Corporate Social Responsibility presentation

1. Belgian-Polish Forum on Corporate
Social Responsibility
Start Small, end up Great!
CSR – another way to increase your competitiveness
Promoting social responsibility in small and medium-sized
enterprises in Belgium
Mr. Peter Schellinck, Chairman
Schellter Strategy Consulting
WARSAW, FRIDAY 19th NOVEMBER 2010
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2. SME’s the unsung heroes of CSR
Whether times are good or bad, companies must be socially responsible.
That's a given.
But the current, tough economic conditions are surfacing the underlying reality
that - to put it bluntly - a company's foremost responsibility is to do well.
Some might consider that statement to be politically incorrect, but the facts are inexorable.
Winning companies create jobs, pay taxes, and expand and strengthen the overall
economy. Winning companies, in other words, enable corporate social responsibility,
not the other way around.
So companies should be putting profitability first right now. It's the one requirement that
makes all else possible.
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3. CSR in Belgium
 Like much of Europe SME’s are key to the Belgian economy - 90% of economic
activity is generated by SME’s - accounting for 70% of the country’s GDP.
 Approximately 83% of Belgian companies have less than 10 employees and 97% of
the companies employ less than 50 people.
 SME’s are strongly linked to federations - key role in transfer and dissemination of
knowledge and best practises. Due to the economic recession, the government is
focusing on stabilizing the banking sector and implementing an economic recovery
package. The recovery package aims to stimulate the economy through measures
such as increasing purchasing power, supporting public investment and providing
export credit support.
 Emphasis on SME’s involvement - how to link their activities better to core strategy
remains an issue.
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4. Society perception
 Recent social research shows that the Flemish civilian population primarily
expects firms to create welfare and well-being (employment, competence
development) in an accountable way.
 A recent survey by GfK Worldwide shows that Belgians in general develop a
high level of trust in professional groups. Managers are the most trusted
professional group in the Flemish civilian population: about 59 % of the Flemish
civilian population trusts managers and business leaders. The same survey
showed that about 80% of Flemish managers questioned showed high trust in
business life. This survey allows the conclusion that corporate scandals (such as
Lernout and Hauspie) did not significantly harm trust in the business community
in general.
 Sociological research on 'social trust towards institutions' leads to more subtle
conclusions: only 40 % of interviewees show the highest levels of trust in
business life (Elchardus, M. & W. Smits, 2001). It further shows that CSR is not
explicitly represented in public opinion.
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5. The origins of CSR in Belgium 1
 Belgium has done pioneering work by issuing the law of February 27, 2002,
introducing ‘the social label’ aimed to “create a label for companies to put on their
products if a company adhered to criteria and standards recognised by the International
Labour Organisation.”
 Belgian government has a long-standing commitment to implementing the OECD
Guidelines.
 The Social Economic Council of Flanders (SERV - 2000) reformulated its mission into
the direction of CSR-topics.
 Generally speaking, the majority of formally organised CSR initiatives emerged in the
past decade, be it inspired and stimulated by public (national or supranational, i.e.
European) initiatives, or be it predominantly inspired by religious or other personal
values. The latter was for instance the case for the Flemish Network for Business
Ethics (Vlaams Netwerk voor Zakenethiek), founded in 1994 by four secondary school
teachers who started the network to create ‘critical mass’ in the domain of business
ethics.
 Earlier research of the authors (Heene et al., 2002: 325-367) has shown that motives
for applying CSR in practice are often inspired by very personal values, by obvious
and clear business needs (such as the difficulties of finding the right workforce on the
labour market), or by the fact that CSR is a “hot topic” in contemporary management. 5

6. The origins of CSR in Belgium 2
 Recent surveys have shown that ethical values as such are not the prime drivers of CSR
in Belgian small and medium sized companies. Here, CSR seems to be much more
driven by customer satisfaction and the aim to build a better relationship with the
community (VKW, s.d.).
 Ethical values do however play an inherent role in the approach that Flemish and
Belgian firms follow specifically towards employees and towards the environment.
‘Caring for the well-being of the employee’ is an implicit value in many Belgian
organisations, expressed by for instance the active presence of many union members in
those organisations, even though an open communication about ethical values is quasi
non-existent in either Belgian or Flemish firms.
 The role that the unions traditionally play in business in Belgium can hardly be
underestimated. Unions determine to a large degree the specific evolution of labour
related human relationships within companies. Belgian trade unions primarily defend
the rights of workers, rather than engaging in a joint formulation of employee policy
with employers. The unions are however slow in their active participation in CSR issues
especially in the explicit commitment to CSR towards their members and their own
administration.
 A real implementation of CSR-issues in their mission and approach to labour market
concerns is still missing. This is in contrast to employers’ associations (UNIZO, VOKA,
VBO) whose members often participate in CSR – debates. 6

7. CSR in Belgium - Legal framework
 CSR in Belgium is framed within a European and more
specifically continental model of welfare state, where social
considerations between social partners are anchored in the law,
contrary to the Anglo-Saxon model. In these welfare states,
governments tend to be heavy handed.
 This means that the government is inclined to build a (legal)
frame for CSR and sustainability.
 This is reflected in the legal basis for a sustainable
development strategy process that has been developed by the
Federal Government.
 Belgium is one of the few countries (with Canada, Luxemburg,
and Switzerland) with such a legal framework.
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8. CSR policy and legislation 1
Government actions
• 1997: legal framework for sustainable development through the
adoption of the Act of May 1997
• From 1997 to end 2006, the FCSD published some 130 advises on
climate change, product standards, biodiversity, corporate social
responsibilities, natural resources, energy, development cooperation,
etc.
• The FPB has published and communicated three federal reports, the
first in 1999, the second in 2003 and the third in 2005.
• The government has adopted two sustainable development plans, the
2000-2004 Plan and the 2004-2008 Plan. Nowadays, the Plan
2009-2012 have started for an adoption by the federal government
which started in autumn 2008.
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9. CSR policy and legislation 2
Government actions
• An evaluation of the first federal plan showed that of the 622 measures
identified in the plan, 71% had been followed up (mainly concerning
energy, transport, ozone and climate), 14% had had no follow up (e.g.
measures concerning competences that had been transferred in the
meantime to other government levels than the federal ones) and no
information was available for the remaining 15%.
• On 28 April 2006 adoption by the Council of Ministers of the Belgian
CSR Reference Framework followed by the Federal CSR Action plan on
25 October 2006. The Green paper of the European Commission is used as
the basis for developing a Belgian federal CSR-policy, one of the priorities
of this initiative. The study group wants to develop a consistent, integral
and integrated policy concerning CSR and is an important stimulus in the
start of abroad social and national debate on the social responsibility of
companies, governments and social actors in Belgium.
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10. Key Drivers of CSR
Key CSR areas indentified in the Belgian context are:
 non-discrimination,
 public procurement,
 international investment,
 SRI,
 fair trade,
 stakeholder dialogue,
 transparency and
 reporting.
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11. Determining factors (drivers)
Workplace
Values Retention and motivation of staff
Competitive advantage
Added value to the company through environmental
approach
Employee retention, motivation, development – TEST next
values
Saving money Retention and motivation of staff
Competitive advantage
Added value to the company through environmental
approach
Employee retention, motivation, development
Supply chain Customer satisfaction and recognition
New business opportunities
Certificates, gaining better competitive advantage
New Provides new and differentiating products
opportunities Better community relations leading to new opportunities
New clients
Join networks and generate new business opportunities
Show leadership and visibility on issues, generating publicity,
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new markets and enhancing reputation

12. Determining factors (drivers)
Market place
Values Customer retention and satisfaction
Saving money Reducing risk of product recall
Enhance company/product image
Supply chain Access to new suppliers on criteria broadened
New Increase market share
opportunities
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13. Determining factors (drivers)
Environment
Values Seen as a clean company
Competitive advantage
Added value to the company through environmental
approach
Employee retention, motivation, development
Saving money Saving costs via resource use
Tax benefits
Lower insurance costs
Fewer environmental penalties & fines
Lower running costs
Save money on publicity/advertising through generating
environmental editorial
Eco efficiency/profitability
Supply chain Customer satisfaction and recognition
New business opportunities
Certificates achieved, gaining better competitive
advantage
New Provides new and differentiating products
opportunities Better community relations leading to new opportunities
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New clients ..

14. Determining factors (drivers)
Community
Values Enhanced reputation
Securing new business
Saving Improving security through crime prevention
money Soft skills
HR and training
Save costs on advertising through generating editorial
Supply chain Supply chain working together in community –
generating new suppliers, clients, teambuilding
improved relationships
New New customers through community involvement and
opportunities publicity generated
Become part of new community business networks
Non-governmental organisations
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15. CSR Best Practice initiatives
Area 1: Provision of employee benefits (health insurance, day care for
children, on site health professionals, transportation, free lunches
etc) could impact on the following business value drivers/KPIs:
– Productivity: More motivated workers are more productive - "this
company treats me well so I will give them a lot back in return/can't
find any better job opportunity and have to make sure I stay here"
– HRM - Improved quality of new staff: More attractive workplace -
higher number of applicants
– HRM - Increase in staff retention: More attractive workplace relative to
other job opportunities
– HRM - Reduced absenteeism / sick leave: Better, more proactive
healthcare reduces sick leaves, increases motivation, day care for kids
leave to lower absenteeism
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16. CSR Best Practice initiatives
Area 2: Gender neutral hiring policies / non-discrimination / diverse workforce
could impact on the following business value drivers/KPIs:
– Productivity: Diverse teams are more innovative, productive, and complement
each other's way of thinking and working. Better problem solving, more clever
ways to address issues as they arise
– HRM - Improved quality of new staff: Expanding the pool of potential employees
and thus raising the average skills level
Area 3: HSE training and safety measures (providing HSE training, preventative
health checks, safety equipment etc) could impact on the following business
value drivers/KPIs:
– Productivity: Training on correct operating procedures, heavy lifting, working
positions etc could improve productivity and reduce down time due to pains, extra
breaks, etc
– Reduced absenteeism / sick leave: Training on correct operating procedures,
heavy lifting, working positions etc will reduce sick leave, early retirement, and
other examples of absenteeism 16

17. Structure of Underlying Model
KPIs
Non-Financials
E S G
3 Areas of Environmental Social Governance
Performance
Emissions, Human Rights Compliance
Effluentes
Resources Societal Sustainability of
11 Categories of Performance Success Factors
Measurement Waste Training &
Qualification
Environmental Product &
Compatibility Health/Safety
Employee
Management
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18. Prospects for the future
 CSR practices will further spread in the business community.
 Stakeholders are progressively exercising more and more influence
on firms.
 The government is progressively involving firms in the realisation
of societal objectives and as a result progressively invites (or
compels) firms to take responsibilities that go beyond ‘making
profit for shareholders’.
 More and more consultants are offering services to implement
CSR in practice, executive educational initiatives are increasingly
offered to the business community, and CSR will in the future be
offered as a course in the basic education. The Ghent University
for instance, offers a course in CSR in the 3rd Bachelor in Applied
Economics from the academic year 2006-2007 onwards.
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19. Prospects for the future
 The Federal Minister of Environment, Consumer Affairs and
Sustainable Development is now starting a broad consultation
process on a number of measures she wants to take to promote
CSR
 Employers’ organisations reject any further regulation of CSR by
the government (VKW, s.d.).
 Develop a clear and precise economic and strategic rationale for
corporate social responsibility.
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20. Analysis and conclusion for Belgium
• The mindset and mentality regarding CSR in Belgium was first of all driven by
social concerns that emerged as a result of the early industrial history of
Belgium.
• Nowadays the focus on social coherence is characteristic of the entire Belgian
culture.
• The lack of open communication on and transparency in business policies may
lead to the impression that Belgium is far behind in the development of a CSR-
mentality.
• It should be noted for instance that social reporting has hardly got started in
Belgian companies.
• In the Belgian culture, however, it is no common habit to make voluntarily
taken initiatives public.
• Driven by the region’s culture, Belgian firms have no real tradition in explicit
communication on their business practices and on the drivers of these practices
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21. Closing remarks
 The bar for strategic CSR is now higher than ever.
 Consumers are increasingly unable (or unwilling) to pay more for
something simply because it makes them feel good about themselves.
Today, it has to make them feel good financially as well.
 That doesn't mean the era of "socially responsible" products is over. It
just means there are increasingly intense cost pressures on the
companies selling those products, and any manager who ignores that
fact is ignoring the competition's oncoming locomotive.
 Not to sound anti-CSR.
 Even in these uncertain times, every company should practice good
corporate citizenship. But they also need to face the reality that you
first have to make money before you can give it away
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