Corporate Social Responsibility Kirsten Schmidt May 2006

Today What is CSR all about Problems in the electronics sector Global Compact – a UN initiative Communicating CSR Stakeholder relations How companies in the electronics sector work with CSR Why should electronic engineers care? Assignment I Assignment II

Electronics and CSR: Some problems Poor working conditions and discrimination towards women Constrained freedom of association and representation Poor application of international labour standards Hazardous working conditions War on Coltan in the Democratic Republic of Congo Contamination of land and groundwater supplies E-waste is one of the fastest growing waste streams Hazardous waste trafficking Lawsuits and non-compliance (Source: CoreRatings, Analysis of financial risks in electronics retailers and their supply chain, 2003)

UN’s Global Compact Global Compact is a soft regulation framework based on a set of core values Supports sustainable development (economic, social and environmental aspects) Supports implementation of international agreements – also in countries with less-developed legislation Voluntary approach based on commitment from the participants Group pressure and self-control

Global Compact: The 10 Principles (I) Human Rights 1. To support and respect the protection of internationally proclaimed human rights 2. To avoid complicity in human rights abuses Origin: “The Universal Declaration of Human Rights” adopted in 1948 Equality Life and security Personal freedom Economic, social and cultural freedoms

Global Compact: The 10 Principles (II) Labour rights 3. To uphold freedom of association and the effective recognition of the right to collective bargaining 4. To eliminate all forms of forces and compulsory labour 5. To abolish effectively child labour 6. To eliminate discrimination with respect to employment and occupation Origin: ILO’s “Declaration on Fundamental Principles and Rights at Workfrom” adopted in 1998 by the yearly tripartite International Labour Conference (governments, employers and workers from 177 countries)

Global Compact: The 10 Principles (III) Environment 7. To support a precautionary approach to environmental challenges 8. To promote greater environmental responsibility 9. To encourage the development and diffusion of environmentally friendly technologies Origin: “Declaration of Principles and an International Action Plan (Agenda 21)” emerging from the Earth Summit in Rio de Janeiro in 1993

Global Compact: The 10 Principles (IV) Bribery and corruption 10. To combat corruption, extortion and bribery Origin: The United Nations “Convention against Corruption” adopted in 2004 This last principle was added in December 2004 and further guidelines and cases are under development

GRI – Global Reporting Initiative GRI is a voluntary, holistic framework for reporting on sustainable development Independent organization started in 1997 Ambition to create the reporting standard within this field - replacing national or sector-specific guidelines - facilitate comparison between reporting organizations Today, the GRI-database contains well over 600 reports for download Promoting exchange of experiences as well as a certain discipline and self-control Working together with the UN Global Compact

International standards on (C)SR SA 8000 National standards ISO – under development

Stakeholder relations Definition of stakeholders: ”Any groups or individuals who can affect or is affected by the corporation” Two types of stakeholders: Market stakeholders Non-market stakeholders Source: A. Lawrance (2005): Business and Society; Stakeholders, Ethics, Public Policy

How companies work with CSR Different focus around the world Global markets and supply chains - Dilemma I: Creating and loosing jobs - Dilemma II: Dealing with different cultures Codes of Conduct – external and internal Development of products and markets

Electronics and CSR: Background One of the most globalised sectors Highest growth rates in the manufacturing industries Accounts for around 1/3 of the world merchandise trade Severe job cuttings in the MNC’s since 2000 in USA, Japan, Europe - moving of jobs to other countries - economic recession - slow-down in development speed (Source: ILO sector report on Mechanical and Electronic Engineering, 2002)

Code of Conduct in the Electronics sector Signatories adhere to implement and promote: Labour standards (The Declaration of Human Rights, Social Accountability International, Ethical Trading Initiative) Health& safety standards (OHSAS 18001, ILO Guidelines on Occupational Safety and Health) Environmental standards (ISO 14001, EMAS) Management System (i.e. OECD Guidelines for Multinational Enterprises, “Corporate governance”) Ethical standards (I.e. UN Global Compact, UN Conventions)

The Sustainability Charter of ETNO - The European Telecommunications Network Operators’ Association ”Corporate Social Responsibility is the business contribution to making sustainable development happen, through the proactive management of a company’s environmental, social and economic impacts” To be implemented via: Sustainable provision of products and services Integration of environmental, social and economic responsibilities in the business activities

Areas in the ETNO Sustainability Charter Awareness of potential positive and negative impacts Regulatory compliance as a minimum Support research and development Procurement of ”green” products produced under humane conditions Accountability – information and stakeholder relations Cooperation with relevant stakeholders Management systems to secure responsibility and continuous improvements Employee relations - maintain and develop the workforce

SONY’s internal Code of Conduct General standards (Compliance; Stakeholder relations; Appreciating diversity; Avoiding conflicts of interest; Communication of concerns) Respect for Human Rights (Equal opportunities; Forced labor/child labor; Sound practices; Work environment) Conducting Business with Integrity and Fairness (Product and service safety; Environmental conservation; Fair competition and procurement; Advertising; Disclosures; Personal information; Gifts and entertainment; Intellectual property; Confidentiality; Recording and reporting of information) Ethical Personal Conduct (Insider trading; Personal conflicts of interest; Corporate Assets; Media relations and public statements)

Development of new products and markets Many – if not most - products are developed to meet the needs of highly industrialized countries Where are the new markets? And in which ways do they differ? Infrastructure Large volumes / small volumes Technical complexity, maintenance Capacity of the users (money, skills, knowledge,…) Resources and waste Cultural, religious, local traditions and values Etc……

Why electronic engineers should care Global job markets and competition - focus on efficiency - room for new challenges Working conditions - High/low degree of influence New needs and markets challenge your professional and personal skills You are the ones to design future solutions

Assignment I In relation to your coming careers as engineers, discuss the following aspects: What are the elements of the 4 basic areas in the Declaration of Human Rights (Equality; Life & security; Personal freedom; Economic, social and cultural freedoms)? In which ways do you think these aspects will influence your professional life, positively and negatively? List some questions on social responsibility you would consider to ask your coming employer when you are invited to a job interview

Assignment II You work for a Danish company producing advanced power supply systems. There is a potentially new market for you in producing mobile systems to be used in hut areas after natural catastrophs like earthquakes, tsunamies etc. In the planning process for development of your new system you have to consider the following aspects: What are the interests of the main stakeholders in relation to functionality, pricelevel, quality, operation? (use the matrix). Consider both the design, implementaton and operational phases. Are there any potential conflicts? Pay special attention to the users and the local community where the system should function. Are there any social, cultural, religious etc. aspects to be aware of? (You may think of Indonesia after the tsunami or Pakistan after the earthquake). Could you benefit from co-operating with other experts? Who, for example? Set up recommendations to the designers that will facilitate the installation and use of your power supply system.