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The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda

The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda Manager, Strategic Corporate Citizenship, Kenan Institute Asia Chaiyod Bunyagidj, Ph.D. Vice President, Thailand Environment Institute June 20, 2006 Four Seasons Hotel, Bangkok. OUTLINE. Introduction to CSR

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The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda

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  1. The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda Manager, Strategic Corporate Citizenship, Kenan Institute Asia Chaiyod Bunyagidj, Ph.D. Vice President, Thailand Environment Institute June 20, 2006 Four Seasons Hotel, Bangkok

  2. OUTLINE • Introduction to CSR • 4 Case Studies: • The Bangchak Petroleum Public Company Limited • Electricity Generating Public Company Limited • Pranda Jewelry Public Company Limited • Somboon Group • Q&A

  3. Per second !!! Global Change in One Second • 390,000 cubic meters of CO2 are emitted, • 1,629 cubic meters of glaciers in Greenland melt, • 710 tons of oxygen are decreasing from the atmosphere, • 2,300 square meters of arable land disappear, • 3 cattle, 7 pigs and 1,100 chickens are consumed, the meat production sums up to 6.9 tons, Edited by Ryoichi YAMAMOTO (DIAMOND Co.2003)

  4. Per second !!! Global Change in One Second (Cont.) • 5,100 square meters of natural forest disappear • 1.3 motorcars, 4.2 television are produced • 532 peoples go to MacDonald and consume more than 500 hamburgers, • population increases by 2.4 persons (200,000 persons per day), Edited by Ryoichi YAMAMOTO (DIAMOND Co.2003)

  5. Product Annual Social or Additional Annual Volume Investment Needed to Achieve Goal Makeup $18 billion Reproductive $12 billion health care for all women Pet food in $17 billion Elimination of $19 billion Europe and hunger and United States malnutrition Perfumes $15 billion Universal literacy $ 5 billion Ocean cruises $14 billion Clean drinking $10 billion water for all Ice cream in $11 billion Immunizing every $1.3 billion Europe child Annual Expenditure On Luxury Items Compared With Funding Needed To Meet Selected Basic Needs

  6. • World Business Council for Sustainable Development (WBCSD) “The continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the workforce and their families as well as of the local community and society.” CSR Definitions: Concept

  7. Corporate Governance & Ethics Product & worker safety Labor standards Human rights Equal opportunity and access People Local and global environmental Quality; Cleaner production processes; Eco-efficiency; Environmental Technology Scope Corporate Values and Purpose; Transparency; Accountability; Tackling corruption Corporate Citizenship Corporate Citizenship Environment Contribution To Development Corporate Governance & Ethics Enterprise development; Community Investment; Education; Health/HIV/AIDS; Overcoming Digital Divide Corporate Citizenship Developed by Suthisak Kraisornsuthasinee, Ph.D. Assistant Professor, Thammasat University

  8. “85% of 140 Chief Executives of U.S. based MNCs believe that sustainable development will be even more important to their business model in five years than it is today.” The Dawn of the CSR Era Recent Survey administered by PricewaterhouseCoopers

  9. Shrinking role of government • Demands for greater disclosure • Increased customer interest • Growing investor pressure • Competitive labor markets • Suppliers relations Drivers of CSR

  10. Increased sales and market share. • Strengthened brand positioning. • Enhanced corporate image and clout. • Increased ability to attract, motivate, and retain employees. • Decreased operating costs. • Increased appeal to investors and financial analysts. Benefits of CSR…

  11. Choosing a social issue. • Selecting an initiative to address the issue. • Developing and implementing program plans. • Evaluation and Reporting. …and Challenges

  12. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED A member of the Thailand Business Council for Sustainable Development

  13. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED BACKGROUND 1984 ESTABLISHED: VOLUME: 80,000 mil. Baht 757 (as of December 2005) STAFF:

  14. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED SCOPE OF BUSINESS Integrated petroleum company (production and marketing) Refined oil sales Oil refinery management; capacity of 120,000 barrels per day Consumer goods retail

  15. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED RATIONALE FOR CESR Bangchak Goal: To be a company that helps develop a better quality of life for all Thais The company recognizes itself as a large petroleum operation - safeguarding environment and society is a priority consideration. >>

  16. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED BANGCHAK CULTURE The sustainable development of business, the environment and society.

  17. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Environmental Focus • Green products: Gasohol, Bio-Diesel • Environmental Management Accounting

  18. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Socio-economic Development • Bangchak community gas stations • Community enterprises >>

  19. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED Budget for Social Activities 10 8 unit (mil. Baht) 6 4 2 0 year 2003 2004 2005 LESSONS LEARNED Key Success Factors - Management’s leadership - Organizational culture Barriers - Development of organizational culture Countermeasures - Management commitment and support.

  20. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED AWARDS & RECOGNITIONS • Board of the Year Award for Exemplary Practices - 2004/ 2005 • Best Corporate Governance Report Award – 2005 • Most Creative Issue Award - 2004 • TIS 18001-1999 and OHSAS 18001-1999 Occupational Health and Safety Management System • ISO 14001-Petroleum Refining Certification, 1997

  21. THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED FUTURE CESR ACTIVITIES Coordinating community networks Expand business opportunities for communities

  22. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED A member of the Thailand Business Council for Sustainable Development

  23. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED BACKGROUND 1992 ESTABLISHED VOLUME 16,000 mil. Baht 107 (as of December 2005) STAFF

  24. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED SCOPE OF BUSINESS Produce electricity and supply to EGAT under long-term power purchase agreement.

  25. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED RATIONALE FOR CESR Corporate belief that success is intimately linked with the qualitative growth of Thai society Vision and policies designed to support activities Corporate contributions to society and communities in which they operate

  26. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED POLICY STATEMENT ON CSR Alleviating environmental impacts and undertaking review and evaluation of performance; Encouraging employee responsibility for a clean environment; Communicating with the public and sharing experience with other agencies on industrial performance, knowledge and operating practices.

  27. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Environmental Focus Implementation of ISO 14001 Promotion of Alternative Energy Energy Efficient Building Program Green Energy

  28. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Social Development • Education • Green library • Learning facilities and equipment for schools Youth • EGCO’s Group Environment Conservation Camp • Thai Forest Conservation Youth Camp

  29. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED LESSONS LEARNED Key Success Factors - Top-down (Board’s & Company’s Policy) - Achievement Incentives - Availability of Budget • Barriers • - Lack of employee support • Countermeasures • Raise awareness of employees • Participation as indicator for performance appraisal • - Recognition of employee contribution to society and • environment.

  30. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AWARDS & RECOGNITIONS Best Corporate Governance Report Award Top ten listed company in terms of Good Corporate Governance 2001 Best Practices On Corporate Governance The Good -Very Good Corporate Governance Company Thailand Energy Awards for "Energy Efficient Building Natural Resource Conservation Award

  31. THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED FUTURE CESR ACTIVITIES Continue implementation of projects; and Expand activities to new plant sites Plans for New projects Sustainable approach to prevent flashfloods and landslides Environmental program at Nam Theun II project in Lao PDR Green Classrooms

  32. PRANDA JEWELRY PUBLIC COMPANY LIMITED

  33. PRANDA JEWELRY PUBLIC COMPANY LIMITED BACKGROUND • Established in 1973 as a jewelry exporter • Started production base 11 years later • Listed company on the Stock Exchange of Thailand in 1990 • Operates 5 factories in 4 countries – Vietnam, Indonesia, China and Thailand • Signed the Global Compact Emphasis on Human Rights, Labor Standards and Environment • Volume: 4,000,000 pieces of jewelry each year • Staff: 3,500

  34. PRANDA JEWELRY PUBLIC COMPANY LIMITED SCOPE OF BUSINESS Pranda Group of companies comprises of: • 9 affiliated companies • 2 Joint Ventures Engages in design, manufacturing, domestic and export markets and retail.

  35. PRANDA JEWELRY PUBLIC COMPANY LIMITED RATIONALE FOR CESR • Issues related to business • Employee retention is key to business success • Require employee honesty and sense of ownership • CEO’s Vision • Vision: • Caring for employee benefit and welfare • Sharing wellbeing with stakeholders

  36. PRANDA JEWELRY PUBLIC COMPANY LIMITED POLICY • Employee Policy: Treat all employees equally and fairly with proper remuneration under a pleasant and safe working environment. • Society and Environment Policy: Take responsibility for community environment through participation in activities and events; and strictly comply with related rules and regulations.

  37. PRANDA JEWELRY PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Employees’ standard of living • Recognize value of personnel. • Emphasis on staff satisfaction (income, security, welfare and career path). • Create environment for employee participation

  38. PRANDA JEWELRY PUBLIC COMPANY LIMITED CESR HIGHLIGHTED PROGRAMS Bilateral Education Project • Cooperation with Kanchanapisek Royal Goldsmith College-2000 • Strategically link community program with core business • Curriculum for Vocational Level Diploma and Higher Vocational Level Diploma • Budget allocation (from year 2000-2006) ~ 31 Million Baht • Scholarships • No. of students: 123 graduated, 302 currently studying

  39. PRANDA JEWELRY PUBLIC COMPANY LIMITED LESSONS LEARNED Key Success Factors • Skilled labor in design and manufacturing • Employees’ honesty and efficiency Cost and Benefits • Enhanced employee morale • Build skilled labor for jewelry industry • Market access (International Labor Standards) • Brand Value and Reputation • Community involvement with underprivileged youth

  40. PRANDA JEWELRY PUBLIC COMPANY LIMITED AWARDS & RECOGNITION 2004: Best Exporter 1999: Thailand’s Brand 1998: Best Marketing of New Gold Product and Best Gold Visual Merchandising in Asia Pacific 1996: Best Own Design Exporter 1995: Best Exporter

  41. PRANDA JEWELRY PUBLIC COMPANY LIMITED FUTURE CESR ACTIVITIES • Strategic focus on Human Resource Development and Welfare • Link communities’ needs with company’s core business • Continue philanthropic and social programs

  42. SOMBOON GROUP BACKGROUND • Established over 60 years ago as a automobile parts distributor • Expanded to automobile parts manufacturing • In 1996 received technological know-how from Japanese partners • Listed on the Stock Exchange of Thailand in 2005 • Obtained QS 9000 and ISO 140001 certification

  43. SOMBOON GROUP SCOPE OF BUSINESS Somboon Group of company has 1700+ staff. The group consists of 3 companies located in the same area. 1. Somboon Advance Technology Public Company Limited (SAT) 2. Somboon Malleable Iron Industrial Company Limited (SBM) 3. Bangkok Spring Industrial Company Limited (BSK)

  44. SOMBOON GROUP RATIONALE FOR CESR • Vision: To be an employer of choice by improving quality of life for employees and their families. The company strives to be a neighbor of choice for surrounding communities by expanding activities to cover communities’ social and environmental aspects. • Issue related to business: As the company is a heavy industrial plant, it is inevitable that there are environmental impacts. The company focuses its CESR programs on reducing air, sound and chemical pollutions in and around the surrounding communities

  45. SOMBOON GROUP POLICY STATEMENT ON CSR • 2003-2007 Corporate Mission: “To be an important part in Supply Chain to satisfy customers, and encourage employees to be environmentally and socially responsible.” • Employee Policy: “The company intends to improve employees’ standard of living, including their morale and physical and mental health, by paying suitable wages; and engage them in the company’s community programs to enhance their awareness of social responsibility and maintain business ethics.”

  46. SOMBOON GROUP CESR HIGHLIGHTED PROGRAMS Environmental Aspects • Center of environmental community learning • Energy saving program • Green School program – Integrated environment and community concept Social and Community Aspect • Drug-free company, cigarette- and alcohol-free program, Good food for employees for better health program • External Community Involvement Program

  47. SOMBOON GROUP CESR HIGHLIGHTED PROGRAMS • Tools / Concepts Pursuing CESR activities through Stakeholder Engagement Engage all stakeholders including employee, supplier, customer, community and partner in CESR programs

  48. SOMBOON GROUP LESSONS LEARNED Challenges • Communication with local communities at initial stages • Management buy-in and employee participation Cost and Benefit • Obtain License to Operate • Increased productivity • Gaining a good reputation • Enhanced employee morale • Lower spending on community/ social projects through employee volunteer program and in-kind contribution from partners only around 200,000 baht in cash and estimate cost of 403,500baht on Employee Volunteer in year 2005

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