The world of corporate social responsibility is ever growing and changing. Some of the prominent developments, trends and initiatives from around the world in recent past with respect to CSR are enlisted below.
With increasing competition and globalization there is an increased level of pressure for transparency and disclosure. According to CorporateRegister.com more than 5500 companies issues sustainability report around the world in 2011. This figure was around 800 a decade ago. The big accounting firms are extending their contribution to audit all these disclosures and are also sponsors for fourth edition of the Global Reporting Initiative Guidelines (these are guidelines that outline standard CSR disclosure). In 2012 a new initiative, the Global Initiative for Sustainability Ratings, was undertaken to standardize the ratings framework.
CSR is now being viewed as differentiator by companies who plan to both collaborate and compete on CSR issues. The ‘Pulse Survey’ conducted by Reputation Institute in 2011 indicates that CSR contributes more than 40% to company’s reputation and thereby laying the foundation for CSR competition. Contrary to this there are number of association and multi stakeholder networks that promote CSR collaboration. The collaboration is mainly on issues which are so massive that collaboration makes it more efficient to work on them.
The increasing drift towards globalization has stretched the scope of CSR. For example, the addition of clause for conflict minerals in Doss-Frank Financial Reform Act has opened new arena for corporate responsibility by making many businesses to track four minerals back to their sources so as to make sure that they don’t add to conflict in minefields of Central Africa. This example points out to the trend that corporate world is accountable for responsible behavior in all aspects of supply chain.
There is strong positive correlation between CSR and employment engagement. ‘The Society of Human Resources Management’ conducted a research by comparing companies with strong sustainability initiatives with those having weaker programs and the results shows that in companies with stronger sustainability programs morale was 55% better, business processes were 43% more efficient, employ loyalty was 38% better and image of company was 43% stronger.
United Nations recently (September, 2013), through its Global Compact, signed a deal with Pearl Initiative (United Arab Emirates based private sector organization that works towards improving transparency, accountability and business practices in the Arab world) to raise CSR performance of Arab World. The aim of this alliance is to introduce corporate responsibility principles in the Arab world by implementation of number of programs throughout countries in Middle East and North Africa. This will cover areas such as transparent reporting, corporate governance, responsible investment, anti-corruption and supply chain integrity. The partnership hopes that the region will eventually adopt ‘universally accepted principles for responsible business practices’. Among 45 companies from 17 countries that have signed up the initiative initially are Bahrian Travel (Sudan), Barrick Gold Corporation (Canada), Empressa de Energia de Bogota (Colombia), Mas Holdings (Sri Lanka), Monsour (Egypt), Rajawali Corpora (Indonesia), Sinopec (China), and Toks (Mexico).
In a recent initiative the US clothing retailers have promised to have safety standards for Bangladesh suppliers in place. The businesses that are part of ‘Alliance for Bangladesh Worker Safety’ confirmed that the initiative taken up by the retailers is now up and successfully running. The standards for safety are laid down and communicated to factory managers along with safety training being organized for workers. The factory inspections will be the future step with factory owners being accountable for safety renovations in the factory employing US$50million low-cost loan fund provided by Alliance members. A similar initiative, ‘Accord on Fire and Building Safety in Bangladesh’, has been joined by more than 80 mainly European brands and retailers.
‘The International Organization for Standardization’ will soon come up with global standard defining the responsible use of private security companies. The ISO standards will include all areas of operation of security firms, including the risk of human rights abuses. The standards will give outline of the management systems and will provide guidance to private security companies on areas such as how to manage risks and how to comply with human rights codes. It will also educate companies about demonstrating accountability to the International Code of Conduct for Private Security Service Providers, which was set up in 2010 and has around 600 signatories.
‘The Companies Bill 2011’ that will make it compulsory for companies to spend 2% of their profits on CSR has finally been approved by Indian parliament and with this India has become the first nation to set out mandatory spending levels on corporate responsibility. The Bill was already passed by lower house, the Lok Sabha, in December 2012, but was subjected to certain delays. The terms of the legislation state that all businesses with a market capitalization of more than five billion rupees (US$82 million) or average annual net profits over a three-year period of 500 crore rupees (US$9 million) must spend at least 2% of their profits on CR activities. There is no legal sanction if they fail to do so, but if they don’t, then they must provide an urgent explanation to the government as to why not. However, there are still some questions that remain unanswered including the definition of corporate responsibility that government would consider. As it stands the Bill appears to allow companies themselves to determine what ‘CR activity’ is.