Corporate Social Responsibility: new context,
new approaches and new applications
A comparative study of CSR in a Croatian and a
UK company
By
Anne Gregory and Majda Tafra
Anne Gregory
Professor of Public Relations
Centre for Public Relations Studies
Leeds Business School
Leeds Metropolitan University
Headingley Campus
Leeds
LS6 3QS
Tel: +44 (o) 113 2837520
Email: a.gregory@leedsmet.ac.uk
Majda Tafra
Public Affairs &
Communication Manager
Coca-Cola Beverages Hrvatska.d.d
Milana Sachsa
HR-10000 Zagreb
Hrvatska/Croatia
Tel: +385 1 2480 167
Email: majda.tafra-Vlahovic@cchbc.com
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Biographies
Anne Gregory is the UK’s only full-time Professor of Public Relations and Director
of the Centre for Public Relations Studies at Leeds Metropolitan University, the
largest department of public relations in the UK.
Before moving into academic life ten years ago, Anne was a full-time public relations
practitioner, holding senior appointments both in-house and in consultancy. Anne is
still involved in practice being a non-executive director of the South West Yorkshire
Mental Health Trust with special responsibility for finance and communication. She
is editor of the Journal of Communication Management and of the UK Institute of
Public Relations’ Public Relations in Practice series.
Majda Tafra, MIPR, is Public Affairs and Communication Manager for the Coca-Cola
Hellenic Bottling Company in Croatia (Coca-Cola Beverages Hrvatska). She has held
this role for five years. Before joining Coca-Cola, Majda Tafra worked as a
programme and communication officer for UNICEF and a journalist and media
studies teacher.
She has been publishing on sustainable development and the role of communication in
stakeholder relationships and corporate responsibility advocating the competitive
advantage of corporate philanthropy and the need for transparency.
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Abstract
There is a growing body of literature on Corporate Social Responsibility (CSR) and
numerous case studies illustrating a variety of approaches by different companies and
organisations.
This paper takes a broad overview of the literature to draw out some of the main
developments and current perspectives on CSR and reaches the conclusion that
stakeholder expectations can be defined in terms of two variables depending on their
perception of their relationship with the organisation: relationship intensity and
content expectation.
In the light of those variables, two cases, one based in Croatia and one in the United
Kingdom are analysed, using published CSR Reports as the basis for comparison
supplemented by information from the Reports author’s. Comparisons are made
based on this analysis and the overall conclusion is drawn that in Croatia, and by
imputation in all developing economies, CSR can and is used as a Societal driver. In
the UK and by imputation in all developed economies CSR is the result of societal
accountability.
To the authors’ knowledge this is the first such comparative analysis and as such
brings new insights into how CSR can be made more relevant to the local
communities of global organisations.
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Corporate Social Responsibility: a new context, new
approaches and new applications
A comparative study of CSR in a Croatian and UK
Company
By Anne Gregory and Majda Tafra
1. Introduction
There is a growing body of literature and an increasing number of published examples
and Reports of Corporate Social Responsibility (CSR) programmes. However, to the
authors’ knowledge there has been no specific comparison between how a company in
an emerging economy and how a company based in a mature economy approach this
issue.
This paper looks at Coca-Cola Beverages Hrvatska (CCBH), based in Croatia and
Cadbury Schweppes based in the UK to make this comparison. To do this the
literature is briefly surveyed to set the context and then the most recent CSR Reports
of both organisations(1) are examined in depth. From this conclusion are drawn about
how CSR should be conducted in emerging and mature economies.
It is recognised that these conclusions require further testing given this is an initial
study, but they are put forward as reasonable propositions based on the Reports and
their authors’ input.
2. Background and history
CSR has its origins in the social activism of the 1960s and 1970s. Awareness of
issues such as equal opportunities, racial equality and workplace safety and health
first galvanised the public into scrutinising business practices more closely than
before, then led to these obligations being enshrined in law (Carroll 1991; Reed 1999;
Dougherty 2001; Heath 2001; Le Jeune 2004). Businesses could no longer justify
their existence by their economic success alone, neither could their responsibility be
regarded as being only to their shareholders as espoused by Friedman (1970). Now
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perceived as social agents, their social responsibilities required a new kind of
responsiveness to a wider range of publics if their reputation was to be protected
(Bowie, 1991). Indeed Andriof and Waddock (2002) see the progress of CSR
thinking as travelling from being understood as just part of business’s social contract
to now being embedded as part of business practice at a strategic level.
Business practices in most developed democracies now conform to a set of normative
standards – equal opportunities, equitable remuneration, healthy work environments
and safe, fairly-priced products and services (Heath 1997). Penalties for nonconformity include legislative or regulatory measures and lost sales (Heath 1997;
Reich 1998). However, social values and expectations are dynamic; even as
businesses try to meet these and other ‘matter of course’ obligations - such as the
elimination of child labour and minimising environmental impact - stakeholders bring
new issues to their attention. Dougherty (2001) highlights the danger of a significant
‘legitimacy gap’ – emerging from the disparity between public expectations and
business performance – which can result in damaging stakeholder challenges to
company reputation.
Bodies such as Business in the Community (BitC), CSR Europe, the Institute for
Business Ethics (IBE), Business for Social Responsibility (BSR) and the Prince of
Wales International Business Leaders Forum (IBLF) have emerged in recent years,
aiming to guide managers through the complexities of balancing stakeholder demands
with business interests, towards well-managed CSR policies and processes(2). Indeed,
the concept of CSR is now so established as a business consideration following the
European Summit in Lisbon in March 2000, business leaders launched the European
Business Campaign 2005 on CSR (CSR Europe and IBLF, 2002).
In similar vein, academic research has focused on understanding stakeholders,
defining what types of CSR might be undertaken, and how to reconcile CSR with
more traditional business priorities. CSR has been found to make a positive
contribution to the bottom line (Little and Little 2000; Moore 2003), to be a
significant element in reputation management, and particularly reputation risk
management (Lewis 2003; Sagar and Singla 2004), to improve operating efficiencies
(Heath 1997), and to generate positive morale among employees (Lines 2004).
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2. Current perspectives
Definitions of CSR have evolved and the term is used interchangeably with ‘corporate
responsibility’ and more recently ‘sustainable development’ (Buchholz 1991; Le
Jeune 2004). In addition, the concept has been linked to the related area of corporate
reputation, where poor CSR presents a major risk to reputation, while good CSR
represents an insurance policy against damage to reputation and demonstrates best
practice corporate governance, reflected in triple bottom line reporting where the
economic, environmental and social aspects (sometimes called the three P’s, profit,
plant and people) of a business are covered (Harrison 1997; Genasi 1999; Laurence
and Blakstad 2001; Wheeler 2001). More recently, academics have criticised existing
models and suggested that social responsibilities, rather than business obligations or
public-driven motives, should lie at the heart of CSR programmes (Moore 2003).
Others argue for more comprehensive incorporation of the dialogue inherent in CSR
programmes between an organisation and its stakeholders (Haas 2003; Roberts 2003).
These discussions reflect the acknowledged status of CSR as a core business issue.
Commonly accepted definitions of CSR reflect this. For example, BitC defines CSR
as follows:
‘Companies have an impact on society and the environment through their operations,
products or services and through their interaction with key stakeholders such as
employees, customers, investors, local communities, suppliers and others. Corporate
responsibility means managing this impact so as to add value to the company and
increase wider economic and social well-being now and over the longer term.’
(http://www.bitc.org.uk/programmes/key_initiatives/corporate_responsibility_index/a
bout.html)
BSR says CSR conduct helps companies:
‘achieve success in ways that respect ethical values, people, communities and the
environment.’
(http://www.bsr.org/Meta/About/index.cfm)
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The IBLF defines CSR as follows:
‘CSR – or Corporate Social Responsibility – means open and transparent business
practices that are based on ethical values and respect for employees, communities
and the environment. It is designed to deliver sustainable value to society at large, as
well as to shareholders.’
(http://www.iblf.org/csr/csrwebassist.nsf/content/a1.html)
Definitions such as this acknowledge that CSR activity takes place as a managed
programme of activities in the context of ongoing relationships – about which the
business has no choice – with diverse stakeholders including government, non profit
organisations, customers, employees and others (Bowie 1991; Sutton 1997; Haas
2003; Hatcher 2003). Indeed the requirement for multi-stakeholder dialogues where a
negotiated solution between the stakeholding partners who together seek mutually
acceptable solutions to “messy” problems is seen as the best way for ward (Payne and
Calton, 2002). They also accept that CSR must be part of the core business strategy,
planned and executed so that it is in line with those business interests (Saiia, Carroll et
al. 2003).
Because of the breadth of interests involved – and therefore the variety of
expectations to be managed - formulating a CSR programme is a complex process
(Dalton and Daily 1991). Key areas to be considered in any CSR programme include:
ethics – the degree to which business activities can be considered ethical
governance – the role of CSR in good corporate governance
human rights – the rights of employees, customers, outsourced workers and others
affected by the activities of the business
environment – the impact of the business activities on the immediate and remote
environment
social duty – the obligations of the organisation as a social partner.
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Research has found that these areas will carry different weight in different societies.
Expectations of organisations are, to a certain extent, culture- and society-bound
(Adams and Kuasirikun 2000; Maignan and Ferrell 2003; Sagar and Singla 2004).
For example, consumers in mature democracies are able to consider global issues
such as ethics and human rights, since businesses already meet normative
expectations about their immediate environment. However, in countries where
democratic government is emerging, expectations of business may include
requirements to support and even enhance the democratic process (CSR Europe and
IBLF 2002; Molleda 2000).
The Global Reporting Initiative (GRI), which is used by many organisations as their
benchmark for CSR reporting has produced content guidelines(3) for the production of
comparable CSR reports (see Figure 1).
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REPORT CONTENT
PERFORMANCE INDICATORS
Part C of the Guidelines recommends that five sections appear in a sustainability
report:
1. Vision and Strategy: A statement from the CEO and discussion of the reporting
organisation’s sustainability strategy.
Performance indicators, both qualitative and quantitative, are the core of a sustainability report.
The performance indicators are grouped under three sections covering the economic,
environmental, and social dimensions of sustainability. In each area, GRI identifies core
indicators (required for reporting in accordance with the Guidelines) and additional indicators
(used at the discretion of the reporter to enrich a report).
Economic indicators concern an organisation’s impacts, both direct and indirect, on the
economic resources of its stakeholders and on economic systems at the local, national, and
global levels. Included within economic indicators are the reporting organisation’s wages,
pensions and other benefits paid to employees; monies received from customers and paid
to suppliers; and taxes paid and subsidies received. In a few instances, economic performance
information overlaps with that in conventional financial statements. In general, however, the
two are complementary.
Environmental indicators concern an organisation’s impacts on living and non-living natural
systems, including eco-systems, land, air and water.
Included within environmental indicators are the environmental impacts of products and
services; energy, material and water use; greenhouse gas and other emissions; effluents and
waste generation; impacts on biodiversity; use of hazardous materials; recycling, pollution,
waste reduction and other environmental programmes; environmental expenditures;
and fines and penalties for non-compliance.
Social indicators concern an organisation’s impacts on the social systems within which it
operates. GRI social indicators are grouped into three clusters: labour practices (e.g., diversity,
employee health and safety), human rights (e.g., child labour, compliance issues), and broader
social issues affecting consumers, communities, and other stakeholders (e.g., bribery and
corruption, community relations). Because many social issues are not easily quantifiable, GRI
requests qualitative information where appropriate.
2. Profile: An overview of the reporter’s organisation, operations, stakeholders,
and the scope of the report.
3. Governance Structure and Management Systems: A description of the reporter’s
organisational structure, policies, management systems, and stakeholder engagement
efforts.
4. GRI Content Index: A cross-referenced table that identifies the location of
specified information to allow users to clearly understand the degree to which the
reporting organisation has covered the content in the GRI Guidelines.
5. Performance Indicators: Measures of performance of the reporting
organisation divided into economic, environmental, and social performance
indicators.
Organisations may adopt this format or modify it to enhance usefulness of the report
to its stakeholders.
ASSURANCE
Just as investors look to independent audits to certify the accuracy and completeness of financial reporting, stakeholders increasingly seek such assurance for sustainability reports. GRI
encourages the independent assurance of sustainability reports, while recognising that no generally accepted assurance framework, protocols or practices currently exist.
Figure 1. Summary of Global Reporting Initiative (GRI) Sustainability Reporting Guidelines
9
In addition to content, the actual process of management and evaluation has been
subject to much debate over the past decade (Pavla and Krauscz 1997; Little and
Little 2000; Jackson and Bundgard 2002). The quality of these processes depends on
the strategy behind the program and the outcomes associated with it. These, in turn,
vary according to stakeholder expectations of the business in a particular social
environment.
Therefore a new insight that can be drawn from the literature is that stakeholder
expectation can be defined in terms of two variables which may or may not be
independent depending on the stakeholders perception of their relationship with the
organisation.
a. Relationship Intensity
CSR is embedded in relationships that require levels of dialogue that vary in intensity.
Charities, for example, may argue that financial support is most helpful. Government
may ask for intermittent engagement in the policymaking process. The local
community might require physical engagement of employees in community
initiatives. Employees may argue for genuine two-way discussions about their
working conditions and, as instrumental in the delivery of CSR in practice, want
involvement in the development of the company’s policies and processes. Activist
groups may want both involvement from the business and involvement in the
business, to ensure their interests are considered. One extreme of this continuum may
be called contact engagement – the other, comprehensive engagement.
Contact engagement requires no action from the company other than a single or
regular transaction whether, for example, for information or a donation. It may be
regarded as a ‘tick the box’ activity, and there is, effectively, no dialogue other than
the initial discussion required to understand the stakeholder expectation.
Comprehensive engagement, on the other hand, requires the company to demonstrate
tangible actions or change as a result of its relationship with the stakeholder, and
further, to involve that stakeholder in the longer term and in evaluation and reporting.
Dialogue in this case is intensive, continuous and extended. Employee engagement is
a good example of this.
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The continuum between these two extremes tracks the level of dialogue between
stakeholders and the organisation, based on the degree to which each must take into
account the needs of the other. The further apart are the parties, the less the need to
accommodate the other’s view in discussions, the lower the level of engagement. The
closer together they are, the more the dialogue is characterised by mutual
accommodation, respect, understanding and consideration.
b. Content Expectation
Content expectation of CSR programmes will vary according to the social and cultural
context. In line with previous case study findings, it can be argued that obligations
relating to the immediate business environment are paramount in countries where
democratic government is evolving or unstable. These may include, for example:
•
wellbeing of employees, suppliers and their communities;
•
protection of the immediate physical environment;
•
national or regional regulatory issues relating to business and employee rights
and obligations
In these countries, supranational considerations are unlikely to be of high importance
in a CSR programme.
Further, we suggest that supranational considerations are likely to be considered only
in countries where normative obligations about business practice have been enshrined
in law - and are therefore virtually guaranteed to be met. Supranational
considerations may include:
•
human rights of workers in supplier companies based in developing countries
•
environmental impact of business practices on an international scale
•
fairness of trade practices between trading bocks or regions
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The following case studies are analysed in light of these suggestions.
3. Coca-Cola Beverages Hrvatska (Croatia) – a case study
3.1 Context
Croatia is situated on the crossroads between Central Europe and the Mediterranean,
along the eastern coast of the Adriatic Sea and its hinterland. It stretches from the
Alps on the north-west to the Panonnian plain on the East.
According to official data(4) the total country population is 4,437,460. GDP per capita,
in 2002 was 5,569.1 USD. The unemployment rate is 22.5% and the average monthly
gross wage 682.4 USD. Total number of employees was estimated at 1,043,871.
The country’s economy is in a transition period from a state-dominated economy to a
free market economy. The period is marked by turbulence, both political and
economic. The beginning of the new democratic independent state emerging from the
former Yugoslavia was marked by four years of war (1991-1995). The war ruined
many industrial, civilian and cultural assets and left a number of unsolved problems
with hundreds of thousands of refugees, human rights abuses and political conflicts.
The results of the Global Competitiveness Report for 2002/2003 published by the
World Economic Forum(5), in which Croatia was included for the first time, placed
Croatia in the 58th place out of 80 countries in the Growth Competitiveness Index, far
behind other transition countries (those which joined EU in 2004) at the time and with
only Romania and Bulgaria placed behind Croatia. It was 67 out of 80 countries in the
Global Information Technology Report(5).
High levels of political corruption and some other factors indicated that in most areas
in connection with the government and the public sector, Croatia was ranked as
poorly as other countries in transition, with the only exception of the tax system which
was seen as better and more transparent than the world and EU average.
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Regarding public institutions, the benchmarking analysis showed parity with the other
transition countries (with the exception of Slovenia and Hungary). Only Bulgaria was
ranked lower in media censorship. Croatia also earned a very low general mark on
infrastructure. Relations between employees and employers are the worst of all the
countries in transition, and the ratio between salaries and productivity is the lowest
compared with other countries in transition. The other transition countries (with the
exceptions of Bulgaria and Romania) also ranked better in the implementation of the
environmental regulation.
Croatia aspires to join EU in 2007 or beyond.
3.2 CSR in Croatia
What differentiates Croatia from other transition states is its immediate past history: a
very special type of socialist rule, so called “workers self-management”, a more
flexible open model of socialism, not found in any other country at the time. It was a
combination of certain elements of the market economy and western democratic
liberties, with state protection of labour rights and core labour and social standards.
Although, from a historical distance of more than ten years, this social system is
sometimes considered to have been less efficient and rather tokenistic, it has been
acknowledged that it had introduced employee participation and a culture of dialogue
in social and political life, and into managerial practices. This led the authors of recent
research on CSR in Croatia (Bagic, Skrabalo and Narancic, 2004) to the conclusion
that the current endorsement of team work and stakeholder consultations in the
Croatian business community seems to be a combination of contemporary western
approaches to quality management and former types of corporate governance. While
this particular feature could be further debated, there is no doubt that the culture of
dialogue, self- management as corporate governance and heightened awareness of
human and employee rights did make fertile soil for the development of positive
attitudes to CSR, first of all in the business community. In the research this was
reinforced by suggesting that the country had ethical business, community relations
and product quality and environmental commitment, long before foreign companies
introduced basic CSR ideas.
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An enabling legislative and policy environment for CSR currently does not really
exist in Croatia, although progress has been made. At the moment there are no
government measures to stimulate companies, and the government appears to shrink
from a CSR debate which includes the business community and civil society. The
government appears to be determined to over-regulate various sectors and here,
consultation with the business sector is often regarded as being of a formal nature, and
tokenistic rather than a genuine engagement in substantial policy development.
According to the research (the only research on CSR done so far in Croatia), CSR has
been seen by some of the managers who were interviewed, as a driving force behind
the commitment to human resources and investment in the community. Thus, it is
contended, companies and their ownership structure have been designed to facilitate
CSR achievements. In the context of the competitiveness indicators with other
countries, companies’ commitment to strive for leading positions in the
democratisation process by relating it to CSR development, could be considered a
logical deduction. The other driver that emerges is the leadership of committed
individuals. Finally, it is the big companies that have been shown to be the leaders,
driving visible CSR policies and practices while SMEs lack knowledge and capacity
in this respect.
The report identified the key areas of CSR in Croatia as being community investment
and philanthropy, policy dialogue, advocacy and institution building and core
business activities including employment and wealth creation, training and human
resources development, equal opportunity and diversity, supply/value chain
development, knowledge and technology transfer, cause-related marketing, business
standards and governance, relations with consumers and product integrity.
The examples of best practice in this area illustrate strong positive core-value drivers
behind CSR development, particularly in environmental protection, business
governance and ethical business. One of the main conclusions of this report is the
crucial role of leadership in driving CSR in Croatia. Leadership, in general, is high on
the agenda in Croatia, and this particular category of leadership, considered a must in
the ever changing, demanding business environment, ranks high on public lists.
Politicians get more media coverage when promising European standards to the
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inhabitants, but it is the business leaders, particularly those with CSR achievements
and charisma, that are considered to be the main drivers in pushing the country to EU.
Within this context, Coca-Cola, one of the largest companies in Croatia, is a major
exemplar of CSR in practice and it is quoted in the research as a leader in the area. Its
first Social Report was published in November 2003. The following describes the
reporting framework used, the process for collating the Report, content of the Report
and how it was communicated. Conclusions are then drawn.
3.3 Coca-Cola Beverages Hrvatska.d.d. Social Report, Nov 2003
a)
Framework used and rationale
Coca-Cola Beverages Hrvatska’s (CCBH’s) Social Report is a stand-alone
document whose aim is to set out the social impact of its core business
behaviour on a number of stakeholders, including its own employees, customers,
suppliers, and the wider community. It is a ‘triple bottom line’ Report covering
profit and loss; environmental protection; and social obligations. The Report
states it wishes to be seen as a means of verifying how far the company has met
standards of ethical and social behaviour.
CCBC has opted for a mixed model of authorship in which the social Report
was produced jointly by a CCBC employee and an independent external
consultant. Whilst free to explore issues at will, the consultant was dependent on
CCBC for co-operation, access to information and stakeholders, and for the final
publication of the Report. In addition, the Report contains an external review by
the IBLF.
The narrative is based on the Social Performance Reporting Guidelines issued
by the Global Reporting Initiative (see Figure 1), with a degree of adaptation to
fit the Croatian context.
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b)
Process
The External Consultant used various methods for gathering information: indepth scrutiny of a range of internal documents relating to all aspects of
CCBH’s social performance, individual interviews with key CCBH staff
including representatives of trade unions, individual interviews with external
stakeholders including representatives of community groups and two focus
group discussions with a cross-section of stakeholders who were able to give
their responses to a draft Report.
Additionally, internal documents were scrutinised by the internal team and
outcomes were shared with the consultant. There was ongoing discussion on
the content of the Report.
The Report covers the Financial Year 1 January – 31 December 2002. For
comparative purposes, wherever possible, two previous years 2001 and 2000
were used. As this was the first Social Report by CCBH a baseline for reporting
has been established which will allow for comparisons in subsequent reporting
years.
The GRI Guidelines were chosen from the many global reporting frameworks
available since they were regarded as the most rigorous. Annex 1 to the Report
includes a GRI Content Index so that the reader can easily locate each GRI
reporting element and performance indicator in the text. The main gap in the
Report is on CCBH’s performance in relation to the environment because in
May 2002, CCBH published a separate Environmental Report. However,
wherever possible, the Social Report addresses social aspects of CCBH’s
commitment to the environment. CCBH will produce a fully integrated
Sustainability Report in 2005, the European Year of CSR, which will
incorporate the Environmental Report.
An interesting aspect of the Report is a statement of the methodology used. This
is unusual in CSR Reports and the company justifies its inclusion not only to
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demonstrate transparency, but also in the hope of stimulating others in Croatia to
produce similar reports in the future.
To generate content for the Report, indicators in the GRI Guidelines and others
relevant to CCBH were framed into questions and responsibility for answering
each question was given to a named person in a named department.
Publicly available documents on social reporting, a range of internal documents
and copies of external standards, codes of practice, and relevant rule-books were
also consulted.
The Consultants held interviews and discussions. The interviews providing an
opportunity to explain the Social Report more fully, clarified issues regarding
the questions, and explored in greater depth wider contextual and organisational
issues.
Following a draft Report, feedback sessions were held with a small group of
senior mangers to explore further issues in the Report, to clarify some
information, and to discuss next steps.
c)
Content
The content of the Report is structured as follows. In line with the GRI
Guidelines the Report has included a General Manager’s statement; external
review and executive summary.
The main body of the Report contains an overview including the company and
its partners; vision and strategy; organisational profile and governance structure,
policies and management systems. This is followed by information on
performance containing data on economic impacts and performance,
employment and labour practices, promoting and guaranteeing human rights,
product responsibility and community programmes and partnerships.
Recommendations and a commitment to future actions are also included.
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Contained in the Annex, are the GRI content index; the methodology of the
Social Report and contact addresses.
A fuller summary of the Report is given in Appendix 1, however, a brief
overview is provided here.
CCBH operates under franchise from The Coca-Cola Company and is largely
owned by The Coca-Cola Hellenic Bottling Company S.A (CCHBC), Europe’s
largest soft drinks company operating in 26 countries.
It has six main departments: operations, sales, finance, administration,
marketing and public affairs and communicators, net sales revenue in 2002 was
109,404,000 Euros, earnings before interest and tax were 14,844,000 Euros and
total employees numbered 758.
The parent company, CCHBC’s mission is “to refresh our consumers, partner
with our customers, reward our stakeholders and enrich the lives of our local
communities” (p 13). CCBH shares that mission. The company states its wish
to be a world class selling organisation, emphasising the 4A’s of availability,
affordability, acceptability and activation. Alongside this the company’s
mission embraces a commitment to enrich and support the lives of the
community it lives in, to honesty and integrity in business practices, to respect
the diversity and dignity of people, and to protect the environment” (p 14).
Its specific CSR commitment is to local communities and their social, healthrelated and environment concerns and issues. “CCHBC is striving to be a
valuable partner in community relationships, a neighbour of choice and a good
corporate citizen. Again, CCBH takes its cue from the parent company.
The Report itself lists all the key stakeholders of CCBC and summarises the
nature and frequency of consultations with them. Out of those listed, contact is
most often and intense with (in priority order) workforce, trades unions,
customers, consumers/communities.
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Quality standards are clearly important and signified with its achievement of
international production standards and its quest for ISO 14000 – an
environmental standard. In addition, there are clear statements about
commitments to a Code of Business Conduct and modern risk management
practices.
Consideration of the internal stakeholding community takes up most room in the
Report. A key issue has been a reduction in salaries which, although still
considerably above the Croatian average, has clearly brought tensions in the
workforce. The rights of workers to belong to trade unions and the Workers
Council are emphasised as is the commitment to training and development, but
flexibility is also a concern as the requirement for a more profitable
organisation takes on new importance in the move to an open market economy.
Diversity, inclusivity and equal opportunities are also recognised issues.
The separate section of the Report on Human Rights also focuses on employees
to a large extent, emphasising non-discrimination and fair disciplinary
procedures. It also touches on fair and open business practices.
Customer and consumer implementation focuses on the complaints procedure,
quality assurance, product labelling and a commitment to uphold high standards
in marketing. Here comparative advertising, marketing to children and
consumer privacy are specifically covered.
d)
Communication
The Report was published in the Croatian language with a summary in English
and distributed after a public launch to 300 recipients in government, business
and civil society. The copies were supplied with a questionnaire asking for
feedback in an attempt to launch an ongoing stakeholder dialogue. The Report
has also been put on the company web-site. The first results of the survey,
informal feedback and feedback from focus groups are being analysed and a
second round of stakeholder dialogue will be initiated in September 2004.
19
The launch of the Report has had a powerful advocacy effect on the public status
of CSR in Croatia. By organising a public discussion on CSR and publishing its
first social report, CCBH wanted to encourage a wider dialogue about CSR. The
General Manager of CCBC who is also President of the Management Board of
the Croatian Business Council for Sustainable Development, spoke at the launch
of the Report (the first social report issued by any company in Croatia) stating
his hope that the Report would encourage discussion and dialogue in Croatia.
3.4 Observations of this case
In terms of the literature review and specifically the two variables – relationship
intensity and content expectation – the following observations can be made on this
case
a)
Relationship intensity
While it is dangerous to make simplistic assumptions that the amount of
discussion given to a particular stakeholding group or concern is a measure of
their importance, it is advisable to say that it is an indicator of the current
priority that the company puts on that group or concern and it is legitimate to
suggest certain implications which would benefit from validation in the field.
Thus:
•
the weighting of the Report and the level of detail given indicates that
there is most requirement for dialogue and engagement with, in priority
order, employees, the local community, customers and consumers.
There is least dialogue with suppliers, Non-Governmental
Organisations (NGO’s), business organisations, central and local
government, public institutions with contact with the latter two being
mainly related to community based activities.
•
the centrality of community and nation-building stakeholding groups is
reflected in this weighting
•
engagement is at the local and national level
20
b)
Content expectation
Obligation to the immediate business environment is paramount and focuses
on
•
the well-being and human rights of employees.
•
supporting and developing local communities which is a central
tenet of the CSR programme.
•
protection of the environment surrounding the plant and in local
communities.
•
conformity to national and where applicable, international
regulations and protocols.
Community involvement also features prominently in the Report. 0.15% of
net sales revenue in 2002 was given in cash and kind. Donations are in line
with the policy outline earlier, but the emphasis is on community building and
ameliorating the effects of the war which ended in 1995. All giving is within
Croatia and is a combination of national and local projects. Dialogue with
local communities, both formal and informal and across a broad range of
stakeholders is regarded as vital.
Environmental concerns are handled at a local level, but also with Government
and NGO’s and pressure groups.
The Report finishes with a restatement to CCBH’s CSR responsibilities and a
commitment to ten themes which have been identified as areas for special
attention.
4. Cadbury Schweppes – a case study
4.1 Context
21
The United Kingdom (UK) is located just off the North West of the European
Continent and has been a full member of the EU since 1973. Total population is
59.2(6) million and GDP per capita in 2002 was 28,000(7) USD. The current
unemployment rate is 4.8% and average monthly earnings approximately £1750. The
total number of people in employment is 28 million.
The country has a free-market economy and the parliamentary system of democracy is
the oldest in the world with its origins in the 1600’s. The 2002/3 World Economic
Forum Global Competitiveness Report(5) placed the UK 11th out of 80 countries in the
Growth Competitiveness Index. Technologically the country is advanced (ranked 7th
in the Global Information Technology Report) and it is politically stable.
The Global Competitiveness Report also shows that political corruption is minimal,
political institutions are sound and infrastructure is advanced.
4.2 CSR in the UK
There are two main sets of drivers for the move toward CSR in the UK. The first set
is external and require companies to respond in a reactive way to defend their market
and legal position. External stakeholders including customers and activist groups are
increasingly looking at the organisation behind the brand and making purchasing or
hostile-action decisions based on social responsibility judgements (MORI, 2003).
Because these groups impact on the business growth and reputation of organisations,
shareholders too are interested in CSR. A notable recent example of this was the
removal of Piers Morgan as editor of the Daily Mirror, one of the largest circulation
newspapers in the UK. The Mirror had published photographs of alleged prisoner
abuse in Iraq which subsequently were revealed to be fakes. In the resultant furore, it
was two leading shareholders, Isis Asset Management and Deutsche Asset
Management speaking out publicly about their concern for the integrity of the
Mirror’s editorial process and the damage to the newspapers reputation that led to the
editor’s removal (Burrell et al, 2004).
The second principal external driver is potential regulatory change. Largely in
response to corporate scandals in the US including Enron and WorldCom, but also in
22
sympathy with the public mood, the UK government is proposing changes to the
Company Law Act. This will require companies to provide a much more holistic
valuation of their performance rather than just the financial one currently obligatory in
the Annual Accounts. Proposals being considered demand reporting on factors such
as stakeholder relationships, environmental impacts and risk assessment and
management.
In response to these external drivers numerous organisations have been very publicly
promoting their CSR credentials. There has been an increase in corporate giving,
volunteering and environmental initiatives. However, for many this activity has been
mainly for marketing purposes (Le Jeune, 2004). The CSR philosophy has not been
embedded in the organisational culture nor is it seen as the driver of fundamental
policies on, for example, employment in developing nations, supplier relationships
and corporate governance. Marketing-driven tokenism has led to accusations,
especially from NGO’s of “green washing” in the environmental area, where
publicised activities are seen as an attempt to mask environmentally unfriendly
actions elsewhere in the organisation or as an effort to bolster relatively minor
improvements, or even standard practice as major achievements.
More positively and proactively there are a growing number of companies whose
ethos and business practices reflect a deeply embedded CSR culture. While it is fair
to say that the majority of companies would ultimately conform to a narrow definition
of CSR as being part of business’s social contract when maximising stakeholder
return, for the leaders in the field it is clear that the wider notion of CSR as being part
of business practice as a whole, is entirely applicable. These leading companies
embed CSR because they regard it as morally right to act in this way - it also makes
business sense. They do not do it primarily to drive profits.
Principal CSR activities in the UK are cause-related marketing, volunteering, equal
opportunity and diversity, business standards and governance, community investment
(including sponsorship of the arts, sport and education) and philanthropy.
4.3 Cadbury Schweppes Corporate and Social Responsibility Report, May
2004
23
Cadbury Schweppes’ CSR Report is the second such report produced by the company,
the first being issued in 2002.
The first report was considerably less detailed than the second and acted as an initial
benchmark. It did not include a full environment, health and safety report, which the
second one does. The first report sought to give an overview of the values of the
company, what the company was currently doing in CSR, and an indication of the
direction of travel. The second report, which is much more comprehensive, details of
performance against key performance indicators, stakeholders’ analysis against
external and sectoral standards and presents a much more holistic approach as
indicated below.
a)
Framework used and rationale
The CSR Report is a stand alone document produced by the company. It sets
out the impact Cadbury Schweppes has on all its core stakeholders including
suppliers, consumers, business partners, employees, government and
shareholders.
The Group CSR Manager, who gathered information and data from all business
units, operating regions and corporate headquarters, coordinated the writing of
the Report. The CSR Board Committee was also involved in the reporting
process. The Committee is chaired by a non-Executive Director and comprises
the company Chairman, CEO, Chief HR and legal officers and two other nonexecutive Board members. At present there is no external verification or
auditing of the Report, but the CEO makes a clear commitment to progress that
in the next two years. The company recognises this as an issue.
The company has some external assessment of its CSR performance in that it is
included in the FTSE4Good Index, the Dow Jones Sustainability Index (DJSI)
(since 2001), the DJ STOXX Index in 2003 which recognises progress in CSR
and in the BitC Corporate Responsibility Index. Cadbury Schweppes publicly
committed to the United Nations Global Compact in 2003.
24
While not specifically stating that it conforms to the Reporting Guidelines of
the GRI (see Figure 1) the Report draws on these and from guidelines provided
by the UK’s Food and Drink Federation to put together its 33 Key Performance
Indicators under the headings of employment practices; environment, health
and safety; human rights and ethical trading community and economic. It is
apparent on reading, however, that the Report covers all the areas outlined in
the GRI guidelines.
Before embarking on the second Report the company held three separate
stakeholder focus groups consisting of NGO’s, customers, interest groups such
as CSR specialists, socially responsible investors and employees, specifically
to obtain feedback on the 2002 Report and to gauge their expectations of the
second Report. Email and telephone surveys with employees and key
customers in the UK were also conducted. Whilst there was general
satisfaction with the first Report as a starting point, the Company learned that:
•
there was a requirement for more input on content from the Business
Units – a bottom-up approach
•
the framework for CSR needed explaining in greater detail and its
relevance for all members of the company – for many employees this
was purely a requirement to explain the terminology since they were
already engaged in CSR. Its relationship to the company’s values and
principles needed clarifying.
•
there was a need for more hard facts and figures in the Report. The
cameo examples in the first Report were appreciated, but the overall
tone needed to be more heavyweight to be persuasive.
•
there were a number of key challenges that the company had to
address more thoroughly – principally obesity, diet and nutrition,
ethical trading and managing company change – especially plant
closure and reorganisation
•
the design of the Report, although in keeping with the corporate style,
was regarded by some as too playful and served to trivialise the
content. The second Report retained a similar design for the
25
Overview, but had a much more traditional approach to the detailed
sections on each topic.
The company accepts that it will be necessary to continue to engage at a deeper level
with a broader group of stakeholders before producing the next Report (2006).
Besides these focus groups, the company has regular contact with
stakeholders, for example it holds investor seminars, undertakes consumer
surveys, employee team briefings, business partner and supplier dialogues and
engages with government on food and agricultural policy, business issues and
social and education policy and this also informed content.
The Report covers the period from January 2002 to December 2003 and
therefore substantially overlaps with CCBH’s Report. It does not
systematically use data outside the reporting period for comparative purposes
or to show trends, but in some areas, for example in the environment, health
and safety section and the resources section, data is supplied from 1997
onwards on topics such as time lost through injury, energy use, CO2 omissions,
use of water, solid waste generation and recycling/reuse rates.
b) Content
The content of the Report is structured as follows. It is presented in two
formats. One gives an overview for each chapter. And the other is a series of
booklets, expanding on the overview, providing details on specific issues,
policies, performance indicators and case studies.
Following the spirit of the GRI reporting guidelines the Overview includes a
statement of commitment from the CEO and the Chair of the Corporate and
Social Responsibility Committee. Next follows a profile of the company and
its value chain and a statement about what CSR means to the company. The
management structure, along with the location and composition of the CSR
Committee precedes an explanation on the Company’s approach to CSR.
There are then brief statements and core data concerning employees,
26
consumers, working with suppliers, working with communities and the
environment. The overview finishes with a series of future commitments and
aspirations under the company’s five CSR pillars.
A fuller summary of the Report is given in Appendix 2, however a brief outline
is provided here.
Cadbury Schweppes is a global company which manufactures and
distributes a range of confectionary and non-alcoholic beverages. It is joint
number one in chocolate, sugar and functional confectionary, second in gum
and the world’s third largest soft drinks company. It operates from five
regional units in: Americas Beverages, Americas Confectionary, Europe,
Middle East and Africa Confectionary, Europe Beverages and Asia Pacific.
There are six global functions: Human Resources, Supply Chain, Commercial
Strategy, Finance, Legal and Science and Technology. Total turnover in 2003
was £6,441 million, pre-tax profit was £564 million and total employees
numbered 55,799.
The company enshrines its overall philosophy for business in its Business
Principles. These are headed by its core purpose “We work together to
create brands people love” (p 12). Its declared core values are integrity,
openness and responsibility and the three key behaviours are accountability,
adaptability and aggressiveness. The Business Principles cover corporate
governance, ethical business practices, treatment of employees, consumer
issues, community activities, government relations and environment issues.
CSR is regarded as fundamental to the company, stemming from the
philanthropic beliefs of its founders 200 year ago. CSR, it is stated, is not only
the right thing to do, but good for business because it engenders trust and
minimises risk. CSR is explicit in the organisation’s fifth strategic goal and
the company is past half way on a five year programme, begun in 2001, to
embed it in the business. To achieve this it has devised its sustainability KPIs
and five “pillars” around which its CSR is built – human rights and
27
employment standards; ethical sourcing and procurement; marketing; food and
consumer issues; environment; health and safety and community investment.
The Report lists the company’s major stakeholders: consumers, customers,
employees, suppliers and communities. Out of those listed, more information
is given in the Report on employees, suppliers, communities and the
environment.
The section of internal stakeholders stresses commitment to a set of company
minimum standards combined with compliance with local country standards.
Significant emphasis is placed on equal employment opportunities and
diversity with many examples being given from overseas operations.
Individual, local and global learning and development programmes are
explained as are remuneration and rewards, health and safety and
wellbeing/work-life balance initiatives. The Report does give examples from
the UK, but the orientation of the Report is on demonstrating fairness and
progress in developing economies. The Report also covers plant
rationalisation and point outs the efforts of the company to ameliorate the
impact of this on employees and communities.
This is reinforced by describing in detail the developing Human Rights and
Ethical Trading Policy (HRET) first introduced in 2000 and which seeks to
ensure ethical standards throughout the supply chain, particularly for those
supplying primary ingredients such as cocoa, sugar and fruit. It also seeks to
ensure labour rights and good working conditions in its plant. Again, the
emphasis is on its operation in developing countries. The company has good
ratings in the FTSE4Good, Dow Jones Sustainability and BitC Indices.
In the section on consumers there is reference to quality assurance and to
conformance to international standards, but the main focus is on issues,
principally food and diet. The Report mentions policy on genetically modified
ingredients, but focuses on the growing problem of obesity.
28
Community involvement is a main plank of the company’s CSR programme.
It has a target of investing 1% of pre-tax profits globally – it was 1.09%
globally and 3% in the UK in 2003. Preferred areas for investment are in
education and enterprise, health and welfare and the environment and there are
company guidelines to measure and manage community investment, although
there is local discretion. The company is involved in major initiatives at
national and local levels and cites numerous external awards and recognition
for its work.
There is a major section in the Report on resources and the environment. The
company has had an environmental policy for several years which commits it
and its suppliers to improving environmental impact, using resources
responsibly and protecting the ecosystems from which it draws its raw
materials. A whole series of indicators are used to demonstrate performance
and examples are given from both the developed and developing world.
c) Communication
The Cadbury Schweppes Report is published in English and was launched on the
corporate website at the company’s AGM in May 2004. Printed copies will be
distributed in July. Copies will be made available to employees as well as other
external stakeholders. It will be discussed with members of the focus groups with
whom the company engaged prior to the production of the Report.
4.4 Observations on this case
In terms of the literature review and specifically the two variables, relationship
intensity and content expectations, the following observations can be made on this
case.
a)
Relationship intensity
Again it is important to guard against simplistic links between the amount of
discussion devoted to a particular stakeholding group concern and its
importance, but it can be an indicator of current priorities
29
•
the weighing of the Report and the level of detail indicates that there is
most requirement for dialogue and engagement with, in priority order,
suppliers, employees, local communities. There is at least observable
dialogue with customers and consumers, NGO’s central and local
government. This could well be because there are already established
dialogues with these groups.
•
there are efforts to engage a variety of stakeholders via a spectrum of
issues of interest rather than by addressing their specific needs. Emphasis
on the environment and ethical trading is clearly aimed at a range of
stakeholders, customers, NGO’s, activists, employees and shareholders.
These are activities commensurate with a comprehensive engagement
strategy.
•
the interests of indirect stakeholders, those who do not necessarily have
direct contact with the company, for example primarily ingredient growers
and potential activist groups are accommodated even though they may be
at the contact engagement end of the scale. This could be part of a riskmanagement strategy.
b)
Content expectation
Obligations go far beyond the immediate business environment. Indeed, there
is an implicit assumption that the company will obey the legal framework for
business in their spheres of operation and go beyond it. Hence these issues do
not receive major prominence apart from to confirm this is the case. Effort is
concentrated on demonstrating how the company exceeds these norms in the
following areas:
•
human rights and employment conditions of employees in developing
countries
•
human rights and ethical trading down the supply chain
•
fairness in trading between nations and with other companies
•
willingness to address broader food, diet and health issues beyond those
concerning quality
30
•
contribution to communities beyond those immediately impacted by the
business
•
not only protection of the environment, but leadership in environmental
good practice promotion, resource conservation and ecosystem
protection.
5. Comparisons between the two cases
While clearly there are differences between the two cases, principally that one
operates and reports globally, and the other is a country-specific Report for a global
concern, there are a number of similarities and differences that provide useful
insights. First the similarities.
5.1 Similarities
Both find the GRI Guidelines appropriate with a level of customisation to suit their
particular sector and company needs.
The embedding of CSR within the organisational infrastructure is signalled as a key
factor for both organisations. Given Cadbury Schweppes’ history and its earlier start
in demonstrating a public commitment to CSR, it is apparent that they are further
ahead in the process. The non-executive Director led CSR Committee and the
Committee’s composition is a clear indication of this. However, given that the CCBH
Report was the first country report of its kind for Coca-Cola (CCBH’s parent
company CCHBC published its first Social Report in June 2004), the level of
commitment to date is impressive. In particular, the use of external consultants to
obtain data, interpret result and write the Report provides a level of transparency and
assurance not yet achieved by Cadbury Schweppes. For both organisations,
systematic training on CSR for buyers and sellers is seen as vital.
Both place major emphasis on the employee. Not only are the indications that their
remuneration packages are at least as good as competitor’s, but they are usually better.
Similarly with training, both in terms of its formal structure and in the amount
31
provided for each employee. Equal opportunities and diversity are a central concern
and although the CCBH case presents difficulties in the diversity context because of
the country’s recent history, it is clear diversity is an aspiration. Both organisations
respect employee’s rights to trade union or other types of representation.
Community commitment as an expression of CSR is apparent for both organisations.
Although direct comparisons are not possible because Cadbury Schweppes quote a
proportion of pre-tax figures and CCBH a proportion of net sales revenues, it is clear
both companies donate substantial amounts of money and merchandise. As part of
their commitment to the end-consumer and the community, both organisations express
concern about marketing to children, with Cadbury Schweppes not targeting
advertising to children under 8 and encouraging support for parental control. CCBH’s
rules are not so well developed because Croatia has no specific standards on
advertising to children in Croatia. However, the company does use The Coca-Cola
Company’s Global policy on advertising and promotion to children
5.2 Differences
In many respects the key differences between the Reports are in emphasis, style and
their point in company history rather than differences in principle.
The most notable difference is in physical presentation. The CCBH document is
simple, even stark in design and layout. It gives the impression of being a serious
document where content is very much more important than presentation. Full colour
materials are minimal. Single or two colour tables, pie charts and simple line graphics
punctuate the body text. However, it is important to stress that this is not a cheap
publication.
The Cadbury Schweppes Overview booklet is full colour throughout with each page
having a full colour montage as background to the text. The text itself is laid-out in a
variety of ways. This style is in keeping with the corporate style. The detailed
supporting booklets are much more subdued. Each has a full colour front, but inside
text dominates with most illustrative materials been kept to colour panels,
photographs and simple graphics.
32
It is difficult to explain this difference as just being a result of the different cultures of
each company. Both have colourful, bold marketing presences. It can be interpreted
as a statement of confidence. For CCBH this is the first step in a new political and
economic environment. For Cadbury Schweppes this is an evolution of 200 years of
socially business practice.
This view is re-enforced by the level of reference to regulation and law. The CCBH
Report makes many references to Croatian and International Law, protocols,
conventions and frameworks and stresses conformity. While the Cadbury Schweppes
Report makes reference too by ensuring compliance to international standards like the
Universal Declaration of Human Rights, the ILO Conventions and local laws, it is
also confident of its own processes and ways of doing things (which go beyond the
law). The CCBH Report stresses its use of the GRI Guidelines, the Cadbury
Schweppes Report refers to and uses some them, but structures the Report around its
own CSR Pillars and company policies, for example, its HRET policy which is central
to the Report.
However, there are other style and tone differences that merit mention. The CCBH
Report includes a section on methodology. The Report author is clear that this is not
only to aid transparency, but as an encouragement to other companies in Croatia to
produce a CSR Report. The notion of the company being part of a wider community
with responsibilities not only to its own stakeholders, but to the new society that is
being built in Croatia, is inescapable.
While value judgements on the levels of honesty and/or defensiveness are dangerous,
it would make this paper incomplete if this were not included. There is no reason for
the authors to believe there is dishonesty in either report, but the question has to be
asked about how much of the whole truth is being revealed. The CCBH Report
appears to admit to more shortcomings, and that may well be the case. However, its
size of operation, the size of the community in which it operates and its greater
emphasis on internal stakeholders would make it highly likely that any over-emphasis
of the case would be quickly uncovered. The Cadbury Schweppes Report is targeted
at a much wider audience and to a greater number of stakeholders. Its orientation
appears to be much more externally focused and this may partially explain why the
33
company is keen to demonstrate its CSR credentials in a more positive way. The
danger is that absolute transparency lays a company open to attack even if it is, by all
objective measures, doing far more then most other companies.
The CCBH Report places more emphasis on human rights and opportunities for and in
the workforce. Cadbury Schweppes emphasises this aspect too, but the major focus is
on human rights and opportunity for those in the supply chain, particularly at primary
source level. Again, history is the main explanation for this Cadbury Schweppes are a
long established company operating in a free market and have had time to evolve their
employee policies and practices over many years. For CCBH the environment is in
transition and the company is playing a significant role in bringing together a
workforce that is drawn from communities where war and politically related problems
combined with nepotism and, sometimes, ethnic preferences were commonplace.
Approaches to the consumer sections of the Reports are also different in emphasis.
CCBH lays great weight on the safety and quality control aspects of its products. The
weighting of the Report toward quality issues reflect concerns in the former
communist nations over poor quality and safety. Again while quality control and
assurance is highlighted in the Cadbury Schweppes Report, it is treated almost as a
given. More space is devoted to the Company’s response to consumer issues such as
health and diet, including the growing problem of obesity. The Report recognises the
link between the nature of the products the company manufactures and health issues.
This is not so evident in the CCBH Report.
There are also differences in emphasis in the community involvement section of the
Reports. While the areas for support are broadly the same, education, lifestyle and the
environment, CCBH has now included one other – social inclusion – obviously a key
concern in the locality. While the Cadbury Schweppes covers this under health and
welfare, it is interesting to note its prominent mention as a specific area for support in
the CCBH Report. Volunteering and donations of staff time also play a major part in
Cadbury Schweppes’s community programmes. This does not feature in the CCBH
Report where the focus is on donations and gifts of merchandise or products.
34
The environmental section of the CCBH Report is brief because a separate document
was prepared on this. However, what material there is focuses on factory processes
and ensuring these conform to ISO standards. The Cadbury Schweppes Report
reports comprehensively on a range of factors. However, it goes beyond factory
processes to look at sustainability issues down the supply chain, taking as a basic
assumption the responsibility to ensure the manufacturing process is environmentally
enlightened.
Again, ethical trading does not feature at all prominently in the CCBH Report because
most basic products come from the global company. However, the company does
make a commitment to open competition and to meeting all contractual obligations.
The Cadbury Schweppes Report lays great store on the ethical trading issue,
emphasising its historical commitment and responding to current consumer concerns
in a comprehensive manner.
6. Discussion and Conclusions
From the foregoing a number of observations and conclusions about the approaches of
the two companies can be drawn which are presented in tabulated form to aid
comparison.
Topic Area
Reporting protocol
Cadbury Schweppes
GRI, industry and
proprietary
CCBH
Comment
GRI
Embedding CSR
5 year programme
building on traditional
company values. Board
level representation
3 years into new
programme. No Board
level representation
After a merger in 2002,
CCBH became a
member of CCHBC.
In 2003 the company
celebrated its 35
anniversary in Croatia
Employee rights
EEO and Diversity
Policies. Comprehensive
Remuneration package.
Plant mergers can lead to
redundancies.
Shareholder
accountability given
priority
Implementing EEO and
Diversity. Developing
remuneration package.
Salary reductions.
Employee
accountability appears
the priority
Redundancies and
salary reductions were
to drive greater
efficiency, but the
perceived
accountabilities are
different in orientation
for each company.
35
Community
commitment
Money, merchandise and
time. Investment areas:
1) education and
enterprise
2) health & welfare
3) environment
Money and
merchandise.
Investment areas:
1) Education
2) Environment
3) Health
4) Sport & leisure
5) Social inclusion
Human Rights
Focus on the supply chain
Focus on employees
Consumer affairs
Focus on food/diet issues
Focus of product
quality
Tone and style
Confident, on exposition
of CSR in action as a
progressive journey
Aspirational,
benchmarking with
points to future
requirements
Presentation
Colourful, bold, KPIs, full
of case studies
Sparing use of colour,
formal, serious, full of
facts and figures
CCBH focuses on
community-building to
mitigate the effects of
the recent war and to
bring communities
together.
These indicators of similarity and difference lead the authors to propose a model of
CSR reporting that is very much driven by the context in which the organisation
operates and which is supported by the literature. It can be seen as a continuum
summarised in the phrase “CSR to build democracy, CSR because of democracy.” In
other words, in developing nations and economies, companies have a critical role to
play in developing democratic accountabilities and building communities. Indeed,
that is their principal CSR. In developed, democratic economies companies are
already held accountable and their CSR has to be developed to demonstrate that
accountability.
The model below, illustrates the progression from one situation to the other.
ORGANISATION IN
DEVELOPING
DEMOCRACY
CSR as Societal Driver
ORGANISATION IN
DEVELOPED
DEMOCRACY
CSR as Societal Accountability
36
This has a number of practical implications therefore for organisations who wish to
operate effective CSR in developing and developed economies.
DEVELOPING ECONOMIES
DEVELOPED ECONOMIES
Demonstrate compliance with
regulatory framework to gain trust
Demonstrate compliance plus to maintain
trust
Explain and demonstrate principles of
CSR (reframe ‘old’ community
philosophy)
Demonstrate embedded CSR (regain ‘old’
community philosophy)
Focus on internal stakeholders to found
the reality
Focus on external stakeholders to
demonstrate the reality
Focus of product quality to demonstrate
integrity
Focus on product issues to demonstrate
leadership
Community engagement for social
cohesion
Community engagement for social
concern
Human rights of employees
Human rights in supply chain
Environmental impact in the locality
Environmental impact in a global context
Ethical trading practices with consumers Ethical trading practices in the supply
chain.
Business initiates dialogue with civil
society – underdeveloped civil society,
weak or no pressure
Civil society exerts pressure on business,
demanding accountability and
responsibility – civil society demands
dialogue
Ethical consumerism not developed and
consumers not socially organised/
represented/legally protected
Volunteering in the community not
socially recognised or rewarded
Ethical consumerism developed and
consumers well organised/
represented/legally protected
Volunteering in the community well
recognised and stimulated
Of course the above table simplifies the complex issues and situations facing
organisations as they operate in a global context and the two positions would be better
seen as a continuum, with the declared case on both sides being more or less true.
In terms of the insights that come from the literature it can be seen that relationship
intensity and content expectation are reflected in the balance of the Reports. In
37
developing economies the focus is on employees and consumers. New relationships
with the workforce develop driven by new market realities. At the same time, CSR
can be used as a means of embedding democratic change and an acceptance of the
implications of an open market economy in the wider society. Hence the orientation
on the CCBH Report is on employees and consumers, where these relationships are
more critical at this stage. The content expectation reflects these priorities. In
developed economies, the focus is on the wider relationship with society with
accountabilities reaching beyond the immediate operation of the company. Thus
although employees and consumers are regarded as important, more broadly based
stakeholder groups are addressed. Hence the orientation of the Cadbury Schweppes
Report is to external accountabilities and relate to the supply chain, environmental
issues and broader issues of governance.
To the authors’ knowledge no such comparative study has been undertaken before.
Global organisations tend to take a stance from the point of view of the country in
which they are headquartered. This present study has sought to bring further insights
into how CSR may be made more relevant to all the communities of global
organisations. Further research is needed to explore these concepts and proposals.
Fruitful lines of enquiry may include
•
further testing of the notion of relationship intensity and content expectation
•
development of theorising on stakeholder relationships, stakeholder
dialogue/engagement in the CSR context
•
testing the limits of organisational responsibilities for CSR
•
exploration of the role of the public relations function in this context,
especially relations to the boundary- spanning, mediation and dialoguefacilitation areas
•
developing an understanding of what changes and opportunities CSR activities
bring to the public relations function
•
increasing understanding of how nations with a tradition of public information
and propaganda models of communication can use CSR to develop new
models of communication
38
Acknowledgement: The authors would like to acknowledge the assistance of Lee
Edwards of Leeds Metropolitan University in the preparation of this paper.
39
NOTES:
1. The full Report for Coca-Cola Beverages Hrvatska (CCBH) can be found on
www.coca-colahbc.hr. The CSR Report for Cadbury Schweppes is at
www.CadburySchweppes.com
2. See the following websites for further information (www.ibe.org.uk;
www.bsr.org.uk; www.csreurope.org; www.bitc.org.uk)
3. Full details of the Guidelines and background to them can be found on
www.globalreporting.org
4. Data in this paragraph is drawn from the website of the Croatian Chamber of the
Economy (Hrvatska Gospodarska komora – www.hgk.hr)
5. The Global Competitiveness and Global Information Technology Reports for all
participating countries are available in an individual and collated form at
www.weforum.org
6. All data in this paragraph is drawn from www.statistics.gov.uk except where stated
otherwise. This site gives a full profile of the UK economy.
7. Data drawn from www.oecd.org where full comparisons of GDP per capita for all
participating nations can be found.
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44
Appendix 1
Summary taken from CCBH Social Report Pages 8 - 11
45
APPENDIX 1
Summary taken from CCBH Social Report Pages 8 - 11
1. In the main Report, figures are provided which outline the main economic
impacts of the company. These include: Sales Figures; Market Share; Exports;
Supplier Breakdown; Costs of Goods and Services; Operating Expenses; Payroll
Costs; Capital Expenditures; Dividends and Retained Earnings; Return on
Tangible Assets; Earnings Before Interest and Tax; Taxes; and Financial
Obligations and Contract Compliance. In a period marked by global, regional
and national uncertainty, CCBH has sought to ensure a degree of stability in
terms of its economic impacts on a range of stakeholders, taking steps necessary
to correct negative trends at an early stage. Above all, the steady increase in the
rate of return on tangible assets and on earnings bode well for the future.
Investments made to modernise the production process continue to ensure that
CCBH stays at the very top of technological development in the industry. In the
reporting period, CCBH has increased sales by volume and reduced its costs.
2. In the reporting period, there was little change in overall employment and,
notwithstanding a decision to reduce wages and salaries overall, average salaries
remain well above those for Croatia as a whole and for the food and drinks
production industry. There is one recognised Trades Union*, and 51.7% of the
workforce are members, with all employees covered by collective bargaining
agreements. A Worker’s Council functions according to the requirements of the
Croatian Labour Law. A good record of health and safety continues to be
improved upon. In the reporting period, increases in the amount of training, and
improvements in quality, have been noted, with the introduction of People
Development Forums (PDFs), creating a clear link between skills development
and training. The proportion of women in management positions is above the
figure for general female employment in the company.
3. An employee satisfaction survey found high levels of satisfaction for issues
rated as important such as: Company Image; Responsibility; Dedication; and
Quality but lower levels regarding: Salary; Integrity; and Managers/Supervisors.
In the context of an increasingly competitive environment, there is a need for
flexibility in the workforce and an intensive commitment to building new skills
and competencies. In the process, new relationships between management and
46
workers develop, built around core labour standards and the importance of
safeguarding workers’ rights and interests, amongst those of other stakeholders.
Inevitably, processes of restructuring can result in a decline in some aspects of
workers’ satisfaction, and CCBH is committed to responding to real and
perceived gaps between rhetoric and performance, in order to maintain its
position as one of the most desired employers in Croatia.
4. CCBH adheres to international standards of the protection of human rights, as
enshrined within the Croatian constitution and relevant laws. In a country in
transition emerging from conflict, adherence to the rule of law, supplemented by
clear codes of ethics and statements of principle, are key guarantors of human
rights. As a company involved in relationships with communities, customers,
consumers, employees, and suppliers, the company seeks to model high
standards of behaviour and, through constant awareness and monitoring, ensure
that any issues in performance are addressed and remedied as quickly as
possible. CCBH’s disciplinary and appeals procedures go beyond the
requirements of Croatian law. 2 employees were dismissed in 2002, and 18 were
subject to formal disciplinary procedures, compared with 4 dismissals and 15
disciplinary procedures in 2001. Every effort is made to provide a confidential
employee grievance mechanism and to ensure non-retaliation against any
employee who brings a grievance or who reports a practice which violates
principles of human rights and the highest ethical standards. In accordance with
the Code of Business Conduct, no political contributions are made. Lobbying
takes place through industry interest groups.
5. Coca-Cola Beverages Hrvatska has established procedures guaranteeing a high
level of responsiveness to consumers, with a free-phone telephone line, and
quick responses to any complaints and concerns. A total of 114 consumer
complaints were received in 2002. Supply chain evaluations are rigorous and
focus on quality, delivery, customer service standards, and price. A Customer
Satisfaction survey in 2002 found a very high rating for relationships with Sales
Staff amongst all different customers, particularly relating to Courtesy;
Regularity of Visiting; and Communicativeness. CCBH also pays attention to
respect for consumer privacy, as in recent promotions. In Marketing, there is
awareness of the importance of a balance between creativity and responsibility,
with a keen desire to maintain a reputation for honesty and fairness, as well as
47
respect for diversity. A number of emerging challenges are being faced,
including the link between marketing and sponsorship; cause-related marketing;
and children and advertising.
6. CCBH’s corporate giving is one part of its commitment to the wider community.
In 2002, donations in cash and kind totalled 1.2 m HRK (160,000 Euro), a
220% increase from 2001. A total of 14 causes received direct donations of
693,000 HRK with a further 11 receiving indirect donations, purchased through
a third party, of 156,000 HRK. The largest single donation was 400,000 HRK to
the campaign for cochlea implants for children, in which CCBH was the largest
single donor, in a campaign which raised over 15.7 m HRK. The company’s
donations focus on Health; Education; the Environment; Children and Young
people; and Sports/Healthy Lifestyles. These are chosen as priorities based on
the global commitments of the Coca-Cola Company and the specific needs of
Croatian society. In addition, there has been targeting of specific towns and
cities, including a major effort on sponsorship in Dubrovnik, as well as
partnerships with a range of institutions and groups.
7. In each of the communities which border our plants, factories, and distribution
centres, we have established good relationships with formal and informal
community leaders, with schools and other public institutions, and with ordinary
citizens. We have sought to consult and communicate on our plans through
leaflets and attending public meetings. We have also responded to concerns
regarding issues such as noise and smell by seeking independent expert advice
and, in some cases, even when no clear evidence of a problem was forthcoming,
acted and invested in order to reassure local citizens of our intention to be a
good neighbour.
8. In looking forwards, CCBH is committed to produce a full sustainability report,
incorporating all aspects of its social, environmental and economic
performance, in 2005. Before then, CCBH will focus on a number of themes
highlighted by the Report as meriting further attention.
•
Health and Safety: CCBH will seek to ensure, in consultation with the Trades
Union, that the worker’s representative on the Health and Safety at Work
Committee is enabled to attend meetings of this Committee regularly.
48
•
HIV/AIDS: CCBH will hold discussions within the company, within CCHBC,
and with The Coca-Cola Company, on the need for a stated company policy on
HIV/AIDS. CCBH will consult with a range of interested parties including
business organisations, trades unions, Inter-Governmental organisations such
as UNAIDS, medical experts, and others, on the development of such a policy.
CCBH expects to make a decision on whether to pursue a formal written policy
by the end of 2003. During 2004, CCBH expects that the Policy, if needed, will
be written in draft form and, following consultations, will become company
policy by the end of 2004. All procedural aspects of the policy should be in
place by the time of the Sustainability Report in 2005.
•
Code of Business Conduct: A version of the Code of Business Conduct will be
made available to all employees, as soon as possible. A shorter pamphlet
describing the key aspects of the Code should be available to all stakeholders
by the end of April 2004. In addition, CCBH aims to develop specific training
on the Code for all employees by the end of 2004.
•
People Development Forums: In accordance with existing plans, PDFs will be
cascaded through the whole workforce. In the 2005 Sustainability Report, an
expanded section on training will describe the impact of this move, and should
include a survey of the evaluation of skills training by the workforce which we
will aim to undertake in 2004.
•
Equal Opportunities Policy: CCBH, with CCHBC, and in consultation with the
Coca-Cola Company, will establish a Working Group to review the Company’s
commitment to Equal Opportunities. This group is expected to report by the
end of June 2004. The company aims to produce a formal Equal Opportunities
Policy statement, with associated measures and monitoring mechanisms, by the
end of 2004.
•
Human Rights: CCBH will consult with the Croatian Business Council for
Sustainable Development, with the World Business Council for Sustainable
Development and others, regarding the formulation of a Human Rights
Statement. The formulation of this statement should be completed in 2004 and
will be extensively discussed and should be developed into a policy, likely by
the end of 2004. The Sustainability Report will provide the first assessment of
this policy and its value within the company and to various stakeholders.
49
Recognising that most of the suppliers for CCBH are European, the statement
will be of a general nature but will elaborate on the importance of human rights
criteria in all contracting relationships with suppliers and customers.
•
Marketing: CCBH will produce a short statement on social principles in
advertising to reflect the increasing importance of cause-related marketing; the
relationship between marketing, sponsorship and corporate giving; and the
need for care in the use of and targeting of children in advertising. This
statement, based on existing good practice, will be completed by the end of
2004.
•
Community Giving: Throughout 2003 and 2004 CCBH will consult with a
range of stakeholders to assess the advantages and disadvantages of holding an
annual competition requesting proposals from humanitarian organisations and
associations of citizens for projects which contribute to the lives of the
community according to one or more key themes such as Health and Healthy
Lifestyles, Education, Environmental Awareness, Sports and Leisure, and
Social Inclusion. If appropriate, the first such open competition will be held in
2004, and the results reported on in the 2005 Sustainability Report.
•
Environmental Sustainability: As already indicated, CCBH will complete all
necessary steps to receive ISO 14000 certification in 2004. In addition, it will
continue its relationships with a range of environmental groups including
governmental bodies, non-governmental organisations, and environmental
experts, and engage in a process of consultations to ensure that the reporting on
Environmental issues in the 2005 Sustainability Report reflects a broad
consensus on the crucial issues facing CCBH in this area.
•
Training and Dissemination: All aspects of Corporate Social Responsibility
will be incorporated into the Company’s training plans, and will be reflected in
company publications. In particular, the training of sales representatives will
include a specific focus on their role as potential eyes and ears of a community
development and community partnership approach. The company will also
consider rewarding those employees who demonstrate a particularly innovative
approach to social issues.
* Another Trades Union was formed in 2003
50
Appendix 2
Summary of the Cadbury Schweppes CSR Report
provided by the authors of this paper
51
APPENDIX 2
Summary of the Cadbury Schweppes CSR Report
1. The Company’s People Strategy sets out values and policies in line with the
Company’s purpose, values and business principles. All businesses are
expected to operate within the Company’s minimum standards and local (i.e.
country) legislation. The Equal Employment Opportunities (EEO) and Diversity
Policy state that there will be fair and equitable treatment of employees
regardless of gender, race, ethnic or national origin, colour, religion, marital
status, age, sexual orientation, disability, social class and political affiliation within an inclusive work environment. Ethnic statistics are tracked against the
appropriate national demographics – the company is actively collecting data to
compare local for local statistics. Cadbury Schweppes are members of the
Vanguard Group of EEO Companies, the Employers’ Forum on Age and the
Employers’ Forum on Disability.
Training and development opportunities are provided individually as part of
personal development plans to meet job and career needs; locally to support
local business needs and globally, to address the strategic needs of the group
and to ensue consistency for cross-company processes. The company reported
an average number of training days at between 3-15 days training per
employee. All managers are performance managed with the majority having
personal development plans. 360o feedback tools are encouraged. The
company partners AIESEC, the international students association in leadership
development and exchange programmes.
70% of employees are represented via trade unions, works councils and/or
collective bargaining arrangements. The CEO and management team give
personal presentations around the world and employees have a confidential
hotline to report any activities that might be inconsistent with the Company’s
business principles. Remuneration is generally comparable to that of similar
companies share ownership is encouraged to those eligible and the company is
working to extend that as a worldwide benefit. Wellbeing and work/life
52
balance initiatives are encouraged and there are numerous flexible working
benefits ranging from maternity leave for all female staff to job sharing,
sabbaticals and career breaks.
2. Cadbury Schweppes deals through third parties (customers) to sell its products
to consumers. Working with its customers, with consumer organisations and
through direct contact with consumers via queries and complaints the company
seeks to identify consumer trends and issues. In addition, advice is taken from
Governments, activists, food lobbyists and the academic community. The
Foods Issue Strategy Group, led by the Chairman is responsible for identifying
emerging issues, setting global strategy and monitoring progress. As a result of
monitoring consumer preferences, UK confectionary products do not contain
genetically modified ingredients. The newly acquired Adams confectionary was
quickly brought into line with this policy. The company is also aware of the
increasing incidence of obesity in the Western World and in taking steps to act
responsibly over this issue – see below.
Cadbury Schweppes has introduced a new Quality Policy and supporting
standards to ensure the integrity of its products throughout the supply chain.
Many factories have adopted the international, external Hazard Analysis and
Critical Control Points (HACCP) programme and progress is being monitored at
each site.
3. The company sees its relationship with suppliers as a critical expression of its
CSR policies. A cross-functional working group consisting of senior employees
and an external advisor, The Corporate Citizenship Company, monitors the
Human Rights and Ethical Trading Policy (HRET). It reports to the CSR
Committee. Cadbury Schweppes has about 40,000 suppliers in total. The
current focus is on human rights and labour issues in the supply chain. Core
labour rights preclude the use of forced labour and child labour under the age
legally allowed in any country of operation. In addition children are only
employed where they are protected from physical risks and their education is
not interrupted. Employees can join recognised trade unions and harassment in
the workplace is forbidden. Health and Safety is a priority. Remuneration and
53
equal opportunities have been covered under point 6 above. The HRET policy
was developed in 2000 and was followed by a series of detailed pilot studies in
China, Ghana, Indonesia, Mexico and Turkey which involved discussion with
and site visits to suppliers, NGO’s, governments, international organisations and
a major international commodity supplier – the company buys cocoa on the
international commodity market. The company has developed ethical sourcing
standards based on the Universal Declaration of Human Rights and the
International Labour Organisation convention on labour rights. Existing
suppliers implement the standards with Cadbury Schweppes buyers being
trained in the standards and checking compliance with suppliers. The
programme is now being rolled out across the company in a prioritised way.
Major suppliers will be regularly assessed for compliance.
4. The company is committed to build community value around the world. The
overall aim is to invest 1% of pre-tax profit in community programmes. There
are three main areas for investment: education and enterprise, health and
welfare, and environment, but local business units have latitude to invest to suit
the needs of their community. They also have total discretion on how much
money, time and skills or gifts in kind they will invest. The company works
with BitC Per Cent Club and the London Benchmarking Group to measure and
manage community investment. In the UK, cash donations are channelled
mainly through a registered charity, the Cadbury Schweppes Foundation. In
2003, global contributions to charities or equivalents in cash, kind or time
amounted to £6.03m, 1.09% of global pre-tax profit and an increase of about
10% on the previous year. Of this £3.3 million went on education and
enterprise, £1.8 million on health and welfare, £0.3 million on environment and
£0.5 million on other projects. Health and welfare initiatives focus on
promoting active lifestyles such as the Chappies Little League a national
schools soccer development programme for under 12’s. In 2003 it became the
world’s largest football tournament with 138,529 players participating. The
company also supports HIV/AIDS education programmes for its African
employees and access to healthcare products. It also helps numerous charities
who work with HIV/AIDS sufferers. Environmental initiatives cover providing
clean drinking water in Ghana and India and local “clean up” activities. In
54
recognition of outstanding contribution to the community the Company awards
the Chairman Awards every two years. Numerous external awards have been
given to the company including the Food and Drink Federation Award 2003 and
Management Today’s Most Admired Companies Award.
5. In terms of its approach to the environment, health and safety (EHS), Cadbury
Schweppes has a ten point policy. For a number of years the company has been
working with suppliers to improve environmental performance and protect the
ecosystem that provides raw materials. The company is committed to
implement an integrated EHS Management System that is compliant with ISO
14001 and ISO 18001. All sites are audited by Group Personnel and some are
audited and certified by either ISO 14001 or the Eco-Management and Audit
Scheme (EMAS). The sustainability KPI’s introduced in 2003 will provide a
benchmark for future measurement. The Business in the Environment Survey
2003 ranked Cadbury Schweppes 3rd in the food and drink sector. In 2004
health and safety statistics will be collected group-wide to a standard set of
KPI’s as opposed to local reporting standards. Those operating under the new
KPI’s in 2003 recorded 819.5 accidents per 100,000 employees.
The company supports the Kyoto Protocol and local agreements. In 2002 and
2003, it participated in the Carbon Disclosure Project, a survey of the world’s
largest 500 companies and was selected as one of the 50 global companies in
the Climate Leadership Index. The UK government’s standard for “Company
Reporting on Greenhouse Gas Emissions” has been adopted. The company
goes beyond its requirements and includes the CO2 used to carbonate
beverages on the assumption that the gas will be released at some time. The
trend for energy use, CO2 emissions and packaging is down over a six year
period. The Company recognises its responsibility to maintain biodiversity
and in consulting with NGO’s on what its priorities should be. Current
biodiversity projects include one to look for sustainable sources of palm oil.
In areas such as water consumption, ozone depletion, fuel consumption and
transport emissions, the six year trend is down and a range of measures are in
place to minimise the potential for groundwater contamination and to
55
minimise waste which includes a comprehensive realigning and reuse
programme. For example, in France 90% of solid waste is recycled. All
wastewater is treated before being returned to the environment.
6. Looking to the future, the Company commits to further develop the five CSR
Pillars. Some of the key features of this are:
Human Rights and Employment Standards
•
labour standards throughout the supply chain to meet highest
international minimum standards
•
confidential employee hotline for breaches of business principles
•
global employee climate survey in 2005
Ethical Sourcing and Procurement
•
integrate ethical sourcing, environments and quality audits in
supply chain global compliance process
•
understand better the parameters of sustainable supply of raw
agricultural products and take a leadership when raising standards,
for example in palm oil and cocoa.
Marketing Food and Consumer Issues
•
more research into the area of food and diet and build findings into
policies and activities
•
work with stakeholders on the issues of obesity and poor lifestyles,
especially their impact on vulnerable groups
Environment, Health and Safety
•
support new ISO 14001 and ISO 18001 standards
•
measure impact on ecosystems from which raw materials are drawn
and work with partners to protect biodiversity
Community
•
build community investment into mainstream business practitioner
•
Business Units to invest 1% pre-tax profits in targeted projects
56
57