CORPORATE SOCIAL

RESPONSIBILITY IN
GLOBALIZATION

Gholamhossein Davani
Chairman of Dayarayan Auditing &Financial Services Firm (RSMi Iran)

Member of High council of Iranian association of Certified Public

Accountants (IACPA)
IMA,IIA,AAA,BAA,EAA,CAAA,AIA,CFE
International Symposium on Business Ethics in The Age of Globalization “ “
Feb. 18-19th 2007 , Tehran-Iran

1
Ladies & Gentlemen.
I am very glad to have the opportunity to
speak at this conference, as it gives me the
chance to stress the importance of the
corporate social responsibility in
globalization.

2
World at a glance 2006
Population=6,525,000,000
GDP= $43,920,000,000,000
Oil Product= 79,650,000 (BBI/day)
Oil proved reserve (BBI)= 1,349,000,000,000
Purchasing Power Party (PPP)= $ 59,590,000,000,000
Export= $ 10,320,000,000,000
Import= $ 10,270,000,000,000
Labor Force (Person)= 3,001,000,000
Oil Consumption (BBI/Day)= 80,100,000
Internet users= 1,018,057,389
Telephone- mobile cells= 1,752,183,600
Debt-external= $38,540,000,000,000
Natural Gas- Proved reserves (Cu-m)= 174,600,000,000,000
Natural Gas-Export (Cu-m)= 667,600,000,000
Daily transaction= S 1,300,000,000,000 (60 times of industrial goods)
CHIP= Clearing House Inter-banks Payment System Every Minutes 2 B.US
Every day = $1,000,000,000,000
Daily transaction= $ 1.300.000.000.000 (60 times of industrial goods)
CHIP= Cleaning house inter banks payment system every minutes 2 B. US Dollars
Everyday= $ 1.000.000.000.000
3
World at a glance 2006

Oil production
Oil Consumption
80,100,000
)BBI/day(
Telephone
1,206,315,500 
Internet users


1,018,057,389
)BBI/day( 79,650,000

Oil- proved reserve Airplane

)BBI( 1,349,000,000,000 49,024

Oil export
Gas- consumption
)Cu-m( 2,820 7,920,000
Bbi/day

Gas Exports
667,600,000,000
Labour force
)Cu-m( 3,100,000,000

Gas Import
Mobile cell
828,000
)Cu-m( 1,752,183,600

Gas Proved Reserve Roadway

)Cu-m( 174,600,000,000,000 32,345,165KM

World export Railway

Billion USD 10,320 World’s import 11,115,205KM
10,270
Billion USD

4
 Outlook of world 2006

GDP
GDP GDP
Oil product Purchase Export
Gas reserve Oil reserve Oil BBI/Day Population Percent Official rate
BBI/Day per Billion
Current price Billion
capital

172,200,000,000,000 1,326,000,000,000 82,590,000 83,000,000 6,525 59,590 47,766 10,320 43,920 World

7,335,000,000 7,335,000,000 14,700,000 3,172,000 486 12,180 45435 1,318 13,310 Euro

5,451,000,000,000 22,450,000 20,730,000 7,610,000 298 12,410 42,000 927 12,470 USA

39,640,000,000 29,290,000 5,353,000 120,600 127 3,914 30,700 550 4,848 Japan

279,100,000,000,000 39,600,000 2,650,000 167,400 82 2,454 29,800 1,016 2,747 Germany

589,000,000,000 4,500,000,000 1,827,000 2,075,000 60 1,869 30,900 327 2,218 UK

12,770,000,000 144,300,000 1,977,000 77,690 62 1,822 30,000 443 2,067 France

2,350,000,000,000 16,100,000,000 6,534,000 3,631,000 1,313 8,182 6,300 752 1,790 China

26,620,000,000,000 135,500,00 1,510,000 3,979,000 68 552 8,100 55 178 Iran

835,000,000,000 5,600,000,000 2,450,000 758,000 1,095 3,669 3,400 77 720 India

5
 World Military expenses 2006
518 USA
81 China
45 France
44 Japan
42 UK
35 Germany
19 India
4/3 Iran
Source: CIA Fact book 2006 6
 Big world economic 2006

China EU USA World Description

752 1,318 927 10,320 Export(Billion $)

1,790 13,310 12,470 43,920 GDP(Billion $)

6,300 28,100 42,000 --- $ GDP (Per capital) PPP

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 What is Globalization

Globalization as a decoupling of space and

time, emphasizing that with instantaneous
communications, knowledge and culture
can be shared around the world
simultaneously.
“Sociologist, Anthony Giddiness”

8
 Global village (one – world list)

Global village is a term coined by Wyndham lewis

in his book “America and comic man” (1948) but
Herbert Marshall Mcluhan (1911-1980). Also
wrote about this term in his book “The making of
typographic Man” (1962)

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 Globalization is an umbrella term which refers
to complex of economic, trade, social,
technological, culture and political.
 Global village idea is Electronic
interdependence when electronic media
replace visual culture.

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Elements of Global village (one-wordlist)

Convergence
Uniformity

Homogenization

Hyper-liberalism

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 The History of Globalization

Globalization is an historical process that began

with the first movement of people out of Africa into
other parts of the world. Traveling short, then longer
distances, migrants, merchants, and others have
always taken their ideas, customs, and products into
new lands. The melding, borrowing, and adaptation
of outside influences can be found in many areas of
human life.

12
Globalization in the era since World War II has been
driven by trade negotiation rounds, originally under
the auspices of GATT, which led to a series of
agreements to remove restrictions on "free trade".
The Uruguay round led to a treaty to create the
World Trade Organization or WTO, to mediate trade
disputes. Other bi- and trilateral trade agreements,
including sections of Europe's Maastricht Treaty and
the North American Free Trade Agreement have also
been signed in pursuit of the goal of reducing tariffs
and barriers to trade.
“Source:Wikipedia”

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 World Great Transformation

 Fire Discover
 Invention of Gun

 Invention of Printing

 Invention of Machine

 Invention of Computer

 Invention of Internet

Virtual Organization

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 Arising New Globalization

Globalization is a process
that has been going on for
the past 5000 years, but it
has significantly
accelerated since the
demise of the Soviet Union
in 1991.
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Timeline of Globalization
Age of Imperialism-1900
Great Depression- 1929
World Economic Forum (WEF)-1971
Dwellers land 1986-
General Agreement on Tariffs and Trade (GATT)-1986
Montreal Protocol-1987
Fall of Berlin Wall-1989
Collapse of Soviet Union-1990
Union European-1992
Un World Conference on Human Rights-1993
North American Free Trade Agreement (NAFTA)-1994
World Trade Organization (WTO)-1995
International criminal court-1998
Euro adapted 12 countries -2002

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Effects of Globalization

 E-governance
 E-trade

 E-bank

 E-learning

 E-(Virtual) Organization

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Global Gross Domestic Product (GDP)
 Year 2000:
 30 trillion – 5 billion people – 20% global GDP
 Year 2050:
 140 trillion – 8 billion people – 40% global GDP
(assuming 3.5% growth)

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New world Discipline
The fall of the Berlin Wall and the
collapse of the Soviet Union ended the
cold war between the forces of capitalism
and socialism with capitalism
triumphant. The development of the
internet made possible the organization
of business on a global scale with greater
facility than ever before.
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Importance of Ethics

“There is no such thing as business

ethics….There’s just ethics; and we all
have to practice them every day in
everything we do.”
Peter Drucker

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 Social Responsibility
The currency and general relevance of social
responsibility and sustainable development
(SR/SD) to society is seen in such areas as
investor interest in ethical mutual funds,
government lists of threatened or endangered
species, and pollution control mandates
established by public policy setters. Indeed,
business, government, and society are caught
up in a debate over how this planet’s scarce
resources are to be preserved and used.

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What are SR/SD
These are voluntary initiatives with a global
constituency that can also be defined as multi-sect
oral, in that they can be applied in a wide range of
industries. They have all evolved through social
partnerships involving some elements of business,
governments, labor organizations and non-
government organizations. They all take a multi-
stakeholder approach to corporate citizenship
issues.

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Elements of Social responsibility
• Community
• Diversity
• Environment
• Ethics
• Financial Responsibility
• Human Rights
• Safety

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 The Global Eight
1-The UN Global Compact
2- ILO conventions
3- The OECD Guidelines for Multinational Enterprises
4- ISO 14000 Series
5- Accountability 1000
6- The Global Reporting Initiative
7- The Global Sullivan Principles
8- Social Accountability 8000

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 Timeline of Corporate Governance
 The Cad bury Report (1992), UK
 Green bury Report (1995) , UK

 Hampel Report (1998), UK

 The Smith Report (2003), UK

 The Higgs Review (2003), UK

 The Company Law White Paper (2002)

 Sarbanes- Oxley Act 2002 USA

 The Tyson report on the Recruitment

 Development of Non-Executive Directors (2003)

 The European Commission’s Action Plan for

Company Law and Corporate Governance (2003)

25
 Corporate Governance
The good corporate governance needs to address
not only boards of directors, committees, and legal
and regulatory issues, but also business practices
and ethics, disclosures and transparency,
enterprise risk management, monitoring, and
communication. That it's a whole set of systems
and processes.
“It's not just narrowly focused on compliance with
Sarbanes-Oxley.”
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Accountability
The objective of accountability towards
stakeholders requires information about
general issues such as product safety, the
environment, employee relations, etc. An
ethical bookkeeping system collects data
systematically about the organization's ethical
behavior, which is relevant for stakeholders.
This process is most likely to include "hard"
information, including for instance complaints
of stakeholders, business accidents or fines for
unethical behavior .
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 Different Roles in Accountability &
Corporate Governance

 Role of chief of the board

 Role of audit committee
 Role of non-Executive managers
 Role of internal audit
 Role of shareholders annual meeting
 Role of Human resources
 Role of transparency

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 Traditional view of business strategy
and Social Responsibility
Industry
Structure

Resources Competitive Financial

Business Strategy
Advantage Performance

Corporate values Social Social

and ideology Responsibility Performance

Stakeholders

29
 Integrated view of business and
social strategy

Industry
Structure

Business Strategy Financial

Resources Competitive
Advantage Performance

Corporate values
and ideology

Social Social
Responsibility Performance

Stakeholders

30
 Different Corporate Responsibility
 Economic Responsibility (Must be done)
 Ethical Responsibility (Better to do)
 Law responsibility (Obliged to do)
 Voluntarily Responsibility( Free in do)

A.B. Arky Carroll

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 …Sustainability

“Sustainable development is a
very simple idea. It is about
ensuring a better quality of life
for everyone, now and for
generations to come.”
Sustainable Company
The systems and processes of corporate governance also
should consider a diverse group of stakeholders, not
solely shareholders. "Most corporate governance
focuses just on shareholders. But a shareholder's
interest is different than an employee's interest, which
is different than the interest of a community, creditor,
or supplier. And too often, the focus of shareholders,
management, and everyone else in the company is on
.increasing shareholder value
Furthermore, this responsibility is often on the backs of
the community or the employees or the suppliers, and
.that is not in their interest

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History of Global Reporting

The Global Reporting Initiative (GRI) was conceived

in 1997 by the Boston-based Coalition on
Environmentally Responsible Economies (CERES) in
collaboration with the Tells Institute. Over the past
five years, the GRI has evolved into a set of reporting
criteria on all aspects of a company’s performance.
The initial draft standard was ‘field-tested’ in 1999
by over 20 companies and released in June 2000. A
revision was published in 2002.

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 It is possible for standards to have
:several of these characteristics

• Principles (Global Compact and Global Sullivan Principles)

• Standards (GRI, OECD Guidelines, SA8000, AA1000S, and ILO Conventions)
• Foundation (ILO Conventions, AA1000S)
• Process (SA8000, AA1000S, ISO 14000S)
• Performance (SA8000, OECD Guidelines, and ILO Conventions)
• Certification (SA8000 and ISO 14000 Series)

35
What is GRI
The GRI has been adopted by the UN Environment
Programmed (with funding from the UN Development
Fund) and is becoming an independent organization. The
GRI is built on a simple premise. By providing a broadly-
agreed mechanism, reached through negotiation between
the partners in the process, to measure environmental
and social performance, the GRI aims to assist investors,
governments, companies and the wider public to
understand more clearly the progress being made
towards sustainability. The use of a common framework
is seen as a way to improve related analysis and decision
making.

36
 SA/CSR
After Enron Clops some terminologies same
Social audit (SA), corporate social
responsibility (CSR) have been relief. These
days, corporate social responsibility (CSR) is
common currency but a “currency” that is
rather devalued. The phrase is so over- and
poorly used that it begins to lose any meaning.
Any proper definition of CSR would require a
categorical standard of values. This is lacking.
In fact CSR now means many different things
to many people.

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Social Responsibility
In the globalization area auditors'
responsibilities have changed to corporate social
responsibility that main basic is related to
Ethics. Although many auditors are burning the
midnight oil to familiarize themselves with the
new regulations and to prepare for their role in
the compliance process, the scope and
complexity of change has made the learning
process a significant challenge.

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Global Reporting Initiative (GRI)

P= M × E (i)
P= Share price/market cap
M= Multiple
E= earning per share
i= Social / Environment

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 The Global Eight

1-The UN Global Compact

2- ILO conventions
3- The OECD Guidelines for Multinational Enterprises
4- ISO 14000 Series
5- Accountability 1000
6- The Global Reporting Initiative
7- The Global Sullivan Principles
8- Social Accountability 8000

40
Elements of social responsibilities &
sustainable development

International Labor Organization (ILO)

UN Declaration on the right of the child

Sex Discrimination in employment

Human Right

Environment Protocol

Social Security
Commerce Code & Fair competitor

41
New responsibilities of Managements

Social Responsibility
Sustainable development

Corporate Governance

Business Ethics

Sustainable development

Transparency

Accountability

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Iranian managements legal responsibility

Labour law


Social Security Law



Tax act


Commerce Law


Environment Law


Stock Exchange regulation



General account office (GAO)


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 :Iran Corporate Governance Include

 Partner Rotation-Transition Questions

 Non-audit Services
 Audit Committee Pre-approval
 Audit Committee Communications
 Full Disclosures
 "Cooling Off" Period

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Yearly World Stock Value Exchange Transaction

$ Amount: Billion

7,900 1990
26,000 2000
31,000 2003
41,000 2005

45
Stock Exchange 2006
$ Amount: Billion
15,451 New York
4,614 Tokyo
3,715 London
1,638 Germany
1,323 Spain
1,212 Swiss
3,708 Euro next
1,715 Hong Kong
1,701 TSX
38 Tehran Stock Exchange
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 Tehran Stock Exchange at a glance

2006 2005 2004 2003 2002 2001 2000 1991 Description

10078 9460 12113 11380 5062 3758 2978 472/1 Index Shares prices
Market value
37615 35472 35470 33625 12787 8446 6784 267
Million USD
435 432 426 383 334 318 307 129 Companies Listed
Gross Domestic Product (GDP)
245 192 161 133 116 115 96 97/3
Billion USD

47
Sources
1- Auditors’ responsibility on globalization PPT Gh. Davani.2006
2- Stockholder Engagement standard, Institute of Social & Ethical
accountability.
3- GRI and the transparency imperative, why GRI, global reporting
initiative.
4- Living corporate citizenship by persons education Ltd.
http://www.business-minds.com
5- Corporate social responsibility & the global sullivan principle.
6- Ethics after Enron: PPT. Where are we, and where are we going,
University of San Diego 2003.
7- The world fact book www.cia.gov
8- IMF- www.imf.org

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