CSR and ESG – in spite of the recession? Professor Hans De Geer, TI Sweden, SSERiga Tallinn, April 24, 2009 Professor Hans De Geer, TI Sweden, SSERiga Tallinn, April 24, 2009

License to operate … NGO’s (CSO’s ) CSR CG Financial markets Politics Business Media members voters Savers/investors Employees customers …stakeholders’ expectations

Initiatives UN ILO OECD EU ICC GRI CAUX Rio ISO Standardisation of expectations through ”soft regulation” Global compact PRI

Activity NGO’s (CSO’s ) CSR CG Financial market actors Political actors Business Media

Business CSR - no longer if but how 98 % of top 150 companies in Europe addresses CSR on their website, 73 % of top 600. CSR – the idea that corporations have a responsibility for social and environmental issues that goes beyond their core activity, beyond ”ordinary decency” and beyond regulation Linked to the concepts of ”embeddedness” and ”sustainability” Crises,close downs and lay offs makes CSR even more demanding! CSR - no longer if but how 98 % of top 150 companies in Europe addresses CSR on their website, 73 % of top 600. CSR – the idea that corporations have a responsibility for social and environmental issues that goes beyond their core activity, beyond ”ordinary decency” and beyond regulation Linked to the concepts of ”embeddedness” and ”sustainability” Crises,close downs and lay offs makes CSR even more demanding! 1

Arguments against CSR CSR is just window-dressing and blue wash! “The business of business is business” (Milton Friedman). Macroeconomic waste (Dave Henderson). Business’ first social responsibility is to be profitable and create jobs! CSR might lead to protectionism. CSR is just window-dressing and blue wash! “The business of business is business” (Milton Friedman). Macroeconomic waste (Dave Henderson). Business’ first social responsibility is to be profitable and create jobs! CSR might lead to protectionism.

Arguments for CSR Production has in fact negative effects that businesses have an obligation to take care of. Big corporations do have resources. Public sector failure. CSR – the business case –Risk management –Reputation management and brand building –Values based leadership Production has in fact negative effects that businesses have an obligation to take care of. Big corporations do have resources. Public sector failure. CSR – the business case –Risk management –Reputation management and brand building –Values based leadership

Politics Financial crises: Unsound managing of risk in structured products >systemic dependencies >domino effects Politicians take the initiative back Reregulation of markets – towards a new Bretton Woods? Recession: state intervention & support of failing industry Still: climate issues - high priority during Sweden’s EU presidency Financial crises: Unsound managing of risk in structured products >systemic dependencies >domino effects Politicians take the initiative back Reregulation of markets – towards a new Bretton Woods? Recession: state intervention & support of failing industry Still: climate issues - high priority during Sweden’s EU presidency 2

NGOs NGOs - the opaque sector: lack of transparency From confrontation to alliances NGOs - the opaque sector: lack of transparency From confrontation to alliances 3

Financial markets Friedman’s argument Institutional owners ESG issues Growth of SRI – : 102 % in 13 European countries (Eurosif) –18 % of total assets –€ 2,7 quintillion –PRI as support structure Friedman’s argument Institutional owners ESG issues Growth of SRI – : 102 % in 13 European countries (Eurosif) –18 % of total assets –€ 2,7 quintillion –PRI as support structure 4

Issues remain HR WR E C Child labour increases The supply chain: Lay offs here or there? Climate - and water issues Corruption increases: Greed as a system

and calls for The ethics of lay offs The ethics of increasing social differences The ethics of risk management The ethics of systems of remuneration The fight against corruption The ethics of lay offs The ethics of increasing social differences The ethics of risk management The ethics of systems of remuneration The fight against corruption