Pioneering CSR - An analysis of Danish frontrunners in Corporate Social Responsibility Authored by GLOBAL CSR for The Danish Business Authority Developed by GLOBAL CSR for the Danish Business Authority Disclaimer: This report was prepared by GLOBAL CSR for the Danish Ministry of Business & Growth, and was financed by the Danish Business Authority (Erhvervsstyrelsen). The report does not necessarily reflect the official view of the Danish Government. Cover photography: Henrik Brahe for GLOBAL CSR© February 2013, Copenhagen, Denmark This publication can be downloaded from: www.samfundsansvar.dk 1 Table of Contents 1 Executive Summary................................................................................................................. 4 1.1 Key Findings - CSR compliance ......................................................................................... 4 1.2 Key Findings - Beyond Compliance .................................................................................... 5 1.3 Challenges and Opportunities ........................................................................................... 5 2 Introduction ........................................................................................................................... 6 2.1 The Triple Bottom-Line .................................................................................................... 8 2.2 CSR Compliance .............................................................................................................. 8 2.3 Beyond CSR Compliance .................................................................................................. 9 3 Reflections and experiences in relation to CSR Compliance ......................................................... 11 3.1 Social Compliance ......................................................................................................... 12 3.1.1 Policy commitment - Social ......................................................................................... 14 3.1.2 Due Diligence - Social ................................................................................................ 15 3.1.3 Remediation - Social .................................................................................................. 18 3.2 Environmental Compliance ............................................................................................. 19 3.2.1 Policy Commitment - Environment ............................................................................... 20 3.2.2 Due Diligence – Environment ...................................................................................... 21 3.2.3 Remediation - Environment ......................................................................................... 21 3.3 Economic Compliance .................................................................................................... 22 3.3.1. Policy Commitment - Economy .................................................................................... 23 3.3.2. Due Diligence - Economy ............................................................................................ 24 3.3.3. Remediation - Economy .............................................................................................. 25 3.4 Danish Frontrunners and CSR Compliance ........................................................................ 26 4 Beyond CSR Compliance ........................................................................................................ 27 4.1 Best Practice Strategic CSR Focusing on Social Sustainability .............................................. 28 4.1.1 ISS: Diversity as a Competitive Advantage ................................................................... 29 4.1.2 DONG Energy: Multi-Stakeholder Initiative on Responsible Supply Chain Management ....... 30 4.1.3 Carlsberg: Initiative on Responsible Drinking ................................................................ 31 4.1.4 Novo Nordisk: Integrating CSR in Business Strategy for China ......................................... 32 4.2 Best Practice Strategic CSR Focusing on Environmental Sustainability .................................. 33 4.2.1 Maersk: Triple-E ........................................................................................................ 33 4.2.2 DONG Energy’s Climate Partnerships ............................................................................ 34 4.2.3 Carlsberg: Sustainable Packaging ................................................................................ 35 4.3 Best Practice Strategic CSR Focusing on Economic Sustainability ......................................... 36 4.3.1 ISS: Business Integrity is non-Negotiable ..................................................................... 36 4.3.2 Novo Nordisk: Learning the Hard Way .......................................................................... 37 4.3.3 Maersk: Maritime Anti-Corruption Network .................................................................... 38 4.4 Danish Frontrunners and Strategic CSR ........................................................................... 39 5 General Challenges and Opportunities ...................................................................................... 42 2 5.1 CSR; A Moving Target .................................................................................................... 42 5.2 Lack of Awareness and Capacity ..................................................................................... 42 5.3 A Business Case to End Them All..................................................................................... 44 5.4 The Importance of Ownership ......................................................................................... 44 5.5 Context Matters ............................................................................................................ 45 5.6 Concluding Remarks ...................................................................................................... 45 3 1 Executive Summary This report provides an analysis of five Danish frontrunner companies’ Corporate Social Responsibility (CSR) approaches and activities. A.P. Moeller Maersk, Carlsberg, DONG Energy, ISS World Services and Novo Nordisk have shared their manifold CSR-experiences, as well as their insightful views on the challenges and opportunities that the CSR agenda holds. The analysis is based on the internationally recognised framework for CSR, consisting of the triple bottom-line of the UN Global Compact and the UN Guiding Principles for Business and Human Rights (UNGPs). The report is aimed at inspiring more Danish companies to become CSR pioneers. It offers a current insight into what these five frontrunners currently do in relation to social, environmental and economic compliance. In addition, it describes best practices in relation to voluntary initiatives that go beyond compliance on all three bottom-lines; commonly referred to as strategic or proactive CSR. Such efforts are showcased and connected with interesting examples from international frontrunners. 1.1 Key Findings - CSR compliance Recent developments, i.e. the adoption of the UNGPs, the updated OECD Guidelines for Multinational Enterprises and the EU Strategy for CSR, have had quite an impact on how the compliance dimension of CSR is understood internationally. The five Danish frontrunners are all experienced CSR practitioners. This means that they have many policies and processes in place to ensure a solid foundation for their CSR activities. However, even among these frontrunners there is a need to adjust existing processes to ensure alignment with current compliance expectations. When it comes to environmental compliance, Danish companies are generally characterised by strong and robust management systems, mostly due to strong regulation and the obvious business case related to reducing energy consumption. Anti-corruption has been characterised by increasing regulation, most notably through the adoption of the UK Bribery Act in 2010. This has spurred quite a bit of action among Danish companies, many of whom have since created policies, conducted training and set up whistleblower hotlines. When it comes to social compliance however, the case is somewhat different. The emphasis of the UNGPs on the need to incorporate the full spectrum of human rights in compliance activities requires a new mindset in most Danish companies. For example, all of the frontrunners have to adjust the scope of their processes to include all human rights. In addition, the expectation that companies have to ensure access to remedy for victims is a challenge for companies, including the Danish frontrunners, most of which have yet to set up operational level grievance mechanisms. Although the business case for investing in environmental compliance is initially clearer, the frontrunners highlight how being able to display an equally sound compliance system and a good track record on social and economic sustainability means good business. Firstly, because a strong CSR-profile can heighten motivation among employees, attract new investors, pave the way for new business partnerships, and open up new market opportunities. Secondly, some of the participating companies highlight how drawing a strict line between compliance and beyond compliance can be counterproductive. To them, compliance is a valuable element in identifying areas in which the company can work strategically with CSR. As such they stress the