Corporate SoCial reSponSibility (CSr)

Contact

Ministry of Foreign Affairs of Denmark, The Trade Council or one of our CSR advisers in Denmark, China or India:

The Trade Council: Tel. +45-33 92 00 96

Copenhagen: Carl Christian Hasselbalch, Business Development carhas@um.dk /Phone +45 50 87 66 55

Beijing: Søren Albertsen, Head of CSR, China soralbm@um.dk /Phone +91 (11) 4209 0700

New Delhi: Bhawna Argawal, Head of CSR, India bhaaga@um.dk/Phone +86 (10) 8532 9900

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Preface

For most Danish companies a considerate human resources policy, a decent working environment, contributing to environmental protection and maintaining business integrity are part and parcel of sound management when you do business in Denmark. Moreover these values are supported and indeed required by Danish laws, e.g. on environmental protection and health and safety in the workplace. Corporate Social Responsibility is an everyday phenomenon in Denmark itself.

But with globalization, a company’s business activities today very often cover several continents. As an example, a Danish company may have a joint venture or a subsidiary in China and have suppliers both there and in the neighboring countries. It may sell its finished products in China, in other countries in Asia as well as in Europe and the US. From the point of view of CSR, the conse-quences are evident: When the business goes global, so does its social responsibility.

Recognizing the growing importance of CSR as a competitive parameter, the Trade Council of the Ministry of Foreign Affairs has decided to include this area in its business services to Danish compa-nies in the most important emerging markets. We see CSR as a field in which we can contribute to the overall business strategy that Danish companies lay out for themselves in these markets and we have chosen a bottom-up, demand-driven approach for our advisory services.

Last Spring the Embassies in Beijing and New Delhi were reinforced with experienced CSR advis-ers, and they have embarked on the first exciting assignments for Danish companies. In 2011 we are expecting to expand our CSR services to other interesting emerging markets as well as those more traditional export markets in which CSR plays an increasing role for the business strategies that Danish companies adopt. This booklet is our introduction to CSR and to the services that we offer. We hope you will enjoy the read!

Ministry of Foreign Affairs, The Trade Council, January 2011

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What is CSR? Corporate Social Responsibility (CSR) is the responsibility of a company for the impact of its decisions and activities on society and the environment. Business driven CSR is when a com-pany links its CSR activities directly with its long term efforts to secure a profitable business.

A business takes social responsibility when it:

• works to improve conditions for employees and occupational health and safety • works systematically with environmental and climate management• develops new products or services which include a social or environmental dimension• works with honesty and integrity in business transactions • engages in local community development,• takes into account expectations of stakeholders• works together with its suppliers to improve social and environmental

conditions

CSR is closely associated with stakeholder engagement. It is all about the way the company interacts with its employees, various business partners, customers, investors and other interest groups, helping its own business while contributing to society.

INVESTORS

EMPLOYEES

CUSTOMERS

NGOS

COMMUNITY

GOVERNMENT

MEDIA

COMPETITORS COMPANY

Stakeholders

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Benefits at a Glance

Supplier reliability Today it is not only the end-customers that are expecting companies to engage in corpo-rate social responsibility. The demands have been pushed further down the value chain. Business customers are requiring suppli-ers to comply with their code of conducts. Ethical supply chain management can result in closer and more binding partnerships with suppliers which create added value for everyone involved.

Improved competitiveness CSR can be a strategic tool to enhance a company´s competitiveness, to innovate and move ahead of competitors. Through suc-cessful CSR, the company can strengthen its overall management and enhance its brand.

Customer loyalty and satisfaction CSR initiatives can increase customer loyalty and satisfaction and thereby boost sales, resulting in a stronger market position.

Employer Branding CSR initiatives can also boost employees’ pride in a company, and thereby increase staff motivation and work productivity. Today, CSR is an important recruitment parameter. Showing corporate responsibility makes it easier to retain and attract the most talented employees.

Innovation Focus on CSR can foster development of new business models and products, e.g. eco-labels, new product specifications and products for new market segments.

Risk mitigation CSR is becoming an ever more important element in company risk management. A serious and comprehensive approach to CSR can mitigate reputational risks, risk of high staff turnover, high number of sick days, low quality of products and conflicts with local governments or other interest groups.

Productivity gains and lower costs CSR initiatives can increase productivity and lower costs. Environmental management sys-tems can lower production costs by reducing energy consumption and optimize business processes. Investment in health and safety programs for workers can reduce accident rates, health care costs and the number of lost work days.

“ The assistance of the Embassy has been of decisive value for us. The Embassy has helped us finalize the framework of an ambitious CSR project we are undertaking which we expect to replicate elsewhere to maximize its social as well as its business impact. The CSR expertise of the Embassy has been especially valuable for us in setting the baseline and assessing the impact of the project.

Ajit Inamdar, Chief Financial Officer, Cheminova India Ltd.

Ethical Supply Chain

Management

Stakeholder

Engagement

CSR in the

Organisation

Political-Social

Analysis

CSRStrategy

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Services from The Trade Council

The Trade Council offers advisory services on how to work with CSR.. on your export markets and cover the whole spectrum from strategy and policy making, ethical supply chain management to stakeholder engagement and political-social analysis. We deal with compli-ance to national law and international standards as well as voluntary contributions.

In China and India, we have experienced CSR advisors who are able to assist you throughout your work with CSR, from the initial overview of the challenges you and your business part-ners are facing, to the identification and development of value propositions for the partner-ship.

New emerging markets are currently being identified to follow China and India as the Trade Council’s key service markets in CSR.

In other more traditional export markets, selected export advisors provide a basic advisory package. They are able to help you design local CSR strategies and to conduct political and social risk analysis.

As the figure below illustrates, the Trade Council offers five types of CSR services. On the fol-lowing pages you can read examples on how we are able to assist you within each area..

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CSR StrategyTypes of services:

• Assistance on aligning CSR strategy with corporate strategy • Assistance on integrating CSR in business development and innovation

Case 1: Market penetration and reputation enhancement

The challenge for the company To enhance reputation with customers at the Base of the Pyramid in order to expand market share in the low income markets.

What will the Trade Council do? Assess company’s business strategy in regard to proposed new CSR strategy and design a pilot project for the company in selected vil-lages to test and develop the new strategy.

Expected outcome A pilot project that can be brought to scale and strengthen the company’s brand. In ad-dition it can increase outreach and strength-en sales.

Case 2: Strategy formulation

The challenge for the company To strengthen CSR activities globally.

What will the Trade Council do? Help company identify challenges and op-portunities and assist in devising a strategy for how to work with CSR on specific export markets.

Expected outcome A plan of action for how to work with CSR on specific export markets.

“Maersk invited the Danish Embassy to assess the CSR improvement process made by Maersk Dongguan (MCID) since 2008 and based on the assessment give a presentation about the connection between the CSR improvement process, MCID strategy, Maersk values, Danish values as well as cultural differences. By use of films, speeches, presentations, group exercises and role play, the activity succeeded with active participation of our foremen and an efficient commu-nication of values and interrelations. The activity has highly supported our company in communicating our values.”

Morten Hostrup, Head of Human Resources and Administration, Maersk Container Industry Dongguan Ltd.

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CSR in the Organisation Types of services: Support to policy making, strategy development and training regarding

• Human resources • Labour practices • Health and safety • Environment • Anti-corruption

Case 2: Human resources

The challenge for the company To keep down staff turnover and increase employees’ job satisfaction as well as pride in company.

What will the Trade Council do? Identify CSR initiatives which will strengthen the company’s human resource management. Propose an action plan.

Expected outcome Lower staff turnover and higher job satisfac-tion for employees leading to higher produc-tivity.

Case 1: Anti-corruption

The challenge for the company To assess the risks of corruption with likely business partners (e.g. commercial bribery) and public authorities (e.g. extortion) when entering the market for the first time.

What will the Trade Council do? Undertake a corruption risk assessment for the company in regard to likely business partners and public authorities and /or pro-vide training for staff and management at all levels. A risk analysis will be accompanied by recommendations for action. Expected outcome The company will have a strong tool to handle corruption both on the political and practical level.

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Ethical Supply Chain ManagementTypes of services:

• Screening and analysis of business partners with regard to compliance or development potential

• Upgrading (including training) of business partners in human resources, labour prac-tices, health & safety, environment and anti-corruption

Case 1: Upgrading of business partners

The challenge for the company To comply with European B2B customers’ codes of conduct.

What will the Trade Council Do? Make CSR analyses and plans of action for a number of suppliers and conduct CSR audits in a number of production facilities.

Expected outcome The company will be certified in accord-ance with the European Business Social Compliance Initiative (BSCI), and be able to stay in business with its business-to-business customers.

Case 2: Partner search

The challenge for the company To manage the risk for the company’s brand posed by new suppliers with questionable CSR standards.

What will the Trade Council Do? Integrate CSR screening in partner search for the company.

Expected outcome The company will minimise the CSR risk for its brand and use CSR activities for branding and marketing.

“The Trade Council provided TOP-TOY with an industry report regarding CSR related risks in China. This was a very efficient way for TOP-TOY to get an overview of the challenges and TOP-TOY utilised the valuable information as a solid and valuable contribution to current and future CSR activities in China”.

Veronique Brigitte Bagge, Group Sustainability Manager,

TOP-TOY.

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stakeholder Management

Case 1: Branding & promotion through CSR

The challenge To promote Danish businesses in South Korea through their CSR engagement.

What did the Trade Council do? The embassy collected CSR stories from Danish companies and published them in a booklet.The embassy arranged the ‘Dan-ish CSR Week’ during which participating companies carried out CSR activities and allowed media to follow these. In relation to the launch of the project, the embassy hosted a media presentation event at the Danish ambassador’s residence. ¨

What was the outcome? The Danish business community as a whole was branded and the individual companies gained valuable promotional material in

terms of press coverages and a CSR booklet to give business partners. Case 2: Community project

The challenge for the company To position itself as the dominant and most socially responsible supplier within the industry

What will the Trade Council do? Design CSR pilot project for company on the basis of a social needs’ assessment in selected communities. Assist in implementa-tion of the project.

Expected outcome A successful CSR project will show that the company takes on greater social responsibil-ity for workers in its target industries than its competitors do. Will solidify company’s hold on the market. People will know the name and buy the product.

Types of services: • Stakeholder analysis • Stakeholder dialogue including with the public sector • Community projects and development of partnerships and local network • CSR communication and reporting • Branding & Promotion through CSR

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Political- Social Analysis

Types of services:• CSR sector reports • Political - social risk analysis • Assessment of specific politically sensitive issues

Case 1: Risk analysis

The challenge for the company To minimize the risk in procuring raw ma-terials from countries with difficult political-social conditions.

What will the Trade Council do? Conduct a social and political risk assessment in selected countries and sectors.

Expected outcome The company will gain a better basis for understanding the social and political risks of doing business in the specific region. On that basis, they can decide whether or not they will do business in the country and which conditions suppliers must fulfill in order to engage in business with the company.

Case 2: CSR sector reports

The challenge for the company To get familiar with CSR standards and prac-tices within a given industry on a new export or sourcing market.

What will the Trade Council do? Prepare a report that examines how CSR challenges have developed in the industry globally and within the country, and what these changes mean for companies seeking to establish themselves there.

Expected outcome The company will gain an overview of the CSR situation within an industry in a selected country, and have a better basis for formulating its own CSR strategy.

“I participated in the Danish Embassy in Beijing’s anti -corruption seminar together with many other Danish companies. The course certainly inspired us in Martin Bencher Group to implement and outline a clear anti- corruption policy for ourselves, our staffs and our customers/vendors, and we furthermore were pleased that the seminar was vigorously pursued and followed up by the organizers reminding us to not only attend but also to actively implement what we learnt during the seminar.”

Bo H Drewsen, Chief Executive Officer, Martin Bencher Group.