Britcyna Ekaterina, Ph. D candidate, ebritsyn@ulapland. fi 2017 Russian CSR and participatory righ 07. 02. 2017
Introduction “Our biggest challenge this century is to take an idea that seems abstract— sustainable development—and turn it into a reality for all the world’s peoples. ” Kofi Annan, former UN Secretary General
Cases • Ronald Macdonald House (USA) https: //www. youtube. com/watch? v=Us. BK 44 Sl 6 P 4 Lukoil “ Red tippy” (Russia) https: //www. youtube. com/watch? v=w 00 lr. Jl. AFjk Ikea “Soft toys” https: //www. youtube. com/watch? v=Dcxs. By 2 bo-M
Discussion part Should the corporations have a conscience? • What is CSR? (Create a definition of corporate social responsibility) • What are the benefits of corporate social responsibility? (summarize the benefits of CSR and evidence to support each benefit) • What are concerns about corporate social responsibility? (summarize the concerns about CSR and evidence to support each Criticism). • Is social responsibility in the best interest of society?
CSR definition by Carroll
Other definitions of CSR • The European Commission defines it as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (2006). • The United Kingdom defines CSR as how business takes account of its economic, social and environmental impacts in the way it operates — maximizing the benefits and minimizing the downsides. • The United Nations (2007) defines CSR as the overall contribution of business to sustainable development. ”
Other definitions of CSR • The World Business Council for Sustainable Development (WBCSD) provides that CSR is the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life (WBCSD, 2002). • Amnesty International advocates for mandatory “global standards on business and human rights that will apply across borders to all companies. . . (which). . . will provide governments with clear, common guidelines on how to address corporate behavior on human rights” (Khan, 2007).
Benefits of CSR practices • Triple bottom line ("People, planet and profit“) - People" refers to fair labour practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital (by John Elkington 1994) • Brand differentiation build customer loyalty based on distinctive ethical values. • Reduced scrutiny and/or risk management Corporations are keen to avoid interference in their business through taxation and/or regulations and risks.
Benefits of CSR practices • The ability to have positive impact in the community hence support public value outcomes Keeping social responsibility front of mind encourages businesses to act ethically and to consider the social and environmental impacts of their business. In doing so, organizations can avoid or mitigate detrimental impacts of their business on the community. • Access to funding opportunities • Enhancing your influence in the industry • Enhanced relationship with stakeholders
Concerns about CSR The Social Responsibility of Business is to Increase its Profits by Milton Friedman. The New York Times Magazine, September 13, 1970. Copyright @ 1970 by The New York Times Company. Greenwashing? • CSR allows businesses to project positive image by doing very little (Mullerat (2009) and Aras and Crowther (2010) • CSR is only an effective public relations tool (Catka et al (2004)
Main concepts of CSR (Carroll, 1979) Firms have responsibilities to societies including economic, legal, ethical and discretionary (or philanthropic). See also De. George (1999) on the “Myth of the Amoral Firm” Social Contract (Donaldson, 1982; Donaldson and Dunfee, 1999) – There is a tacit social contract between the firm and society; the contract bestows certain rights in exchange for certain responsibilities. Stakeholder Theory (Freeman, 1984) – A stakeholder is “any group or individual who can affect or is affected by the achievement of an organisation’s purpose. ” Argues that it is in the company’s strategic interest to respect the interests of all its stakeholders.
Who are the stakeholder groups? Stakeholder is anyone who can affect or be affected by the success of the firm. Group № 1 A Swedish forestry firm, logging trees in Swedish Lapland, has the pulppaper factory in the south of Sweden and sells its products to several European markets. • Group № 2 A Dutch multinational seafood producer, involved in fishing in the North Sea and producing and packaging fish in Morocco and selling it in the central European market.
Who are the stakeholder groups? .
What is the difference between legal responsibility and corporate social responsibility?
Key drivers of CSR . Around the world • NGO Activism • Responsible investment • Litigation • Gov & IGO initiatives Developing Countries • Foreign customers • Domestic consumers • FDI • Government & IGO
Procedures for Cooperation with Stakeholders • 1. Prepare a list of stakeholders 2. Understand their needs and expectations 3. Schedule a process of establishing a dialogue and cooperation 4. Initiate dialogue 5. Maintain dialogue, cooperate and use a tool of feedback • Methods of Stakeholder Engagement • Online discussion forum • Working Group • Individual meetings • Informal meetings • Organization of joint projects
From theory to practice .
Komi case .
Indigenous communities (e. g. Sámi, Nenets) for whom the North is a homeland rather than a resource frontier, are engaged, or are attempting to engage, in dialogue with one another and with government and industry and seek to express their views about what oil exploration and extraction could mean for both present and future generations in terms of socio-economic impacts, community sustainability, wildlife, and environmental health (Nuttall 2010).
Komi Case: WHO? Interested parties: Lukoil- Komi, oil company Komi-Izhemtsi, local community Save the Pechora committee and Izhvatas, NGOs Mass Media Banks Researchers
Komi Case: Where?
Komi Case: Background • The main oil-production enterprises in the Republic are OOO LUKOIL-Komi (hereinafter Lukoil. Komi), OAO NK Rosneft, ZAO Kolvaneft, OOO Enisei, ZAO Pechoraneftegaz, ZAO Nam Oil and ZAO Neftus
Komi Case: Background Majority of the people living in the Republic of Komi are ethnic Russians and only about 24 % of the inhabitants are indigenous Komis.
Komi Case: Background • Komi people – not officially indigenous peoples • In 1926 • 191. 000 Komi (92, 2 %) • 13. 000 Russians • In 2010 • 202. 000 Komi (23, 7 %) • 555. 000 Russians • Komi-izhemsti is a distinct group of Komi people • Izma-river-region • Still practicing reindeer herding (Komi Nenets Region)
Conflicting definitions: Indigenous peoples under international law and Russian law UN working definition of indigenous peoples established by the Martínez Cobo study on discrimination against indigenous peoples: • Self-identification; • Historic continuity with regard to settlement with in a specific place; • Cultural distinctiveness. A group, aspiring to recognition as an indigenous small numbered peoples must meet all of the four criteria: It must reside within a specific place (the tradi tional settlement territories of its ancestors), 2. It must live in a specific way (“traditional way of life”), 3. It must fall within a specific size range (Less than 50, 000), 4. It must self-identify as an ethnic group 25
Komi Case: Background • Oil esp. in the Northern parts • Lukoil biggest in Komi • Headquarters of oil companies in Moscow: tax money goes to Moscow • Old pipelines • E. g. Lukoil inherited old pipelines where had been the world’s biggest oil leak in the 1990 s
Usinsk 1994 • Kolva River Oil Spill • When: September 8 th, 1994 Where: Usinsk, Komi Republic, Russian Federation Casualties: n/a Amount spilled: 2 million barrels (84 million gallons) • A badly corroded pipeline around the northern Russian town of Usinsk had been leaking for eight months, contained by a dike erected around the leak site. Severe weather conditions caused this dam to collapse, resulting in the millions of gallons of accumulated oil spilling across the fragile Siberian tundra and into the Kolva River, a tributary of the Pechora River that flows into the Barents Sea. 23 species of flora and fauna were affected by the disaster which polluted 186 km² of grass and marshlands.
Conflicts now Greenpeace about Komi • https: //www. yout ube. com/watch? v =a 6 r. TM 1 a 5 ST 4
Main Recent Conflict • The conflict between komi-izhemci and the Company started in February, 2014. Local people of the village Krasnobor near Izhma uncovered several oil rigs which had been placed at the edge of the village. • • Inadequate conduct of a “clean up” operation of an oil spill from a gathering oil pipeline covering 0. 6 ha in March 2014 by means of igniting the oil
People in Komi are not in general against oil drilling
Izhma
Usinsk
CSR in Russia Stages Forms of realization Until 1917 Charity Soviet times The government implements social programs Post soviet times Emerging role of the business in social expenditures Modern times Establishment and development of social partnership
Modern Russian CSR • Russian CSR is at its initial phase • Still orientated on the closest stakeholders (government, shareholders and employees of the company), because the main driving forces of implementation of CSR practices are the companies, created during privatization or the government • Insufficient development of civil society, which can influence on the company’s decisions
Specific Russian trends of CSR perception • 1. Historical and geographical trends (large territory; isolated localities from the center; capital concentration in some regions); • 2. Mentality of the public (high social expectations within low activity of the citizens, labor law traditions) • 3. Economical and political trends(high level of income inequality, different and large scale of problems in regions: poverty, environment pollutions, diseases)
Lukoil http: //www. lukoil. com/Investor. And. Shareholder. Center/Reports. And. Presentations/Presentations
Voluntary initiatives 2006 - Company joined the Social Charter of Russian Business, which relies on UN Global Compact guidelines 2007 - the Company joined UN Global Compact 2012 -the Company joined to the campaign “Green office”, organized by Greenpeace 37
Всегда в движении! Lukoil today Lukoil operates in 39 countries 63 regions in Russia
Всегда в движении! Lukoil’s inititatives of support Development of monotowns Preservation of ethnical cultural identity Support of vulnerable groups Nature conservation activities Sport support Social responsible participation of the Company Charity Industrial safety and labour protection Realization of soical programms for the employees and their families technological development 39
Всегда в движении! CSR • Two goals: - To increase capitalization of the company • To pay taxes to RF
Всегда в движении! CSR “For us it is important not just to give money, cover some gaps or buy-off. For us also it’s important not to substitute the state in the issues of charity. With a wish we could install plastic windows to all schools. For us is important to solve social problem, that it will be good for definite social group. ”
Lukoil´s policy Social policy of a company Social projects Agreements Regional level Municipal level Programs Charity • Social Code of Lukoil stipulates the social investments management system. • Social investments are financing of programs and projects that create a lasting effect and have positive impact on the life quality in the Russian regions. • Social investments are implemented within the social partnership agreements, federal corporate programs and social and cultural projects contest, corporate voluntary work, socially important campaigns. 42
Participation
Other forms of participation • Public expertise Citizens, NGOs and municipal bodies could organize public expertise. The object of public expertise could be all objects of state expertise, except objects, information about which constitutes a state, commercial or another protected by law secret.
Other forms of participation • Judicial protection method • Individuals, legal entities, prosecutor are entitled to claim compensation to the court for damage to health and property. • For example, if a anyone discovers an oil spill he/she can apply to the court, because a damage was caused to environment. The process of application could be quite difficult and long, a person should have special knowledge to deal with legal issues or to apply to authorized bodies
Judicial protection method • LUKoil-Komi was fined for nine oil spills from 2011 in Russia’s northern republic of Komi, according to documents available on the republic’s arbitration court website. • The spills covered an area estimated between 20. 5 and 21 hectares of land in the province. • https: //sputniknews. com/business/20140111186404096 -LUKoil-Hit-With-Biggest-Oil-Spill-Fine-in-Russian-History/
Administrative protection method • Citizens have the right to address personally or to send individual and collective to state and local government bodies or officials. • An inspection can be initiated
Direct participation • Local referendum • Local meetings
Agreement with NGO In April, 2015 JSC Lukoil-Komi concluded the agreement for a period of a year with movement of the Izhma Komi «Izvatas". Environmental problems were defined as one of the document’s top priorities. "Before "LUKOIL-Komi" will decide to begin operations, plans and projects, the principles of operation will be discussed with us- the chairman of the Izvatas mentioned.
References • Aras, G. , & Crowther, D. (2010) A Handbook of Governance and Social Responsibility, Gower Publishing, UK • Banarjee. , S. B. (2007) Corporate Social Responsibility: the good, the bad and the ugly Edward Elgar Publishing, Cheltenham, UK • Cartka, P. , Balzarova, M. A. , Bamber, C. J. & Sharp, J. M. (2004). How can SME’s effectively implement the CSR agenda? A UK case study perspective. Corporate Social Responsibility and Environmental management. 11: 140 -149 • Cilliberti, F. , Pontradolof, P. , & Scozzi, B (2008). Investigating Corporate Social Responsibility in supply chains: and SME perspective. Journal of Cleaner production. 16: 1579 -1588 • Fernando, A. C. (2011) Business Environment, Pearson, USA • Freitag. , A. R. (2008) Staking Claim: Public Relations Lenders Needed to Shape CSR Policy, Public Relations Quarterly, Volume: 52, Issue: 1 • Heath. , R. L. (2010) The SAGE Handbook of Public Relations, John Wiley & Sons, New Jersey, USA • Lepoutre, J. & Heene, A. 2006. Investigating the impact of firm size on small business social responsibility: A critical review. Journal of Business ethics. 67: 257 -273 • Mullerat, R. (2009) International Corporate Social Responsibility, Kluwer Law International, Netherlands • Perrini. , F. , Pogutz. , S. & Tencani. , A. (2006). Developing Corporate Social Responsibility: a European Perspective, Edward Elgar Publishing, Cheltenham, UK • Johnson. , G. , Scholes. , K. & Whittington. , R. (2008) Exploring Corporate Strategy, 8 th Edition, FT Prentice Hall, Essex • Schwartz, MS, 2011, Corporate Social Responsibility: An Ethical Approach, Broadview Press, USA • Tolhurst, N, Pohl, M, Matten, D & Visser, W, 2010, “The A to Z of Corporate Social Responsibility”, Wiley Publications, New Jersey, USA
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