Zh.S.Belyaeva CORPORATE SOCIAL RESPONSIBILITY IN ENERGY INDUSTRY Ekaterinburg, 2015

Lecture 6_ International CSR outlook in energy business 1.Cross-country CSR Models 2.Cross-cultural Risks and Peculiarities 3.Energy Business for CSR

Cross-Cultural CSR Understanding corporate philanthropy and social marketing financial donations and address sponsorship working conditions health and safety of employees charity NGO pressure Institutionalized responsibility

Corporate Citizenship Model Employees,Investors,Custome rs Community, Government, Environment Economic, Legal, Ethical, Philanthropic Financial Performance, Commitment, Trust, Reputation Corporate Citizenship Strategic Philosophy Stakeholders Outcomes Corporate Social Responsibility Fombrun,C (1997)

Corporate Citizenship Model For each country a contribution will basically be structured around the followingissues: 1.Traditional roles of the economy, state and society focussing in particular onexpectations of the role of business in society; 2.Traditional drivers for CSR such as religion, tradition, core values, culture or history as well as an outlook of their future development; 3.A concise overview of the recent history of CSR for each individual countryfollowed by political, societal and economic drivers leading to a sketch of fu-ture trends.

Cross-Cultural Risk A situation or event where a cultural miscommunication puts some human value at stake Cross-cultural risk arises when we step into different environments characterized by unfamiliar languages and unique value systems, believes, and behaviors It is one of the four major risks in international business

Why does it happen? Ethnocentric orientation: using our own culture as the standard for judging other cultures Polycentric orientation: a host country mindset where the manager develops a greater affinity with the country in which she/he conducts business Geocentric orientation: a global mindset where the manager is able to understand a business or market without regard to country boundaries So….Managers should strive to adopt a geocentric orientation.

Example: Cultural Differences in Entrepreneurship It’s been said that when someone in Hong Kong starts a new business venture, the entire family works around the clock to make it a success. In the U.S., friends put up their money for the entrepreneur. In the U.K., everyone tries to discourage the entrepreneur by explaining why it is likely to fail and then scratch his car. In Turkey, friends will ask the entrepreneur to hire their sons, nephews. In India/Brazil, the administrative system will put up monumental red tape.

National Culture Culture relates to a system of shared assumptions, ideas, beliefs, and values that guide human behavior Appears in statements, actions, material items Culture is acquired and inculcated; acquisition of cultural norms and patterns is a subtle process...can take a lifetime Culture is transmitted from generation to generation; with embellishment and adaptation over time

The Environment Influences Language Language is a function of the environment: The language of Inuits (an indigenous people of Canada) has several different words for “snow,” English has just one, and the Aztecs used the same word stem for snow, ice, and cold. The concept and meaning of a word are not universal, even though the word can be translated into another language. The Japanese word “muzukashii”, for example, can be variously translated as “difficult,” “delicate,” or “I don’t want to discuss it,” but in business negotiations it usually means “out of the question.”

Culture’s Role in International Business In the West, “the customer is king,” but in Japan, “the customer is God” Japan’s orientation to customer service derives from its national culture- form, quality, and service are the key success factors in Japan. A densely populated and homogenous society has encouraged the development of a cohesive and polite culture that rewards harmony. “Amae” means "indulgent dependence.“ In Western cultures, independence is taught, in Japanese culture, an emotion-laden dependence is instilled. Filial piety – respect for one’s parents and elders – is the foundation of the Confucian ethic. Amae and the Confucian parent-child relationship provide the basis for all other relationships.

Comparative Characteristics of The American and European CSR American ContextEuropean Context CharacterizationIntrinsic: The American doctrine has not dramatically changed over the last 100 years and has been developing smoothly reflecting gradual shifts in social development Extrinsic: Britain and the European continent developed CSR practices intensively over the last years, driven largely by external factors Economic Responsibilities Corporate policies with regard to "good corporate governance", "remuneration" or "consumer protection" Legal framework, codifying corporate constitution ("Betriebsverfassungsgesetz"), the 35h-week, minimum wage legislation, overtime regulation, development and testing of pharmaceuticals Legal ResponsibilitiesRelatively low level of legal obligations on business Relatively high levels of legislation on business activity Ethical ResponsibilitiesCorporate policies with regard to local communities High level of taxation in connection with high level of state welfare provision Philanthropic Responsibilities Corporate initiatives to sponsor art, culture or fund university education High level of taxation sees governments as the prime provider of culture, education etc.

Praise and Criticism The 2010 CSRI Index i. Boston College’s Carroll School of Management and the Reputation Institute ii. Corporation’s strong interest in stakeholder opinion iii. Combined average 1. citizenship, governance and workplace

Praise and Criticism Top 50 most socially responsible companies i. No oil and gas companies ii. The energy industry ranked the last in the perception of U.S. industries

Challenges to Sustainable Development Oil and gas industry operates globally Complex and diverse environmental and social issues Weak governance in many areas leads to civil society expectations that companies are development actors So... Companies need to ensure good policy & practice 17

Addressing CSR trends Three emerging trends in CSR for the industry 18 Developing strong partnershipsContributing to sustainable social investment Defining roles and responsibilities for human rights

Study – Voluntary Principles on Security & HR Shared responsibility by three key pillars in improving security & human rights practice Helps to fill gap in international legal framework and encourage joint action 19 GOVERNMENT NGO INDUSTRY

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