Integration Sustainability into every day business processes

RESPONSE projectKyiv June 6th 2008

Professor Peter Neergaard

Department of Operations ManagementCopenhagen Business School

What is integrating CSR?

• IT is not• - philanthropic• - reporting on CSR/projects• - not an add on• But it is• - making CSR a part of every day

decision making• Part of all disciplines

About the survey

• Web-based survey administered by the CBS of randomly selected 100+ managers in 8 companies

• Organization level: replicate interview protocol across levels/contexts

• Individual level: study personal values and psychological traits

• Answers from app. 1100 managers• Scale 1-5

• 1= Strongly disagree, 5 strongly agree

Peter Neergaard CBS

About the survey

Company Number of

responsesResponse rate

Nat. resources #3 127 32%

Food #1 139 43%

Chemical #1 42 77%

Industrial #2 151 77%

Chemical #3 199 28%

Pharma #2 114 25%

Energy #1 187 68%

Nat.Resources #1 149 43%

Information in the survey• Responsibilities toward society• Reasons for CSR• Knowledge and CSR• CSR Practices• Reporting, rewards and recognition• Benchmarking CSR performance• Experiences and expectations• Various background variables: Age,

tenure, nationality, gender, position, education, etc.

Peter Neergaard CBS

Conclusions

• Need to broaden the view of corporate responsibilities at middle management level

• Need to upgrade education in CSR-issues

• Need to integrate CSR measures further in into performance assessments and reviews.

• Need to broaden focus on stakeholders• Need to find ways of collaborating with

NGOs

”Our responsibility towards society is to..

0

1

2

3

4

5

6

7

make sure that wecomply with national

and localregulations,

standards, andnorms".

provide the productsand services that the

customers wanttoday or in the

future”.

be responsive to thedemands of all

groups andindividuals that are

directly our indirectlyaffected by our

activities”.

enhance the qualityof living in the

communities inwhich we operate”.

Statements

num

ber

of c

ompa

nies 1st

2nd

3rd

total

Peter Neergaard CBS

Responsibilities

• According to the managers, companies’ main responsibilities' are:• The provision of products • Be responsive to affected groups

• Compliance with laws and regulation among the top 3 responsibilities in 75% of the companies.

Peter Neergaard CBS

Differences between companies

• “be a company where people like to work”• Scandinavian companies

• ”maximize the profits for the shareholders”• American company

• ”facilitate the access to our products/ services to everyone who needs them, irrespectively of their social and economic conditions.”• Pharma company

• Could be explained by culture and industry

Peter Neergaard CBS

My knowledge of CSR comes from..

00,5

11,5

22,5

33,5

4

Personal interest inthe subject

Training programson

social/environmentalissues

The company'ssocial and

environmentalreporting

Sources of Knowledge

Mea

n s

core

Pharma #2

Total

Peter Neergaard CBS

Knowledge about CSR

• Main sources of knowledge are• External communication• Personal interest in the subject

• Perhaps surprisingly – training programs are not perceived to be very important• Only exception is Pharma #2

• Influence of e-learning program

Peter Neergaard CBS

Are any of the following issues recognized by superiors in your performance assessment?

0 20 40 60 80 100

Customer/clientrelationships

Respect of ethicalprinciples/codes

of conduct

Occupationalhealth and safety

Environmentalprotection

Equal opportunity

Worker rights

Local communityInitiatives

Human rights

Charity anddonations

Iss

ue

s

Yes (%)

total

Pharma _#2

Food #1

Chemical #1

Chemical #3

Industrial #2

Energy #1

Nat. Resources #3

Nat. Resources #1

What is recognized?

• Customer/Client relationships• Respect of ethical principles/Code

of Conduct• Occupational Health and Safety• Environment

Peter Neergaard CBS

Are any of the following issues financially rewarded as part of your performance review?

0 20 40 60 80 100

Customer/clientrelationships

Occupationalhealth and safety

Environmentalprotection

Respect of ethicalprinciples/codes

of conduct

Worker rights

Equal opportunity

Local communityInitiatives

Human rights

Charity anddonations

Iss

ue

s

Yes (%)

total

Pharma #2

Food #1

Chemical #1

Chemical #3

Industrial #2

Energy #1

Nat. Resources #3

Nat. Resources #1

Peter Neergaard CBS

What is rewarded?

• Customer/Client relationships• Occupational Health and Safety

• Especially natural resources

• Environment• Natural resources and energy

• Respect for ethical principles/Code of Conduct• Pharma

Peter Neergaard CBS

Peter Neergaard CBS

Recognition and Rewards

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

Equal opportunity Worker rights Respect of ethicalprinciples/codes of

conduct

Environmentalprotection

Occupational healthand safety

Customer/clientrelationships

Issues

Yes

(%)

Issuesrecognized bysuperiors inyourperformanceassessment?Issuesfinanciallyrewarded aspart of yourperformancereview?

Recognition and Rewards• Large gap between what is

recognized and what is rewarded• Respect of ethical principles/Code of

Conduct• App. 80% recognition, less than 40%

rewarded

• Traditional issues rewarded most frequently

• Percentage of managers actually rewarded on CSR issues is not high

Peter Neergaard CBS

Influence of stakeholders

2

2,5

3

3,5

4

4,5

Type of Stakeholders

Mea

n sc

ore

Total

Peter Neergaard CBS

Stakeholders

• The stakeholders perceived to be most influential are the ”traditional stakeholders”• Employees• Shareholders• Direct customers• Consumers

• Communities, social pressure groups and media are not seen as influential

Peter Neergaard CBS

Experiences and Expectations

3,8

3,9

4

Over the past three years,would you say that the

business unit's concerns forsocial and environmental

issues have:

Over the next three years, doyou think that your business

unit's concerns for social andenvironmental issues will:

Statements

Mea

n s

core

Total

Future of CSR

• Managers believe that concerns about CSR have increased over the past 3 years

• Managers believe that the importance of CSR will increase in the future

• CSR is here to stay

Peter Neergaard CBS

Peter Neergaard CBS

Some important findings

1. Compliance is still a powerful explanation 2. Do no harm is still a prevailed perception3. CSR-knowledge is still based on personal

interest 4. CSR- measures are still not integrated in

recognition and reward systems5. Stakeholders are still the traditional one6. Collaboration with NGO is still relatively

seldom

The way ahead

• Need to broaden the view of corporate responsibilities at middle management level

• Need to upgrade education in CSR-issues• Need to integrate CSR measures further in into

performance assessments and reviews.• Need to broaden focus on stakeholders• Need to find ways of collaborating with NGOs

• Thank you for your attention

• Peter Neergaard, CBS

“Our responsibility towards society is…

Total respondents 1098

214

217

120

171

180

115

162

142

100

132

176

108

0 100 200 300 400 500 600

to provide the products and servicesthat the customers want today or in the

future”.

to enhance the quality of living in thecommunities in which we operate”.

to make sure that we comply withnational and local regulations,

standards, and norms".

to be responsive to the demands of allgroups and individuals that are directlyour indirectly affected by our activities”.

Sta

tem

en

ts

number of respondents

1

2

3

Peter Neergaard CBS