The impacts of Corporate Social Responsibility

A systematic review of the effects of government supported

interventions on the corporate social responsibility (CSR) behaviour of

enterprises in developing countries

Verina Ingram, Karin de Grip, Giel Ton, Marieke Douma, Marieke de Ruijter de Wildt, Koen Boone 24-10-2012

For the Policy and Operations Evaluation Department (IOB) of the Netherlands Ministry of Foreign Affairs

Aim

Find out what have been the outcomes and results of Dutch government’s efforts to influence the way companies approach CSR in developing countries.

Systematically explore & analyse effectiveness of public policy support for enhancing or supporting CSR in private sector development programs in developing countries

Different pathways for generating CSR behaviour explored that could have effects on employment relations, human rights, fair operating practices (combat of bribery and corruption), environmental care, consumer interests, community involvement and organizational governance (including information disclosure

CSR intervention core theory of change

Figure 2

Review methods & results

Figure 1

7 = Dutch policy18 = policy in other country

10 = NGO policy20= National legislation14 = supra-national policy/convention

Quality of evidence: weakness a problem.....Quality parameter Publications with

information on policy intervention/support

Publications with no information on policy intervention/support

Total number of

publicationsn % N % n %

Independenceof evidence

Peer reviewed 5 33 17 63 23 52

Independent authors 10 67 20 74 30 71

Not independent authors

3 20 2 7 5 12

Independence not clear

1 7 5 19 6 14

Reliability a Clear 7 47 16 59 23 55

Unclear 8 53 10 37 18 43

Rigour of analysis b Strong 8 53 10 37 18 43

Weak 4 27 6 22 10 24

Unclear 4 27 5 19 9 21

Type of study Largely quantitative 1 7 2 7 3 7

Largely qualitative 12 80 23 85 33 79

Mixed methods 2 13 3 11 4 10

Counterfactual analysis or reasoning

Included counterfactual

2 12 0 0 2 5

No counterfactual 14 82 21 78 32 80

•reliability of information sources; representativeness of results, outcome indicators assessed .•clear indicators and steps in pathway , clear description of intervention strategy, consistency between results and conclusions.Note: Shaded rows indicate good quality, unshaded rows indicate lower quality.

Results: Location of evidence – HD level

UNDP Human Development Index (HDI) rankings 2011

--

M (48%) LM (18%)57%

-

Information policy %

No information policy %

total %

0% 50% 100%

3 = medium de-velopment country2 = Low - medium development1 = Low income country

Evidence on CSR behaviours

Comm

unica

tion

/ disc

losu

re o

n CSR

Relat

ions

hips

bui

ldin

g CSR

Volun

tary

code

s / c

ertifi

catio

n on

CSR

CSR p

olicy

inte

rnal

in e

nter

prise

Exte

rnal

revi

ewin

g / i

mpr

ovin

g en

terp

rise

Enha

ncin

g cr

edib

ility

rega

rdin

g CSR

0%

10%

20%

30%

40%

50%

60%

70%

80%

Information policy %No information policy %total %

Pathways

Pathways : with & without mention of policy

LABOUR PRACTICES

HUMAN RIGHTSFAIR OPERATING

PRACTICESENVIRONMENT

CONSUMER ISSUES

COMMUNITY INVOVLEMENT

ORGANISATIONAL GOVERNANCE

37% 37%

32%

37%

42%

63%

32%

COMMUNITY INVOVLEMENT

WITH INFO ABOUT POLICY

NO INFO ABOUT POLICY

COMMUNITY INVOVLEMENT

48%LABOUR

PRACTICES

OTHER

32%

44%

OTHER

ENVIRONMENT

44%

44%

FAIR OPERATING PRACTICES

24%

ORGANISAITONAL GOVERNANCE

24%CONSUMER

ISSUES

20%

HUMAN RIGHTS

37%

environmental

organisational governance

human rights

labour practices

fair operating practices

consumer issues

community involvement / development

Other

0% 10% 20% 30% 40% 50% 60% 70%

total %No information policy %Information policy %

Pathways : with & without mention of policy

Evidence from specific sectors: implications for target ting policy & corporate interest?

Industry and trade

Business & commerce

manufacturing agriculture, livestock,

timber

services other 0%

10%

20%

30%

40%

50%

60%

Information policy %No information policy %total %

Dutch CSR Policy

Government roles

Level of impacts

Results: Q1. What are the effects (impacts, outcomes and cost-effectiveness, directly or indirectly) of government supported interventions on the corporate social responsibility (CSR) behaviour of enterprises in developing countries?

Some evidence of impact of certain policy types, through specific pathways and in specific sectors on specific impact themes

Evidence of indirect impacts clustered around particular high profile concerns …. (e.g. Oil and gas impacts etc...)

Evidence on cost effectiveness extremely limited & generally anecdotal. Suggests positive cost effectiveness: CSR activities benefit access to finance, shareholder & customer goodwill and consumer acceptance. Some limited counterfactual evidence to support this.

Some literature with costs was excluded (eg corporate CSR reports) as did not mention policy drivers or impacts.

 

● Vast majority of CSR interventions business practice driven (not policy), majority (61%) also by corporate philanthropy.

● Most interventions concentrate on internal CSR company policy, followed by voluntary codes, communication and disclosure and enhanced credibility

● Mainly in low developing countries – but varies over time, with increasing numbers of publications (perhaps an indicator of CSR behaviour ?– conjecture) now in countries that have moved up (e.g. Brazil, China, India, South Africa)

● Majority occur in industry and trade, but did have a bias towards specific sectors e.g. oil companies, consumers retail and those with dramatic histories of media coverage and academic discussion. Dominated by larger, multinational firms, but some X cases of smaller firms and national firms located in developing countries

● Evidence tends to be provided of long term (over 5 years) CSR activities. Idicative of longer time scales, or due to a bias in the studies?

● Main outcomes heavily focussed on labour issues, followed by environment. Could be bias in peer reviewed literature with a focus on specific topics and companies (e.g. Shell)

● Outcomes tend to be evidenced at firms/company level, followed by sector or chain, and community. A fifth each give impacts at micro scale (household or individual 18% together) or a macro/national economy (20%), some studies report on more than one level.

Results: Q2. What is known about the effects of CSR-behaviour of enterprises, influenced by government supported interventions, on poverty reduction in developing countries?

The whole pathway from government intervention to poverty alleviating impact in a developing country

Evidence gaps on a national or regional level: tends to be specific “projects’’ and geographically local

Weak level of analysis: reliance on anecdotes, difficult to verify

Long term time retrospective assessments lacking

Lack of robust evidence that government supported interventions influence company CSR behaviour in developing countries: Most attention has been on impacts in developing countries and on outcomes and only 15 policy related studies

Little quantitative or multi methods based evidence presented: Majority qualitative, anecdotal with methods and references not provided

Little on (cost) effectiveness either policy or company level of CSR behaviour

Ad-hoc use of indicators and many different ones- limits comparability

Results: Q3. What are the main gaps in evidence?

Looking backwards: What worked well

with policy on CSR in terms of gaining an

impact and what did not?

Worked well ●75% literature had some indicators, especially for on HR,

labour & environment impact●Certain impact types were indicated: environment, human

rights, labour, community development●Evidence especially about endorsing types of policy support,

also mandating ● Influence of supranational policies/conventions and NGOs/ UN

Compact/GRI etc. apparent (ISO not yet) Didn't work well

Sparse indicators for some impact groups (consumer, community involvement, organisational governance)

Robust evidence! Total pathway linked evidence

Looking forward: Recommendations

Policymakers could identify pathways by which a policy and its intervention mechanisms means seek to impact poverty alleviation and sustainable development and the scale on which they can achieve this – and not only the outputs and outcomes of such interventions.

Developing pragmatic indicators for all assumed CSR impacts for policy and enterprises

PSOM/PSI Triodos study serves as good model – although additional focus on poverty impacts and indicators needed – now outcome based.

Definition of developing country needs to be clearer and flexible to account for changes over time

Review methods can be improved (broader or more specific country focus, longer publication date)

Conclusions

1. empirical evidence re policy-induced CSR behaviour in developing countries still scarce and limited, also due to the long time frame required to generate outcomes.

2. Company CSR behaviour triggered by multiple internal and external factors - effect of policy incentives difficult to disentangle. Governments play a key role in mediating between conflicting corporate and development agendas.

3. Government policies towards CSR make almost equal use of all 4 intervention pathways: endorsing, partnering, facilitating and mandating. Most positive impacts are documented for facilitating and partnering policies. Negative or mixed results were most reported for mandating and endorsing policies.

Conclusions (cont)

4. Majority of documented CSR behaviour from industry and trade sectors (energy, mining, textiles and crafts), followed by agriculture (good agricultural practices, fair trade) and manufacturing (consumer electronics). Impact reporting dominated by large multinational firms operating in or sourcing from developing countries.

5. Many indicators used for assessing CSR impact, lack of standardization makes comparison difficult. Most frequently used re labour relations (24%), environment (16%), community involvement (11%) and human rights (9%).

6. Impact of CSR behaviour on societal outcomes remains ambiguous, indicating both positive, negative and sometimes mixed effects.

Conclusions (cont) 8. Main reported impact areas of CSR behaviour - in

order of importance - (i) labour practices (ii) community development, (iii) environment, (iv) human rights, (v) consumer issues, (vi) fair operating practices and (vii) organizational governance. Most policy information is available for the first three. - generally positive social, economic and/or environmental impacts, but 24% studies indicated negative and 22% both positive and negative effects

9. Sustainability of CSR impact is largely unknown, since few studies devote attention to long-term prospects. Indirect effects of CSR behaviour at local and sector level are likely to occur but scarcely documented

10. Little meaningful data re investments in and cost-effectiveness of CSR. Anecdotal evidence of benefits in (access to finance, stakeholder and consumer goodwill, and consumer acceptance.)