CORPORATE SOCIAL RESPONSIBILITY
Session Leader: Türkiye Ekonomik ve Sosyal Etüdler Vakfi
Turkish Economic and Social Studies Foundation

Monday, October 7, 2002
12:00 – 2:00 pm

What is Corporate Social Responsibility About?

"...Globalization must mean more than creating bigger markets. The economic sphere cannot be separated from the more complex fabric of social and political life, and sent shooting off on its own trajectory. To survive and thrive, a global market economy must have a more solid foundation in shared values and institutional practices -it must have a broader, and more inclusive, social purpose."

Kofi Annan, "We the Peoples: The Role Of The United Nations in the 21st Century"

Corporate social responsibility (CSR) is about the acknowledging that sustainable competitive advantage requires companies to be economically viable, environmentally sound and socially responsible. Starting with, adhering to principles of transparency, accountability such as compliance with ILO conventions or national legislation, or quality standards, corporate social responsibility engages companies to adapt themselves to local stakeholder interests and to respond to their shareholders, customers and ultimately to their local and global stakeholders.

Rapid political, economic and technological developments have led to an ever more complex operating environments for business, governments and society. The importance of building alliances and partnership has also increased. There is a growing awareness of the need to develop new types of consultation and partnership between companies and their secondary stakeholders- communities, governments, non-governmental organizations and the general public.

Governments are no longer able to solve developmental challenges and achieve "sustainable" development on their own. In seeking to raise the country's socio-economic status, there is consensus that other sectors such as the private sector and the NGOs have a role in development. International organizations and institutions (UN, UNDP; World Bank, EU) are all emphasizing a wider role for business and including corporate social responsibility into their agenda. Beginning from 1995 the World Bank and UN are running Partners for Development Program with over 30 countries with some of the world's well-known multinational companies.

People responsible for developing new markets, and building business and community relationships in the increasingly important emerging economies are seen as the new actors of the economic, social and environmental progress around the globe. It is argued that the leadership companies of the future will be those that base their mission and their corporate strategies around creating, measuring and managing value. CSR has become an international norm and a standard emphasizing the importance of human and social capital for global development.

In western free-market economies, there is growing recognition by companies of the value people place on corporate social and environmental action. The manifestation of this trend is increasingly found in the choices consumers make about the products they buy and the companies in which people choose to have a stake, either as employees or investors.

The expanding role of private sector has resulted in an increasing focus on their corporate behavior, which has led to the need to build reputation and relationships based on CSR. Companies are expected to adhere to universal standards on human rights and environmental issues and to engage with stakeholders when formulating and implementing corporate strategy.

Background

Companies and CSR

With higher social awareness about the crucial role companies play in creating and distributing value-added activities locally and internationally, their internal governing structures and varying external impacts have come under closer scrutiny. It is believed that corporate governance's emphasis on shareholder rights, which require transparent and accountable management structures, contribute to stakeholder interest, as well as to economic efficiency. According to the Cadbury Report on Corporate Governance (1992), Corporate Governance (CG) is defined as " the system by which companies are directed and controlled". That is, CG is about improving board structures and procedures to make a company more accountable to shareholders, covering issues such as financial reporting, transparency and audit, remuneration of directors, separation of powers and minority shareholders. At its broadest, CG can be seen as the full set of relationships between a company's management, its board and its stakeholders, including but not exclusively shareholders.

However, as Corporate Governance issues are discussed in a separate event, the emphasis of the present session is Corporate Social Responsibility (CSR). The difference between CG and CSR is that the latter has a more external focus- considering a wider range of stakeholders. In addition to its shareholders, a firm also interacts with employees, consumers, public authorities, non-governmental organizations, all of which entertain differing expectations. As a response, companies develop strategies where they voluntarily integrate social and environmental concerns in their business operations. In this context is the triple bottom line which focuses corporations not just on the economic value they add but also on their environmental and social impact. At its narrowest, the term triple bottom line is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters. At its broadest, the term is used to capture the whole set of values, issues and processes that companies must address in order to minimize any harm resulting from their activities, and to create economic, social and environmental value. By adopting socially responsible behavior, corporations expect to achieve long-term sustainability through responding to a greater number of stakeholder demands. It is not clear that CSR directly leads to increased profits, although it is true that CSR- minded companies do tend to perform better in the stock markets as they tend to focus more on their long-term ability to compete.

The current debate about CSR raises many questions ranging from what it means to what it involves for companies. Following are some pertinent issues:

1. Corporate social responsibility (CSR) is the acknowledgment that sustainable competitive advantage requires companies to be economically viable, environmentally sound and socially responsible. Starting with, adhering to principles of transparency, accountability such as compliance with ILO conventions or national legislation, or quality standards, corporate social responsibility engages companies to adapt themselves to local stakeholder interests and to respond to their shareholders, customers and ultimately to their local and global stakeholders.

   What makes companies go beyond the legal obligations and assume wider responsibilities? What are the drivers for CSR from the company point of view? Is there a way to ensure basic standards of social responsibility are honored? In particular, consideration should be given to the question of incentives, which may be instrumental to give greater momentum and drive up standards in CSR.

2. Within economic activities, CSR may involve developing policies toward the employees, sub-contractors, customers, investors and joint-venture partners. There are also external environmental and social issues of concern to the local community. To decide the issue, it is more appropriate to focus on, a good advice for the company is to align its CSR policy to its core business activity. For example, for a chemical producer, environmental pollution control would be directly relevant. Similarly, hi-tech firms may support computer literacy programs. In this way, the cost savings associated with reduced emissions/ recycled resources, and recruiting trained staff would help to maximize the company's financial performance.

3. How companies mainstream CSR into all their operations is an important aspect. How do they mobilize corporate commitment? Is there a culture/ awareness of CSR valued by top mnagers/ the board/ employees? What is the decision-making process? Who is in charge of the process- an individual/ committee/ department? Is it a full-time/ part-time job? Are there supporting programs/tools? Company responses can be different in marshalling resources.

4. It is crucial that CSR be monitored and measured in order to bring about improvements in performance. Setting minimum standards, and including the performance evaluation in annual reports would be a good starting point. The social and environmental performance of firms can also be audited by an independent monitoring unit. In any case, publishing regular reports would lead to increased transparency and accountability, thus strengthening firm reputation.

CSR is a new concept for the MENA region, and MDF4 is a platform of new ideas. TESEV would like to contribute to this debate by bringing in examples of corporate practice from the region.

Objective

This workshop offers a platform where issues concerning the need for implementing Corporate Social Responsibility in the business world is explored and discussed in depth. The session also offers one large corporation of the region relate their responses to the increased expectations of the people in terms of social responsibility.

Specifically, the presenters are invited to explore the following points among others:

1. The practice of CSR around the globe the global. What are the basic problems encountered? How are they dealt with? What are the lessons learned?
   
   
2. What is the business case for CSR?
   
   
3. Best practices : How does a company incorporate its CSR commitment into its operations?
   
   
4. How does corporate governance link with corporate social responsibility?
   

By bringing business people and experts together, the workshop hopes to:

1. disseminate knowledge on CSR practice to other companies who would like to initiate it;
2. encourage companies operating in the MENA region to share their own CSR expertise with others.
3. offer an action plan to promote socially responsible business

This session is two hours long. The moderator of the session will introduce the speakers and facilitate the discussion. One hour is allocated for presentations and one hour for discussion. The first speaker, Ms. Janet Breeze, from Prince of Wales Business Leaders Forum (IBLF) is a professional with extensive experience in business, civil society and government. She will focus on the new challenges of global economy and the reciprocal benefits of socially responsible strategies for firms and their stakeholders.

Second Speaker Dr. Can Paker is the chairperson of TESEV and has an active role in Turkish Businessman's Association (TÜSIAD) Mr. Paker will focus on the practice of CSR in Turkey. The third speaker Mr. Rachid M. Rachid, a top executive of UNILEVER and the regional director for North Africa, Middle East and Turkey, will approach the topic from the point of view of a large multinational company which has to compete globally while responding to local needs. The fourth speaker, John D. Sullivan, Executive Director of CIPE (Center for Private Enterprise) will link the issue of corporate governance with corporate social responsibility. After the presentations, Djordija Petkoski, Lead Specialist at the World Bank, will make comments on the presentations and the session will go on with floor discussion.

The discussion will give an opportunity to exchange views and experience on how CSR can be integrated to business practices.

Suggestions for an action plan will be debated.

Action program for partners on CSR

1. Initiating meetings to develop basic sustainable standards of CSR for large firms as well as small and medium enterprises ( Policy, Process, Evaluation).
   
   
2. Encouraging Business Associations/ Chambers of Commerce and Industry to establish CSR desks which would facilitate information exchange among their member firms.
   
   
3. Enlisting CPAs, accountants, professional associations, and tax experts in an effort to develop triple bottom line (economic, social, environmental) budget models.
   
   
4. Upgrading annual reports to include business ethics codes, environmental reports or a statement that such reports could be obtained from the firm.
   
   
5. Partnering with university/ departments to develop measurable standards of performance , surveying CSR practices, and programs for assessing quality of corporate annual reports.
   
   
6. Preparing seminars/ workshops directed to the media/ NGOs, public sector officials on CSR.
   

Implementation

This session is two hours long. In the first part it is planned that the moderator of the session will explain how the session will be conducted and introduce the speakers.

First Speaker, Mr. Rachid M. Rachid, a top executive of UNILEVER and the regional director for North Africa, Middle East and Turkey, will approach the two key concepts from the point of view of a large multinational company which has to compete globally while responding to local needs.

Second speaker, Ms. Güler Sabanci of one of Turkey's top conglomerates, Ms. Sabanci will share Sabanci Holding's contributions to corporate social responsibility and governance.

Program of the session, October 8, 2002

12:00 – 12:05	Introduction: (5 minutes) Moderator Fawaz Shalan, CEO Medicare (Jordan)
12:05– 12:25	Presentation 1: (20 Minutes) Speaker: Janet Breeze (Associate Director of The Prince of Wales International Business Leaders Forum -IBLF) Setting the Scene: From Power to Responsibilty
12:25– 12:35	Presentation 2: (10 minutes) Speaker: Dr. Can Paker (Chair of the Executive Board of TESEV) The Business Case for Corporate Social Responsibilty
12:35 – 12:50	Presentation 3: (15 minutes) Speaker: Rachid M. Rachid, (UNILEVER, Regional President North Africa, and Middle East and Turkey The CSR Imperative and Multinational Companies: Adding Values and Principles To Business and Performance Goals
12:50 – 13:05	Presentation 4: (10 minutes) Speaker: John D. Sullivan, Executive Director of CIPE Input of from Corporate Governance workshop: How does Corporate Governance Link with Corporate Social Responsibility?
13:05 – 13:15	Commentator: Djordjija Petkoski, Lead Specialist at the World Bank
13:15– 13:50	Floor discussion (35 minutes)
13:50 – 14:00	Concluding remarks: Fawaz Shalan, summary of the session and concluding remarks (10 minutes)