Chapter 10 : Civil Society and Business Ethics Group 8 : Nuri Rahmawati – 22/510159/PEK/29193 Agung A. Arianda - 22/510349/PEK/29233 Table of Content 01 Civil Society Organization (CSO) 05 Employee volunteering 02 Social license to operate 06 Social Enterprise 03 Boycott 07 Civil Regulation 04 CSO Accountability Civil Society Organization (CSO) Type of organization that is neither a business nor a government institution, and which is involved in the promotion of societal interests, causes, and/or goals. ● International CSOs: the Red Cross, Greenpeace, Friends of the Earth, WWF, Amnesty International, and Oxfam ● Indonesia CSO: Indonesia Corruption Watch (ICW), Wahana Lingkungan Hidup Indonesia (Walhi), Komisi untuk Orang Hilang dan Korban Tindak Kekerasan (KontraS) Civil Society Organization (CSO) CSO can range local neighborhood associations and religious groups to powerful national lobbying, organizations, and globally, there has also been an explosion of international CSOs working across border: climate protection, international development and human rights, and also involved in a varied mixture of activities. CSOs have a vital role to play in enhancing and ensuring ethical behaviour in business. Diversity in CSO characteristics Social License to Operate The ongoing approval and acceptance of a company’s activities by society, especially among local communities and civil society. ● CSOs tend to fall into two main types: sectional groups and promotional groups ● CSOs are increasingly attempting to influence political decision-making processes, setting up joint ventures with companies as ‘frenemies’, and investing in collaborative research projects. Different types of CSO Groups ● ● ● ● ● Trade unions Professional associations Student bodies Neigbourhood groups Parent associations, etc ● Environmental groups ● Anti-smoking groups ● Pro-life groups, etc e.g: Greenpeace, Amnesty. WWF, etc Boycott ● Boycotts are a very specific form of ethical consumption. Ethical consumption is often an individual activity or choice that may involve decisions to purchase some products and not others ● A boycott is a co-ordinated endeavour among a group of consumers to refrain from making specific purchases due to perceived deficiencies in social, ethical, and/or environmental performance. ● Its goals may be to influence corporate policy directly, or to achieve other objectives through collective action https://www.britannica.com/topic/cost-of-living Boycott by CSO https://www.bu.edu/goglobal/a/presentations/greenpeace_nestle_socialmedia.pdf https://lestari.kompas.com/read/2023/10/02/190000686/jejaring-organisasi-masyarakat-sipil-serukan-tolak-p erdagangan-karbon-?page=all Boycott by CSO Boycott by CSO For some CSOs high-profile controversy is exactly the purpose of calling a boycott they want to raise awareness of the issues involved rather than necessarily expecting the company to change its behaviour. CSOs might actually have four different purposes for: ● Instrumental boycotts aim to force the target to change a specific policy. Goals may be very clear, such as the repudiation of the challenged policy, the introduction of better conditions, etc. ● Catalytic boycotts seek to raise awareness about the company’s actions and policies. The boycott itself is more of a means to generate publicity, either for the CSO or for a broader campaign of action against the company. ● Expressive boycotts are more general forms of protest that effectively just communicate a general displeasure about the target company. This form tends to be characterized by more vague goals, since their focus is more on the CSO and consumers registering their disapproval. ● Punitive boycotts seek to punish the target company for its actions. Therefore, rather than communicating displeasure, the boycotters actively seek to cause the firm harm, usually by aiming for significant erosions of sales. CSO Accountability The Global Standard for CSO Accountability ● The question of CSO accountability is gaining further traction among academics, practitioners, and policy makers. ● Some of the largest international CSOs, including Oxfam, Amnesty International, and Greenpeace,have responded to these challenges with an ‘Accountability Charter’ intended to serve as an international code of conduct ● Under the banner of ‘Accountable Now’ CSOs are committed to improving accountability standards, enhancing public trust. ● Members of ‘Accountable Now’ has define 12 key principles that part form part of the Global ‘Standard for CSO Accountability’ which member are required to report annually to ensure commitment and accountability are maintained Employee Volunteering ● The giving of time or skills by company employees to a civil society organization during a planned activity endorsed, arranged, or funded by their employer. ● Volunteering for charities has traditionally been part of a citizen’s private civil engagement, companies have increasingly offered their employees the opportunity to volunteer on company time ● By enabling employees to commit their time and efforts to social initiatives in this way, firms and their workers may be able to achieve a number of aims, for example: contributing to skills development among workers, Increasing employee morale and teamwork and Enhancing the firm’s reputation. Social Enterprise A hybrid form of organization that pursues a clear social purpose through commercial trade. ● Social enterprise (also known as ‘social entrepreneurship’ or ‘social business’) but several key characteristics distinguish social enterprises from either traditional CSOs or from business enterprises. ● Social enterprises occupy something of a middle ground between a conventional business and a civil society organization (whether promotional or sectional). Some elements they share with the former (such as the production and trade of goods and services for a profit) while others they share with the latter (such as having a distinct social purpose) ● Social enterprise originally emerged from the civil society sector, primarily as a way for non-profit organizations to diversify their funding and become more self-sufficient. Civil Regulation ● Arrangements whereby civil society organizations play a role in defining and enforcing social and environmental standards for business. ● Business collaboration with civil society can sometimes help to build social and political structures that effectively change the rules for whole groups of business actors, or even entire industries. ● At the national level civil regulation is much more rooted to state policies and the law, where CSOs are more likely to work with, rather than in place of governments ● Civil society can act as a conduit through which individual citizens can exert some kind of leverage on, or gain a form of participation in, corporate decision-making and action Resume Case Case 10 : TOMS and ‘one for one’ : Implementing CSR one step at a time Founded in 2006 by Blake Mycoskie. Initially was a shoe-based charity movement. TOMS is now a privately owned global brand valued at US$625 million with 550 employees. Widely know through its ‘one for one’ initiative. TOMS has given away over 75 million pairs of new shoes to children in across 70 countries since 2016. Launch ‘Start Something That Matters’ social entrepreneurship fund to support new social enterprises to grow and flourish. Kindness is Contagious “When we started, no one was doing ‘one for one’ and a lot of people thought we were crazy. Many of my business colleagues thought we would not make money and we would never be sustainable. Now there are over 100 one-for-one companies.” - Blake Mycoskie TOMS has developed its model further, launching TOMS Eyewear, TOMS Bags, and TOMS Roasting Co. Coffee. TOMS Shoes TOMS Eyewear Consumers Beneficiary Impact Buys one pair of shoes Receives one pair of shoes 75 million shoes distributed Buys one pair of sunglasses Receives sight restoration Restored sight to 500.000 people Buys one TOMS bag Receives a safe birth through vital materials and training 175.000 mothers Buys one bag of Coffee Receives 140 liters of safe water (a week’s supply) 450.000 weeks of safe water TOMS Bags TOMS Roasting Co. Coffee Critics to TOMS Operation Decision & Charity Model Moving manufacturing activity to China - Critics : Focus on cheap, mass-production. contrast to the brand’s true value. One for one charity Model - Critics : encourages beneficiaries to become dependent on gifts, perpetuating stereotypes of developing country stakeholders as poor and needy. Also, there is an indication from a recent research that some beneficiaries may not actually need shoes donation. TOMS Business Sustainibility - Critics : Raising concern on TOMS economic Sustainibilty Also open production facility in local regions of Ethiopia, India, Haiti, and Kenya to encourage more sustainable futures by creating work for local communities. Transforming its CSR initiatives and position itself as a leading B-Corp company. “The combination of Toms wanting to do as much as we could in a way that was aligned with the passions of our consumers, we really started to wrestle with this idea of, 'Maybe it's time to evolve a little bit and maybe it’s time to do more than just our one-for-one giving.'" - Amy Smith, Chief Strategy & Impact Officer ; Case Questions 1. What are the main CSR issues facing the apparel and footwear industry? How does the TOMS ‘one-for-one’ model address these issues? Labor Practices Environmental Impact Many companies outsource production to countries with lower labor cost. Issues : poor working conditions, low wages, insufficient labor rights Textile waste, pollution form production, etc Access to Footwear Expert Says : “Shoes are the first step out of poverty.” 2. Focusing on recent news, take a look at what three or four CSOs have been saying about the TOMS business model. Do they broadly align with the ‘compassion for fashion’ argument, or do they see TOMS as ‘perpetuating poverty’? Compassion for fashion : a concept that suggests that fashion companies can incorporate social responsibility and charitable initiatives into their business models. Perpetuating Poverty : a situation or action that sustains or continues the cycle of poverty, rather than alleviating or addressing the underlying causes of poverty. “But while Toms has done an amazing job of providing children with shoes, I wonder if it couldn’t do more to solve the underlying problem” - Adriana Herrera, WSJ “Over-reliance on philanthropy as a sales motivator may potentially overshadow the need for product quality and innovation. Also, measuring the actual social impact can be complex, and not all donations may lead to sustainable change in the recipient communities.” - Dr. Jamie Humphries, Consultant “Mycoskie ensured poor children in different parts of the world got the benefit of its business. What made it work even better is the fact that a buyer, typically a young adult looking for an affordable yet cool pair of shoes, would feel good in the knowledge that his purchase has actually helped a poor child get a much-needed shoe for free.” Arezou Naeni, Business Today Compassion for Fashion Perpetuating Poverty “The combination of Toms wanting to do as much as we could in a way that was aligned with the passions of our consumers, we really started to wrestle with this idea of, 'Maybe it's time to evolve a little bit and maybe it’s time to do more than just our one-for-one giving.'" “At TOMS we’ve had to make a lot of pivots in our plans to adapt to the needs of these unprecedented times. Last year (2019), TOMS made the bold decision to decouple our impact from our original One for One model so we could be more nimble, meeting the needs of a new reality.” Amy Smith, Chief Strategy & Impact Officer “Now for every $3 we make, we give $1 away, both in the form of shoes and impact grants.” “We’re trying to add as many environmentally responsible things as we can. We’re investing in more earth-friendly products in our product line.” Compassion for Fashion 3. Who are the main stakeholders of TOMS and how has the firm prioritized them? Is it right to prioritize them in this way? Customer Providing affordable, stylish, and ethically sourced products. Beneficiary Employee Shareholders Suppliers and Partners Providing them essential items (shoes, vision, water, etc). Offering fair wages, safe working conditions, and opportunities for professional growth. Providing good returns and assuring its business sustainability. Build collaborative partnership, perform impact assessment. TOMS' way of prioritizing its stakeholders is quite good, as they try to balance their social impact with their business objectives. Nevertheless, there have been criticisms of their CSR model, which TOMS has addressed by transforming their CSR model. 4. What are the potential risks and rewards of TOMS’ approach to philanthropic giving? How sustainable do you believe this business model to be in the long term? Rewards Risks Positive Brand Image Financial Sustainibility Consumer Engagement Creating dependency on charitable donations rather than addressing the root cause of poverty. Gaining Brand Advocacy Social Impact Perception of Tokenism / Greenwashing TOMS' sustainability will be threatened if they do not adapt and improve their approach to how they conduct CSR. The expert critics and the fact that the company faced financial difficulties in 2019 show how vital it is to adapt and change. The current CSR model they use now (Purpose, Planet, People) is believed to be more economically sustainable and socially impactful. 5. How could TOMS enhance its social license to operate? Consider the ethical challenges of social entreprises listed in this chapter in your response to this question? Social license to operate : The ongoing approval and acceptance of a company’s activities by society, especially among local communities and civil society. Civil Regulation Balancing Competing Interests Fostering Participation and Democracy Sustaining Civil Society Enhancing TOMS' social license to operate involves actively addressing the ethical challenges associated with social enterprises. By embracing transparency, engaging with stakeholders, and demonstrating a commitment to addressing the multifaceted concerns of civil society, TOMS can improve its social impact and credibility, leading to a stronger social license to operate. References https://www.hukumonline.com/berita/a/perbedaan-antara-ormas-dan-organisasi-masyarakat-sipil-lt61fceb4cea1c0 /?page=1 https://www.bu.edu/goglobal/a/presentations/greenpeace_nestle_socialmedia.pdf https://lestari.kompas.com/read/2023/10/02/190000686/jejaring-organisasi-masyarakat-sipil-serukan-tolak-perd agangan-karbon-?page=all HOME WASTE MANAGEMENT THANK YOU CO₂ EMISSIONS COMMITTED EMPLOYEES SOCIAL ACTION
