Djordjija Petkoski, Head of Business, Competitiveness & Development; World Bank Institute

1. Corporate Social Responsibility and Sustainable Competitiveness World Bank Institute & GAIN Business Alliance Djordjija Petkoski, Head of Business, Competitiveness & Development; World Bank Institute Dr. Djordjija Petkoski Head of the Business, Competitiveness & Development Program World Bank Institute, The World Bank Group Alexandria, Egypt - October 29, 2008

2. Background and Context

3. Our world is … … out of balance.

4. Challenge: • Today across the world: • 1.3 billion people live on less than one dollar a day; • 3 billion live on under two dollars a day; • 1.3 billion have no access to clean water; • 3 billion have no access to sanitation; • 2 billion have no access to electricity. • Challenges or opportunities? Source: The World Bank Group

5. Is This Our World? • Amount needed to put every child into school by 2000 = US $950 billion. It did not happen. • This amount was less than 1% of what the world spent every year on weapons.

6. Is This Our World? • 20% of the population in developed nations consumes 86% of the world’s goods. • The poorest 20% of the world’s population consumes only 1.3%.

7. Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs). • The top 200 corporations’ combined sales are 18 times the size of the combined income of 24% of the total world population. • MNCs account for a quarter of global economic activity, they employ less than 1% of the world’s labor force, while one third of the world’s willing-to-work population is unemployed.

8. Developing countries outperform high-income countries Real GDP, percentage change Forecast Developing countries High-income countries Source: Development Prospects, The World Bank Group

9. Developing countries outperform high-income countries Real GDP, percentage change Forecast Developing countries Excluding India and China Source: Development Prospects, The World Bank Group

10. Emerging of MNCs indeveloping countries Galanz 134 major companies in ten developing countries: Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Poland, South Africa and Turkey

11. “Buying Spree” Announced value of Western-targeted acquisitions by emerging-market acquirers, (Wall Street Journal, Feb 2006)

12. The Role of the Private Sector

13. Evidence of the Importance of Goodwill Stock Market Value NetBook Value Goodwill % $113 bn $7 bn $106 bn 75% $380 bn $41 bn $339 bn 89% $199 bn $21 bn $178 bn 90% $499 bn $23 bn $476 bn 95% $8 bn $96 bn 92% $104 bn $202 bn $31 bn $171 bn 85% $60 bn $8 bn $52 bn 87% $46 bn $19 bn $27 bn 59% $35 bn $8 bn $28 bn 78% $77 bn 52% $149 bn $72 bn Source: Interbrand/Citibank league table, 2001 Corporate Responsibility & Risk Management, SustainAbility, 2005

14. New Pressures New Paradigms • Pressure on business to engage in broader sustainability issues. • Increasing difficulty of tackling certain global problems unilaterally. • Necessity of bringing in the comparative advantages of all stakeholders. • Competitive benefits for the private sector to play a more proactive and collaborative role in development.

15. The Role of the Private Sector • Economic, environmental and social issues are becoming too complex and the resources and competencies needed to address them too dispersed for one sector to have all the solutions. • There is a growing expectation that the private sector can and will play a role in helping to address these challenges. • The critical issue for all stakeholders is to define appropriate and realistic boundaries. • Common interests and values.

16. Challenges to Businesses • Businesses must go beyond the "compliance game" and public relations. • Businesses must define the boundaries of their social and environmental impact. • Businesses must prioritize demands for CSR and philanthropic giving. • Businesses must deal with "activist organizations" and making them part of the solution.

17. What Do Executives Think? 84% of executives agree that making broader contributions to the public good should accompany generating high returns to investors. - McKinsey Global Survey – Assessing the Impact of Societal Issues, 2007.

18. What Do Executives Think? • Most important ways in which large corporations currently contribute to the public good: McKinsey Global Survey – Assessing the Impact of Societal Issues, 2007.

19. Reactive  Proactive • Businesses must move from reactive behavior to strategic measures. • Businesses must create new strategic opportunities, including multi-stakeholder engagement. • Businesses must make improvements in the competitive context - a healthy society is a prerequisite to economic success.

20. Corporate Social Responsibility • CSR is the commitment of business to managing & improving the economic, environmental & social implications of its activities at the firm, local, regional & global levels. • CSR can be used as a framework through which business engages in multi-stakeholder partnerships for sustainable development.

21. Corporate Philanthropy vs. CSR • CSR does NOT have to be a philanthropic activity. • Philanthropy can be complementary to CSR. • Philanthropy is external to a business. • CSR is both internal and external to a business. • CSR should be a part of a business’s core strategy • This way, there can be a fundamental, long-term impact on poverty alleviation and social development by increasing national competitiveness.

22. enhanced competitiveness and investment. Collateral Social benefits Stabilization of fragile,developing and emerging market countries Poverty Reduction Better business Environment

23. Corporate Social Responsibility And the Base of the Pyramid

24. Base of the Pyramid Approach Despite global companies’ ability to create wealth worldwide, the benefits of this rarely directly reach the 4 billion poorest people of the world – the so-called “Base of the Pyramid (BOP).”

25. Population Distribution (by Age) and Population Growth

26. Estimated BOP market by sector: $5 trillion

27. BOP Approaches and CSR • BOP approaches can be a critical component of a company’s CSR strategy and core business. • New business models • The more traditional “consumer-oriented” BOP approaches • Empowering the poor to not only enter the market as consumers, but to be integral parts of the supply chain as producers. • Creation of new markets AND the transformation of existing markets.

28. Platform for Business Growth • Increased access to financial services and to communications, notably mobile telephones is the greatest success story. • Access to information, e.g. up to date market prices, and to credit is now enabling the poor to compete more effectively, and engage as entrepreneurs in the global economy.

29. Integrating CSR and BOP • Both CSR and BOP strategies should be fully aligned with broader corporate strategy and long-term market positioning. • Effective CSR and BOP strategies can help deliver sustainable business growth.

30. Emerging Business Case for BOP Approaches • Top-line Growth • Most large businesses have saturated their markets  entering untapped markets opens up an enormous new consumer, supplier, and partner base and unlimited opportunities for innovation and investment. • Cost Savings • Bringing in the BOP creates supply chain efficiencies • Outsourcing labor markets to the BOP • BOP markets are built on different business models • Innovation • Extending beyond innovation in new products to innovation in new business models.

31. Some Main CSR-related Issues in the Arab World

32. Areas Where Businesses Can Play a Significant Role • Business Engagement with Youth • Youth unemployment is a growing problem in the region. • There is a large gap between the skills that people have and job requirements. • Investing in young people will pay off as a more skilled labor force is created. • Engagement of youth can also have a multiplier effect – increased entrepreneurship, wealth creation, increased innovation, higher education levels, reduced fertility rates. Our program is very committed to engaging youth and future leaders. • Videoconference on CSR in the Arab World.

33. Areas, cont. • SMEs and Family-Owned Enterprises (FOEs) • SMEs and FOEs are very prominent in the region and their success, development and expansion is critical to the region’s economic competitiveness, growth, and wealth creation. • Finding ways to reach this demographic in regards to CSR is important. • Supply chains and Clusters. - Public-Private Partnerships • Engaging with the government is critical for creating incentives, enforcement, setting national priorities, and comparative advantage.

34. Areas, cont. • Transparency and accountability

35. Corruption as a Key Constraint to the Private Sector, by Region

36. Learning and Experience-Sharing

37. WBI’s CSR Program • Online course on interactive e-learning platform • Face-to-face workshops • For localized training and relevance to the client’s socio-political, cultural and sectoral context. • Case studies • For relevant experience-sharing and learning. • To document progress and success stories.

38. CSR Program Focuses on: • Key elements of the policy and business environment that support CSR and how these elements function as an integrated system • Providing a strong justification on why CSR should be incorporated in corporate business strategy and country development strategy • Facilitating access to relevant research and data and dissemination of best practices. Objectives: To provide participants with an introduction to the fundamental rationale, design and implementation of CSR programs. The course can be used to establish or strengthen CSR policies and practices by focusing on sustainable competitiveness and good governance.

39. CSR Online Course • Over 30,000 participants in over 90 countries around the world. The course is now available also in Arabic. • Course Modules: • CSR Main Concepts • Decision-Making Frameworks • CSR Diamond • Building Sustainable Competitiveness through CSR • CSR and the Poor • An Introduction to Coalition: Building Action Plans • Target Audience: • Primarily business, but also very useful for government, NGOs, academia, and university students.

40. CSR Program The WBI CSR program in Egypt will be offered jointly with InWent Capacity Building International, Germany

41. Executive Development Program

42. Defining the Learning Experience Preparation Learning by experiencing Training Applying what you have learned Consolidation Approach The World Bank Institute’s Executive Development Programs utilize a holistic approach to the learning experience. Preparation In order to tailor the program to your needs and to encourage learning before the beginning of the Training component, participants are challenged to clearly define what they hope to learn during the program, and commit to how they plan to leverage on that learning after the program. Participants will be given key materials and resources to prepare for the training.

43. Training Training is divided into thematic modules consisting of a combination of the following session types: • Panel discussions • Case study • Simulation exercises • Interactive multimedia sessions • Face-to-face component

44. Partners • World Bank Group • InWEnt Capacity Building International, Germany • Transparency International • The Wharton School of Business, University of Pennsylvania • Harvard University • The Global Alliance for Improved Nutrition • The Center for International Private Enterprise

45. Upcoming EDPs At World Bank Headquarters, Washington, D.C 1. Inclusive Agri-Business February 16-20, 2009 2. Business-led Anti-Corruption Strategies April 6-10, 2009 3. Opening Markets with the Poor June 8-12, 2009 (Regional Program) 4. Africa Dates to be determined

46. CSR and BOP case studies

48. Takamol Integrated Reproductive Health Services Project

49. Takamol is a five year project to promote an integrated model for strengthening maternal/child heath, family planning and reproductive health in Egypt. Through the USAID funding, Takamol is the result of a social responsibility partnership between the private and public sector in Egypt. The objective is to encourage the private sector involvement in Takamol’s integrated model and thereby encourage the effort of the Ministry of Health and Population (MOHP), to achieve sustainable reduced fertility and improved health outcomes of mothers and newborns. It targets 200 villages and more than 25 hospitals in the neediest areas of 11 Upper and Lower Egypt governorates.

50. Focus on • Mobilizing religious leaders as advocates for reproductive health • Empowering woman to improve their reproductive health • Bringing a positive behavior change • Reactivating clinic management boards • Reactivating clinic service improvement funds • Maximising ideas and resources to create sustainable community assets • Closing the gap between poverty and poor health