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We inspire, lead and support businesses to continually improve their positive impact on people and communities

Shalini Mahtani, CEO, Community Business

CORPORATE SOCIAL RESPONSIBLITY

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Community Business

• A unique non-profit organisation, working in Corporate Social Responsibility with member companies

• Focus Areas:• CSR Strategy and Policy• Diversity in the workplace and work-life balance• Corporate Community Investment

• Research/advice/training and facilitation/assessment

• Community Business Leadership Team

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Members of Community Business

• ABN AMRO

• Allen & Overy

• APCO Worldwide

• Baker & McKenzie

• Barclays Capital Asia Limited

• BP Asia Ltd

• British Council

• CLP Holdings

• Coca-Cola China Ltd

• Credit Suisse First Boston

• Fleishman-Hillard Hong Kong Ltd

• Freshfields Bruckhaus Deringer

• Hang Seng Bank Limited

• Hewitt Associates LLC

• Hong Kong & China Gas Co Ltd

• Hong Kong Quality and Assurance Agency (HKQAA)

• Johnson, Stokes and Master• JP Morgan• Lehman Brothers• Manpower Services (Hong Kong) Limited• Merrill Lynch • MTR Corporation Ltd• PepsiCo International, Asia Region• The Prudential Assurance Co Ltd• Schroder Investment Management (HK) Ltd• Serco Group (HK) Ltd• Shell Hong Kong Limited• St George’s Group• Standard Chartered Bank (Hong Kong) Limited• Starbucks Coffee Asia Pacific• The Timberland Company (Asia Pacific) Pte Ltd• UBS• The Walt Disney Company (Asia Pacific) Ltd• Zurich Insurance Group (Hong Kong)

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Agenda

• Corporate Social Responsibility

• Corporate Social Responsibility in Hong Kong

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CORPORATE SOCIAL RESPONSIBILITY

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Definition- CSR

• “Achieving commercial success in ways that honour ethical values and respect people, communities, and the natural environment.”

Business for Social Responsibility

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Definition - Sustainable Development

• “Development that meets the needs of today whilst not affecting the ability of future generations to meet their own needs” Brundtland Commission Report

• Sustainable Development has 3 pillars: Economic, Social and Environmental

• SD applied in companies in known as the: Triple Bottom Line

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• Because there is NO single accepted definition of CSR there is no commonly accepted classification of the main components of CSR.

• Some agreement that it CSR components can be divided into:•Workplace•Marketplace•Community •Environment

CSR Components

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CSR Components

CSR

WORKPLACE- Equal Opportunity - Working Hours- Staff Training and

Development - Health and Safety - Freedom of Association

and Human Rights- Bribery and Corruption

MARKETPLACE- Suppliers- Customers

COMMUNITY- Community

Investment (cash/in-kind/ volunteering)

- Community protection

ENVIRONMENT - Environmental

protection - Impact on air,

water, biodiversity etc

Leadership Commitment

Integration into business

• Engage with stakeholders

• Communicate CSR

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1. Stakeholders are demanding it Customers/ Employees/ Investors/ NGO’s/ government

2. Increased Role of Business• Size/ influence of business vs. governments

3. Globalisation: New CSR issues• Diverse cultures/ norms/ jurisdictions• Need to achieve consistency globally

4. Complexity and risks• Increasing complexity, likelihood and significance of risk and

wrongdoing• New laws and regulations• Greater influence of NGO’s and other stakeholders• Increased merger and acquisitions

Growing Importance of CSR

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5. Greater likelihood of discovery• 24 hour global news, media more aggressive• High speed info access and dissemination

6. Greater cost of misconduct• Fines, penalties, reputation damages• Growing interest on softer CSR issues- social and environmental

Growing Importance of CSR

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1. Reduces and avoids costs and risks• E.g. Costs of litigation on discrimination

2. Cause related marketing • E.g. Proctor & Gamble, Italy with Action Aid, 5% increase in sales

3. Reducing waste, increasing efficiency • E.g. MTR

4. Attracting and retaining investors• Socially Responsible Investing in USA represents one in eight dollars

5. Higher Growth• Research done by Harvard University shows that “stakeholder” balanced

companies showed 4x the growth compared to “shareholder” focused companies

6. Creating New Business Opportunities• Fair Trade Products, UK

CSR – builds Profit

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1. Easier to attract staff• E.g. Allied Dunbar (now Zurich Financial Services) found that there

were four times as many responses to job advertisements that mentioned the firm’s community involvement.

• E.g. In addition, a study conducted by Net Impact in 1997 found that slightly more than half of 2,100 MBA students in USA would accept a lower salary to work with a socially responsible company.

2. Easier to retain and motivate staff• E.g. In cases where staff whose volunteering had been supported by

their employers, 70% of then had an improved perception of the company, 58% had improved personal development and 35% had improved professional development

3. It builds creativity and innovativeness in the way your people think

CSR - builds People

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1. It builds customer loyalty • E.g. In HK: 38% of consumers in Hong Kong rate environmental and

social indicators amongst the top 3 factors in making purchases along with quality and price. Centre of Urban Planning & Environmental Management, HKU( Lam, J.C.K. Salahuddin, S. Tsoi, C.S.J (2003)

• E.g. Millennium Poll, over 23 countries (including China) with over 25,000 citizens worldwide, found that one in five consumers report either rewarding or punishing companies in the last year based on perceived social performance.

2. Access to markets• E.g. HSBC UK: gay and lesbian network

3. Building political capital and government support• Especially through community involvement initiatives

4. Cooperation with local communities

CSR - builds Reputation

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Trends

1. In many countries, CSR was initially about charitable giving. Today, internal aspects seen as just as important as external aspects.

2. Around the world, CSR has become BIG business- there are local non-profit organisations working on CSR- advocacy organisations and business associations

3. Companies are being watched by investors, consumers, media, government, employees on their CSR performance- much more emphasis on:

• The process of stakeholder engagement

• Supply chain and sphere of influence

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4. Companies are measuring and reporting their CSR performance:• UK- Corporate Responsibility Index • Global Reporting Initiative

Trends

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CORPORATE SOCIAL RESPONSIBILITY IN HONG KONG

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CSR in Hong Kong

HONG KONG CSR CHARTER is the highest benchmark

LEADERSHIP• Little commitment and engagement • Limited understanding of the business benefits- view it as a PR stint

WORKPLACE• Little focus on internal issues• Freedom of Association and trade unions ignored• Working hours long (compared to ILO standard)• 8% of employers do not comply with the minimum annual leave

requirements

COMMUNITY• Not strategic- more reactive• Cynicism as many think companies are doing it to just enhance public image

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CSR in Hong Kong

MARKETPLACE• Supply chain given large attention by some of the major MNC’s

operating in China• Hong Kong factory owners in China- known for poor working conditions

ENVIRONMENT • Much more recent focus given air pollution

STAKEHOLDER ENGAGEMENT • Limited

COMMUNICATION • Reporting on CSR on the increase

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• CSR is not new concept.

• Fundamentally CSR is about engaging with your stakeholders understanding their expectations, and aligning these with your business objectives. It’s about being clear about what you can and cannot do and setting reasonable targets for your company. CSR is also about managing this process.

• CSR will differ from company to company

• CSR will always remain at the fringe of business as long as businesses do not understand the business benefits of this.

• Today businesses have to address CSR- there is little choice, particularly with companies that operate in global markets..

Final thoughts

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Thank you

 All information provided in this document is intended for discussion purposes only and is not in the nature of advice. Community Business Limited reserves the right to make alterations to any of its documents and presentations without notice. Reproduction and dissemination of

these materials is permitted provided that the material is unaltered and ownership is acknowledged. Express permission of the Board of Community Business is required for use of materials if such use will generate income for the licensee. © Community Business Ltd. 2006

• Contact Us• shalini@communitybusiness.org.hk

• Visit us• www.communitybusiness.org.hk

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The business case- a Hong Kong case study

CSFB- Race for Mentors• Set objectives:

• Team building • Employer of choice• Feel good factor

• Work with young people not ordinarily supported by the community

• Longer duration project• Mentoring

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Impact Area % Improvement

Pride in the firm 95%

Feel-good factor 84%

Insight into local community 79%

Perception of firm as an employer of choice 68%

Relationship with other colleagues 58%

Development of employees’ skills

·  Listening

·  Communication

·  Interpersonal

53%

47%

42%

Race for Mentors- BUSINESS BENEFITS

The business case- a Hong Kong case study

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Impact Area % Improvement

Self confidence 100%

Knowledge of the world of work 95%

Understanding of employers’ needs 79%

Race for Mentors – COMMUNITY BENEFITS

The business case- a Hong Kong case study