Corporate Social Responsibility and Relocation Relocation – Challenges and Opportunities June 2006 European Economic and Social Committee Professor Nigel Roome: Daniel Janssen Chair of Corporate Social Responsibility, Solvay Business School, ULB

|2|2 Structure Background and Definitions CSR issues raised by relocation Management challenge arising from diversity in CSR encountered in relocation Conclusions

|3|3 Corporate Social Responsibility – A definition The principal purpose of enterprise is the creation of value for shareholders. CSR is seen as the voluntary management of relationships with stakeholders (social, environmental and economic) as a way to provide for the continued existence of an enterprise so that it can pursue its chosen purpose However, CSR activities do affect the way an enterprise fulfils its purpose as it offers: a basis for protecting the value of the existing assets of the enterprise a stimulus for creating value through innovation in the activities of the enterprise - technologies, products and services, management know-how and business models

|4|4 Contention In managerial/enterprise terms CSR as relationship management involves: a recognition of the relationships between an enterprise and others in society an awareness of context and trends, and a sensitivity to issues CSR is therefore measured through the ability of an enterprise to: anticipate and contextualise its activities, develop effective and coherent systems to control risks and to spur innovation and change engage with stakeholders Through this an enterprise is responsive to these complex relationships and to the stakeholders that represent them

|5|5 Key stakeholders Shareholders, socially responsible investing, agencies, employees, suppliers, agents, & competitors Customers Environmental interests and concerns Neighbours, societies, governments & their departments, NGOs Media, Codes and CSR Institutions Economic Non-Economic

|6|6 European Commission Communication March 2006* Establishing CSR as part of the European competitive landscape CSR seen as the business contribution to a more competitive, sustainable and cohesive social market economy CSR as the voluntary contribution of business enterprises to issues such as: –Integrated labour markets and social inclusion –Skills development –Improvements in public health –Innovation performance –More rational use of natural resources –Better image of enterprise –Respect for human rights, environmental protection and labour standards –Reduction of poverty in developing countries in line with Millennium Goals –(regional policy - EC cohesion) * Implementing the Partnership for Growth and Jobs: Making Europe a pole of excellence on CSR (COM(2006)136 final of ) Policy background

|7|7 Types of CSR issue from relocation Shareholders (competitiveness) Employees (job security, development, retraining & out-placement & retraining, inclusion) Customers (product provenance and tracking) Environmental interests and concerns (protection of global and local key resources and sinks) Neighbours (local value added and retained, minimum nuisance and protection of environmental assets, maintenance and improvement of social cohesion) Governments (inward investment, economic multipliers, cultural and environmental asset protection, development of local know-how) NGOs (labour and human rights, environment)

|8|8 X X But relocation has many CSR poles… Location (To B) Relocation (From A to B) Within EU Beyond EU Developing Economies Entry Policy* Exit & Entry Policy* Entry Policy for Developing Economies* Exit Policy From EU plus Entry Policy for Developing Economies* B EU B ex-EU B EU A B ex-EU A (* This does not take account of market expectations of CSR)

|9|9 Poles of issues Entry Policy EU Understand local CSR context in host and home country expectations of CSR activities in host Entry and Exit Policy EU Understand local CSR context in host, home country CSR expectations in host as well as home country CSR expectations on closure Entry Policy for Developing Economies Understand local CSR context, home country CSR expectations on operations in developing economies Exit from EU and Entry Policy for Developing Economies Understand local CSR context, home country CSR expectations on operation in developing economies as well as home country CSR expectations on closure

| 10 Relocation confronts diversity in CSR globally, regionally and nationally Regional blocks and countries have different views on the role of business in society Countries have different CSR policies and institutional support for CSR practices Countries have diverse CSR agendas Enterprises have different managerial understandings of CSR and CSR has many different positions in their strategies

| 11 North America Shareholder Capitalism China & India New Capitalism Europe Social Market Capitalism Japan Network Capitalism Emerging models of the role of enterprise in society

| 12 North America Philanthropy & community involvement Human rights & labour standards Diversity at work Transparency & anti-corruption Selling products to the poorest - Bottom of the Pyramid (BOP) Jobs and outsourcing Africa & South America Adding & retaining value in country Health & welfare Child work with education Social & institutional development Appropriate technologies Europe Environmental sustainability Labour conditions No-child or forced labour Supply-chain responsibility Overseas development Social cohesion Asia Growth with minimum environment damage Employment Value added & retained Access to energy & water Developed & developing world perspectives on enterprise & CSR * Some of the distinctions between developed & developing countries maybe found within the enlarged EU

| 13 UK –Full-spectrum CR –Shareholders, customers, neighbours, social & environmental responsibility & governance 360° stakeholder view Netherlands –Environmental sustainability –Overseas trade –Human rights –Immigrant inclusion France –Labour contracts & rights –Community relations –Environmental sustainability –Product safety –Social inclusion Germany –Relations with neighbours –Training & education –Environmental sustainability –Product/chain security Sweden –Overseas operations –Human rights –Selling to responsible business customers Poland –Enterprise in society –Corruption –Loss of employee provision as it is seen as part of central planning Within Europe – Mosaic of CSR Policies & Agendas

| 14 Conclusions Managing the CSR aspects of (re)location is an incredibly difficult process because of the many contexts, and local as well as global issues to address Relationship management is difficult to measure Engaging with stakeholders is not a core competence of most enterprises, especially not at pre-project assessment stage (even for companies like mining, oil & gas which are familiar with following location) Yet, CSR issues will not go away and the possibility of managers to misunderstand context and CSR issues is more probable in new contexts that arise from relocation

| 15 End Thank you Nigel Roome