Background of the knowledge exchange mission csr knowledge Exchange Visit to Norway; World Bank- department of Public Enterprises

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The Role of Companies in Integrating CSR Principles

A company’s core activities drive the focus of its CSR work. The issues and challenges that a company decides to tackle are also influenced by a company’s stakeholders, which typically include media, civil society, government, employees, customers, suppliers, owners/investors, and local community. Hence, although there is some standard understanding of how CSR is defined, at the company level CSR principles differ from company to company and are very much sector specific. The Norwegian concept of CSR is industry-driven and there are expectations that the individual companies adopt, adhere, and report compliance to the guiding principles set out in the White Paper, with the Government playing the role of an enabler, guide, catalyst and motivator. Close dialogue between the Government and trade unions and social groups for ensuring good practices within the country is a key component of the Norwegian model for CSR. Investor behavior also significantly guides good practices by companies in Norway. Provides general principles but leaves it up to individual companies to develop and implement guidelines for corporate social responsibility. The guideline should not only be known by all the employees, but also by everyone in a given company’s value chain.4

Companies appreciate that it is necessary from the business perspective to adhere to the CSR guiding principles and assimilate them in their business activities. They understand that there are long-term benefits for companies that integrate CSR into their work. It has instituted a ‘Committee of Deputy Ministers’ to look into these guidelines. Companies are liable under Norwegian law to follow the regulations embodied in the voluntary principles and extend them also to the other countries where they do business. Focus of Government will be on dissemination, incentivization and encouragement to push the guidelines forward. The Committee/Working Group does not get into role of a monitoring agency on implementation related issues.
Norwegian companies, with operations abroad, face unique challenges related to human rights and labor standards, especially in countries where the level of adherence to globally recognized and accepted standards varies considerably from accepted norms in Norway. For example, issues related to the use of child labor--in a company or anywhere in a company’s supply chain—has sparked lots of debate in Norway and provided an important impetus for many Norwegian companies to take CSR more seriously. Irrespective of where the company is headquartered, such issues have to be looked throughout the value chain. Norway has been proactively implementing UN Business and Ethical Practices guidelines and through its companies operating outside of Norway has endeavored to disseminate and monitor as best as possible the application of these guidelines more broadly. Another important facet of operating in a more globalized world, is that many European companies regardless of where they are headquartered or have operations are employing guest/temporary workers. How such workers are treated and what access they have to workers’ benefits are part of the future debate on CSR issues in Norway.

Assessing Performance and Monitoring

The Government’s guiding principles are an instrument to effect positive change in Norwegian companies as well as other companies and contractors in the whole supply chain. The guidelines are not meant to be punitive.

Nine Sector-independent Considerations3

  1. Health, safety and the working environment: work in this area must also cover companies’ international operations. Cooperation with employees and their organizations must be in place when a company operates in other countries.

  2. Environment: The companies’ work on environmental issues must extend to the enterprise’s entire value chain. Product development, production, distribution and the subsequent use of the company’s products must be adapted to long-term responsible social development with the least possible environmental impact.

  3. Ethics: The companies are expected to have adopted corporate vales and ethical guidelines. In formulating ethical guidelines for their operations, the companies should, among other things, consider the factors on which the Government Pension Fund – Global’s ethical guidelines are based. Such ethical guidelines should be in line with the UN Global Compact and the OECD’s Guidelines for Multinational Enterprises. The guidelines should also be in accordance with the OECD’s Guidelines for Corporate Governance.

  4. Combating corruption: Greater transparency can prevent wrong and ethically dubious decisions. Companies should therefore be open about dilemmas relating to corruption, conflicts of interest and impartiality. Civil protection: As is the case for private enterprises, companies in which the state has an ownership interest are obliged to protect their own operations, employees and the surrounding environment against accidents.

  5. Gender equality: Open and genuine competition for positions in society promotes both justice and economic efficiency. The Government believes that failure to make better use of the competence and capacity women can bring to companies and society as a whole represents squandering and poor management of society’s resources.

  6. Restructuring: As owner, the state expects companies to take a long-term view and act responsibly in connection with restructuring processes.

  7. Research, development and competence-building: Business and industry should be ambitious with respect to research and development. The Government expects companies in which it has a major ownership interest to have a strategy for increased research and development.

  8. Integration and career opportunities for other groups: The Government is concerned that Norwegian companies should be proactive in their attitude to the recruitment of personnel from minority backgrounds, qualified seniors and people with functional impairments. The companies should also emphasize knowledge of other countries’ cultures in their recruitment policies. The state’s attitude to social responsibility in companies in which it has ownership interests is expressed in the form of general, sector-independent expectations rather absolute requirements. It is the task of each company’s board of directors and management to adopt guidelines for its operations. Different areas are important for different companies and must be addressed accordingly.

3 Corporate Social Responsibility in a Global Economy (2008-09). In the White Paper, the Government clarified its expectations of companies on CSR in nine areas, which companies should take into account in their business assessments and that are intended to promote companies’ long-term rate of return and industrial development.
Reporting in not mandatory. Most of the large partially-state owned companies, however, have chosen on their own initiative to report in accordance with the Global Reporting Initiative (including the companies visited on this study tour—Statkraft, Kongsberg Gruppen, Telenor, Hydro, Statoil, and Hydro). Many of the public sector companies issue separate sustainability reports or report specifically on CSR in their annual reports.
Key Takeaways from the Mission:
Globally, CSR initiatives are determined and shaped by international covenants and agreements on the key elements of CSR—detailed in various international conventions such as the UN Global Compact and ISO 26000. The working definition of CSR does, however, differ across countries and in the context of Norway; it was found that there were differences in the approach to CSR even between companies. Though internationally, experience shows that certain elements of CSR may be included in legislation, yet this varies from one country to another. Enforcement of the legislation may vary, and coordination may be weak or strong. However, by its very nature, CSR efforts need to be more integral to the ethos of the company rather than be externally determined by legislative mechanisms. While variations in approaches towards CSR are natural, as they are determined by differential factors in the context of public or private owned enterprises, however, the basic tenets, nature and priorities for undertaking CSR initiatives need not differ very fundamentally. In Norway, the Government leads the effort in ensuring that there is a robust follow-through on basic CSR principles of the country that are formulated by the nodal ministries that are the MOFA and the Department of Industries. KOMpact at the Ministry of Foreign Affairs and the Ethics Council Group at the Ministry of Trade and Industry are set up as an advisory group to the Government. Both bodies ensure that the CSR process integrate varying views from different sets of stake-holders.
While companies have espoused globally-accepted CSR principles for decades, the Government of Norway issued a formal document (The White Paper on CSR) only in 2011. The process for developing a national view on CSR in Norway took a relatively long time, and is a gradual and iterative process. The White Paper outlined the Government’s vision for CSR, or very broad-based principles that reflect international conventions and agreements such as the UN Global Compact, ILO, etc. The documents allows for flexibility. The details of implementation are then tailored to the needs of each industry and company. They keep within the broad guidelines. The document provides a set of guiding principles. It is the business that drives the CSR agenda, which is very specific to each sector as well as location. CSR in the Norwegian context is at the core of business. CSR is an internal as well as an external concept. CSR guidelines especially those on ethical practices, human rights, supply chain integrity etc need to be followed by everyone in the company as well as those in business relations with the companies- the collaborators, suppliers etc. Each company has issued a code of ethics, which is publically accessible on its website.
It is interesting to note that Norway is very diligent in CSR practices in its operations abroad and CSR issues such as human rights, adherence to labor standards and workplace issues figure prominently in the same. The Guidelines and business practices that shape CSR in Norway continue to be the guiding principles for each company in its operation in any foreign country. There would therefore be zero tolerance for any contravention of ethical practices, human rights violations, supply chain malpractices etc. This has significant lessons for India as many of its large PSEs are opening operations abroad. It is necessary that international covenants, practices and guiding principles put forward by entities like the UN, UNGC, ILO, etc are understood and respected. There may be need for appropriate orientation and capacity building of SPEs on these issues as next step, emerging from this knowledge transfer visit.

A significant difference that was found in the way CSR is understood or practices in India and in Norway was: India views CSR more as a human development issue that requires businesses to give back to society and improve the lives of the communities in which they operate. In Norway however, domestically, CSR is an internal concept- guided more by issues related to ethics, human rights, sustainability etc. One of the reasons for this approach is the fact that Norway is already highly ranked in the Human Development Indicators (HDIs) and do not need developmental activities so much as the ethical and other compliance components of CSR. In the Norwegian context and in many of the companies visited, the focus on CSR was often triggered as a result (of fear of future) crisis that involved media and CSOs, driven by reputational considerations.

Internationally, Norwegian companies work with communities to assess needs and concerns and develop community development projects i.e. build schools, construct water wells, provide health care services etc. Often this is done with the help of local NGOs and/or international and multi-lateral organizations. Telenor is an example of a company that has undertaken substantial development work in thir areas of operation in Bangla Desh, Pakistan etc. through the Michael Porter concept of Creating Shared Value where CSR and development is integral to the business strategy of the company and furthers its business interests through CSR. Telenor has used its core business model of telecommunications for ensuring that its mobile telecommunications technology is accessible to the poor and is used for use of mobile telephony in education, health, financial inclusion etc, and thereby making immense contribution to the improvement in the lives of the people in the area where they operate.
There is no mandatory financing requirement set out by the Norwegian Government. It is up to each individual company to incorporate CSR into their own governance structures and use resources as needed. The Norwegian Government’s approach to CSR is principle-based, which gives a lot of flexibility to companies to develop their own concrete and sector specific guidelines. While a company’s Board has full responsibility of the implementation and monitoring of its CSR guidelines, the way CSR is incorporated into the management of each company differs from company to company. In some instances, there may be a CSR Director that reports to the CEO and Board and in other cases, the responsibility rests with each line manager. This has important lessons for India as the GOI is considering CSR options and requirements (whether CSR should be voluntary or mandatory) under its potential Companies Bill. A key take-away from the mission was that each company needs to set priorities and gradually implement a holistic CSR agenda that is enmeshed with their business priorities. This needs to be phased out and taken up carefully as not all objectives can me met at the same time of all initiatives undertaken at the same time.


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