The Market as CSR Driver
The role of the international media
Henning Høy Nygaard
Programme Director
SUSBIZ Kenya
Drivers of CSR
• The pull from the market: Companies are
becoming aware of the new market opportunities
– consumers and business partners increasingly
demand high ethical standards and new ethical
products (CSR innovation)
• The push from critical actors: Companies are
increasingly managing risks for negative
publicity, e.g. critical NGO’s journalists,
consumer organisations, governments, etc.
Drivers of CSR
• Ethical standpoint: whish for minimising
negative impact – and optimising positive
impact – on environment and society,
related to managing businesses. High
Ethical Management goals.
Four strategic drivers of CSR
Demand
Production
processes
strategic
CSR
Value
chain
relations
Push from
critical actors
Human
resources
Ethical
Stand
Points
The international view on CSR
CSR in the view of the European
market
• Labour standards (working hours, payment, forced
labour, child labour, disciplinary practices, freedom of
association, collective bargaining etc.)
• Occupational health and safety (exposure to
hazardous substances, machine guarding, ergonomics,
noise, dust, first aid, fire safety, emergency
preparedness etc.)
• Environmental protection (discharges of hazardous
substances to water, air and soil)
• Community activities at foreign suppliers is
not the focus of much attention of
European buyers
Market demand as a driver of CSR
• 70 - 75 % of US and EU consumers think a company’s
commitment to CSR is an important parameter for their
buying behaviour
• 59 % of US consumers are planning to spend the same
or more from socially responsible companies within next
year
• Yet only 11 % of US consumers have heard
communications about CSR from any company in the
past year
• 77% say that it is very important for the apparel industry
to be socially responsible – only 52 % believe the
industry has performed well (various studies including
PSB/Burson-Marsteller CSR branding survey 2010)
The Danish CSR Media Focus
Cases
Wolff Manufacturing, China
• Danish manufacturer of acoustic and magnetic
electronics, sales offices in Europe, USA and Asia.
Headquarters in Denmark. Own manufacturing facilities
in Korea and China.
Media case 1: Wolff Manufacturing, China
•
•
•
•
•
•
•
•
National Danish TV reveals Wolff
Manufacturing China in:
Paying wages below the official
minimum wage
Denying workers their right to organize
Laying off political active workers
Retaining fired workers permits to work
Not abiding by court judgments about
re-hiring fired workers
New channels of information:
The scandal reaches Chinese and
Danish national radio and TV, because
of Chinese workers blogging extensively
about their conditions and
communicating directly with the Danish
Union 3F using the internet.
Media case 1: Wolff Manufacturing, China
•First reaction from Wolff headquarters in Denmark: Denies
knowledge of any illegal or unethical business, claims that the
responsibility lies with the Chinese management.
•ILO joins the case, asking for a meeting with the Danish management.
•Case brought up in the Danish parliament, Danish minister of
commerce asked to take action by MPs.
•Wolffs major customer Danfoss, member of Global Compact, joins the
case, demanding Wolff to comply with Global Compact guidelines.
•Second reaction from Wolff: Engages in dialogue with Chinese
union, promises to take action and solve the matter. Company
reputation is severely damaged as result of the
reluctant CSR-strategy.
Media case 2: Jysk, Bangladesh
• Jysk, major Danish
corporation,
manufacturer of beds,
bed linen, towels etc.
• Holds 1450 shops in
32 countries.
• Production outsourced
to more than 500
suppliers all over the
world.
Media case 2: Jysk, Bangladesh
•
Jysk promotes a sustainable
product line. The idea behind the
line is to support education for the
children of the workers at the
production facility in Bangladesh.
•
As part of the promotion, Jysk
invites a media delegation to see
their suppliers factory in
Bangladesh.
•
The visit reveals poor social and
environmental standards at the
factory.
•
Several critical articles about the
case in Danish newspapers.
Media case 2: Jysk, Bangladesh
• First reaction from Jysk:
– Accepts responsibility immediately.
– Explains the poor conditions by the fact that CSR-management has
been outsourced.
– Takes action by involving external consultants in CSR-management.
– Explains that it would be unethical to cut off the cooperation with the
supplier. Instead Jysk takes responsibility by increased audits and
training and education of personnel in Bangladesh.
– Though damage to company reputation is inevitable, the damage is
minimized because of the action taken.
Media case 3, Telenor & Sony-Ericsson, Bangladesh
Entering the Bangladesh market for mobile telecommunication
Norwegian Telenor and Sony-Ericsson have mobile masts produced
at their Bangladesh manufacturer Grameenphone.
The Danish TV-documentary “A tower of
promises” reveals poor social and
environmental standards at the supplier in
Bangladesh:
• Child labour
• Unsecured acid pools for galvanizing
• Other severely hazardous working
conditions
The documentary is broadcasted on
national TV in all Nordic countries.
Severely damaging the companies
reputation
Unethical sourcing and risk: Mærsk Container
Industry Duangong, China
• Owned by Danish
multinational, A.P MøllerMærsk Group
• Established in 2006 as
container production was
outsourced from Denmark
to China
Mærsk Container Industry
Duangong, China
• Sole costumer: Mærsk
Line, one of the worlds
leading shipping
companies and part of
A.P Møller-Mærsk Group
 Production level 2008: 183.000 containers = 500
containers per day
Mærsk Container Industry
Duangong, China
• Mærsk Container Industry is
accused of corruption,
dangerous OHSconditions and suppression of workers, by human rights
organization Globalization Monitor
 The case is the main story of the day in national papers
and in the news on national TV.
Mærsk Container Industry
Duangong, China
• The issues:
– Damage to hearing and lungs among workers
as result of excessive noise and dust and
poisonous gasses at factory
– Middle leaders paying there way to higher
positions
– Workers victims of violence from factory
safety personnel
Mærsk Container Industry
Duangong, China
 The issues.
 73 point disciplinary set of rules e.g. prohibiting
workers from revealing their salary, hiding sexually
transmitted diseases. In most cases non-compliance
results in lay-off.
 Previous protests by workers met with opposition,
resulting in strikes and riots.
 Practice by factory is violating national laws and ILO
conventions.
The future European media approach to CSR
Media and ‘watch-dogs’ will be hunting innovative CSR companies. Next
step will be to focus on certified products.
Possible developments:
1)
2)
3)
4)
5)
Nobody can hide – responsibility for the entire value chain. Strong
demands on suppliers. Co-operation or force?
Demands in public procurements – difficult for small suppliers
Everybody afraid of implementing own initiatives/programmes.
Companies move away from CSR or try to hide behind external
certification programmes and auditors.
Very few very focused (and dedicated) B2B co-operations on CSR
improvements.
High CSR standards implemented imposed on both small and
large companies; Own fairtrade, the entire value chain, community
programmes, close follow up on CoC