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



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Notes from Meetings

During a five-day exposure visit to Norway, the nine-member Indian Delegation met with Government entities, public sector enterprises, two industry federations, a foundation and the Central Bank of Norway. The following is background information on each of these institution as well as a summary of these meetings.


Ministry of Foreign Affairs (MoFA)

The Norwegian CSR initiative for public sector enterprises places a great deal of significance on ompliance issues, which also have an impact on external relations and functioning of Norwegian companies with internal operations. Although the Department of Ownership located in the Ministry of Trade and Industries is the nodal body for CSR of public sector enterprises, the Ministry of Foreign Affairs (MoFA) is also deeply involved.



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MoFA ensures that Norwegian companies operating both inside and outside of the country adhere to Norwegian and global laws and standards regarding ethics, human rights, corruption, and supply chain integrity. MoFA acts as an advisory body, advising companies on adherence to a set of international guidelines for CSR, including international conventions, standards for CSR, UN Global Compact, GRI ISO 26000, and others. MoFA’s CSR Department promote Norway’s CSR agenda, both nationally and internationally; deal with Norwegian counterparts with regard to pursuance of CSR practices and render assistance as needed; act as an intermediary between the Norwegian companies and international bodies/host countries where the industries are located to appropriately facilitate implementation of Norwegian Guidelines on CSR (usually with special reference to the compliance aspects). The Government is very sensitive about the ‘reputation’ of Norwegian companies doing business globally, and hence the handling of the CSR agenda MoFA.


Norway has been proactively implementing UN Business and Ethical Practices guidelines and through its companies operating outside of Norway has been endeavoring to disseminate them guidelines more broadly. Using the Bhopal Gas Tragedy as an example, MoFA stressed the importance of companies operating abroad in adhering to such guidelines to avoid future mishaps.
Companies need to appreciate that it is necessary from the business perspective to adhere to the CSR guiding principles and assimilate them in their delineation of business. 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. Guiding Principles are a Government instrument and the intent is to make them work positively rather than punitive by entering into a dialogue with companies.


Virke

Virke is the Federation of Norwegian Industries. It has 1,600 members—both public and private companies—as well as NGOs. Members are primarily importers. The company has been working on its CSR strategy since 2010 and were part of discussions with the Government of Norway before the issuance of White Paper on CSR. Virke’s membership also includes NGOs, who actively support and act as a pressure group for strengthening the national CSR strategy. Its members (i.e. importers) are better placed to push on the CSR front than exporters. VIRKE provides advice to companies for an overall fee structure. Members pay an annual fee. They maintain an updates website that provides latest information on all key events and developments. Most issues on which clients sought advice were on implementation of triple bottom line. and has an association of members to whom they offer advisory services of all types related to CSR and legal issues.


Virke’s CSR policy focuses on four basic pillars: human rights; ethical conduct of business/anti-corruption and bribery; good labor practices; and environmental protection and risk mitigation. Since 80 percent of its member are regional pharmaceutical companies, they are in a position to be the political voice of that industry and address political issues of their clients. A survey conducted by Virke showed that ‘Ethical Trade’ practice was of utmost concern to the consumers. Most consumers (83 percent) saw CSR as an ‘Ethical Task’ stating that they did not want to buy goods produced through companies employing unethical practices. The sectors of the industry that posed the biggest challenges in implementation of CSR were Food, Textile and Electronics. Many clients were concerned and sought advice from Virke on implementation of CSR and possible supply chain violations in their suppliers. Virke also supported companies on conflict resolution. While Virke works on the import segment, the Confederation of Norwegian Enterprises (NHO) undertakes work related to exporters. The MOFA coordinates as the nodal body between the two industry associations.

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Services provided to members include networking, leadership programs as well as courses. Virke coordinates various groups around CSR issues.


Norwegian consumers are concerned about ethical trade especial in three industries: textiles, food and electronics.
Virek noted that its members have a very diverse understanding of CSR which ranges from following regulations to charity and philanthropy.
Confederation of Norwegian Enterprise (NHO)

The NHO is an industry federation that advises (among other activities) its members—export industries—on matters related to CR5. It is an umbrella federation that represents 26 different sector-specific federations, with the exception finance and international shipping. Most Norwegian public sector enterprises are members. NHO plays the role of a facilitator for the employers and federations. It facilitates wage negotiations, advises the Government on tax systems, etc.


Since 1995, NHO has been very active the area of CSR, both domestically and internationally. They work closely with companies to help them develop a CSR strategy and with the broader public to raise awareness of CSR issues. The federation has developed a series of guidance documents and tools that help companies integrate the Government’s CSR principles into their operations. www.nho.no/csr
The federation’s working definition of CR is: “Corporate responsibility means that companies produce goods and services in a profitable, decent and sustainable manner, integrated in strategy and daily operations”. NHO focuses on the following areas: human rights; decent work; environment; anti-corruption; and society—or the positive contribution to broader societal objectives. For NHO, CR goes beyond compliance to rules and regulations, which in the case of NHO is seen as a precondition for CR. Corporate responsibility for NHO has two aspects: it is integrated into a company’s operations and permeates the whole corporate culture and also about manageing risk and reputation. NHO espouses the idea of shared value i.e. profit plus positive impact on community. Value for shareholders and broader society. It advises members on issuesrelated to risk and repuation management (major focus of NHO.


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NHO believes that it is more important on companies to focus on internal CSR issues first and only then focus on influencing other stakeholders i.e. customers, suppliers business partners and common welfare. This for them is a natural progression. Lots of companies focus on welfare first but it is more important to focus on company first.


The NHO has its own CSR Advisory Board (members), CSR Forum (functions like a network), and CSR Team (with representation from across departments) and acts as a major lobbying organization, initiating cooperation with members of international bodies and sister federations working on CSR.
NHO advises companies on its CSR strategy. One such company has been Hydro—the large industrial giant working on hydro power generation, energy and defense equipments. When Hydro initiated overseas operations in a new geography some years ago, NHO helped in developing its entire CSR strategy that was based on the country’s development parameters. Under the initiative, Hydro created schools, hospitals and helped set up the entire township and livelihood options. Hydro was also visited by the Indian Delegation (see below).
NHO advises its members that the preparation of a good CSR strategy should involve identification and then consultations with stakeholders. NHO stresses the importance of doing a stakeholder analysis before developing a CSR strategy. (The booklet “A Matter of Trust” provides a nice example of stakeholder analysis.)
Det Norske Veritas (DNV)
Det Norske Veritas is a foundation that provides services to private and public sector companies for identifying, assessing, and managing all types of risks. DNV considers Corporate Responsibility (CR) as an integral part of its management system and business culture. CR—term preferred over CSR—is seen as the company’s response to future expectations and is something that goes beyond compliance to the laws of the land or rules. DNV believes that every action taken on behalf of the company, 365 days per year, should reflect corporate transparency and an overriding linkage to ethical values. They aim at enhancing the positive impact of their business on society, which must manifest itself in how the company is managed with special reference to ethics and corruption and how it manages diversity, communication, transparency, and involvement in local community and in global policy making.
DNV has a global CR Board which is responsible for formulating and developing its annual action plan on CR. The Board continuously evaluates the company’s CR commitments to ensure that it meets stakeholders’ expectations. The main focus areas are: governance, business ethics, communication and transparency and HSE (Health, Safety and Environment). The company’s guiding principles for conduct business are based on the ten principles of the UN Global Compact. The institutional framework developed for carrying out their CR mission includes development of a corporate integrity profile, and fostering a democratic culture by allowing participation of its employees in appointment to Board positions. They have also developed a tool called ‘Crossing the Line’ wherein the employees are provided an opportunity to skip the hierarchical system of the company and bring to the notice of higher authorities any matter which they think is important and needs immediate attention. DNV has been actively involved and has been a partner in developing the ISO 26000 Global Standards of CSR for the last 8 years. To sum up, CR at DNV is simply how they do business every day. The way they do their business should always inspire confidence amongst all its stakeholders, which they believe is the key to sustainability. They are extremely cautious about their conduct in international business arena where corruption gets zero tolerance with the aim to handle it before it happens. CSR should not be left to HR only. It was decided that they would share success stories on effectively handling corruption in international arena. Training is important; all employees go through “dilemma” training.
There is a continuous process of evaluating and improving CR policies and procedures. The organization is also evaluated internally and externally every three years.
DNV has a CSR Board, with top managers as its members. The main incentive for companies to seek DNV’s services is when it faces a serious situation of fraud and/or corruption. DNV now see that more and more companies are coming to them to help develop a CSR policy prior to a triggering event, but driven by the “possibility” of fraud and corruption.
Kongsberg Gruppen ASA
Kongsberg—a leading company working in the areas of maritime, defense and oil and gas—is directly governed by the Norwegian Ministry of Trade and Industries. Kongsberg provides technological solutions from deep water explorations to space applications (including the monitoring of 47satellites). Fifty percent of its activities are in defense and 80 percent of its revenue derives from operations abroad. The company has limited operations in India (based out of Mumbai), but wants to expand.
For Norwegian companies, reputation is of paramount importance and drives (at least initially) a company’s CSR agenda. For example, in 2003 a large Norwegian company was implicated in a major corruption scandal involving child labor in a developing country This triggered a response from many Norwegian companies. Under the leadership of its CEO, Kongsberg prepared a well-defined Code of Ethics that became the mainstay of their business operations and guided the company’s CSR initiatives. The Code focuses on international relations, business conduct, provides guidance on follow up and treatment of noncompliance and applies to Kongsberg directors, management, employees, all casual employees, consultants, agents, lobbyists and others who act on behalf of the company. All managers are responsible for ensuring that the Code is reviewed, communicated and observed in their own departments. A copy of the Code of Ethics is attached to all agreements with agency contracts, distributor contracts, other representation contracts and supplier contracts. The company’s CSR agenda focuses on five areas: ethics; human rights; labor rights; anti-corruption; monitoring of supply chain; and dialogue with stakeholders.
Kongsberg is increasing putting more emphasis on supply chain issues. Its Supplier Conduct Principles aim to ensure safe working conditions, respect and dignity, environmentally sound business operations and business practices as per internationally recognized principles across the whole supply chain. They periodically conduct supply chain audits (often pre-project implementation) to ensure compliance. The principles seek continuous improvement on the part of suppliers. If suppliers fail to comply with these principles, Kongsberg’s policy is to work with the supplier to help them improve rather than penalizing them or cancelling their contracts. They work in partnership with non-compliant suppliers to identify activities that do not measure up to these standards (by themselves or with sub-contractors), and who agree to pursue improvements.

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Kongsberg expects all its suppliers to comply with, or actively pursue compliance with:




  1. National legislation: In all of their activities, Kongsberg’s suppliers must operate in full compliance with the legislation, rules and regulations of the countries in which they operate. Where the provisions of applicable local laws and the Principles address the same subject, and they are not in conflict, the highest standard shall be applied. Where any of the requirements in the Principles conflict with applicable local legislation in the sense that it would represent a breach of applicable local legislation if the Principles were applied, the highest standards that are consistent with applicable local legislation shall be applied

  2. Human rights: Suppliers are expected to support and respect the protection of internationally proclaimed human rights, such as the United Nationals Universal Declaration on Human Rights and ensure that they are not complicit in any human rights abuses.

  3. Labor rights: Suppliers are expected to be committed to upholding the human rights of workers, and to treat them with dignity and respect as understood by the international community. The human rights of workers are are defined in the International Labor Organization Conventions.

  4. Health & Safety: including occupational safety, emergency preparedness, occupational injury and illness, sanitation, food and housing.

  5. Environment: In manufacturing operations, adverse effects on the community, the environment and natural resources are to be minimized while safeguarding the health and safety of the public.

  6. Anti-corruption: the highest standards of integrity are to be expected in all business interactions. Suppliers and their agents shall prohibit any and all forms of corruption, extortion and embezzlement. Monitoring and enforcement procedures shall be implemented to ensure conformance.

Excerpt from Kongsberg’s Supplier Conduct Principles. Full document can be found on www.kongsberg.com


For Kongsberg, CSR has long-term benefits that it brings along with its new business opportunities through increased stakeholder value and had a positive correlation to the improvement in its Dow Jones index rankings. Kongsberg’s CSR strategy draws heavily from government CSR White Paper and is based on other relevant international guidelines and initiatives like the ten principles of the UN Global Compact, OECD Guidelines for Multinational Companies and ILO conventions. The company’s policy goes beyond the White Paper and is more practical. The CSR policy is driven from the top, but implementation is handled by line people. Integrity and transparency are central to its CSR policy. At Kongsberg, CSR means taking into account the communities in which the Group operates and which are affected by our activities. It also involves relations with our employees, society-at-large and external stakeholders.


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They have a reporting system into the Corporate Executive Management and Board of Directors. The CSR organizational structure includes Corporate Compliance and CSR Office, and the company has a CSR Forum, Forum for Environmental Reporting and Forum for CSR Supply Chain monitoring. Compliance is reviewed only periodically.


The company has a Corporate Compliance and CSR Officer who reports directly to the CEO as well as the Board of Directors on behalf of the CEO. Three bodies have been created to better implement CSR policies: a CSR Forum that includes representatives from all business areas and corporate office, a Forum for Environmental Reporting and a Forum for CSR Supply Chain issues. The last two Forums are not policy or decision-making bodies, but only a platform for discussions and dialogue. In addition the company has an Ethics Council, which includes all the VPs and CEO and is a forum for exchanging information on what is happening at the operational level. Kongsberg attends an annual meeting with the Ministry of Trade and Industries (Department of Ownership) to report on CSR issues. White Paper No. 13 (2010-2011) – Active Ownership)

Kongsberg has a “sponsorship” program that supports youth, cultural, environmental sustainability projects/initiatives in communities where it operates.


Statkraft

Statfraft’s core business is Hydel Power and On-shore, Off-wind and Renewable Energy. They are the biggest renewable energy company in Europe and are now seeking new business ventures in emerging markets. Statkraft has a strong partnership with Tata Energy and exports power to India from Nepal. Their CSR covers impact on society that is relevant to their business. They review the impact on environment, community, workplace and integrity and ethical business. At the workplace their focus is on diversity and non-discrimination for rules of engagement. While key issues are covered in their review, the reporting is only on what is material to business. They work on key impacts and have development indicators for review and monitoring. Their belief is CSR is to an initiation and should be done out of fear of consequence of bad/wrong action. They have integrated CSR as a part of their Company’s Strategy. They build CSR competence within the organization to do good business. In doing business overseas, they go beyond compliance and adopted the highest of the standards laid down by each of the stakeholder. Their process of executing CSR is integrated into their business line and each Project Manager is responsible for the Project CSR. They do a need assessment before taking up a project and also an impact assessment in case of community work. Their CSR includes the entire line of supply chain and the Procurement Officer is responsible for the vendors meeting the standards. They believe that CSR is about competence and mind set in doing CSR in the Projects. (Hydropower was key is Norway’s development into a welfare state. CSR addresses sector specific concerns. In Statkraft’s view it is more important to build and sustain livelihoods than to build housing for people affected by a project. CSR is about making companies behave better. There’s a fine line between the responsibility of a company and local governance.




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Case of Laos: Statkraft has projects that focus on health, infrastructure and education. They plan to stay involved until projects have proven to be sustainable. CSR also covers security issues, especially on building sites. Statkraft takes responsibility for the safety of its workers and their families.


Statkraft endeavor to use performance indicators in IFC’s Equatorial Principles. They noted that DPE guidelines are more in line with these principles than the “common” understanding of CSR. Within Statkraft CSR is the responsibility of top management.
Need to train staff on relevant procedures and policies. It’s about changing mindsets and increasing competence. CSR is a part of their leadership programs.
Statkraft is concerned about CSR throughout its supply chain. As such, they have developed a suppliers code of conduct and use scorecards to rate performance of its suppliers.
CSR is a line responsibility of managers. Each project manager has full responsibility for CSR, and they hire experts to deal with CSR. Internal reporting takes place on a monthly basis as well as annually as part of their annual report.
Telenor
Tenor is the second largest publically traded company on the Norwegian stock exchange. It is an international provider of tele, data and media communication services. It is present in a 11 markets globally, with a huge presence in Asia including India. An interesting take away from the visit was the community and stakeholder engagement, which has been a mainstay of their CSR activity. There is a need to go beyond statutory obligation/guidelines and look at opportunities of CSR. The Telenor example of Impact Management is another interesting insight into their CSR activity. Telenor is ranked top 5 on the Dow Jones Sustainability Index.
Telenor is an excellent example of a company that uses its own product to improve the lives of poor people around the world. With the help of NGOs and multilateral institutions, it has implemented an array of development projects using mobile telecommunications. Examples include a program in Pakistan, focusing on people with disabilities to help them better integrate into the work place, a program in India to help close the mobile gender gap and a program on mobile banking. This is the only company that the delegation visited that rigorously monitors outcomes and results of its CSR program..
Hydro
Hydro is a large extractive company working in sectors like fertilizer, oil, and aluminum. It has operations Brazil, Asia and Middle East. It is rated very highly on the Dow Sustainability Index. Hydro is committed to sustainable value-creation for its shareholders, and as an international industrial and natural resources company, their operations impact the lives of a large number of people around the world. Their concept of CSR is to pursue opportunities while managing risks taking the social impact of the business operations into consideration. CSR for Hydro is a way of life and goes beyond statutory and legislative requirements. For example, China allows 40 hours of work per week but Hydro manages to follow its own flexible principles after discussion with the Chinese authorities.
For Hydro, CSR is about taking responsibility for the impact its activities have on the people, society and the environment. It goes beyond statutory obligations. Hydro’s basic CSR principles include: human rights; environmental sustainability; diversity and social inclusion; dialogue to ensure that its activities are properly adapted to meet local conditions; and, integrity i.e. zero tolerance towards engagement in bribery or other forms of corruption.
The company’s CSR document stresses the following:
To ensure the best possible management of long-term social consequences related to significant changes in an ongoing operation or when new projects are launched, the unit in charge evaluates whether and to which extent social impact assessments should be conducted as a basis for making business decisions.
Based on systematic impact assessments and corporate strategies, Hydro’s businesses may engage selectively in social investments that contribute to healthy community development. Opportunities for implementation through partnerships with government and civil society organizations are actively explored.
Hydro’s CSR principles are promoted vis-à-vis
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