World Business Council for Sustainable Development - Case Study Example

? Sustainable Development of the Table of Contents Table of Contents 2 Corporate Social Responsibility 4 Sustainable Management Solutions of Saipem 5 Results of the Initiative by Saipem 8 Triple Bottom Line Theory & its Impact 9 Introduction: World Business Council for Sustainable Development World Business Council for Sustainable Development (WBCSD) is a global association which constitutes of more than 200 international companies (WBSCD, 2013b). The association was formed by a merger of Business Council for Sustainable Development and World Industry Council for Environment. The association is situated in Geneva, Switzerland with its branch office located in Washington. The association provides a platform to the companies to explore the various dynamics of sustainable development, knowledge sharing and experiences. It also helps in suggesting best business practices on various issues on variety of platforms like government, non government and inter-governmental organizations (WBSCD, 2013c). The main objectives of the association are as follows: To be one of the leading business that advocate on matters like sustainable development To actively participate in policy development and in development of the right kind of framework that helps in making an effective contribution in sustainable human progress To develop and promote the business case for sustainable development To demonstrate the business contributions to the development of sustainable business solutions and sharing the knowledge among the members (WBSCD, 2013d). To contribute towards a sustainable future for developing nations The association helps in bringing the forward thinking companies together that help in reshaping the global business community and in creating a sustainable future for society, business and environment. The association plays an eminent role in providing business solutions by developing strong relationship with business partners and suggesting leadership approaches which can improve the existing business process. Corporate Social Responsibility Corporate social responsibility (CSR) also known as corporate citizenship is a method of self regulation which has been integrated as a business model. This concept is developed in response to the behavioral, legal, ethical, environmental and social expectations (WBSCD, 2013f). It helps the management of various companies to lay emphasis on the societal and environmental concerns in the business interactions and decisions taken by the stakeholders. CSR is in response to the various kinds of civil society and consumer pressure. The main focus of WBCSD is to ensure that the CSR model has been implemented by various organizations that will help in taking managerial decisions ethically (WBSCD, 2013e). The main focus of the organization is to ensure that the companies are aware about the benefits, applications and awareness of the CSR model. WBCSD ensures that the CSR assists the small and medium enterprises in developing countries in promoting environmental awareness and also achieve their organizational goals. Promotion of CSR concept among small and medium enterprise requires several approaches that complements the business capacity and needs and do not have an adverse impact of the business decisions taken by the management. Various techniques like Triple Bottom Line theory and other CSR based programme have proven to be instrumental in meeting social and environmental needs without compromising their competiveness. Company Profile: Saipem Saipem is regarded as one of the largest oil and gas companies in the entire oil and gas industry. It is one of the leading companies in engineering, construction and drilling. The company enjoys a superior position in the offshore and onshore oil industry by completion of successful technological projects. Saipem is regarded as one of the global contractor companies with a strong presence in Middle East, Asia, West Africa, North Africa, FSU and Central Asia. It has a strong presence in the European region and the major part of its human resources comes from the Asian countries. It employs more than 40000 employees belonging to more than 110 nationalities in the world. Apart from the manual workers, the company employs from cost effective developing nations and has a serviceable base in Croatia, Romania, India and Indonesia. In the year 2007 the company started establishing a new facility for the fabrication of offshore structure like jackets, topsides, piles and decks on Karimun Island. The company was listed in the Milan stock exchange in the year 1984 and in the year 2001 the company started number of acquisitions including Bouygues Offshore. The company operates on EPC/EPCI contracting strategies, which help in the establishment of contracting industrial models. These industrial models help in performing procurement and contraction in the engineering phase helpful for the development of offshore and onshore projects. Sustainable Management Solutions of Saipem Sustainability is regarded as an important part of the business system of Siapem and it helps in attainment of long term goals and creation of value through a effective cooperation from the employees and the managers of the company (Saipem, 2013a).The nature of the business has compelled Saipem to give due consideration to social and environmental factors and develop sustainable models accordingly. The company has taken certain initiatives which help in addressing societal, environmental and community needs. The management system of Saipem complies with internationals standards and other strict legislations. The company has attained ISO 14001 and OHSAS 18001 certification which helps in improvement of existing process (Saipem, 2013b).The sustainability model helps in the integration of the business model system and also in creation of stakeholder value through innovative, safe and reliable solutions which are applicable to the management of the human resource system. A Case study on how Saipem supported the Du Pont sustainable solutions after the application of Measuring Impact Framework of WBSCD along with other sustainable development solutions would be observed now (WBSCD, 2013a). It can be seen through the case study that Saipem supports the usage of Du Pont solution which was also used in Karimun Yard project. Saipem contributes to the sustainable development by utilizing and supporting the usage of local content strategy that lays emphasis on creation of organizational value (Saipem, 2013c). Saipem uses local content technology and tools customized to its business operations and systems that help in development of an effective strategy. The company has developed a sustainable development model known as SELCE (Saipem Externalities Local Content Evaluation) which measures induced, direct and indirect impact of the economy on the business activities. The case study will lay emphasis specifically on how social value framework is developed to integrate the impact of WBSCD Measuring Impact Framework and other tools in assessment of the socio economic impacts and the contribution of the Karimun Yard Construction project. The main objective of analyzing the case study was to highlight the contribution made by Saipem to the local economy and society of Karimun Island. One of the other objectives was to quantify the social value creation including indirect and direct impacts on wide range of societal progress. It will also focus on the short term and long term actions and plans for Saipem local investment operations management. The social value added model helps in combining the internationally recognized WBSCD measuring Impact Framework with the Navigator of GEMI AND SROI Model (WBSCD, 2013a). The model is complemented by well-established concepts, procedures, and tools such as theory of change, stakeholder engagement, economic externalities evaluation, and stakeholder perception survey (SPS). The model serves to identify the material business drivers and issues, define the boundaries and the activities in scope, measure the inputs-outputs, focus on long term outcomes and calculate the SROI. It includes substantial validation of the outcomes and impacts through stakeholder consultation and communication and compares the value created to the value perceived by the surrounding society (WBSCD, 2013a). The assessment followed the WBSCD Measuring Impact Framework which helps the users in the process of identification, measurement, assessment and management of company’s development impact. Firstly, the geographical boundaries were set at the local level in Karimun Regency and at the international level in Indonesia. The main focus of the assessment was the construction phase of Karimun Yard during the tenure 2007 to 2011 (WBSCD, 2013a). The activities included acquiring goods and services, local wages, tax payments, depreciation, training and expenditure, local social initiatives like providing funding to local schools, operations and participation in vocational teaching. The stakeholders were identified and categorized as per their level of influence on the project and their physical distance in the Karimun Yard. Secondly, the main objective was to measure the direct and indirect impacts of the Karimun Yard project. The theory of change or impact tree was developed to reflect how the activities performed by Saipen generate outputs which contribute to long term changes and regarded as an outcome which is positive or negative. The impacts associated with Saipem’s activities were evaluated through an attribution process. The resulting impact tree identified approximately 100 potential impacts of the Karimun Yard on the local and national economy and society. The Saipem Externalities Local Content Evaluation (SELCE) measures the local and national positive economic impacts, given by the sum of the direct, indirect and induced effects, such as Saipem Externalities Local Content Evaluation (SELCE) helps in measurement of local and national positive economic impacts which is given by the sum of the direct, indirect and induced effects like the economic value creation in terms of the purchases made locally, tax payments to local authorities, employee salaries, number of employment opportunities created and human capital development. It also includes the increase in the earning expectancy due to the training and development at Saipem. Results of the Initiative by Saipem The construction of the Karimun Yard had a positive local and national socio economic impact. At the local level, the social value created was worth $151 million along with the below mentioned contributions: Enterprise development was worth $119 million and the project was able to provide business opportunities to more than 100 suppliers which included direct and indirect suppliers and also helped in the creation of 2500 local jobs (WBSCD, 2013a). There was an improvement in the existing business practices and the working conditions which was widely recognized by the local stakeholders and led to savings of $1 million from health issues. The company donated $2 million from its savings for community development purposes like creation of education opportunities and various other small community projects (WBSCD, 2013a). The company also contributed $29 million from its savings for the improvement in the quality of life of the common people by creating job opportunities and providing high quality on the job training (WBSCD, 2013a). The Karimun Yard project also attracted investment worth $102 million in the form of foreign and domestic capital investments and setting the basis for sustainable, local infrastructure and societal development worth $16 million (WBSCD, 2013a). The company also contributed $96 million for the development of economic activities and creation of job opportunities in the national supply chain resulting in increased earnings and consumption (WBSCD, 2013a). Thus, we can observe that the sole intention of the project was to focus on the economic impact on Saipem investment. It was observed that for every dollar spent in Indonesia an additional value of $0.83 to $0.95 was created through induced and direct economic activities. Triple Bottom Line Theory & its Impact The triple bottom line theory also known as 3BL theory constitutes of 3 elements people, profit and planet. The theory helps in exploring business ideas about environmental sustainability and also helps in formulation of a conceptual framework for the development of sustainable solutions (IBO, 2013). In this case study we can observe that Saipem had supported and applied Du Pont sustainable solutions for the societal and economic development. The company also applied other specific tools which helped in the betterment of the local and national people. It helped in smooth facilitation of data collection process and creation of social value in six domains; infrastructure, enterprise, community development, business and institutional governance, ecosystem governance and improvement in quality of life. It helps in smooth infrastructural, electricity and water development and also helped in reduction of costs. The core value of Sapiem has also helped in creation of a culture of safety and health that has been extended beyond Karimun Yard and has improved the quality of life. The increased business activities and employment opportunities by Saipem have helped in enhancing the image of the company. Triple Bottom Line theory has helped in enhancement of the ability of Saipem to provide exemplary business services along with yielding profits from their business. References IBO. (2013). Triple bottom line. Retrieved from http://www.ibo.org/ibap/conference/archive/documents/JamesMacdonald-TripleBottomLine.pdf Saipem. (2013a). Corporate governance. Retrieved from http://www.unido.org/what-we-do/trade/csr/what-is-csr.html Saipem. (2013b). Company profile. Retrieved from http://www.saipem.com/site/Home/Company/CompanyProfile.html Saipem. (2013c). Commitment to stability. Retrieved from http://www.saipem.com/site/Home/Sustainability/CommitmenttoSustainability.html WBSCD. (2013a). Measuring social value creation at Saipem’s Karimun Island fabrication yard in Indonesia. Retrieved from http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=15365&NoSearchContextKey=true\ WBSCD. (2013b). Overview. Retrieved from http://www.wbcsd.org/about/overview.aspx WBSCD. (2013c). WBCSD US overview. Retrieved from http://www.wbcsd.org/about/wbcsd-usa/overview.aspx WBSCD. (2013d). Measuring socio-economic impact -- A WBCSD guide for business. Retrieved from http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=15366&NoSearchContextKey=true WBSCD. (2013e). Corporate social responsibility for market integration. Retrieved from http://www.unido.org/csr.html WBSCD. (2013f). What is CSR? Retrieved from http://www.unido.org/what-we-do/trade/csr/what-is-csr.html Read More