More Related Content Similar to Valuing Non-Financial Performance and Sustainability Reporting (20) More from Mark Anthony Camilleri (17) Valuing Non-Financial Performance and Sustainability Reporting2. Overview of this Presentation
• Background of Regulatory Instruments
• Intergovernmental Benchmarks and
Guidelines
• The National Governments’ Regulatory Level
• Non-Governmental Regulatory Tools
• The Way Forward
© Dr M.A. Camilleri PhD (Edin.)
4. • In the mid 1990s, Robert Reich in his capacity as the
American Secretary of Labour has asked the
International Labour Organisation (ILO) to develop a
social label that would certify to consumers which
products comply with the ILO labour standards.
• The ILO has limited itself to establish minimum
standards for working conditions and these have
been agreed to by numerous governments.
• The Organisation for Economic Cooperation and
Development (OECD) had issued guidelines for
multi-national corporations (MNCs). They were also
entirely voluntary in nature.
© Dr M.A. Camilleri PhD (Edin.)
5. “It is against this background of weak
instruments and failed initiatives at the
international level that NGOs have begun to
target MNCs with increasing frequency and
vigour in recent years”, (Newell, 2002:910).
© Dr M.A. Camilleri PhD (Edin.)
6. • The growth of global CSR engagement can also be
viewed in the context of the business developments
within the international trade law:
– For instance, a number of bilateral and regional trade
agreements were entered into force in North American and
European countries. They contained such provisions
about the inclusion of labour, human rights and
environmental standards in trade agreements.
– However, the World Trade Organisation (WTO) did
not necessitate the countries to conform to any
product labelling standards.
© Dr M.A. Camilleri PhD (Edin.)
8. International Labour Organisation
• ILO promotes dialogue between government,
workers’ and employers’ organisations.
• It provides assistance and tools to better
understand the labour dimension of CSR (ILO
Helpdesk Url., 2013).
© Dr M.A. Camilleri PhD (Edin.)
10. The Organisation for Economic
Cooperation and Development
• The Organisation for Economic Cooperation and Development
(OECD) promotes policies which improve the economic
growth and social cohesion.
• OECD guides policy makers, regulators, and market
participants in improving their legal, institutional, and
regulatory frameworks.
• OECD’s principles have shown an acceptable level of
adaptability in varying legal, economic, and cultural contexts as
they have served as the basis in various reform initiatives by
different governments and have been taken up by the
private sector in different countries (Jesover and Kirkpatrick,
2005). © Dr M.A. Camilleri PhD (Edin.)
11. Basic Principles of Corporate
Governance
(Source: Jamali et al. 2008 ; OECD, 1999)
© Dr M.A. Camilleri PhD (Edin.)
12. European Union’s
Recommendations (I)
• According to the EU Commission Expert Group (2012), non-
financial reporting enables investors to contribute to a
more efficient allocation of capital, and to better achieve
longer-term investment goals.
• It can also help to make enterprises more accountable and
contribute to higher levels of citizen trust in business.
• Several experts have supported the idea of a principles-
based approach, rather than a detailed, rules-based one.
© Dr M.A. Camilleri PhD (Edin.)
13. European Union’s
Recommendations (II)
• The experts stressed that improving materiality
of reports is useful to address the comparability
issues.
• They advocated that the companies' boards
should have ownership on reporting, in order to
make it relevant and effective.
• There are significant differences in mentalities
across different member states, and within
economic sectors (EU Commission, 2011).
© Dr M.A. Camilleri PhD (Edin.)
16. The Relational Framework
• There are different expectations and perceptions
within each stakeholder relationship, which have
to be addressed to develop an appropriate CSR
policy (Albareda et al., 2008).
• Essentially, this relational approach is based on the
idea that recent changes and patterns affecting the
economic and political structure may transform
the roles and capacities of various social agents
(Albareda et al., 2009).
© Dr M.A. Camilleri PhD (Edin.)
17. “Our approach is to encourage and
incentivise the adoption of CSR, through
best practice guidance, and where
appropriate, intelligent (soft) regulation
and fiscal incentives”.
(UK’s Department of Business Innovation
and Skills, 2012).
© Dr M.A. Camilleri PhD (Edin.)
19. • The social and environmental accountability standards
represent voluntary predefined norms and procedures for
organisational behaviour and are often valid on a global level
(Rasche, 2010; Smith, 2002:21).
• Such accountability standards reflect a shift towards a ‘quasi-
regulation’ which are based on substantive and reflexive law
approaches (Rasche et al., 2008).
– A ‘substantive’ (outcome-based) law approach is regulated by
prescribing predefined outcomes;
– A ‘reflexive’ (process-based) law approach is regulated by prescribing
procedures to determine outcomes in a discursive way (see Hess, 1999,
2001). *
Non-Financial Accountability
Standards (I)
© Dr M.A. Camilleri PhD (Edin.)
20. Non-Financial Accountability
Standards (II)
• Performance-oriented standards are more generic in
their approach:
– Such standards focus on specific areas such as human rights, labour
standards, environmental protection and the like (see Jamali, 2008).
– Many NGOs are providing a certification for compliance with proposed
rules and guidelines as they incorporate their own independent
monitoring systems (see Berkhout et al., 2008; Koenig-Archibugi, 2004).
• Process-oriented standards are applied across
particular industries.
© Dr M.A. Camilleri PhD (Edin.)
32. Creating Shared Value through
Regulation
• Governments can play a pro-active role by setting the
regulatory social and environmental standards.
– The introduction of standards, phase-in periods and utilisation of
innovative technologies can bring operational efficiencies and cost
savings to the businesses.
– Such measures may improve the environment, and increase the
organisations’ competitiveness, simultaneously (Porter and Kramer,
2011; Van der Woerd and Van Den Brink (2004).
© Dr M.A. Camilleri PhD (Edin.)
33. Key Recommendations
• Governments may assist businesses by fostering the right
type of environment for responsible behaviours; through
various incentives (e.g. grants, tax relief, sustainable
reporting guidelines, frequent audits et cetera).
• The proposed regulatory changes can involve the
efficient and timely reporting of sustainable (responsible)
practices.
• The reporting may be primarily aimed at the larger
businesses.
• Of course, the governments will have to provide structured
compliance procedures (and support where necessary).
© Dr M.A. Camilleri PhD (Edin.)
34. Key Recommendations (II)
• The CSR practices and their measurement,
their reporting and accreditation should be
as clear, concise and understandable as
possible for the businesses.
• The governments’ reporting standards and
guidelines may be drawn from international
reporting instruments (e.g. ISO, SA, AA, and
GRI).
• Businesses should be given adequate and
sufficient time (and resources) to comply
with the governments' requirements.
© Dr M.A. Camilleri PhD (Edin.)
35. References
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Business Ethics: A European Review, 17, pp. 347–363
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• Berkhout, F., Hertin, J., Wagner, M. and Tyteca, D. (2008). Are EMS Environmentally Effective? The Link between Environmental Management Systems and Environmental
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© Dr M.A. Camilleri PhD (Edin.)