LOCAL AND GLOBAL ACTORS IN CSR MAY 11, 2016 MLI51C100 Stakeholders and Stakeholder Engagement

Agenda Review of Stakeholder Theory and Stakeholder Mapping Practice EDM and Stakeholder Mapping with Garment Industry Case Discussion of Globalization and its Challenges

SHAREHOLDER- STAKEHOLDER- MISSION- CENTRIC CENTRIC CENTRIC Where do you think most businesses are?

Defining Stakeholder “An individual or group who can influence and/or is influenced by the achievement of an organization’s purpose.” (Sexty, 2014, p.4, 47)

Who are the stakeholders companies need to be concerned about? STAKEHOLDERS

Stakeholders Owners Directors Managers Source: Sexty, 2014, p

Who are civil society stakeholders? STAKEHOLDERS

Stakeholder Influence on CEOs UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010

Is it a stakeholder of business organizations? Should it be? THE NATURAL ENVIRONMENT

UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June 2010 CEO Mindset is Shifting

Drivers of Investor Interest “Sustainability goes mainstream,” PwC, May About 40 U.S. investing institutions participated, representing $7.6T assets under management. About 45% are asset managers, and one-third are pension funds.

CSR and Stakeholder Theory “Socially responsible organizations try to identify all stakeholders and their interests. They seek to be accountable to these groups, cooperating with them whenever possible and minimizing the negative impact of organizational activities.” (Johnson, p.333)

Stakeholder Engagement Defined as “any efforts by a corporation to understand and involve relevant individuals, groups or organizations by considering their moral concern in strategic and operational initiatives” (Sexty, 2014, p. 73)

Basic Stakeholder Analysis Corporations take steps to identify stakeholders, assess their influence and place them on a map by addressing the following questions:  Who are our stakeholders?  What are their stakes?  What opportunities and challenges are presented to our firm?  What responsibilities does our firm have to its stakeholders  Consider economic, legal, ethical and philanthropic  What strategies of actions should our firm take to best deal with stakeholder challenges and opportunities? Source: Sexty, 2014, p. 73

More Advanced Approaches Corporations perform stakeholder analysis to increase understanding of stakeholders through categorization.  Can use Matrix Mapping  Categorize an organization’s stakeholders by their influence on two variables using a two-by-two matrix Position on Issue or Proposal AND Importance (p.77)  Can use Diagnostic Typologies  Categorize an organization’s stakeholders into “types” Mixed blessing, Supportive, Nonsupportive, Marginal (p.80)  Categorize in terms of attributes Power, Legitimacy and Urgency (p.82) Source: Sexty, 2014, p. 73

Mapping Stakeholder Attributes Legitimacy Urgency Power Source: Mitchell, Agle & Wood (1997)

Position/Importance Matrix ProblematicAntagonistic Low PrioritySupporter Importance of Stakeholders 0 Least 10 Most Support Oppose Position on Issue Source: Nutt & Backoff (1992)

Stakeholders and Social Capital Social Capital is a relatively new concept defined as:  “Any aspect of a corporation’s organizational arrangement that creates value and facilitates the actions of stakeholders within and external to the corporation” (Sexty, 2014, p. 88).  Also sees as “the trust or goodwill existing between the corporation and its stakeholders” (Sexty, 2014, p. 89).

15th Annual Trust and Credibility Survey  Trust in Business Trust in Business

16th Annual Trust and Credibility Survey  Trust in Business Trust in Business

Formal Issues Management Process Source: Value Generation Partners (2015)

Issue Life Cycle Source: Time 1 None or Little Time 2 Increasing Time 3 Prominent Time 4 Peak Time 5 Decline /

Issue Identification and Tracking

Old Approach versus New Approach Stakeholder Management Fragmented among various departments Focus on “managing” relationships Emphasis on buffering the organization Linked to short-term business goals Implementation dependent on division interests and personal style of manager Stakeholder Collaboration Integrated management approach Focus on building relationships Emphasis on creating opportunities and mutual benefits Linked to long-term business goals Coherent approach driven by business goals, mission, vales and corporate strategies Sexty, 2014, p. 87

DOMESTIC GARMENT COMPANY Discussion Case

THE GARMENT INDUSTRY ABROAD Discussion

Defining Globalization “A process of decreasing constraints on the interactions among the nations and peoples of the world” (Sexty, 2014, p.350).

Just How Big Is Walmart? Its net sales equal some nations' GDPs. Its grocery revenue makes Whole Foods' look downright puny. In other words: really, really big. — By Andy Kroll March/April 2012 Issue com/environment/2012/0 3/walmart-sales-energy- use-statisticsAndy Kroll March/April 2012 Issue com/environment/2012/0 3/walmart-sales-energy- use-statistics

WHAT ARE THE ARGUMENTS FOR AND AGAINST? The Globalization Debate

WHAT ARE THE SOCIAL JUSTICE CONCERNS? The Globalization Debate

Unequal Climate Change Impact world

WHAT ARE THE AREAS GETTING THE MOST ATTENTION IN GLOBAL CODES OF CONDUCT? Standing on Common Moral Ground

Focus of Conduct/Accountability Standards for Global Business Political factors Socio-cultural objectives and values Disclosure of information Competition Financing Employment and human resources Science and technology Corrupt practices Environmental protection Stakeholder consideration Corporate governance

Closing Thoughts Stakeholder collaboration recognizes complex business environment and provides systematic approach for responses  Companies who engage authentically can derive benefits Continued trend towards globalization brings new challenges and opportunities  Concerns over its harms likely to continue  Requires ongoing consideration of the ethical issues