Home   About Us   Contact Us
 

Corporate Social Responsibility

 

Surveys and Trends


On this page


* * *

Study Tracks Trends in Global Corporate Human Rights Abuse Allegations

Allegations of corporations’ involvement in human rights abuses are not particularly uncommon.  However, until recently there has been no resource available or study done to track trends and patterns in the large number of cases.  Michael Wright, research fellow for the Corporate Social Responsibility Initiative at Harvard University, undertook the project along with the Business and Human Rights Resource Center.  The resource center has been collecting human rights abuse allegations made against companies on its website for the past couple years and allowed companies to respond to these allegations.  Wright used the webpage as a primary resource to collect data for his study.

From the website, Wright whittled down 320 cases brought between February 2005 and December 2007.  The goal of the survey was to report data trends and to analyze how the abuse occurred.  The following are some of Wright’s key findings.

Trends in the Data

All of the cases cover the full range of human rights abuses, not just labor abuse.

The most common labor rights claimed to have been impacted were:

  • the right to work (34%)
  • the right to just and favorable remuneration (30%)
  • the right to a safe work environment (31%) 
  • the right to rest and leisure (25%)

Non-labor rights abuses occurred frequently as well. The right to physical and mental health appeared as an alleged impact in nearly 75% of all the cases.  Other common abuses included:

  • the right to life, liberty and security of the person (44%)
  • the freedom from torture or cruel, inhuman or degrading treatment (57%)
  • the right to social security, self-determination, privacy, and education (20-25%)

In most cases, the abuse impacted several rights simultaneously

Often allegations of abuse in one area spurred further allegations.  The report gave the example that where a firm was reported to use child labor, the circumstances of the case might also give rise to alleged impacts on the right to education, freedom from torture or cruel, inhuman or degrading treatment, the right to health, and even the right to life.

Environmental harm and corruption were often related to human rights abuses

In 60 percent of the cases, companies were directly involved in the abuse.  The remaining 40 percent were cases of indirect involvement by companies.

Both workers and communities were affected equally as often and the abuse in both areas was caused by companies in all regions and in every sector, except in the finance sector where no allegations were brought for abuse against communities.

Abuse against “end-users,” which the report describes as company actions that cause abuse to those who use its products and services, was found in 16 percent of the cases.  This type of human rights abuse was generally relegated to pharmaceutical companies where cases centered on issues of access to essential medicines and industries’ lack of research into diseases primarily affecting persons in poorer regions.

Lessons Learned

The report also includes several case examples of human rights abuses against workers and against communities.  Environmental impacts were particularly harmful to communities, the report shows.  In many such cases, Environmental Impact Assessment were either never carried out or carried out incompletely which in the end, affected community members’ right to an adequate standard of living, right to food, right to access to medical care, etc.  The need for transparency is particularly important in this area, the report points out. 

Indigenous people were also often targets of corporate abuse. Cases frequently coupled more direct forms of company involvement with the abuses of third parties, the report said, the forms of abuse were overridingly direct.  Some cases even alleged that firms made an express request for third party abuse of indigenous rights, e.g., requesting security forces to carry out abusive acts such as offensive use of force and intimidation—a potentially direct form of involvement on the part of the company.

Overall, Wright urges companies to look outside just the workplace in order to protect human rights.  Abuse throughout the supply chain and through unethical investments were examples which highlight the need for companies to be aware of their actions worldwide.  The tendency to have a narrow view of company actions leaves the door wide open for an abuse that could have a domino effect.  Companies should consider the environments in which they work because often, their actions can play into already unstable social, environmental, political and economic situations.  Finally, the report also emphasizes the importance of companies that respond to these allegations quickly.  It is a critical part of their efforts to uphold international human rights standards.

Posted 5/2/08

Back To Top

 

* * *

CRO Ranks 100 Best Corporate Citizens 2008 with Newly Revised Criteria

Intel Corp ranks number one overall

For the ninth year in a row, the Corporate Responsibility Officer ranked what it found to be the 100 best U.S.-headquartered companies based on corporate social responsibility criteria.  Companies were scored on 150 different data elements within eight categories.  Each category was then weighted to average a total score.  The categories Environment and Climate Change were weighted the highest, while a newly-added category Lobbying carried the least weight.

This year, CRO altered some of its methodology in order to improve the survey.  CRO used only publicly available sources “on the theory that transparency is a basic principle of the Corporate Responsibility profession.”  The 2008 rankings include only companies included in the Russell 1000.  A new ranking provider was used to reflect a stronger emphasis on Environmental, Social, Governance rankings (ESG).  Finally, a Lobbying category was added, but carried the least weight since “lobbying in itself isn’t necessarily ‘good’ or ‘bad.’”

The final eight categories include Environment, Climate Change, Governance, Employee Relations, Financial, Human Rights, Lobbying, and Philanthropy.

The following is a list of the top 10 ranked companies.  Please view the whole list on CRO’s website.

RANK

COMPANY

AVG. SCORE

Climate Change

Employee Relations

Environment

Financial

Governance

Human Rights

Lobbying

Philanthropy

1

Intel Corp.

123.971

32

37

16

586

29

50

687

122

2

Eaton Corp.

124.50

22

20

80

417

163

32

693

127

3

Nike Inc.

139.004

8

138

120

359

213

80

598

57

4

Deere & Co.

139.622

47

245

128

131

213

80

719

111

5

Genentech Inc

149.771

8

13

25

372

50

607

652

3

6

Corning Inc

151.883

64

31

39

196

426

80

606

244

7

Humana Inc.

154.588

259

290

172

52

6

139

711

84

8

Bank of America Corp

157.169

22

37

235

616

107

61

548

7

9

ITT Corp

158.918

3

340

2

35

6

98

611

354

10

PG& E Corp

173.942

114

130

100

396

1

139

964

304

Source: www.thecro.com

Posted 2/22/08

Back To Top

 

* * *

Survey Tracks Sustainability Reporting in Emerging Markets

South African companies were found to be the clear leaders in corporate social responsibility disclosure among emerging market companies, according to a report published by the Social Investment Research Analyst Network (SIRAN), KLD Research & Analytics, and the Social Investment Forum.  The report attributes this strong performance to the fact that the Johannesburg Stock Exchange listing requirements are set comparably high.

The survey, which was conducted in seven countries with 75 companies, is the first step in a larger project to boost sustainability reporting in emerging market countries.  According to the report, the ability to discern the social and environmental risks to investment in emerging market economies is a difficult task due to a lesser degree of sustainability reporting.  Now that the report has been produced, the next steps in the project will include an investor sign-on statement to demonstrate support for this issue, launching an advocacy campaign and creating an updated benchmark report to be conducted in 2009.

Five questions were asked regarding the level of sustainability reporting each company was at. 

1. Does the company have any public disclosure of sustainability issues?
2. Does the company have a separate section of its website and/or annual report addressing sustainability issues?
3. Does the company publish a current (within the last two years) and stand-alone sustainability report?
4. Does the company reference the Global Reporting Initiative (GRI) framework for its stand-alone report?
5. Does the company report sustainability goals and benchmarks?

The energy sector companies showed the strongest reporting out of the three sectors surveyed – energy (oil and gas), materials (metals and mining), telecommunications.  South African companies lead every criteria section, with six companies out of eight meeting all five criteria standards.  Other countries surveyed were Brazil, China, India, Russian, South Korea and Taiwan.  China was the country that had the most room for improvement, overall.

EMtransparency

A strong percentage of companies did some type of sustainability disclosure (87%), while only 27% of companies published reports that made reference to the GRI framework.  The report suggests using GRI is a very new concept in most countries and is starting to gain more traction.  Other barriers were more technical in nature, such as broken links, dysfunctional websites, or blurry downloads.  

Posted 2/6/08

Back To Top

* * *

Gap Exists Between Corporate Attitudes and Corporate Behavior

American companies’ actions are not living up to their words, according to a recently released report called “The State of Corporate Citizenship in the US.” The Boston College Center for Corporate Citizenship teamed up with the Hitachi Foundation to find out how companies are actually performing with respect to their corporate citizenship reporting. 

"While 41 percent felt that companies should be held responsible for improving the education and skills in the communities where they operate, only 18 percent of business are offering job training to people in economically distressed communities," said Barbara Dyer, President and CEO of The Hitachi Foundation.  The report also contains the following significant findings:

Rhetoric: 73% of executives say corporate citizenship needs to be a priority for companies.

  • Reality: 60% report corporate citizenship is part of their business strategy
  • Reality: 39% report corporate citizenship is part of their business planning process
  • Reality: 28% of companies have written corporate citizenship policies or statements

Rhetoric: 65% of executives say the public has a right to expect good corporate citizenship

  • Reality: 29% report discussing citizenship outside the company with stakeholders
  • Reality: 21% of companies report to the public on corporate citizenship issues

Rhetoric: 81% of executives see the importance of valuing employees and treating them well

  • Reality: 54% offer health insurance to all employees, including hourly workers
  • Reality: 52% of companies have written human rights policies that prohibit discrimination
  • Reality: 46% of companies support work-life balance practices for all employees, including hourly workers
  • Reality: 31% provide training and career development for low-wage employees

Drivers of Corporate Citizenship
Question: “To what extent does each of the following factors ‘motivate’ or ‘drive’ your company’s efforts to be a good corporate citizen?”


CSRdrivers

The report also makes clear that the public expects way more from companies than they are doing.  Attitudes toward corporate citizenship are more positive from the public’s perspective than from the company’s perspective, according to the Center for Corporate Citizenship website.  The gaps that exist between corporate attitudes, public expectations, and corporate behavior is a clearly an issue that still needs to be addressed.

Download report for free at the BCCCC website.

Posted 1/29/08

Back To Top

* * *

2007 AccountAbility Ratings for Corporate Social Responsibility

BP tops the list and European companies dominate

AccountAbility, an international non-profit organization committed to providing accountability in sustainable development, has released its Accountability Rating 2007.  The rating, which was first applied in 2004, ranks the “Fortune Global 100” companies based on their public reporting and actual social and economic performance data. 

Each company is assessed in four key areas of corporate social responsibility (CSR) – Strategy, Governance, Engagement and Impact - all weighted equally. 

Company

Rating (out of 100)

Strategy

Governance

Engagement

Impact

BP

75.2

82.9

85.4

73.7

58.9

Barclays

68.5

81.7

60.7

43.0

88.4

ENI

67.9

75.6

57.8

50.5

87.5

HSBC Holdings

67.2

93.0

66.4

59.5

50.0

Vodafone

66.3

88.1

70.9

81.9

24.6

Royal Dutch/Shell Group

66.0

81.2

78.9

68.1

35.7

Peugeot

63.7

85.4

65.9

28.6

75.0

HBOS

62.0

76.0

71.7

56.4

43.8

Chevron

61.6

64.2

55.2

39.5

87.5

DaimlerChrysler

60.1

81.6

66.6

48.5

43.8

Top Ten Rated Companies (Source/Accountability)

In this year’s rating, some significant findings emerged:

  • An overall higher score in the Strategy domain indicates greater boardroom understanding of and participation in CSR.

  • Scores in the Engagement domain was low – companies seem to be devising strategies based on their own perceptions rather than engaging stakeholder views.

  • Independent assurance for sustainability reports is lacking.

  • European companies lead in all four categories; American companies dominate the bottom 20.

  • Companies with the most improved ratings from 2006 are Sinopec, ENI, China National Petroleum, and ING.

The full list of ratings for the Fortune Global 100 can be found on AccountAbility’s website, along with ratings for companies in individual countries, including Russia, Hungary, Turkey, Greece, and South Africa.

Posted 1/22/08

Back To Top

* * *

McKinsey Says Globally, Executives Believe Environment Will Be Top Social Factor to Affect Business

Results of a McKinsey Quarterly Global Survey indicate that the environment, including climate change, is the top social issue that companies believe will affect shareholder value the most. Over half of the respondents said the environment was the biggest issue, compared with 31 percent from the previous survey. Nine out of ten respondents say they themselves worry about global warming. 

The survey also shows executives in Europe indicate more frequently than the global average that climate change is the top social issue, whereas North Americans put health care benefits in the top three most important social issues – almost double the global average. Indians choose privacy and data security as the top social issue, which just edges out the environment, and the Chinese choose corporate political influence. 

Issues Most Likely to Gain Public and Political Attention Over the Next 5 Years
(Results taken from McKinsey data table, see report for full data set)

% of respondents selecting given issue as 1 of top 3

SOCIAL ISSUE 2005 2007

Environment, including climate change

31%

51%

Privacy and Data Security

33%

33%

Job Losses and Offshoring

42%

25%

 

Posted 12/10/07

Back To Top

* * *

Top 10 Best U.S. Corporate Citizens of 2007

The Corporate Responsibility Officer magazine has teamed up with IW Financial to determine the “Top 10 Best Corporate Citizens” across five industries.  U.S. publicly-traded companies in the areas of chemical, energy, financial, media, and utilities were evaluated on how well they performed in the following areas: environment, climate change, employee relations, human rights, lobbying, philanthropy, corporate governance, and finance.  The methodology was modified slightly from CRO’s previous study of “100 Best Corporate Citizens” to include emerging issues, available information, and a new approach to company comparisons, according to the CRO website.

IW Financial relied on data from several sources. IW Financial reviews company financial disclosures, sustainability/environment/citizenship reports, websites, Environmental Protection Agency databases, and other sources as part of its standard research processes.

Each company received a score within each evaluation area, and the companies with the highest scores ranked highest within each industry.  The following table represents the top three companies ranked in each industry.  For a full list of the top 10 rankings and a breakdown of scores the companies received in each category, please download the survey from the CRO website.

RANK
CHEMICAL
ENERGY
FINANCE
MEDIA
UTILITIES
1
Monsanto
Marathon Oil
Bank of America Corp.
Walt Disney
Entergy Corp.
2
Dow Chemical
EOG Resources
Humana
Google
American Electric Power Co.
3
Pioneer Companies, Inc.
Chevron Corp.
Travelers Co.
New York Times Co.
Public Service Enterprise Group


Also see EthicsWorld coverage of CRO's "100 Best Corporate Citizens 2007"

Posted 12/11/07

Back To Top

* * *

UNIDO Initiative Aims to Develop CSR Awareness Among European SMEs

Developing CSR among SMEs is essential to sustainability, says the United Nations Industrial Development Organization (UNIDO)

The August 2007 edition of the Responsible Business Initiative in Serbia newsletter contains two articles on corporate social responsibility (CSR) and Small to Medium Enterprises: the first highlights European trends, while the second concentrates on new developments in Serbia. 

European Trends

According to this UNIDO publication, CSR continues to be seen in many European countries as a strategy for larger multinationals, rather than for smaller, domestic companies. A key theme in an article called “European SME’s Good Practice” is the different stages at which companies in different countries address CSR.  Finland and Norway were two of the first countries, back in the 1960s, where firms started to address CSR, including ethical issues.  In Austria, the issue became more prominent in the 1970s and 80s, while in Poland, for example, companies have only recently begun to adopt CSR principles.

UNIDO asserts that with respect to SMEs, the implementation of substantive CSR programs in most European companies is significantly lower than in multinationals.  Data shows a large variance of SME engagement in CSR activities.  A study found that 83% of Finnish SMEs are engaged in CSR, whereas 46% of Spanish SMEs conduct such activities. Generally, the northern and central European countries show the highest percentages of SMEs involved in external social activities, contrary to southern countries as well as France and the United Kingdom.

The article offers some reasons for why this may be the case. In countries with a high level of legal legislation, the incentive to “do what’s right” may be lower for SMEs with limited capabilities.  In addition, some companies just lack awareness or understanding of the concept.  Data from the United Kingdom in 2006 shows that 71% of the SMEs are uncomfortable with the use of the term CSR, because they see it as too difficult to understand and relate the word “corporate” with issues for large companies only.

According to a survey by the European Commission back in 2001, the majority of CSR activities by EU companies mainly involved donations that support sport; culture; and health and welfare initiatives.  The notion of more “sophisticated” strategies of CSR, those that go beyond philanthropy, were less developed.

UNIDO Developments in Serbia

UNIDO is undertaking a program in this area in Serbia.  UNIDO Officer Kai Bethke explained the importance of fostering CSR among SMEs where awareness is low.  “One needs to recall that about 90% out of all companies that exist around the globe can be classified as small and medium businesses…the reason why more and more institutions active in the field of CSR started to shift their focus towards SMEs has to do with their strength in number on the one hand, and their importance for the economic development of any country on the other.”  He believes the CSR movement will not be sustainable unless SMEs get on board.

Bethke also observes that in Serbia, many companies still relate the concept of CSR to large-scale philanthropic investments, donations or sponsorships.  “It is obvious that those activities are far beyond the reach for many smaller companies that are frequently faced with financial or human resource constraints. As a consequence, we often face a situation where SMEs take up a rather skeptical position when it comes to CSR.”

The solution to this problem is to redefine the concept of CSR as it relates to smaller businesses, he says.  Some progress is being made.  As a country in the process of stabilization and potential accession to the EU, there is more pressure for the business community to commit to CSR, both through direct supply chain relationships, as well as through the development of legislation and international standardization and certification. 

One tool UNIDO is adopting is the “Triple Bottom Line.”  Beyond the financial bottom line, UNIDO is pressing businesses to disclose and report on the social bottom line and the environmental bottom line.  Bethke says the importance of this strategy has to be communicated to all employees of the company for CSR to really work.  “We have often experienced a lack of institutional know-how and capacity to convince and support companies to implement CSR practices in their business operations.” Another strategy will address this problem by training and licensing a pool of experts in various countries who can then reach out to SMEs that require assistance.  Other international networks will be tapped and conferences held to draw on existing expertise, which will strengthen CSR on a more sustainable level.        

Posted 9/27/07

Back To Top

* * *

Key Differences Seen In CSR Performance by Companies from Different Countries – Ethical Investment Research Services Releases International Survey Findings

The data suggests that European companies have the strongest overall CSR performance, although the Japanese are first in environmental standards.  North American companies lag significantly behind Europeans in all CSR areas.  

Ethical Investment Research Services conducted a study of global corporate social responsibility practices, which covers a range of research areas including environmental, social, and governance impact.  Although the study claims to be a global response to these issues, the companies surveyed are American, West European, Asian, and Australian/New Zealand.  The findings provide an interesting overview of which countries are taking corporate social responsibility more seriously.  The following is a listing of the report’s major findings by issue. The full report provides more explanation for why some countries may be performing better than others.

 

Corporate Governance

Equal Opportunities for Women

Human Rights

Over 90% of companies in North America, UK, Switzerland, the Netherlands, Norway, Finland and Australia have more than a third of independent directors, compared with less than 10% in Germany, Austria and Japan.

Around 90% of companies in North America (94%), Europe (88%) and Australia/New Zealand (87%) have basic or advanced equal opportunities policies. Conversely, just over 50% of Japanese and less than 25% of companies in Asia, outside of Japan, meet these standards.

Companies in Norway, the Netherlands, the UK and Finland are more likely to have developed advanced human rights policies; 50% or more of companies in these countries with large operations in high risk countries have an advanced human rights policy. A low proportion of US and Japanese companies operating in high risk countries have developed advanced policies, less than 5% in each case.

In half of the countries studied over 90% of companies separate the roles of chair and chief executive. However rates of separation are lower in the US (30%), Japan (54%) and France (56%).

In management systems, Europe and Australia/New Zealand both perform well, with around 80% and 70% respectively demonstrating at least basic systems. Performance amongst Japanese companies is also strong at 60%, whereas it is weaker amongst US companies at 25%. In the US, companies are less inclined to disclose this information, possibly due to fear of litigation.

Less than 5% of relevant companies in Hong Kong, and none of the companies in Singapore or Portugal have developed even a basic human rights policy, system or report.

Governance codes are being revised to improve levels of transparency and independence, and the proportion of companies adopting Western models of board structure is increasing.

Representation of women on the board continues to be lowest in Japan at less than 1% and remains generally low in Mediterranean countries. The highest rate of 33% is seen in Norway where the government has enforced a quota for a minimum of 40% board members to be women by the end of 2007. The number of women on the board is set to increase in Spain as the Spanish government has recently established a quota similar to that imposed in Norway.

The low proportion of US companies achieving an advanced grade may be explained by the frequent omission of freedom of association and collective bargaining from human rights policies. The low proportion of Asian companies achieving an advanced grade may be explained by differences in their perceptions of what constitutes human rights, as well as relatively lower levels of NGO and responsible investor activity in Asian countries.

Supply Chain Labor Standards

Environmental Responsibility

Community Involvement

Companies are increasingly sourcing products from developing countries as supply chains become more globalized. As a result they are under increasing pressure from responsible investors and NGOs to demonstrate that their products are manufactured employing acceptable labor standards.

Over 90% of high impact companies in Europe and Japan have developed basic or advanced policies for managing environmental impacts, compared with 75% in Australia/New Zealand, 67% in the US and 15% in Asia outside of Japan.

Community involvement can range from simple donations of money to donations of expertise, time and resources.

Across all regions, with the exception of Europe, the majority of companies with a significant degree of reliance on global supply chains show little or no evidence of having a supply chain labor standards policy. Over 80% of companies in North America and Australia/New Zealand and over 90% of Asian companies do not demonstrate any evidence of a supply chain labor standards policy.

Performance in Asia outside Japan and the US is less encouraging. 7% of Asia outside Japan and 18% of high impact US companies demonstrate an improvement in environmental performance, compared with over 50% for companies in Japan and in several European countries.

Community involvement is widely used in all regions of the world as a means to build reputation. In all the countries covered, at least 50% of companies score basic or advanced (Europe 85%, Australia/New Zealand 77%, North America 70%, Japan 66%, Asia outside Japan 60%). Even in the lowest performing country, Hong Kong, 58% of companies meet at least the basic level.

Over 50% of relevant European companies have developed a basic or advanced supply chain policy.

A number of factors drive the strong performance demonstrated by European companies including strict EU regulation and a high level of pressure on companies to adopt sustainable environmental practices from investors, NGOs and civil society. Performance is strong in Japan as ISO 14001 has been widely adopted, championed by the government as a way of providing customer assurance and as a means to avoid losing export business to certified firms elsewhere.

Differential tax rates and incentives for charitable giving between different countries play a part in affecting the average amount donated from country to country.

 

Posted 9/20/07

Back To Top

* * *

 

Hudson Report Evaluates Employee Attitudes Toward Corporate CSR Programs

How Important is CSR to U.S. Employees? Not very, says Report
But Older and Higher Paid Employees Appear to Be More Concerned About CSR Than Younger Ones

As social pressure rises for companies to implement meaningful corporate social responsibility programs, one might expect the quality of CSR programs to be a more significant factor when people apply for jobs in the US.  However, a survey released by Hudson finds that just seven percent have turned down a job offer for lack of a CSR program. Hudson is an international firm engaged in recruitment, contract professionals, and talent management services.

CSRgraph

A high percentage of U.S. workers participate in corporate social responsibility (CSR) programs, including volunteer and community-oriented programs, if they are offered, but they don't go out of their way to work for a company that has such a program, according to the Hudson survey which was conducted in August.

Three-quarters of U.S. workers still think companies have the responsibility to give back to their community.  The idea that companies’ obligations go beyond shareholders and investors to the greater good of society increases with age.  For example, two-thirds of those who are between 18-29 years of age agree with it, compared to 83 percent of those over 65. It also tends to increase with income. Only 64 percent of those who earn less than $20,000 think companies are responsible for the greater good, compared to 80 percent of those who earn $75,000 to $100,000.

The study confirmed that CSR programs are more prevalent at large companies, with 58 percent of respondents who work for a company with 500 or more employees state their firm has a CSR program, compared to 45 percent of all workers.  Of those workers employed by a company with a CSR program, nearly two-thirds participate in it. Among the small number of companies that allow employees to take paid time off to volunteer for community projects, 70 percent take advantage of it. Hudson analysts suggest that for an employer, having a formal CSR program is not as important for recruiting employees, but for retaining them.  "Participating in a charitable activity not only builds strong team dynamics but also makes an individual feel like he or she is helping the organization give back to society. Those positive feelings reflect back on the employer,” said Peg Buchenroth, senior vice president of human resources at Hudson.

The Hudson CSR survey is based on a national poll of 2,000 U.S. workers conducted August 4-5, 2007 and was compiled by Rasmussen Reports, LLC, an independent research firm.  To read more about the survey, click here.

Posted 9/14/07

Back To Top

* * *

Study Says Long-Term Effects of Climate Change on Agriculture Could Be Unmanageable Unless There are Major Policy Changes in Coming Years

The Study, by William Cline, Implies Considerations for Key New Approaches By All  - Including Business.  Dramatic Losses in Global Agricultural Yield Forecasted for Late This Century

“Global Warming and Agriculture – Impact Estimates by Country” by Dr. William Cline

Dr. William Cline, senior fellow at both the Center for Global Development and the Peterson Institute in Washington DC, highlights in his new study, “Global Warming and Agriculture,” powerful statistics about the impact that temperature increases will have on crop yields in over 100 countries by the 2080s (between 2070 and 2100) if efforts are not taken to reduce carbon emission and other greenhouse gases. 

The effects of the decline would filter into many areas of international development including foreign aid flows, global health, and overall standards of living, all of which would greatly impact business strategies. Cline’s analysis focuses on the long-term effects of global warming, and he argues that if leading public and private sector institutions are going to take the welfare of future generations seriously, they need to reconsider long-term sustainability strategies.

At a time when major corporations are significantly increasing their attention on CSR approaches, with strong emphasis on the environment, the new Cline study represents a wake-up call.  His predictions not only add to the long list of arguments for taking action to reduce greenhouse gas emissions, but they provide an exceptionally detailed set of forecasts for the key agricultural sector. They point to especially harsh consequences for countries that are located close to the equator.

Nancy Birdsall, president of the Center for Global Development, said Cline’s book serves to motivate individual countries “getting to yes” on implementing far reaching approaches to carbon mitigation.  Developing countries will suffer the biggest losses.  Cline predicts Latin America and Africa could sustain a 20 to 25 percent loss in crop yield, while Southeast Asia could lose as much as 30 to 40 percent.  Cline said agriculture is one of the world’s most basic resources, and at the same time, the most vulnerable to global warming.  Much of the global South depends on the agricultural industry to earn a living.  A major blow to this industry would be devastating. 

Fred Bergsten, the director of the Peterson Institute, said that Cline’s study “shows that although the two largest polluting countries, China and the United States, will not yet suffer overall agricultural losses by late this century, both will experience substantial internal regional losses that should persuade them to participate in action to avoid severe domestic dislocations.”    

Cline challenges the notion that a few degrees increase in temperature will be positive for agriculture by calling it “a short-term view.”  He cites evidence that agricultural production has already started to decline in the U.S. since the 1960s.  Cline predicts that demand for food will increase significantly, which when coupled with a decline in production, could mean very serious food shortages.

John Lash, President of the World Resources Institute, adds that we will see climate change even if we do take action, probably a rise of two degrees Celsius.  He believes it is necessary to plan for these changes now, especially in developing countries that will be most affected, so that the problems become more manageable in the future. 

“Governments and millions of poor people in developing countries have limited ability to cope with such changes,” Birdsall said. “At least a billion people live in the poorest countries that are likely to be worst hit by this slow-moving crisis.  This will be a serious problem for us all."

The Center for Global Development website

The Peterson Institute of International Economics website

Posted 9/14/07

Back To Top

* * *

Irish CSR Survey

Corporate Social Responsibility is often perceived differently within various organizations and across different countries. This survey examines how many Irish businessmen understand CSR and how it should be implemented.

The contents of this report was undertaken and completed by Alan Tyrrell with the assistance of Accountancy Ireland, the official magazine of the Institute of Chartered Accountants Ireland (ICAI). Tyrrell is a Group Media Relations Manager for Hibernian Insurance. He can be contacted via e-mail at alan.tyrrell@hibernian.ie.The executive summary of this report, released in May 2007, is reproduced here with the permission of Mr. Tyrrell.

A survey of Irish companies on their approach to corporate social responsibility shows that almost 70 percent of respondents are already investing in CSR, with 40 percent spending more now than two years ago. However, the results also show that CSR is among the most vulnerable items when financial cutbacks are required, and respondents could show little evidence of a direct link between CSR and increased profitability.

The survey was undertaken to provide a benchmark on CSR attitudes and behaviors in Ireland and was focused on finance and accounting executives in Irish business. While the results are mainly positive, there are also some strong contradictions in attitudes toward CSR and its interplay with business practice, corporate strategy and profitability.

What is CSR in practice?

In order to develop a deeper understanding of how respondents define CSR, they were asked to distinguish between CSR and standard business practice for a series of items.

What CSR is:

  • 92% of respondents stated that supporting charities is CSR
  • 83% of respondents categorize activities to help solve social problems like crime and poverty as CSR
  • 77% of respondents said that CSR means exceeding legal or regulatory obligations in areas of business operation such as health and safety and consumer rights. This result shows that most respondents have moved beyond a legal compliance model of business practice and toward full engagement with proactive standard setting.
  • 66% stated that managing the supply chain to ensure that suppliers respect human rights is CSR
  • 62% identified CSR as taking measures to ensure that products do not harm the environment

 

What CSR is not:

  • 87% of respondents said protecting health and safety of employees is standard business practice
  • Making website and sales literature customer friendly is seen as standard business practice by 79%, compared to 16% who see this as CSR action
  • 70% see the provision of transparent product information as standard business practice

 

Interestingly 25% state that ensuring the company does not engage in bribery is CSR rather than standard business practice. Given that the sample was drawn predominantly from accountants it is equally interesting that 10% of respondents state that accurate management and reporting of company finances is an act of CSR as opposed to standard business practice. One wonders what businesses this minority operate in!

Communicating CSR

When asked about communicating CSR, 56 percent of respondents agreed that many companies do a great deal more for their communities than is talked about or known, and 40 percent of respondents stated they had received positive media coverage of their CSR actions in the past two years. Just 22 percent of respondents stated that they formally communicated CSR actions to investors.

Contradictory views

Apparent throughout the results were seemingly contradictory views on the interplay between CSR and business. For instance:

    • While 78 percent agreed that businesses generally do not pay enough attention to their social responsibilities, 65 percent of respondents stated that CSR needs to be a priority.
    • Eighty percent stated it was important for companies to expend resources to improve the communities in which they operate. However, 66 percent stated that many companies promote CSR but are not truly committed to it. When presented with a series of priorities to choose from, the largest group (36 percent) selected "balancing the demands of all stakeholders" as the most important priority for a business.
    • Dealing with the links between profitability and CSR the results also showed some contradictions. For example, 56 percent agreed with the statement that ‘CSR makes a tangible contribution to profitability’. Yet only 12 percent said their company’s CSR actions in the two years prior to the survey had led to increased profitability.

     

    Posted 6/28/07

    Back To Top

    * * *

    Australian Corporate Social Responsibility

    Results of the 4th Annual Corporate Responsibility Index

    The Corporate Responsibility Index has been developed by Business in the Community. It is an initiative of the St. James Ethics Centre and it has been supported by Ernst & Young. See the new Index.

    "Corporations only flourish in flourishing communities. Australian businesses no longer ask if they should be responsible; only about how best to be so. The Corporate Responsibility Index is not a tool of measurement for measurement’s sake. First and foremost, it is a management tool – a roadmap for building sustainable prosperity."
    Dr Simon Longstaff, Executive Director, St. james Ethics Centre.

    May 14, 2007 -- Companies representing 1.25 million employees and a total turnover of AU$520 billion have voluntarily demonstrated their commitment to corporate responsibility by participating in the 4th Corporate Responsibility Index (CRI).

    Results of the 4th CRI released show that 83% of participants now evaluate community, workplace, marketplace and environmental issues within their formal risk management processes.

    The groundswell of public awareness on crisis issues of climate change and water shortage, and clear government support for voluntary initiatives has moved more companies to initiate corporate responsibility policies.

    In 2006 the Parliament and Government of Australia conducted inquiries into corporate responsibility. Both the Parliamentary Joint Committee and the CAMAC reports advocated that the business community take the voluntary lead in responsible business practice, in lieu of a regulatory approach.

    “Irrespective of who wins the Federal election, it is likely that community expectations of responsible business conduct will continue to sharpen and deepen” says Dr Simon Longstaff, Executive Director of St James Ethics Centre.

    Companies want a framework to work from, the public expects transparency to inform its choice, and voluntary initiatives are on the rise.

    CEO of Minter Ellison Lawyers Guy Templeton says “We adopted the Index as an internal management tool to guide the growth of our program – and to utilise a framework that would help us achieve best practice”.

    The companies scoring 95% or above in 2006 were, Westpac, Toyota, BHP Billiton, Rio Tinto and ANZ. “In 2007 we will be engaging with these top performing CRI companies to look at what the next challenges on the journey toward sustainability might be” said Emily Albert, CRI Manager at St James Ethics Centre.

    “The greater challenge remains engaging the large number of companies who are not yet voluntarily reporting or benchmarking their corporate responsibility practices” says Dr Longstaff “At our end, we have tried to make the CRI more attractive by allowing companies to complete modules, or engage in private bench-marking as a first step to full participation”.

    In 2006 these new entry options resulted in 34 companies, comprising 11 new companies, voluntarily engaging in this rigorous assessment of the integration of corporate responsibility principles into core business practices.

    “Each year the number of companies engaging in the Index has grown, with this the average score of companies continuing to participate also increases” says Emily Albert “Over the four years of the CRI in Australia the average score of the 16 companies participating each year has increased from 80.2% to 88.7%”.

    “There is still work to be done” says Emily Albert “Some of the key challenges for companies remain in engaging stakeholders, setting and monitoring performance targets, and engaging their suppliers in sustainable practices”.

    The CRI is the only voluntary benchmarking tool that assists business in setting the fundamental management frameworks for corporate responsibility. A critical element to ensure quality and consistency is that all submissions are validated by an independent, professional firm, Ernst & Young. Standing behind that report, St James Ethics Centre operates as trustee of the CRI overseeing the integrity of the process.

    * * *

    CSR Around the World: A Seven Country Study

    Study from the Society for Human Resource Management Shows Brazil Leads in Prevalence of CSR Practices

    A new study from the Society for Human Resource Management, an international human resource management association, shows that while about four out of five HR professionals across the United States, Australia, India, China, Canada, Mexico and Brazil reported that their organizations participated in corporate social responsibility practices, less reported having either formal or informal policies. The study, which surveyed HR professional members from an international list of HR organizations, presents a global view of corporate social responsibility practices and the integration of corporate social responsibility in organizations’ business decisions. It reports on intraorganizational responsibility for creating and implementing corporate social responsibility strategies and analyses, current applications, and future trends.

    Among the reports key findings:

    CSR Practices
    Brazil practitioners reported the highest rate of participation in CSR practices, while China reported the lowest. 

    Formal CSR Policies
    Australian, Indian, Mexican and Brazilian HR professionals were more likely than those from the United States to report that their organizations had formal corporate social responsibility policies.

    “HR professionals from Brazil were least likely to report that their organizations had no corporate
    social responsibility policies. Most organizations without corporate social responsibility policies did not intend to create them. The exception was Brazil, which was significantly more likely than the United States, Australia, China and Canada to plan to create corporate social responsibility policies: more than three-quarters of organizations in Brazil without corporate social responsibility policies intended to create them.”

    Types of CSR Activities
    The largest percentages of HR professionals from the United States, Australia, Canada, Mexico and Brazil reported that their organizations engaged in local charities while professionals from India and China tended to report donating money for natural disasters.

    CSR Reporting
    2/3 of all HR professionals surveyed reported that their organizations documents their CSR approaches through publications or newsletters. Over half reported that CSR was integrated into their organizations’ business strategy through inclusion in its goals or mission, while the least popular form of CSR reporting was through issuing separate reports.

    Public Image
    Most HR professionals picked public image as the organizational factor that could most be improved through CSR programs.

    Obstacles to CSR

    The largest percentages of all HR professionals surveyed identified cost as the main obstacle of corporate social responsibility programs, and the second largest percentages of HR professionals from the United States, India, China, Canada and Mexico reported unproven benefits as an obstacle to these programs. Of the HR professionals from organizations with existing corporate social responsibility programs, less than one-half reported that their organizations calculated return on investment for CSR programs.

    According to the report, "HR professionals from the United States, Australia, India, China, Canada, Mexico and Brazil, HR departments were more likely to be primarily responsible for implementing their organizations’ corporate social responsibility strategies than for creating these strategies. This finding indicates that there is a transfer of accountability as corporate social responsibility moves from policy to practice within organizations, and that HR is more often called upon to engage employees in corporate social responsibility practices than to be at the table when corporate social responsibility policies are designed."

    For the full report visit SHRM's website.

    Posted 4/16/07

    Back to Top

    * * *

    As Pessimism Over Business Ethics Increases,
    Ethical Branding Becomes More Important

    According to a new survey by London-based market research group Gfk NOP, of 5,000 consumers surveyed in Germany, the US, the UK, France, and Spain almost half believe business ethics have deteriorated in the past five years and many see “ethical consumerism” as a means of holding companies accountable.

    According to the survey, which was seen exclusively by the Financial Times (2/20/07):

    Pessimism Over Business Ethics

    - 64% of German consumers and 55% of US consumers believe business ethics have worsened in the past five years.
     
    - UK shoppers are the "most aware, most critical and most likely to see national brands as standard-bearers" wheareas Spaniards are the most cynical about ethical branding.

    According to Chris Davis, who leads GfK NOP's brand strategy center of excellence, "The UK is the hothouse for what is coming. If a brand is going to do well in the ethical market, it should probably look at the UK."

    Importance of Ethical Branding

    - 43% of all respondents believe "ethical" claims on social issues -  such as treatment of employee and environmental practices - would make business’ more accountable to the public.

    - About 1/3 of respondents would pay 5-10% more money for many ethical goods (the article notes however, that ethical brands currently control a very small market share)

    - Several companies that have in the past been criticized for allegedly unsatisfactory CSR practices – such as Nike for its supplier practices and Nestle for its marketing in developing countries – were rated high in ethics in many of the countries. This suggests an the increasing importance on social branding for companies hoping to succeed as well as recover from scandals.

    The Most Ethically Perceived Brands

     

    UK

    US

    France

    Germany

    Spain

    1. Co-op (including Co-op bank)

    1. Coca Cola

    1. Danone

    1. Adidas

    1. Nestlé

    2. Body Shop

    2. Kraft

    2. Adidas

    2. Nike

    2. Body Shop

    3. Marks Spencer

    3. Procter Gamble

    2. Nike

    2. Puma

    3. Coca Cola

    4. Traidcraft

    4. Johnson Johnson

    4. Nestlé

    4. BMW

    4. Danone

    5. Cafédirect

    4. Kellogg’s

    5. Renault

    5. Demeter

    5. Corte Inglés

    5. Ecover

    4. Nike

    6. Peugeot

    5. gepa

    6. Adidas

    7. Green Black

    4. Sony

    7. Philips

    7. VW

    6. Nike

    7. Tesco

    8. Ford

    8. Carrefour

    8. Sony

    6. Sony

    9. Oxfam

    8. Toyota

    8. Coca Cola

    8. Trigema

    9. L’Oreal

    10. Sainsbury’s

    10. LEVI

    10. L’Oreal

    10. Bio Produkte

    10. Mercedes

    11. Innocent

    10. Starbucks

    11. Malongo

    10. Body Shop

    11. Ben Jerry’s

    12. Waitrose

    12. Ben Jerry’s

    12. Alter Eco

    10. Hipp

    11. Pascual

    13. Clipper Tea

    12. Dell

    12. LU

    10. Mercedes

    13. Philips

    14. Asda

    14. Campbell’s

    14. Auchan

    10. Wrangler

    14. BMW

    15. Boots

    15. Microsoft

    14. Chanel

    15. Knorr

    14. Intermón Oxfam

    15. Lush

    15. Tide

    14. Puma

    15. Maggi

    14. Nokia

     

     

    14. Sony

    15. Microsoft

    15. SEAT

     

     

     

    15. Opel

     

     

     

     

    15. Siemens

     

     

    Posted 2/21/07

    Back to Top

    * * *

    CRO Magazine Releases U.S. ‘100 Best Corporate Citizens’ 2007

    On February 15, 2007 the Corporate Responsibility Officer Magazine (formerly Business Ethics Magazine) released its eight annual list of U.S. ‘100 Best Corporate Citizens’ which aims to take a systematic approach to assessing the social and environmental characteristics of a good corporate citizen. The list is drawn from about 1,100 U.S. companies in the Russell 1000, S&P 500 and Domini 400 indices, and uses data collected by KLD Research & Analytics, an independent investment research firm in Boston. Firms are assessed according to eight categories: community, corporate governance, diversity, employee relations, environment, human rights, product and total return on investment (averaged over three years).  

    According to the CRO, twenty-four new companies made the list this year including tech company Google, while Microsoft returned after an absence of several years. For the first time ever, computer company Hewlett Packard was missing from the list and the top ten reflecting last year’s “pretexting” scandal involving its board of Directors (see Corporate Reputation).

    The CRO’s 2007 Top 10 Corporate Citizens:

    1. GreenMountain Coffee Roasters Inc.
    2. Advanced Micro Devices Inc.
    3. NIKE Inc.
    4. Motorola Inc.
    5 Intel Corp.
    6 International Business Machines Corp. (IBM)
    7 Agilent Technologies Inc.
    8 Timberland Co.
    9. Starbucks Coffee Co.

    For the full list click here.

    Posted 2/16/07

    Back to Top

    * * *

    Global 100: Most Sustainable Corporations in the World

    On January 24, 2007, this year's Global 100 Most Sustainable Corporations in the World (Global 100) was released at the World Economic Forum in Davos, Switzerland. Launched in 2005, the Global 100 is a project initiated by Corporate Knights Inc., a Canadian magazine that covers responsible business, with Innovest Strategic Value Advisors Inc. a research firm specializing in analyzing “non traditional” risk and value drivers.

    According to the Global 100’s website, “The concept of sustainability is a contentious one, to say the least. Debates have been raging in various circles (e.g. academia, business, government, the UN, etc.) for a number of years over exactly how to define sustainability, and more importantly over what it should look like in practice. We do not have the pretence to know how to resolve this dispute, let alone be able to produce an authoritative blue-print for ‘sustainable behavior’. What we do know is that social, environmental and governance factors are increasingly relevant to financial performance, and that companies which show superior management of these issues are fast gaining an edge over their competitors – an edge which we believe will translate into outperformance in the long haul. The Global 100 companies are therefore sustainable in the sense that they have displayed a better ability than most of their industry peers to identify and effectively manage material environmental, social and governance factors impacting the opportunity and risk sides of their business.”

    For the full list, which can be viewed alphabetically, by country, or by sector/industry, click here.

    For information on the Global 100’s methodology click here.

    Posted 1/29/07

    Back to Top

    * * *

    Edelman Trust Barometer 2007

    Business More Trusted Than Media and Government Across the Globe

    Edelman, a leading global public relations firm headquartered in New York, released its new  Edelman Trust Barometer on January 22, 2007. This involved a survey of  3,100 opinion leaders in 18 countries.  Edelman concluded that business is more credible than government or media in 13 of the 18 countries surveyed; more respondents in 16 of 18 countries felt that companies have more of a positive impact on society than a negative impact. In the U.S., 53% of respondents report trusting business, which marks an all-time high for the survey (from a low of 44% in 2002).

    In the three largest economies of Western Europe, France, Germany, and the United Kingdom, trust in business stands at 34%, which is higher than trust in media and government at 25% and 22% respectively. In Latin America, represented in the survey by Brazil and Mexico, trust in business is at 68% while trust in media stands at 62% and government at 37%. Asian trust in business is 60%, while government and media are both at 55%. China, Japan, India, and South Korea represent the Asian nations in this year’s survey.

    The 2007 Edelman Trust Barometer’s other key findings include:

    ·  Five years after Wall Street’s stock research scandals, trust in “stock or industry analyst reports” in the United States is 47%, up from 26% in 2003. In 12 countries, stock or industry research is either the most credible or second most credible source of information about a company.

    ·  In 11 of 18 countries, business magazines are the most or second most trusted source of information about a company.

    ·  In many countries, “conversations with friends and peers” is as trusted a source of information about a company as “articles in newspapers” or “television news coverage.” For example, within the nine European Union countries surveyed, 44% trust conversations with friends and peers while 33% trust articles in newspapers.

    ·  In every region (EU, Asia, North America, Latin America), respondents most often named “shares a common interest with you” as one of the top three characteristics that would increase their trust in a person sharing information about a company. In no region did religion, race, or nationality list among the top three attributes of a peer.

    ·  Non-governmental organizations (NGOs) have grown in stature dramatically in Asia. Trust in NGOs in China has increased from 31% in 2004 to 56% today; from 42% in 2005 to 55% in Japan; and from 39% to 46% in South Korea in the last 12 months.

    ·  At least 70% of respondents in North America (71%) and Asia (72%) state that global business plays a role that no other institution can in addressing major social and environmental challenges. Fifty-seven percent in the European Union and 63% in Latin America also believe this to be true.

    ·  Trailing only “providing quality products or services,” undertaking “socially responsible activities” is universally seen as the most important action an organization can to do to build trust. “Socially responsible activities” surpassed providing “a fair price for products or services,” “attentiveness to customers” and “good labor relations” in most markets.

    ·  For the third straight year, American brands operating in Europe continue to receive a trust discount. For example, McDonald’s is trusted by 60% of respondents in the United States and by only 26% across the United Kingdom, France, and Germany. However, American brands are trusted in the developing world, with McDonald’s trusted by 75% of Chinese respondents and 66% of Brazilian respondents.

    ·  The survey found that multinational brands receive significantly more trust in their home country. The United States gives top scores to UPS (83%). In France, the second-highest trust score is Danone (69%). In Japan, the highest score goes to Nissan (79%), and in India it is Tata (89%).

    ·  Technology is the most trusted sector in each region. The industry is trusted by 79% of Asians, 80% of Latin Americans, 72% of Europeans, and 75% of North Americans. The biotechnology and healthcare sectors also receive high trust marks globally.

    ·  Companies headquartered in Sweden and Canada are the most trusted globally; Brazilian, Mexican and Russian companies are the least trusted.

    ·  Traditional media sources such as newspapers, TV, and radio remain more credible than new media sources such as a company’s own Web site and blogs.

    ·  In all four regions surveyed (the European Union, North America, Asia, and Latin America), respondents reported higher trust in their own CEO than in CEOs generally. For example, within North America, 31% of respondents said they trusted their own CEO, compared to 22% who report trusting CEOs generally.

    About the Trust Barometer Survey: The 2007 Edelman Trust Barometer is the firm’s eighth trust and credibility survey. The survey was produced by research firm StrategyOne. The survey was conducted by a 30-minute telephone survey conducted in October - November 2006. The survey population included respondents who are between the ages of 35 and 64; college educated; in the top 25% of household income nationally; report a significant interest and engagement in the media, economic, and policy affairs. The nations represented include United States (400 respondents), China (300), United Kingdom (150), Germany (150), France (150), Italy (150), Spain (150), the Netherlands (150), Sweden (150), Poland (150), Russia (150), Ireland (150), Mexico (150), Brazil (150), Canada (150), Japan (150), South Korea (150), and India (150).

    (About Edelman: Edelman is the world’s largest independent public relations firm, with 2,500 employees in 46 offices worldwide.)




    * * *

    Business and Society Higlights of 2006

    As the field of Corporate Social Responsibility continues to grow and evolve in both theory and practice, keeping up with its development is a daunting task. Every year, Michael Kane, a senior advisor in the U.S. Environmental Protection Agency’s Office of Policy, Economics and Innovation and founder and managing editor of Resources for Promoting Global Business Principles and Best Practices, published by CSRwire, does just that. His Business and Society Highlights 2006 outlines some of the most important developments in the field of CSR over the past year, many of which EthicsWorld has reported on – from new organizations and initiatives to the latest research and publications.

    The Highlights, which can be accessed below, are presented in list format and divided into the following sections:

    New National and Regional Business Policy Organizations
    International Business Policy Organizations
    National Business Organizations
    Human Rights and Labor Organizations
    Environmental Organizations
    National Government Programs and Initiatives
    International Organizations
    Investment Organizations
    New Partnerships
    Accountability and Monitoring
    Public Policy Organizations
    Academia
    Trends and Surveys
    New Publications, Broadcast Media and Film
    Books
    Leaders’ Remarks
    Recruiting Leaders
    Innovative Policy Reports and Research
    Tax policy
    Special CSR-Related Publications
    Books-in-Progress

    To View and Download “Business and Society Highlights 2006”

    From 1973 to 1981 Michael Kane served in various staff capacities at the White House Council on Environmental Quality. Since 1982 he has served as a senior advisor in the U.S. Environmental Protection Agency’s Office of Policy, Economics and Innovation. In 1992 Mr. Kane served as the Department of State’s senior advisor for the United Nations Conference on Environment and Development, and also served as senior advisor for the U.S. Delegation to the Rio Summit in June 1992.          

    Mr. Kane is the author of Promoting Political Rights to Protect the Environment; Yale Journal of International Law; 1993.  He is the founder and managing editor of Resources for Promoting Global Business Principles and Best Practices, published online since 2003 by CSRwire at csrwire.com/directory.           

    Posted 1/3/07

              

    Back to Top

    * * *

    South Africa: Women, Access to Finance, and the Role of the Private Sector

    Women entrepreneurs face diverse forms of discrimination in South Africa when seeking finance for their ventures, according to a new report by the International Finance Corporation (IFC). The report highlights the forms of discrimination and provides a set of key policy recommendations.

    The issues discussed in this report raise questions that reach beyond the specifics of the South African situation. Governments elected in many post-conflict societies pledge to create laws to fairly and peacefully re-distribute wealth and opportunity to previously oppressed segments of the population. In the case of South Africa, some of this legislation came in the form of the “Black Economic Empowerment Program,” (BEE), which included measures such as employment equity, skills development, and access to finance. But, the BEE on its own is insufficient in its present form to secure the results that it promotes – its own code needs some review; and most significantly, there has to be the active commitment of the private sector to address economic injustices. In this report, the IFC, the private sector affiliate of the World Bank, primarily addresses what the private sector in South Africa needs to do.

    The IFC study, “Access to Finance for Women Entrepreneurs in South Africa: Challenges and Opportunities,”  (excerpts from which are reproduced below) was commissioned by the South Africa Department of Trade and Industry and undertaken by IFC’s Gender Entrepreneurship Market program.

    For the full report, including graphs and methodology follow this link.

    “Access to Finance for Women Entrepreneurs in South Africa: Challenges and Opportunities”

    Access to finance in South Africa is not equal across all groups. Race and gender remain important variables in the lack of access, and black African women are at the bottom of the pile. This fact sheet evaluates the challenges and opportunities to government and financial institutions in addressing this key issue.

    South Africa’s constitutional and legislative framework is progressive and highlights the importance of gender equality. The Broad-Based Black Economic Empowerment Act promotes “increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training”. The Act further notes that “to comply with the equality provision of the constitution, a code of good practice and targets therein specified may distinguish between black men and black women”.

    Despite this, the Financial Sector Charter only specifies gender targets for staffing – and these are controversially low – and is silent on gender equality in terms of financial services outreach, enterprise development and in procurement finance. Most financial institutions work on an assumption that BEE strategy will automatically benefit women. This isn’t happening and black women in particular could remain marginalised if adequate measures are not taken to redress this.

    An abundance of resources in both the private and public sectors is not matched by an understanding of women's enterprises, and attempts to accommodate this growing and potentially rewarding market are insufficient. Women in business face a number of barriers and prejudice remains an issue, as illustrated by the fact that women have better credit repayment records than men, yet still find it harder to raise finance than their male counterparts.

    Obstacles to access
    Financial literacy: poor understanding of financial terminology and lack of awareness of bank and microfinance services are an obstacle. A lack of understanding of credit processes and the role of credit bureaus also places women at a disadvantage.

    Attitudes of banks: only one out of South Africa’s four major banks is contemplating a specific programme to increase its share of women-owned enterprises.

    BEE code targets: codes and industry charters do not have sufficient targets for women’s
    financial services outreach or business activity.

    Lack of awareness of development finance: despite the resources available from private
    and public development finance institutions, few women in business know about the different institutions, their products or how to access them.

    Lack of financial confidence: overall women have less financial confidence than men.

    Lack of appropriate products: bank services and products, including savings products are
    often unaffordable, and the emphasis on collateralised and asset based lending disqualifies
    most women from accessing business loans.

    Financial landscape – black women remain on the edge
    Black women are a huge potential market for financial institutions. Only 38% of black women are formally banked against 44% of black men and 94% and 91% respectively of white men and women (see graph 4).

    ■ While 88% of banked white women are able to reach their bank within 10 minutes, the corresponding percentage for banked black women is only 22%.

    ■ 42% of black women are financially excluded – they have no financial products at all (see graphs 5 & graph 6 overleaf). This compares to only 5% of white women who have no financial products at all.

    ■ The remaining 20% of black women use informal products such as stokvels, savings clubs, burial societies and informal sources of credit or have other formal products such as insurance and retail credit.

    Financial institutions – are they reaching women?
    Out of 170 women surveyed in four provinces, only 7 were familiar with the offerings for SME finance from development finance institutions in their provinces. This reflects inadequate marketing to this target market, and limited use of networks such as business women’s organisations and trade organisations for outreach. Some of the development finance institutions report reaching their targets on financing women’s business (see graph 7). Their strategies are, however, mainly based on an assumption of gender neutrality, and even more could be achieved by a concerted effort to analyse and exploit the strengths of this particular market.

    Of the main commercial banks, only two have clear strategies to target the women’s market, and of these only one is targeting women in the small and medium enterprise (SME) sector. Banks’ management information systems (MIS) do not yet seem equipped to break down the market segments and gender disaggregated data is not yet readily available.

    Microfinance is often cited as a resource for women’s economic empowerment. However, despite the growing number of self-employed women in South Africa, only two sustainable microenterprise lenders exist, Marang Financial Services and the Small Enterprise Foundation, which together serve about 56,000 micro entrepreneurs. Rural areas remain underserviced, further disadvantaging those already neglected by the first-tier banks. Urgent investment and expansion in this sector is required, and financing should be accompanied by impact assessments, particularly about the type of skills development that could encourage sustainable growth beyond micro-enterprise.

    RECOMMENDATIONS

    POLICY FRAMEWORKS
    ■ The Financial Sector Charter, other industry charters and BEE codes should be reviewed to include gender-specific financing outreach and procurement targets as well as definitions of women-owned business. This will help to ensure and monitor equal access for women to business opportunities.

    FINANCIAL INSTITUTIONS
    ■ A national directory of business financiers should be regularly updated, published and widely disseminated in order to better inform entrepreneurs of services available in the market.

    ■ Financing institutions should disaggregate their portfolios and targets and put in place strategies that help them to better understand and serve the women’s market.

    ■ Financial institutions need to pay more attention to understanding the pportunities in the emerging markets and to having loan staff who understand the challenges of women in business.

    ■ A comprehensive capacity-building strategy and service for the microfinance sector is needed to meets the needs of the many self-employed women in South Africa, and to enable them to grow their skills and businesses beyond microenterprise.

    BUSINESS DEVELOPMENT SERVICES
    ■ The 70/30 male/female ratio of BDS providers interviewed indicates that women need more access to business development services; such services should include more women mentors and advisors.

    ■ Non-financial support should be structured so that it facilitates access to finance for entrepreneurs and enables business growth at the same time.

    ■ BDS should be designed to meet the different requirements of micro and SME businesses at various levels of growth.

    CREDIT REFERENCING
    ■ Women’s better repayment records should translate into improved access to credit.

    ■ Co-ordinated credit vetting should be promoted between different levels of financial institutions, including microfinance institutions. Alternate mechanisms of determining creditworthiness should also be explored to reduce dependence on traditional forums of assessment.

    ■ The impact of Community of Property marriage on women’s own credit records should be studied. Credit bureaus should begin to better disaggregate credit information in order to differentiate between personal, business and contractual causes.

    ■ Credit referencing should be demystified to make the public more aware of how to positively manage their records.

    BEE FINANCING

    ■ Women need to recognised as an asset in themselves and not as a token or afterthought in BEE deals. The benefits of women BEE companies as shareholders and managers of companies should be better documented and highlighted.

    ■ Industry and financial institutions should put in place gender-specific procurement and enterprise development targets, with aligned and realistic financing mechanisms. Implementation of these should be properly monitored.

    Posted 12/5/06

    Back to Top

    * * *

     

    Tomorrow’s Value: SustainAbility's 2006 Survey of Corporate Sustainability Reporting

    On November 9, 2006, SustainAbility, an international CSR and sustainable development consultancy and think tank, released “Tomorrow’s Value,” its fourth international benchmark of corporate sustainability reporting, developed in partnership with the United Nations Environment Programme (UNEP) and Standard & Poor's. The 50 leaders and executive summary of the survey are reproduced below. For the full report click here.

    THE 50 LEADERS


    The 2006 results show BT head-and shoulders in front of the main pack of leading reporters. They come in seven percentage points ahead of the second group — Co-operative Financial Services, BP, Rabobank and Anglo Platinum — all of which achieve impressive scores of over 70%. A small but growing group of non-OECD companies make an excellent showing, with two companies ranking in the top 10, compared with zero in 2004.

    ethics

    EXECUTIVE SUMMARY

    Tomorrow’s Value, SustainAbility’s fourth international benchmark of corporate sustainability reporting, has once again been developed in partnership with the United Nations Environment Programme (UNEP) and Standard & Poor's. This year we introduce a revised methodology, developed in close consultation with experts and leading corporate reporters, and — in line with our sense that the focus also needs to shift beyond disclosure and reporting to communication — we have adopted a portfolio approach. Tomorrow’s Value is the flagship document in a suite of publications exploring wider aspects of reporting, including communication with financial analysts and the wider innovation agenda. The field is currently extremely dynamic, with new entrants making up half of the 50 Leaders (Figure 1). Strikingly, half of the Leading 50 companies are complete newcomers, including four entrants from non-OECD countries. The pressures driving improved sustainability reporting continue to grow, with the Global Reporting Initiative’s recently launched G3 guidelines providing renewed impetus in terms of international standardisation. In parallel, the slow, grudging awakening of financial markets is being accelerated by growing concerns around climate change.

    The field is currently extremely dynamic, with new entrants making up half of the 50 Leaders (Figure 1). Strikingly, half of the Leading 50 companies are complete newcomers, including four entrants from non-OECD countries. The pressures driving improved sustainability reporting continue to grow, with the Global Reporting Initiative’s recently launched G3 guidelines providing renewed impetus in terms of international standardisation. In parallel, the slow, grudging awakening of financial markets is being accelerated by growing concerns around climate change.

    Tomorrow’s Value asks the question: How far has the value light bulb switched on in corporate brains and boardrooms? On current evidence, the answer is that the links between the evolving sustainability agenda and wider market opportunities are now better understood — with a small number of companies reporting the relationship with value in increasingly interesting ways. Partly as a result, some parts of the financial community are gearing up their use of non-financial, extra-financial and/or sustainability disclosures to better understand emerging environmental, social and governance risks. Nonetheless, our expert panel (page 9) concluded that most companies are still missing an important opportunity to communicate with financial analysts and institutions.

    Conclusions
    Key findings of the 2006 benchmark survey include:

    Yesterday’s risks are mutating into tomorrow’s opportunities for value creation. Leadership companies — including BP, BT, GE and Philips — are shifting the focus of their sustainability strategy towards a more progressive and entrepreneurial approach that seeks to identify opportunities for strategic innovation and market building. The pioneers are still a minority, representing a quarter (28%) of our Leading 50, compared to 60% who demonstrate a more conservative, risk focused approach, but their numbers will likely grow.

    Financial mar