Public Sector Perspective on CSR and Responsibility

1. Public Sector Perspective on CSR and Responsibility Who is Responsible for Responsibility? Santiago, Chile September 2005

2. Public sectors defined • National, state and local governments • Multilateral development institutions • Discuss both to highlight ways in which the two can work together to facilitate CSR

3. Role and responsibility of government • Provide a suite of services to its citizens including basic infrastructure, security and protective services, basic health, educational services, etc. • Ensures that adequate conditions exist for the private sector to function and thrive • Lead and negotiate trade treaties and relations with other nations

4. Responsibility of government and CSR • Government is responsible for a variety of factors • Improve the business climate • Promote transparency and accountability among public sector agencies • Promote public policies that reinforce sound business practices • Engage the private sector in development

5. Improving the business climate • Government has key role to play to foster an environment conducive to private sector growth • Efficient and open markets are essential • Fostering proper incentives can facilitate CSR adoption in the private sector • Business climate actions • Simplify and streamline the process for registering a new company • Reforms to legal and regulatory framework related to private sector operations • Establish minimum standards to ensure level playing field

6. Promote transparency and accountability • Governments can take important steps to promote transparency in its own operations and actions • Minimize opportunities for corruption • Ensure better use of scarce financial resources • Utilize external monitoring in public bidding processes

7. Promote public policies • Only public sector can set the overall policy and regulatory framework within which businesses operate • Some governments are beginning to view CSR as a cost-effective means to enhance sustainable development strategies • Actively promote public policy interventions that enable sound labor and environmental conditions in the country • Link CSR to competitiveness strategies to attract investment and position exports • Challenge is to identify the appropriate priorities and incentives that can strengthen local initiatives

8. Engage the private sector • Harness business enthusiasm for CSR to help reduce poverty • Identify suitable initiatives where public and private interests are aligned • Leverage resources and complementary skills to resolve specific problems or issues • Be careful not to impose responsibilities of the public sector onto the private sector

9. Multilateral development institutions (MDIs) and CSR • Governments face increasing social demands • Business face pressures to be more competitive • The two parts create an opportunity – good for business and contributes to the well-being of society • CSR is development

10. Comparative advantages of MDIs • Ability to convene • Relationships with all parties in the “CSR market” (public sector, private sector, civil society) • Capacity to work on failures or impediments in the market • Share common interest with the public and private sector in terms of development

11. Role of IDB for private sector development • Improve and strengthen the business climate in the region • Business Climate Initiative (BCI) • Efforts to streamline procedures and improve the functioning of the private sector • Financial support to a variety of projects • Promote transparency among governments • Assistance in defining appropriate public policies • Engage the private sector in CSR

12. MIF and Private Sector Development • One of the critical mandates of the MIF is to promote the development and growth of small, entrepreneurial enterprises. • Economic volatility, lack of access to capital, and an increasingly competitive environment have traditionally hampered the region’s businesses. • Small businesses are even more vulnerable as their ability to weather change is restricted by scarce managerial and financial resources.

13. Role of the IDB in fostering CSR • Strengthening of the drivers, through efforts of improving the business climate and public policies • CSR is part of IDB’s private sector development strategy to promote responsible behavior among the private sector • As outlined by our central department (SDS), the role of multilaterals in promoting CSR includes: • Promotion/Advocacy • Conducive policy environment • Financial support • Compliance, reporting and accountability

14. IDB actions to foster CSR • Organize conferences and other events • Publications and research (SMEs and the region) • Interest in adopting Environmentally and Socially Responsible Procurement practices • Interest in developing a strong CSR communication strategy • Use of covenants in contracts • Financial support to projects

15. Use of covenants • Private Sector Department (PRI) activities: • General Environmental and Social Guideline which outlines the basic requirements for PRI projects (CSR conditionality in projects) • As an additional measure to assist borrowers, PRI has prepared a guideline stating how they might do projects with local communities.

16. Project level support to CSR • MIF is interested in CSR as a tool for competitiveness for companies, especially among small and medium enterprises (SMEs) • Launched CSR Cluster in March 2004 • Objective of projects – Expand the use of CSR measures, especially among SMEs • Objective of CSR –Tool for improving competitiveness and new development models that include the private sector

17. Opportunities • Shift mindset from responsibilities to looking for opportunities • Benefits for public and private sectors, civil society organizations and society as a whole

18. For More Information For information about the IDB and CSR, visit the IDB’s CSR website at www.csramericas.org For information about MIF’s activities, visit our website at www.iadb.org/mif