New Developments in CSR & Business and Society ABS Annual General Meeting 2005

1. New Developments in CSR & Business and Society ABS Annual General Meeting 2005 Andrew Dunnett, Director CSR Academy

2. CSRAcademy • Programme Partners: ABS, Accountability, BCC, BITC, CIPD • 04/05 Results • 2500 companies have registered to use the Framework • 499 smes have attended events around UK • 200 large companies have attended masterclasses • 30 business and management schools said using Framework • 05/06 Programme • International Masterclasses with BSI • In House Training with Ashridge • Resources: CSR Making it happen, How to Use the Framework

3. CSR is the management of a companies total impact on its stakeholders, the environment and the community in which it operates.. It is about the integrity with which a company governs itself, how it fulfils its mission, the values it has, how it engages with stakeholders, measures its impact and publicly reports its activities. DTI CSR Competency Framework

4. Managerial decision making needs increasingly to take into account a wide range of criteria relating to the financial, environmental and social implications of business operations. Over the next fifteen years a key strategic driver will be to promote CSR competencies into the education, training and ongoing professional development of all managers. DTI Changing Manager Mindsets

5. There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game which is to say engages in open and free competition without deception or fraud. In fact they are preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades. The discussions of the social responsibilities of business are notable for their analytical looseness and lack of rigor. Milton Friedman New York Times 13th September 1970

6. The problem with the business of business mindset is rather that it can blind management to two important realities. The first is that social issues are not so much tangential to the business of business as fundamental to it. … The second is the need to address questions around ethics and legitimacy. For reasons of integrity and enlightened self interest, big firms need to tackle such issues, in both words and actions. The CEOs of today’s big corporations should take the opportunity to restate and reinforce their own social contracts in order to help secure for the long term the invested billions of their shareholders. Ian Davis, Worldwide MD McKinsey and Co, Economist 28th May 2005.

7. Five Natural Steps to CSR • Defensive stage, it’s not our job to fix it • Compliance stage, we’ll do as much as we can • Managerial stage, its about the business • Strategic stage, it gives us a competitive edge • Civil stage, we need to make sure everyone does it • Simon Zadek, Accountability • As a business employed mainly by the public sector we recognise an additional responsibility to demonstrate that a private sector business can have a public sector ethos. • Serco

8. A key conclusion from all the case studies is that both CSR and HR activities can make a major contribution to creating long term success in organisations and this reinforces the conclusions of other research that CIPD has undertaken in recent years. In an increasingly knowledge based economy, employees are key stakeholders and many of the CSR activities reported are aimed at sustaining and improving the employment relationship. CIPD / CSR Academy Making CSR Happen, The Contribution of People Management

9. The business case is cost reduction, talent attraction, risk management, smarter project execution, faster permits and approvals and much more. Even in Friedman terms it represents a significant competitive advantage and quantifiable shareholder value. Clive Mather, President and CEO Shell Canada Calgary Chamber of Commerce June 2005.

10. The Government’s role is to create the right framework to encourage high standards of corporate behaviour. CSR must start with compliance with the law and in the UK we have a strong record of regulation on a range of issues related to corporate activity. Government provides the right policy environment that sets minimum standards while stimulating business to raise the game. I appreciate that there is considerable support for more mandatory measures to ensure company accountability and although we fully support high standards of business behaviour we do not accept that a one size fits all approach would necessarily benefit the business community, the environment and wider society. Malcolm Wicks MP, Minister of State DTI Hansard 11th October 2005 Col 55

11. Now once we stop asking can ethics be taught we stop the debate on should we create stand alone courses or should we integrate these issues into the entire curriculum? These issues are not exclusively ethics questions. They are questions of finance, marketing, organisational behaviour and accounting. Our student attitude survey reveals that half of the students anticipate that they will confront values conflicts in their business careers. They will arise around the need to weigh trade offs between and among shareholders, employees, customers, and the environment. They see challenges in decisions of downsizing, investing in less developed countries and natural resource exploration. About three quarters think conflicts over financial reporting are somewhat or even very likely. These calculations cannot be separated from the management context. Beyond Pinstripe Suits, Judith Samuelson, Aspen Institute