CSR and SMEs – Setting the Regional Context …towards the creation of a regional CSR network for small business

Table of Contents What is CSR – Scope Why focus CSR activities on SMEs Relevance of CSR for SMEs UNIDO’s CSR Programme CSR and the Regional Network

What is CSR – Scope CSR vs. philanthropy Philanthropy = a practice of voluntary giving by private companies and corporations to charitable causes Corporate Social Responsibility = a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders

What is CSR – Scope

Definition of CSR (ISO 26000) Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that: contributes to sustainable development, health and welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practiced in its relationships.

Why focus CSR on SMEs CSR mainly focused on big companies and developed countries so far (e.g. OECD Guidelines) Global CSR agenda to date has failed to sufficiently address SMEs, except as part of the supply chain of large corporations Public policies/policy frameworks have failed to sufficiently leverage CSR for sustainable development

Why focus CSR on SMEs EconomicSocialEnvironmental ~ 90% of enterprises~ 50-60% of employment~ 70% of industrial pollution Support resilient economic systems  linkages between large & small firms Livelihood opportunities through simple value-adding processing activities in agriculturally based economies Over-represented in industrial sectors with high environmental impacts Seed beds for innovationImportant providers of jobs for young people Produce an important share of overall industrial waste Strong association between economic growth and SMEs SMEs tend to employ more of the disadvantaged groups Do less than larger companies to address their environmental impacts Balanced mix between large and small firms  overall competitiveness On-the-job training for poor people who would otherwise lack access to formal education and vocational training Many emerging firms in the ‘sustainability sector’ are SMEs or engaged in value chains with many SMEs Enhance competition & entrepreneurship More labour intensive production processes

Triple Bottom Line Approach Productivity Issues Environmental Responsibility Social Domain CSRCSR

Relevance of CSR for SMEs Enhanced competitiveness: productivity enhancement and greater cost effectiveness through TBL approach Direct supply chain relationships: supplier codes (OHS, labour rights, environmental management) Development of legislation and policy: Indonesia’s law on CSR, UK Minister for CSR, EU Green Paper, CSR policies in Slovakia, Lithuania and Nigeria International standardization & certification schemes: SA 8000, ISO 14001, OHSAS 18001, ISO upcoming

Drivers for CSR in SMEs Policies of MNCs International standardization & certification schemes Development of legislation and incentive schemes Pressure from stakeholders Strong linkages to communities SMEs selling on the local market Export oriented SMEs

UNIDO’s CSR Programme Micro-level: Direct support to a group of SMEs belonging to the same sector, region, cluster, supply chain, etc. (pilots for training of experts and case building). Meso-level: Assistance to business support and advisory institutions to foster the uptake CSR concepts in their sphere of influence. Macro-level: CSR related policy advice to support government institutions in determining what public policies best support a country’s private sector in its efforts to apply socially and environmentally responsible business practices.

REAP CSR based management & reporting tool for SMEs Aligning economic, social and environmental aspects of business (TBL) for profit AND social and environmental impact REAP consists of methodology (training package) + software Disseminated via a network of trained and qualified CSR experts

Service portfolio  Capacity building and upgrading (REAP)  Pilot CSR interventions in SMEs (REAP)  Establishment of CSR centres and networks MI C R O  Inclusion of CSR in the curricula of business schools and vocational training institutions  Promotion of ethical business principles through business associations (advisory, codes of conduct)  Preventing corruption to foster SME development  CSR research (public policy, SME dimension, corruption)  Integration of CSR in government strategies MESOMESO MAC RO

Regional Networks Reaching a critical mass of enterprises requires a coordinated approach - UNIDO assists governments in the establishment of CSR Centers and Networks at national and regional level Develop an approach to CSR that addresses particularly common problems of firms in one country or region - UNIDO promotes cooperation and coordination among different institutions Stakeholders to learn from best practice examples and experiences of companies or institutions with similar cultural, social and economic contexts - Regional Network in South, Central and Eastern Europe set up in 2009

Regional Network CEE/SEE National Focal Point Institution Country A National Focal Point Institution Country D University Business association National Bureau of Standards National Focal Point Institution - Country B Vocational training institution Chamber of Commerce NGO Network Coordinating Institution Global Compact local network National Focal Point Institution Country C Business leaders forum BDS

Network - expected outcomes Common understanding of CSR amongst local stakeholders Enhanced awareness of CSR and possible implementation practices among SMEs CSR-related services provided to SMEs by qualified experts and on a sustainable basis Enhanced coordination and collaboration amongst public and private sector CSR stakeholders on a national and regional basis Improved performance in the environmental, social and productivity domains demonstrated by assisted SMEs

Network – envisaged services Research Awareness raising and information dissemination SME advisory services Technical assistance and in-plant assessments Training and regional capacity building CSR policy advice

Network – activities 2009/10 6 countries included so far, expansion initiated Background research on the current understanding of CSR among SMEs and the broader context (policy framework and incentives) Compilation of CSR perception survey covering almost 250 businesses (Bosnia, Croatia, Serbia, Ukraine) Mapping of stakeholders of relevance to CSR at the SME level, including public and private actors Creation of a regional web platform for the Network: Regional REAP training of trainers (December 2009) Development of SME case studies in Ukraine, Bosnia, Serbia, Croatia

Network – next steps 2010 Launch of the Regional Network on 6-7 May in Zagreb Presentations of results to date, roundtables on next steps, possible cooperation with academia, and CSR policy dialogue Finalization and dissemination of SME case studies Finalization/consolidation of the website Provision of CSR-related assistance to business associations and other industry support institutions Enhanced work with educational institutions Additional REAP trainings

Expectations launch conference Feedback on the project orientation and activities Launch web platform for the Network and collect suggestions Raise the interest of other countries in the region to join the Network Identify partner institutions in the region to participate in and help coordinate future Network activities Learn about other countries’ experiences in the field of CSR promotion amongst small business and through policy initiatives Appraise the current focus and relevance of the CSR programmes related to SMEs in the region Elaborate conference and roundtable proceedings and implement recommendations

THANK YOU!!! …moving towards the creation of a regional CSR network for small business