CSR in SMEs: Lessons Learned

Hello all!!

It’s been a while since I posted here. To give you a quick update, our Masters programme has advanced into the CSR module and we are seeing how it links back to sustainability. We have been studying and analyzing the CSR/Sustainability reports of several multinational corporations, learning how to engage stakeholders, looking at international labour rights and supplier codes of conduct, working together on constructing a materiality matrix, and debating on whether or not certain companies have truly integrated CSR into their business models.

Recently, we completed a course on CSR in SMEs with Daniel Truran who is Director General of the ebbf and some of the lessons we learned were:

1. SMEs are able to cater to customers more efficiently due to their small size and less bureaucratic form of governance. They also seem to have more potential to become innovative due to the limitations experienced with regard to lack of resources and staff. Together, SMEs can make a big difference in the world.
2. Establishing the “Love Brand” is all about engaging with stakeholders in a way that keeps them loyal to the company brand. Whether there is a phase of economic downturn or the arrival of a new and appealing competitor, the true love for the brand is what makes people trust that the company will continue to produce quality products for its beloved consumers.
3. Leadership is important in an SME that wishes to be sustainable and successful in the long-term. It requires a leader who is able to lead by example and who not only applies principles of CSR to external stakeholders but to its internal stakeholders as well. One of its most valuable assets are its employees, and thus an SME should be able to motivate and inspire its ground staff, executives, and managers, in a way that would enable them to feel engaged and truly a part of the company. To gain this type of loyalty and to make sure that it is sincere, the company needs to inform and educate employees, and find out if they really share the goals and aspirations behind the company’s values and principles.

In class, we also looked at how some SMEs managed to survive economic crises and how the workplace can be constructed to cater to the needs of employees, which made a difference in talent retention and levels of productivity.

All in all, I enjoyed our interactive course and it was a great pleasure to have Daniel join us afterwards for the IMSD international lunch! May our paths cross again!

Comments Off on CSR in SMEs: Lessons Learned / 04 May 2012 por Syafrina Sharif
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Three features of successful CSR in SMEs

Global vision, local Impact.

Today the concept of local market has been loosing importance, as even micro companies have access worldwide to provide product and services, as well as they thrive on international suppliers, employees, investors and so on. However, since SMEs maintain the local identity more than big businesses, they are in a great position to provide the most effective social impact to the community, as they know better than anyone the local reality including needs, weaknesses and opportunities.

Dialogue.

The most successful practices are possible only through effective communication systems which involve active participation and engagement. For a SME to survive against voracious competitors, it is more natural to engage widely with stakeholders externally and internally in order to collaborate toward a common direction and overcome the lack of resources. It is easer for a SME to create a cluster of trust thanks to the development of sound relationships between the few people involved in the activities.

Alignment and Identity.

Is in SMEs where you find the most innovative leaders. They make sure that everyone in the company feels like home, considering every task as personally meaningful. It automatically generate atmosphere of creativity, commitment and sense of belonging, boosting the productivity of the staff.

 

 

Comments Off on Three features of successful CSR in SMEs / 04 May 2012 por Francesco Mazzeo
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Online reputation: Inditex case study

When in 1972, sir Amancio Ortega founded the company GOA Confections dedicated to the manufacture of clothing was difficult to anticipate that later he becomes one of the richest men in Spain.

In 1975, he opened the first store under the name Zara in a central street in A. During the next ten years, the company expands rapidly throughout Spain to create, in 1985, Inditex (Industrias de Diseño Textil SA).

After the expansion through Spain, the company focus all its manufacturing facilities on Zara’s brand. In the following years, company expands abroad of Spain opening stores in Porto (1988), New York (1989) and Paris (1990).

Since May 2001, Inditex is listed on the stock market. Today (April 15, 2012), it has nine fashion brands (Zara, Kiddy’s Class, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque) with 5,527 stores in 82 countries around the world (Inditex, 2012).

Along its history, Inditex has faced different problems of reputation that could have severely affected its sales. However, thanks to the quick reaction of the company, the innovation and flexibility in its business, it has allowed not only to maintain its sales but to grow dramatically (although in Spain, the sales have decreased by 1.6% in the last three years).

This report will address two of the major reputation crisis to which Inditex has faced along its history.

Slave labor in Brazil

On August 18, 2011, the Brazilian Ministry of Labour was made public that after a control operation, it discovered that three sewing workshop in the State of Sao Paulo, used slave labor obliging employees, to work from dawn to dusk in making garments to sell them in Inditex stores later on.

The Inditex reaction was quick and effective. Inditex drew a note explaining the case. From the beginning, Inditex cooperated with the Brazilian prosecution in order to solve the problem not opposing any resistance in their information requirements. In this note, Inditex denied any direct responsibility in the case, although it was assumed that one of the 50 Brazilian suppliers (AHA Industria e Comercio Ltda of Roupas) would have incurred in violation of its Code of Conduct for External Manufacturers. Also  it reported that “it had required to the supplier responsible for the fraudulent contract to remedy this situation.” Inditex also reported that it was working with the Ministry of Brazilian Labour “to strengthen the review of the production system, both the supplier and the rest of its businesses in Brazil.”

In November, Brazil asked for € 8.2 million to repair damage occasioned but it was not until 20 December, when Zara made the commitment with the Brazilian government to invest a fortune to remove “the poor working conditions of business providers “and invest $ 1.8 million (1.4 million) in social actions. The document also established the creation by the Spanish textile group of an emergency fund to resolve any cases of insecurity among the employees employed by its subsidiaries (elpais, 2012a). From my point of view, Inditex response was appropriate

Slave labor in Brazil

On August 18, 2011, the Brazilian Ministry of Labour was made public that after a control operation, it discovered that three sewing workshop in the State of Sao Paulo, used slave labor obliging employees, to work from dawn to dusk in making garments to sell them in Inditex stores later on.

The Inditex reaction was quick and effective. Inditex drew a note explaining the case. From the beginning, Inditex cooperated with the Brazilian prosecution in order to solve the problem not opposing any resistance in their information requirements. In this note, Inditex denied any direct responsibility in the case, although it was assumed that one of the 50 Brazilian suppliers (AHA Industria e Comercio Ltda of Roupas) would have incurred in violation of its Code of Conduct for External Manufacturers. Also  it reported that “it had required to the supplier responsible for the fraudulent contract to remedy this situation.” Inditex also reported that it was working with the Ministry of Brazilian Labour “to strengthen the review of the production system, both the supplier and the rest of its businesses in Brazil.”

In November, Brazil asked for € 8.2 million to repair damage occasioned but it was not until 20 December, when Zara made the commitment with the Brazilian government to invest a fortune to remove “the poor working conditions of business providers “and invest $ 1.8 million (1.4 million) in social actions. The document also established the creation by the Spanish textile group of an emergency fund to resolve any cases of insecurity among the employees employed by its subsidiaries (elpais, 2012a). From my point of view, Inditex response was appropriate while avoiding any responsibility. It is true that it seems difficult to control all suppliers, and it may be that Inditex did not have knowledge of such practices. However, it is equally true that a huge company as Inditex, should implement more stringent controls in order to avoid such situations. However, taking into account that Zara never admitted  the knowledge of the facts, I think they acted in a smart way, investing on social projects and control of its suppliers. If the company was presented an opposition to the government, without collaboration, the consequences on its reputation would have unpredictable considering the high investment that the company maintains on the country, with over 30 stores in operation (elpais, 2012a).

Image theft

Another crisis of reputation to which Inditex had to face was the February 16, 2011. Stradivarius, owned by Inditex, was embroiled in a scandal of plaggirims. Inditex used pictures included in two blogs without the consent of the bloggers. Copying affected, at least two young, the Swiss student of 19 years old Michèle Krusi (editor Bewareof my heels) and 22 French Louise Ebel, author of one of the most popular fashion blogs in Internet, Miss Pandora.

Both have on their blogs, pictures with its own outfits, which were used with little modifications as the basis for illustrations of the shirts.

Another scandals related to the bloggers and photographers, were the appearance without the consent of the French Betty Autier, on Zara clothing in 2010, using photographs of another blogger named Gerard Estadella or the use of a snapshot of the photographer Andy YvanRodic in Lefties clothes.

Inditex’s response in these cases, in my view, was also effective and fast. Inditex decided  immediately to remove these shirts and apologize to the bloggers for the damages caused. Moreover, in the case of Gerard Estadella, Inditex decided to hire his services to enhance the work of bloggers.

Likewise the company, besides of apologizing, said the shirts were designed by an external supplier, and therefore, it unawares if its partner has the rights necessary for printing the bloggers images on its shirts.

Conclusion:

In both cases, Inditex, in my view acts properly, fast in order to reduce the reputation risk. However, even taking into account the large amounts of external suppliers that the company has, it is difficult to understand that a company of such caliber and so exposed to the public, does not have more extensive checks of its designers and manufacturers. Scandals like this, for a company like Inditex, could cause a serious risk in lack of credibility and ethics still it is not directly responsible.

On the other hand, it is important to note the commitment that Inditex has to enter in social media. Currently, it has an official Facebook page, helping page, twitter profiles in the U.S., Japan and South Africa and a video channel on youtube. However, according to the study of “engagement” (L2 Think Tank 2011), Inditex (Zara particulary) gets one of the worst results. It does not interact with the community as a mark or moderate the content of it, does not give added value, does not respond to complaints and claims and it has not a Twitter for Spain. So it seems that it has much to do in order to become important in the social media. In contrast, Inditex has launched a marketing innovator in the sector. It is a form of marketing called “street style” that aims to promote blogging as a means of communication. In 2010, Inditex created Zara People.  It allows customers to upload, after registration, their photos wearing Zara’s clothes. The selected users on the platform will be rewarded with 300 euros (modaes, 2012).

Therefore, although Zara has faced (and will face) to different reputation crisis (online and offline),  it is true that his wingspan, its sources, and its ability to innovate and cooperate has allowed it to grow dramatically without significant loss of credibility. However, it was convenient, in my view, to put more resources in the prevention of such reputational risks from its suppliers because some of these errors can trigger not only economic losses but also great confidence crisis in its customers, suppliers, investors and so on.

References:

(comunidadetnor, 2012). Retrieved 16/04/2012 from: http://comunidadetnor.ning.com/profiles/blogs/una-crisis-de-reputaci-n-para-inditex-el-caso-de-brasil.

(elpais, 2011). Retrieved 16/04/2012 from: http://blogs.elpais.com/trending-topics/2011/02/inditex-retira-camisetas-pide-perdon-bloggers.html

(elpais, 2012a). Retrieved 16/04/2012 from: http://economia.elpais.com/economia/2011/12/20/actualidad/1324369973_850215.html

(elpais, 2011b). Retrieved 16/04/2012 from: http://sociedad.elpais.com/sociedad/2011/08/18/actualidad/1313618409_850215.html

(Franquiciaplus, 2010). Retrieved 16/04/2012 from: http://www.franquiciasplus.com/noticia/2010-08-26/inditex-supera-a-gap-y-recupera-el-liderato-mundial-del-sector-textil/1053

(Inditex, 2012). Retrieved 16/04/2012 from: http://www.inditex.es/

(L2 Think tank 2011). Retrieved 16/04/2012 from: Digital IQ Index® of European specialty retailers 2011. L2 Think Tankhttp://www.l2thinktank.com/research/european-specialty-retail-2011/

(modaes, 2012). Retrieved 16/04/2012 from: http://www.modaes.es/back-stage/220211/zara-le-da-otra-vuelta-a-su-publicidad-pagara-a-la.html

(reputacionmarca, 2011c). Retrieved 16/04/2012 from: http://www.reputaciondemarca.com/2011/12/una-crisis-de-reputacion-para-inditex-el-caso-de-brasil.html

Comments Off on Online reputation: Inditex case study / 04 May 2012 por Carlos Cerdan Infantes
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Apple, an example of CR integration into the Corporate Strategy?

Apple is one of the world’s most important technology company. Its sales increase every year and its innovation is one of the main key aspects for the success. But, as a technological leader, is it also a “sustainable” leader?, In other worlds, is Apple applying properly a CSR strategy? This blog tries to answer both questions by analyzing which CSR actions they have in theory, and which they are applying in practice.

First of all, it is important to highlight which are the main issues that the company faces regarding to CSR. Apple has developed a code of conduct to explain how Apple has to do business in a ethical way including issues such as human rights, customers and business relationships, government and communities (avoiding the bribery and corruption), environment, health and safety and so on. Furthermore, it also has carried out a particular code focus on its suppliers (Apple, 2012).

Secondly, Apple conducts audits every year to control the supply chain to assure the proper application of the Apple’s Supplier Code of Conduct. Thus, Apples carries out employees training programs about local laws, rights and occupational health and safety.  Furthermore, they state that they have a zero-tolerance policy for underage labor, and offer education opportunities at its suppliers’ facilities free of charge. So, Apples seems to apply and control all its supply chain. However the true is different.

The first interesting point to emphasize is the codes of conduct structure. A code of conduct should start explaining how to apply social ethics in a business such as respect for individual dignity, no discrimination between employees, conditions of employment and compensation for personnel in a fair and non-discriminatory manner, working hours of personnel accordance with the specific nature of their duties and so on). However, Apple begins its code focusing much more on selling products to their customers, confidentiality agreements and intellectual property (Apple, 2012a). It seems that all the main principle for them is to sell products and protect itself from seepage or data or resources delivery. It can seems something frivolous, but from my point of view, it shows the main idea of the company forgetting, as a main principle, the purpose of a code of conduct.

On the other hand, Apple has faced through this last years to different problems with its suppliers. For instance it has proved that in Foxcom, its main suppliers, most of the employees have unfair salaries and workdays of more than 60 hours (Infobae, 2012) and different suicides have been registered. So, although the company has a code of conduct and publish an annual report about what it does, the outcomes doesn’t seem to be enough for a company that should be the leader in corporate social responsibility.

Regarding to the environmental impact, although the company includes also the protection of the environment in its code of conduct, the true is that, according to Greenpeace, Apple has bought a land next door to Facebook’s data center in Oregon for a second facility that is likely to be powered by dirty energy. The announcements have drawn a lot of attention because data centers use a huge amount of electricity to deliver our photos, videos, and music to our “iDevices.” (Greenpeace, 2012)

Taking into account all the problems that have came up to Apple during this years, from my point of view, the company strategy is focused too much in innovation (new versions of IPAD or IPOD are launched almost every year) demanding to its suppliers lower prices and high quality, forgetting about the environment and the social responsibility of its supply chain. The strategy and the code to follow seems to be clear. However, if the company is not able to invest more in corporate social responsibility, relaxing  its demand to its suppliers and helping them to fulfill its code, it is impossible to consider Apple as a Social responsible company. The company needs to engage all the stakeholders and one of the most important are the suppliers. They cannot be focus only on the loyalty of its clients but also in the society needs.

References:

(Apple, 2012). Retrieved 4/5/2012 from:  http://www.apple.com/supplierresponsibility/

(Apple, 2012a). Business Conduct.The way we do business worldwide

(Applesfera,2012). Retrieved 4/4/2012 from: http://www.applesfera.com/apple/asi-es-la-nueva-apple-store-calle-colon-en-valencia

(Chinaveboss, 2012). Retrieved 4/4/2012 from: http://www.chinaveboss.com/blog/2012/03/foxconn-worker-prefers-to-make-the-new-ipad-rather-than-iphone-4s/

(Greenpeace, 2012). Retrieved 4/5/2012 from: http://www.greenpeace.org/international/en/campaigns/climate-change/cool-it/

(Greenpeace, 2012a).Retrieved 4/4/2012 from www.greenpeace.org

(Infobae, 2012). Retrieved 4/5/2012 from: http://www.infobae.com/notas/627103-Apple-reconoce-graves-faltas-laborales-entre-sus-proveedores.html

(ipanspain, 2012). Retrieved 4/4/2012 from http://ipadspain.es

Comments Off on Apple, an example of CR integration into the Corporate Strategy? / 04 May 2012 por Carlos Cerdan Infantes
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SME’s post 2

Successful policies (or initiatives) towards a better place to work, should consider the needs and context of each groups of employees. Is no the same being a parent than an intern. The commitment and performance of employees will depend also on how a company considers their needs and situations.

Comments Off on SME’s post 2 / 04 May 2012 por Diana Patricia Sanchez Barajas
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CSR in SME’s

Those stakeholders , who are  “in love”with our brand,

not only buy,

but actively promote the product/brand/company.

Love a brand, instead of only like it – so more stakeholder feel engaged.

Am I in love with any brands because of its sustainability? …

 

Comments Off on CSR in SME’s / 04 May 2012 por Ildiko Heim
IMSD /

CSR in SME’s

Those stakeholders , who are  “in love”with our brand,

not only buy,

but actively promote the product/brand/company.

Love a brand, instead of only like it – so more stakeholder feel engaged.

Am I in love with any brands because of its sustainability? …

 

Comments Off on CSR in SME’s / 04 May 2012 por Ildiko Heim
IMSD /

Sustainability and SMEs

Comments Off on Sustainability and SMEs / 03 May 2012 por Laura Rubio
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CSR in SMEs – part 1

Currently, it seems that only the biggest companies have to apply CSR in their strategy. It seems that, because of these companies employ hundreds or thousands of workers and are the most pollutans, they must be the only ones that are “obliged” to implement a CSR strategy. However, in this class we have learned that SME also have an important contribution to employment, GDP and environmental impact.

So, it is important to apply CSR in all kind of companies, no matter how big it is. Of course, each company will implement the actions according to its size and market, but the values of each company must be the values of the society and the environment in order to promote the sustainable development.

Comments Off on CSR in SMEs – part 1 / 03 May 2012 por Carlos Cerdan Infantes
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The brick effect

Changes are the result of a process and are the base for further changes. Sustainability isn’t something that an enterprise can embrace from one day to another, it has to penetrate in a transversal way. To build the trust that promotes sustainability, small achievable actions have to be everyday proof that further changes are possible by our constant experience, little by little sustainability is a criteria that can be universal inside the different areas that construct an enterprise. The impact that one successful action has over others is important, sustainability is like a great construction were every brick needs to be into place to hold itself, nonetheless, there’s was always one that came first that the other to achieve a great building!

Comments Off on The brick effect / 03 May 2012 por Rodrigo Capriles Mazzei
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