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IC-Actors in the Private Sector
Study
16 September 2013
Excerpt of the original study in German (Chapters 3–6.1)
On behalf of Carried out by
Nina Prochazka KEK – CDC Consultants
cinfo Universitätsstrasse 69
Zentralstrasse 115 8006 Zürich / Schweiz
2500 Biel-Bienne +41 44 368 58 58
Martina Frank
frank@kek.ch
Fiona Wigger
wigger@kek.ch
Markus Engler
engler@kek.ch
Translation: Louise Rapaud and Bina SanghaviThe private sector in international cooperation
Table of Contents
Summary 4
3. The Swiss Private Sector in Development Cooperation 5
3.1 Foundations 5
3.1.1 Definition 5
3.1.2 Overview of foundations with international activities 6
3.1.3 Networks 12
3.1.4 Trends and challenges 13
3.2 Corporate Social Responsibility 15
3.2.1 Definition 15
3.2.2 An overview of companies with international CSR activities 17
3.2.3 Actors and approaches 20
3.2.4 Networks 23
3.2.5 Trends and challenges 24
3.3 Inclusive Business 25
3.3.1 Definition 25
3.3.2 Actors and approaches 26
3.3.3 Trends and challenges 28
3.4 Social Enterprises 30
3.4.1 Definition 30
3.4.2 Actors and approaches 31
3.4.3 Trends and challenges 33
4. Private Sector Development in International Cooperation 34
4.1 Definition 34
4.2 Approaches 35
4.3 Actors 37
4.3.1 Swiss NGOs in private sector development 37
4.3.2 Swiss government actors in private sector development 40
4.3.3 Swiss financial and consulting institutions in private sector development 41
4.3.4 Social investors (non-commercial) 42
4.3.5 Networks in private sector development 42
4.4 Trends and challenges 44
5. Employee Profiles 44
5.1 Working at foundations 44
5.2 Working in CSR 46
5.3 Working for inclusive business ventures 47
5.4 Working as or for social entrepreneurs 47
5.5 Working in the area of private sector development 48
6. Conclusions 49
6.1 International cooperation actors in the private sector 49
KEK – CDC Consultants 2The private sector in international cooperation
Annex 1: References
Annex 2: Interview Partners
Annex 3: Stiftungen Gesamtübersicht (3. Ebene)
Annex 4: Stiftungen Auswahl (2. Ebene)
Annex 5: IZA Aktivitäten in CRS von Schweizer Unternehmen
Annex 6: Schweizer PSD Akteure
Annexes 3–6 in German
KEK – CDC Consultants 3The private sector in international cooperation
Summary
This comprehensive study on the role of the Swiss private sector in international
cooperation (IC) analyses the importance of the activities of companies and foundations
and provides an overview of the actors engaged in private sector development in
developing and emerging economies. It highlights the increasing influence of new
models such as inclusive business, which promotes the development of affordable
products for people „at the bottom of the pyramid“, or social entrepreneurs who
incorporate their desire to address a social problem into their own business ideas and
interests.
“Doing good” and talking about it can generate a strong competitive edge even for a
traditional company. Almost all of the largest Swiss companies have developed a charter
on their Corporate Social Responsibility (CSR) and about half of the analysed 36
companies are involved in charitable work in developing countries - often through
partner NGOs. The estimated funding runs into billions. A strong trend is the promotion
of sustainable value chains, which, in conjunction with the development of labels of
social and environmental standards, aim to create improved production conditions in
countries of the South. Companies themselves see this as their primary responsibility.
The foundation sector is characterised by great diversity. It is difficult to identify
commonalities between the multitude of small foundations on the one hand and
multimillion dollar corporate foundations on the other, and amongst the array of topics.
There is general interest in focusing on areas such as education, water and health,
which account for almost half of all activities.
The second part of the report shows that the private sector is not only a financial or
entrepreneurial actor in developing countries, but represents also a target group for
development projects. It is generally recognised that the promotion of education, health
and infrastructure projects cannot lead to development if the private sector in these
countries remains unproductive. While state development actors focus on improving
conditions and frameworks, NGOs and social investors are active mainly in the field of
microcredit or in the promotion of Small and Medium Enterprises (SME).
Networks play an important role for all stakeholders. Transnational networks are
essential to harness the increasingly global discussion. Nevertheless, there are several
Swiss-based umbrella organisations, networks and exchange platforms that promote
conferences, publications and forums for exchange and to reward innovation.
The demands on employees of the twelve actors interviewed for the study are as
heterogeneous as the organisations themselves. International experience and
intercultural competencies are expected from all employees and are necessary in the
often international teams. Career paths are rarely linear, with changes between private,
public and non-profit organisations common and enriching for both employers and
employees.
There is a substantial range of consulting and training opportunities. Many organisations
have positioned themselves as consulting or training institutes in recent years, especially
in the field of CSR and in the foundation sector. In addition, there is a trend towards
interactive online training tailored to specific target groups and portable to any location.
KEK – CDC Consultants 4The private sector in international cooperation
3. The Swiss Private Sector in Development Cooperation
Private actors play different roles in development cooperation. They act as one-off
sponsors or as long-term donors of development projects. They can also address
development cooperation issues vis a vis their value chains and sustainable business
models in countries of the South, whether through philanthropic engagement, genuine
corporate social responsibility or through business models that target poor populations in
developing countries. In Switzerland, the private sector also contributes significantly to
foundations, which further invest in projects in international cooperation as donors.
This study does not analyse the comparative weight of private and state actors, but
provides an overview of the many actors and their networks.
Important results of the study are found in the tables in the Appendices (CSR of Swiss
companies, Overview of Foundations, levels 1 and 2). Together with the report findings,
they form the extensive documentation that underlies this overview of Swiss actors.
3.1 Foundations
3.1.1 Definition
The study reviews so-called non-profit foundations. A foundation is an asset with a legal
personality. Art. 80 of the Civil Code states that a foundation is established by the
endowment of assets for a particular purpose. The endowment of assets involves the
contribution of assets of one or more donors in favour of the newly established
foundation for this purpose. This initial funding must be substantial enough to enable the
foundation to conduct a reasonably significant activity. The amount of the foundation’s
assets must be commensurate with the foundation’s respective purpose. 1
The terminology used in the foundation sector is multifaceted and complex.
SwissFoundations presents a few definitions of common terms that will be adopted
here. 2
Traditional or non-profit foundation: Personalised special-purpose assets that are
earmarked for non-profit and altruistic purposes and that the donors want to fulfil with
financial and other resources. Non-profit foundations are as a rule tax-exempt and
subject to public supervision. Their endowment funds can also be supplemented with
subsequent contributions, donations or active fundraising.
Charitable foundation (formerly grant-making foundation): Non-profit foundations that
have their own assets and develop charitable activities with the assets or income earned
from the assets. These are not restricted exclusively to the disbursement of funds to
beneficiaries, but include measures that are strategic, mentoring and monitoring in
nature. A charitable foundation can act as an operational foundation with its own projects
or programmes.
Corporate foundations: The purpose of a corporate foundation can be of a charitable
or economic nature or even a combination of both. For this reason, it is often difficult to
1
http://www.edi.admin.ch/esv/01174/index.html?lang=de
2
http://www.swissfoundations.ch/de/glossar
KEK – CDC Consultants 5The private sector in international cooperation
draw a clear distinction between them and traditional foundations.Tax-exemption is only
granted in the context of the charitable purpose.
Umbrella foundation: For dependent foundations and smaller assets, this form allows
asset pooling in the area of investments, as well as in the field of project funding. The
umbrella foundation is also suitable for donations and bequests. It conducts professional
management of investment and funding and, especially for smaller assets, is an
attractive alternative to establishing an independent foundation.
The Federal Department of Home Affairs is responsible for the supervision of
foundations that are of national and/or international significance. All Swiss foundations
are registered in the directory of foundations under one or more key words in
accordance with their purpose.
3.1.2 Overview of foundations with international activities
The 2013 Swiss Foundation Report reports a sustained growth of the Swiss foundation
sector. 376 new foundations were established in Switzerland in 2012. Combined with the
total of 12,957 non-profit foundations that are registered in the foundations register, this
represents a vibrant civil society and plays an important role in philanthropy. According
to estimates the total assets of all foundations are over 70 billion Swiss francs. With this
concentration of foundations and estimated per capita endowment, Switzerland remains
at the forefront in Europe. Basel has the highest concentration of foundations while most
foundations are registered in Zurich. 3
For the present study only those foundations that support activities in a developing
country are of interest. A total of 280 foundations that are active in international
cooperation match the criteria of this study. These foundations support various projects
in Asia, Africa, South America and Eastern Europe and are engaged in issues that
include human rights, sustainable development and humanitarian aid. The list in Annex 3
serves as a reference list. Of these 280 foundations, 56 were selected for deeper
analysis (see also Annex 4, foundation selection 2nd level). Data from these foundations
are the basis for subsequently presented quantitative analyses.
3
CEPS / University of Zurich / Swiss Foundations: The 2013 Swiss Foundation Report.
KEK – CDC Consultants 6The private sector in international cooperation
Figure 1 illustrates the average annual disbursements of foundations. 4
Figure 1: Average annual disbursements of foundations in CHF
(n=27)
15%
22%
kleiner
less than CHFals
0.30.3 Mio. CHF
mio.
CHF 0.3–1
0.3 -million
1 Mio. CHF
30%
33% 1-10million
CHF 1–10 Mio. CHF
more than CHFals
grösser 10 10
mio.
Mio. CHF
Of the 56 foundations, 29 provide no information regarding their annual disbursements.
The 27 foundations that do provide such information can be classified according to the
amounts of their respective annual distributions.
Over half of these foundations (55%) annually disburse more than CHF 1 million each.
Taking into account the fact that 22% of the selected foundations disburse over
CHF 10 million, these 27 foundations alone allocate a significant sum to international
cooperation.
Figure 2 provides an overview of the employees at the foundations. For 40 of the 56
foundations, the information could be surveyed online.
Figure 2. Employees at foundations (n=40)
23%
35% min. 1
2-6
mehr als 6 6
more than
42%
4
The last year for which figures are available was used as the reference year (mostly 2012 or 2011).
KEK – CDC Consultants 7The private sector in international cooperation
A large number of foundations operate with a small back office in Switzerland, 35%
operate with at least one employee, sometimes supplemented by staff working on a
voluntary basis. Another 42% employ from 2 to 6 employees. Large foundations that
employ 7 or more persons represent almost a quarter of the sample (23%).
Figure 3 provides an overview of the broad thematic areas that foundations support.
Figure 3. Thematic commitment of foundations (n=56)
2% Bildung
Education
4%
4% Wasser Hygiene, Gesundheit
Water sanitation, health
5% 27% Frauen
Women&and
Kinder
children
6%
Humanitäre Hilfe
Humanitarian aid
8%
Ländl. Entwicklung, Infrastruktur,
Rural development, infrastructure,Wohnen
housing
8%
18% Soziales & human
Social and Menschenrechte
rights
8%
Umwelt, Energie
Environment, energy
10%
Mikrokredite & Versicherungen
Microcredit and insurance
Kleinunternehmer
Small businesses
Kultur
Culture
Mission (Religion)
Missionary work (religion)
Note to Figure 3: 142 disclosures from 56 foundations, i.e., foundations often commit to more than one area.
The most common purposes of foundations are promoting education (27%), health,
sanitation and water issues (18%) and issues affecting the target group of women and
children (10%). This applies especially to children's homes, activities for disadvantaged
children, and mother-and-child projects.
6 foundations (11%) also promote small businesses and thus fall into the category of
actors that promote private sector development. Some are therefore picked up in the
second section of this report, e.g., 1to4.
An example of a large foundation with an emphasis on educational issues is the Jacobs
Foundation, portrayed here.
KEK – CDC Consultants 8The private sector in international cooperation
The Jacobs Foundation – development and education for current and future generations
The Jacobs Foundation is a foundation internationally active in the field of child and youth
development, which was founded by entrepreneur Klaus J. Jacobs in 1989 in Zurich. The Jacobs
Foundation supports research projects, intervention programmes and scientific institutions with an
annual budget of around 40 million francs. The goals of the Jacobs Foundation are to promote
innovation in research and practice and to combine scientific findings with practical applications.
The foundation also wants to foster public dialogue and create networks to bring about social
change in the area of child and youth development.
Activities: The Jacobs Foundation’s programmes and project funding are internationally
oriented. Within the framework of its medium-term plan 2011-2015, the foundation focuses on
four key areas in various regions: “Early Education” in Switzerland, “Educational Biographies” in
Germany and Switzerland, “Life Skills for Employability” in Argentina, Brazil and Columbia, and
“Livelihoods” in Burkina Faso, Ivory Coast, Senegal and Uganda. In promoting international
support for the thematic priorities “Life Skills for Employability” in Latin America and “Livelihoods”
in Africa, the foundation works with partners that have good local contacts with government and
private organisations as well as with policymakers and civil society. In Latin America the
foundation focuses on projects that promote the integration of young people into the labour
market. In Africa the foundation supports projects that improve livelihoods (living conditions) of
families in rural areas. Livelihood projects work with various members of a rural community to
improve opportunities for children and youth in (further) education and thereby improve access to
the labour market. Currently 15 projects are supported for three to five years with an annual
budget of approximately CHF 2 million.
Employees: The Jacobs Foundation currently has 16 employees in Zurich, of which one person
is responsible for international projects. The foundation developed its international projects in
close cooperation with local and international NGOs that take over implementation of the projects
at the local level. The employees in the intervention areas have at least a university degree and
many years of work experience (at least 10 years). In international cooperation, on-site
experience, especially in the foundation’s focus countries, is considered just as important as
experience with NGOs, private and governmental organisations.
Case Study: In 2012, the Jacobs Foundation started the new programme “Fortalezas” in
Argentina, Brazil and Columbia in its thematic priority “Employability”. Latin America has a large
number of youth who have not completed secondary school and are not engaged in any
vocational training. The foundation works with local civil society organisations that, for example,
support youth affected by violence to attain important social and professional skills. The goal is
that as many of these youth as possible find jobs that would enable them to live under decent
conditions. The intervention programmes work with integrated approaches that combine various
measures, for example, the catching up of basic education and vocational training with “life skills
training” (developing social skills), mentoring and cooperation with employers.
Opportunities: The foundation focuses its interventions on a few countries, based on the
hypothesis that this produces a stronger impact. At the same time the interventions are
supervised by external evaluators from the outset, both to track implementation as well as to
apply the lessons learned to bring in new projects. Synergies and partnerships should also be
established, not only with the education sector in the intervention countries but also with other
national and international partners that support similar projects.
KEK – CDC Consultants 9The private sector in international cooperation
Figure 4 refers to the geographic focus of 56 foundations.
Figure 4. Geographic focus of foundations (n=56)
6% Weltweit
World-wide
10%
Afrika
Africa
42%
Asien
Asia
17%
Lat.-Amerika
Latin America
Europa
Europe
25%
42% (27) of the foundations are active worldwide, without a specific country focus. A
quarter of the foundations are focused on Africa. Of the remaining 29 foundations, 20
(52%) are active on one continent and 9 on two continents (16%), of which more are
active in Africa than in Asia. An even smaller number of the foundations (10% and 6%
respectively) are engaged in Latin America or Europe (especially Eastern Europe).
In addition, the following qualitative analysis can be made of the 56 foundations
selected.
Foundations that are supported by companies (mostly “corporate foundations”):
The focus is normally related to the core business of the firm responsible for the source
of funds. The Swiss Re Foundation, for example, supports measures for disaster risk
reduction, the Novartis Foundation for Sustainable Development aids the improvement
of health care and the Syngenta Foundation for Sustainable Agriculture focuses on
smallholder farmers that to date had to rely solely on their own means. These
foundations are professionally organised, have several employees and, while they
operate independently of the parent company’s core business, nonetheless mutually
benefit from synergies.
Foundations that were established with the personal assets of company owners or
private persons (mostly “charitable foundations”): How funds are thematically
allocated varies widely according to predetermined criteria or personal commitment. The
Jacobs Foundation was established with the coffee producer’s private assets and
promotes various projects in the field of education that focus on children and youth,
domestically and abroad (see also profile).
Private initiatives often have a narrow focus, such as the support of institutions for
children in a particular region (e.g., Bleu Ciel, Arcanum Stiftung) that are regularly
financed with donations.
KEK – CDC Consultants 10The private sector in international cooperation
Usthi provides a portrait of a foundation established by a committed individual.
Usthi Foundation – dedicated philanthropy with a personal touch in India
Usthi Foundation is a private foundation established in 1976 by Swissair pilot Kurt Bürki with
headquarters in Rapperswil-Jona. The foundation supports projects in the fields of education,
health and integration, with a focus on children, youth and women in India and Nepal. The
foundation places particular emphasis on the sustainability of its interventions in social, economic
and environmental terms. Investment in small enterprises (Social Business Ventures) supports
the medium-term financial independence of local partners, which in turn enables the longer-term
economic sustainability of projects. As a private sector actor, Usthi not only supports specific
thematic areas but also contributes directly to private sector development.
Activities: Usthi currently supports 16 projects in the two countries. The goal is to support these
projects financially until they can run independently. Some projects are already nearly
independent, such as the health network in Somagiri, while others will be supported over the long
term. The Tribal Health Centre (“jungle hospital”), for example, which treats patients from 133
villages, has been financially supported by the Foundation for 26 years. The foundation has made
available an annual budget of approximately one million Swiss francs. The funds come from
various sources, with about 40% from donor foundations, 40% from private donations and 20%
from public sector donors such as communes, cantons and parishes. An important approach of
the foundation is to increasingly support projects that are based on new financing models and
have a business orientation.
Employees: 3 persons (equivalent to 220 percent full-time posts) currently work at the Usthi
Foundation in Switzerland. A Swiss intern is in Orissa, India for 18 months to support the
implementation of a new health and education project. The two senior employees in Switzerland
have degrees in international relations, general management and geography. All employees have
international cooperation experience. The projects financed by Usthi and its partners support a
total of 350 employees in the project countries. The local employees have diverse qualifications -
nursing staff and managers in the “jungle hospital” or teachers in the schools.
Case study: The Asha Jyothi vocational training centre is an integrated education and support
project for children, youth and single mothers in Hyderabad. The centre offers specific training
models in various professions to youth who have not completed high school. The goal is to
establish an education centre that is economically independent, thereby ensuring its sustainability
in the medium- and long-term. This is done through the following four pillars:
1) production centre, 2) service centre, 3) fees paid by trainees and 4) microcredit as initial aid for
graduates. A net profit increase of 30% is expected in 2013 - and the full economic independence
of the vocational training centre in 2014.
Opportunities: The trend at Usthi - and at foundations in general - is the support of integrated
projects. These are projects that are implemented with local or international partners as part of a
network. These projects provide the foundations new financing models that are focused on
sustainability and have a business orientation.
KEK – CDC Consultants 11The private sector in international cooperation
3.1.3 Networks
Various Switzerland- and Europe-wide networks and organisations offer support and
advice to the foundations in Switzerland that are internationally active.
SwissFoundations is an association established in 2001, in which membership is
exclusive to regionally and internationally active grant-making foundations. It represents
foundations from all three parts of the country and over 20% of the total estimated
amount distributed by all non-profit foundations. The names of members are publicly
available. The association’s broad-based activities and an administrative office are
financed through membership dues. 5
SwissFoundations notes that, despite the sustained growth and increasing importance of
Switzerland’s foundation sector, to date no professional association has been formed to
act socially and politically as an independent force. The foundation sector is, in fact,
highly under-organised.
From SwissFoundations’ point of view, three main reasons are responsible for this:
(1) the wide variety of types of foundations, (2) the preponderance of small and micro
foundations, and (3) the close ties many foundations have to law firms and banks.
In addition to Swiss Foundations, proFonds also offers membership to all types of non-
profit organisations (associations, fund-seeking foundations, unions, and traditional
foundations) and interested private persons. Information regarding the number and
identity of the members is not published. The management is based in a Basel law firm.
According to its own reports, this umbrella organisation engages in political lobbying in
the legislature and other authorities for framework conditions and regulations that make
it possible for non-profit foundations and associations to carry out their tasks effectively.
ProFonds also promotes the exchange of knowledge and experience among non-profit
organisations and with the public by organising the annual "Swiss Foundations Day",
authoring publications as well as offering consultancy services. 6
Of importance in this regard is the Centre for Philanthropy Studies (CEPS), which is
affiliated with the University of Basel. In conjunction with the University of Zurich, the
Foundations Report is published annually. The CEPS is an interdisciplinary research and
training centre for the Swiss foundation sector and is regarded as a think-tank for the
multifaceted field of philanthropy. The CEPS also wants to improve the scientific basis
for philanthropy through its activities and offers foundations direct benefits with training
and consulting offers.
FSG Foundation Strategy Group: The non-profit consulting firm for foundations,
companies and NGOs, with a branch office in Geneva, works with the Creating Shared
Value principle and leads the Shared Value Initiative. It developed the value chain for the
Optimus Foundation, which formed the basis for the foundation’s strategic grantmaking.
Consulting, research, partnerships, events and publications are all within FSG’s area of
responsibility.
Donors and Foundations Network Europe DAFNE acts Europe-wide and brings
together 24 donor networks, including SwissFoundations. 7
5
www.swissfoundations.ch
6
www.profonds.org
7
www.dafne-online.eu
KEK – CDC Consultants 12The private sector in international cooperation
The European Foundation Centre in Brussels is the umbrella organisation of major
European foundations. Ten foundations registered in Switzerland are members,
including the Jacobs Foundation. 8
3.1.4 Trends and challenges
The Swiss foundation sector has experienced uninterrupted growth. The financial crisis,
however, has clearly demonstrated how much the latitude of foundations is dependent
on developments in financial and capital markets. Many foundations have drawn lessons
from the lean last few years: On the one hand, they pay more attention to their
investments and on the other they consider new methods like mission investing. Mission
(related) investing means the implementation of an investment strategy, i.e., investing
the endowment (or part of it) in accordance with the foundation’s purpose or at least not
contrary to the foundation’s purpose. 9
A trend of many foundations that are active in developing countries is so-called catalytic
philanthropy – do more than give 10. What drives this new approach is the experience
that financial support alone is not sustainable and the donor plays a pro-active role. The
question of how a foundation can generate the best and most sustainable impact is
central to this approach. Close cooperation with all stakeholders, involving local partners
and the promotion of innovations that tackle social or environmental problems are key
strategies of foundations that are not themselves primary donors, but instead act as
active partners. The sustainability of projects after the foundation’s financing ends often
represents a challenge, especially in developing countries. Even though most
foundations work with local partners, it is often difficult to generate local resources,
expertise and local leadership for projects. Implementation of the foundation’s catalytic
role implies that new and innovative projects must be integrated with existing systems in
developing countries. Finally, these are the same challenges that development
organisations face.
The Optimus Foundation promotes the catalytic philanthropy approach. The following
profile provides some insight.
Optimus Foundation - catalytic philanthropy to improve children’s opportunities
UBS Optimus Foundation was founded 14 years ago with the goal of improving the lives of poor
children in developing countries. In 2007/08, with help from the Foundation Strategy Group
(FSG), a new programme strategy was developed which focused on education for children, global
health and protection of children. A new Landscape Analysis from 2012/2013 confirms that there
is still a strong need for educational opportunities for children in developing countries and that the
foundation’s approach should take a multidimensional perspective of poverty in these countries.
Local partnerships and networks are becoming increasingly important to successful support and
long-term implementation of projects. Analysis results also show that a limited country focus (15-
20 countries) is more effective and can show a greater long-term impact than a wider focus of
over 50 countries.
The funds for the foundation come from UBS bank customers. Optimus has its main office in
8
www.efc.be
9
2013 Swiss Foundation Report, p. 31
10
Crutchfield/Kania/Kramer, Mark R. (2011): Do more than give. The 6 Practices of Donors Who Change the World.
KEK – CDC Consultants 13The private sector in international cooperation
Zurich, and in addition opened a new Asia office in May 2013 in Hong Kong. The Hong Kong
office’s main task is to fulfil the philanthropic requirements of the bank’s Asian customers.
Activities: The foundation has a rigorous grantmaking approach and supports approximately 100
projects per year with its Optimus-specific “value chain” procedures. Three phases of a “value
chain” run throughout a successful project: 1) innovation phase, 2) project phase and 3)
programme phase. Projects are supported for up to 10 years, depending on the results of
implementation. The more successful the projects, the longer they are supported financially with
annual contributions of between 100,000 and 2,000,000 Swiss francs. In general, especially in
the area of global health, those projects are promoted that strengthen health care, improve
access to health care or include innovations to combat health problems. The foundation’s main
goal is to identify projects that are self-supporting after a certain period of time. Collaboration with
local partners from various sectors is essential to anchor the projects in the field. The local
partners should also assume important leadership roles - a central strategy to strengthening the
ownership of projects.
Employees: 12 employees currently work at Optimus in Zurich and two in the new office in Hong
Kong. Half of the employees have an area-specific background, while the other employees are
responsible for fundraising. The “grant makers” bring an average of 20 years’ experience in the
health or education sectors and work with donors. Some also have sound field experience, which
is important for implementing the projects and evaluating their feasibility.
Case study “Access to quality education in India and Ghana”: The project supports local
private schools in Ghana and India, so that these children from poor backgrounds receive high
quality education. The project concept is based on research results that indicate that poor families
in the affected countries are increasingly sending their children to private schools. This was only
made possible by the fact that new private schools with affordable school fees have sprung up,
some in places that previously lacked even public schools. The project partner’s vision is to build
a global chain of affordable private schools. In total there already are 34 schools with 18,000
students in Ghana and 20 schools with 8,000 students in India. Even though the quality of
education in these schools is often better than in public institutions, the difference in quality
between the schools nonetheless represents a challenge. To compensate for these differences
and ensure the quality of education in private schools in the future, the schools need to be
supported for a longer time period.
Opportunities: The trend at Optimus and other foundations shows that they increasingly see
themselves in a catalytic role as donors who promote and support innovative projects and
approaches in the fields of education and health in developing countries. Optimus Foundation
works only with local partners to strengthen the community’s acceptance. New projects should be
integrated with existing structures so that they are strengthened and expanded, thereby ensuring
the sustainability of projects.
KEK – CDC Consultants 14The private sector in international cooperation
3.2 Corporate Social Responsibility
Increasing globalisation, in particular the outsourcing of production to developing
countries, has led Swiss companies to shift their social engagement to the poor in the
vicinity of their operational sites around the world. Approximately three quarters of all
Swiss companies are committed to social issues, although how they perceive their social
responsibility varies. 11 This chapter describes how Swiss companies engage themselves
in social issues.
3.2.1 Definition
Sustainability, corporate citizenship, creating shared value, social commitment and triple
bottom line: the terminology of Corporate Social Responsibility (CSR) varies, with even
greater differences in the interpretation of this responsibility. The European Commission
defines CSR as a "concept that provides a basis for companies to voluntarily integrate
social and environmental concerns into their activities and in their interaction with their
stakeholders.” 12
The concept of CSR began in the USA in the 1950s. The demand for sustainable
business practices increased in the 1970s and in the 1980s, environmental protection
became an issue, although the topic was taken up in Europe much later (from 2000
onwards). Economic, environmental and social sustainability can defined as the
cornerstones of CSR. According to some, these three factors can also be extended to
include philanthropic responsibility. 13
Consumers increasingly expect larger firms to address social and environmental
problems through CSR activities and to produce results. 14 It is common for larger
companies to report on CSR according to certain criteria including energy consumption,
women’s empowerment and measures for workplace safety. Members of the UN Global
Social Compact voluntarily comply with its reporting mechanisms (see also chapter
1.1.4). Many large firms provide information about CSR in English on their websites, an
indication of the strong American influence on CSR. While CSR efforts focus on
increased transparency and fairer production conditions, it can also constitute a
competitive edge.
Understanding CSR as necessary for a company’s survival is particularly evident in the
writings of C.K. Prahaldad, an Indian-American economist who developed the “bottom of
the pyramid” concept. He wrote: "We have come to a point now where the agenda of
sustainability and corporate responsibility is not only central to business strategy but has
become a critical driver of business growth.” 15
11
Schweizer Arbeitgeber (2009): Unternehmen in der Schweiz uebernehmen gesellchaftliche Verantwortung
12
http://de.wikipedia.org/wiki/Corporate_Social_Responsibility
13
http://de.wikipedia.org/wiki/Corporate_Social_Responsibility
14
C.K. Prahalad (2010) “The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits”, S.19
15
C.K. Prahalad (2010) “The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits”, S.19
KEK – CDC Consultants 15The private sector in international cooperation
16
Three levels can be identified at which companies engage in CSR activities abroad.
Diagram 3. Levels of corporate responsibility.
General market conditions
mitgestalten
Responsibility for the social
environment (corporate citizens)
Training Social Community
Culture
Responsibility for the
sustainable shaping of core
business
Employees Suppliers
Customers Environment
Source: Anna Peters, Endeva
In the innermost circle, the company assumes responsibility towards its stakeholders in
those areas with the biggest potential for influence. These include, in particular, fair
working conditions in their supply chain or CO2 emissions from production. It is after all
at this level that negative consequences often appear, for example as a result of the
production process. In the middle circle, the company is engaged outside of its core
business. This involves more of a philanthropic engagement, with the aim of anchoring
the company in a community and fostering a good image. Addressing improved market
conditions at a macro level allows interested companies to exercise creative influence.
Examples of this level of engagement include the development of standards and labels
for a particular country or sector.
This study focuses on the second circle, the level of the society. The oft-stated
motivation of a company at this level is to give something back to society from the
increased wealth, of which there is a tradition in Switzerland.
It is worth highlighting at this point that projects that focus on sponsoring and donations
have little to do with the concept of sustainable CSR. Furthermore, these commitments
are the first to be dropped or reduced in times of crisis because their benefit to the
company is not measureable. Their added social value is also often minimal because
16
Compare model from Anna Peters, Endeva. Z.B. In: CSR Worldwide (2012) or Pathways out of the Crisis – CSR as a
Strategic Tool for the Future.
KEK – CDC Consultants 16The private sector in international cooperation
comprehensive solutions to social problems cannot be achieved within limited donation
budgets. 17
3.2.2 An overview of companies with international CSR activities
To provide an overview of CSR activities of Swiss companies in international
cooperation, the thirty biggest companies, as measured by their turnover according to
Handlungszeitung, were chosen. 18 Because this list included no financial service
providers or insurance companies, the four biggest Swiss banks and two biggest
insurance companies were added to reflect these sectors. An additional five Swiss
companies were included, all of which undertake CSR activities in international
cooperation and are members of the UN Global Compact but are not amongst the thirty-
six biggest Swiss companies.
Of the 41 Swiss companies surveyed, all but one have a CSR charter, undertake CSR
reporting or refer to a commitment to sustainability on their website. This commitment
often revolves around the well-being of their employees (safety, women’s
empowerment), environmental protection, energy consumption in the production process
or Swiss interests in sponsoring cultural or sporting events, etc.
Nearly half (49%) of the Swiss companies also have an international focus to their
activities that goes beyond the company’s direct stakeholders (see Diagram 3). The
selection includes both traditional Swiss firms like Nestlé, Coop or Swisscom, as well as
raw commodity and international trade companies that are headquartered in Switzerland
due to its attractive tax conditions.
Figure 5 presents the thematic focus of the 20 Swiss companies with CSR activities (see
also Appendix 5, International Cooperation Activities in CSR of Swiss companies).
17
Peters (2009): Pathways out of the Crisis, S.8
18
http://www.segmentas.ch/top500
KEK – CDC Consultants 17The private sector in international cooperation
Figure 5. Thematic focus of CSR (n=20)
Figure 5: Thematic focus of CSR (n=20)
Gesundheit
Health
3% 2%
5% Wasserand
Water & Hygiene
sanitation
21%
7% Bildung
Education
Ländl.development,
Rural Entwicklung,
Infrastruktur &and
infrastructure Wohnen
housing
10%
Soziales
Social issues
Umwelt
Environment
19%
Humanitäre Hilfe
Humanitarian aid
16%
Förderung
Support Kleinunternehmen
to small businesses
17%
Mikrokredite and
Microcredits & insurances
Versicherungen
Note for figure 5: n = 20 companies with international CSR, total 58 thematic responses
The most popular issue is health (21%), followed closely by water (19 %). These two
related topics cover 40 % of the thematic areas. Pharmaceutical companies (an obvious
choice) are not alone in committing to health issues: many others (in total twelve firms)
also address it, for example by supporting an NGO with health programs, such as the
Swiss Red Cross. Eleven companies support water projects, including firms such as
Geberit and Nestlé who have an obvious link to the issue. Of interest is the support given
by three companies to encourage small business (Holcim, Glencore) or micro-credit and
insurance (Syngenta). This crosses over into private sector development, which is
explored further in this study.
Development cooperation activities are not always clearly reported in a company’s
portfolio, but most list at least one organisation whose projects they support on a regular
basis (such as SRK, Friends of Humanity). Less often, firms undertake activities
themselves or pick and choose projects from different NGOs. Sponsorship, donations
and fundraising activities are to some extent complementary, for example, in response to
natural disasters.
KEK – CDC Consultants 18The private sector in international cooperation
Figure 6 provides an overview of the geographic focus of activities.
Figure 6: Geographic focus of CSR projects (n=20)
weltweit
World-wide
7%
7% Afrika
Africa
Lateinamerika
Latin America
14% 45%
Asien
Asia
10%
Nordamerika
North America
17% Europa
Europe
Note to Figure 6: n=20 Companies with international CSR, total 29 geograph. locations indicated
The geographic focus is as wide as the thematic focus. Multinational companies often
support countries in which they do business. When a company chooses not to
implement or select projects itself, it supports international NGOs to run projects
worldwide. Projects in Africa are most commonly considered, followed by Asia and Latin
America. Two companies are active in Eastern Europe or in North America, focusing on
specific disadvantaged groups.
Half (50 %) of the 20 companies have a general, global focus, four (20%) companies are
essentially globally but with a specific commitment to a continent, three (15%)
companies are active mainly in two regions and three (15%) companies have a clear
geographical focus on a country or a continent.
Swiss companies spend a substantial sum each year on international CSR activities.
Figure 7 presents the disbursements of 10 Swiss companies. There is no information on
the other half (10).
KEK – CDC Consultants 19The private sector in international cooperation
Figure 7: Disbursements for CSR projects in international
cooperation in CHF/year (n=10)
30%
40% kleiner als22mio.
less than Mio.
22–18
- 18 mio.
Mio.
grösser als18.
more than 18 mio.
Mio.
30%
The amounts vary considerably. The four biggest companies (Glencore, Novartis,
Holcim, Syngenta) each spend more than CHF 18 million / year for development
cooperation activities within CSR. The amounts of the five smaller companies (Global
Compact members) are not known, but are certainly not of the same magnitude. Some
companies, such as Glencore or Holcim, link their CSR disbursements to annual profits.
With over 2 billion USD, Novartis spent by far the largest amount on total CSR activities
in 2012. Glencore intends to devote at least 1% of its annual profit on Community
Investments in 2013, which received $140 million in 2011. As mentioned, in many cases
it is not possible to determine disbursements on CSR from published figure. Nestlé
distributes these disbursements across individual country budgets; Roche and Clariant
provide indicators but no actual budget figures. Others do not, or cannot, monetise their
CSR commitments, such as Swiss Post’s support of know-how and material to postal
organisations in developing countries.
Despite incomplete data, the magnitude of the largest Swiss companies’ engagement in
development cooperation activities is clear: 2,271 billion USD was spent on international
CSR projects during the past financial year (2011 or 2012) by the 10 companies that
quantified their commitment. Novartis’ contribution stands far above the others: the other
nine companies spent a total of 220 million USD. Contributions to their own corporate
foundations are, as a rule, not factored into these figures.
3.2.3 Actors and approaches
While the CSR policies of almost all of the 41 companies in the study express
commitment to their employees and the environment in their operational areas, the
extent of concern beyond the immediate environment varies considerably. In general,
but not always, there is a thematic relevance to the company. So, for example, the
building materials company Holcim supports affordable housing and microcredit for the
KEK – CDC Consultants 20The private sector in international cooperation
poor, amongst other things. In contrast, the global transport company Panalpina
provides general support to a campaign of the Swiss Red Cross against blindness.
SECO: SECO interprets CSR today as being more than a process of supporting a few
charitable projects: it is about sustainable production, an efficient business strategy and,
not least, a risk mitigation strategy. SECO supports companies in developing countries in
the export of know-how, environmentally friendly production methods, labour standards,
etc. Companies are supported to produce according to the demands of Western
consumers and SECO mediates between producers in developing countries and buyers
in Switzerland. Particularly in demand at present are the certification processes,
supervised by SECO, in which technical, quality, environmental or social standards are
developed.
The Department of Trade Promotion is overwhelmed by requests from Swiss companies
seeking advice or wanting to participate in one of SECO’s programs. These companies
recognise that biodiversity, work safety, environmentally friendly methods of production
and the sustainable use of resources are an increasingly important selling point for
consumers. But they also recognise that their survival depends on the continued
existence of natural resources. For example, Givaudan, the Swiss global leader for
fragrances and flavours, promotes biodiversity and the sustainable production of plant-
based raw materials in the preparation of natural essences in 50 countries.
A re-evaluation is also taking place in the gold and jewellery industry, an example being
the recent collaboration between SECO and Cartier. Concerned about its reputation, the
jewellery brand has reacted to pressure from civil society, amongst others (e.g., with the
"No Dirty Gold" campaign of the Society for Threatened People - GfBv 19).
Another model for CSR engagement is a partnership with a (Swiss) relief organisation,
as described in the profile of Geberit.
Geberit – CSR addresses water
The Geberit Group is the leading company in the European market for sanitary technology, with
headquarters in Rapperswil-Jona (SG) and production capacity in seven countries. Since its
founding in 1874, the company ranks among the pioneers in the industry and has received
numerous awards for efforts in the area of sustainability. Products with improved environmental
performance and which minimise water consumption are vital to this traditional company: as they
say in the company “they are in the genes of Geberit”.
Activities: The Environment and Sustainability Department is responsible for CSR and the
company’s social commitment, including issues such as sustainable and water-efficient
construction. Social projects are defined within a strategy and should be closely aligned to
Geberit’s core business of water. Since its products are not designed for the "bottom of the
pyramid", Geberit does not have direct access to people in developing countries. Nonetheless,
the company believes it has a responsibility to work for improved access to water by the less
privileged.
Employees: Geberit has more than 6,000 employees worldwide, mainly in production and
development. The CSR department consists of two managers with a background in
environmental sciences. The social projects are also partly supported by the Communications
Department.
19
http://www.gfbv.ch/de/kampagnen___projekte/no_dirty_gold_.cfm
KEK – CDC Consultants 21The private sector in international cooperation
Case study: Geberit strives to contribute to improved water supply and to reach people not
generally in contact with their products through two initiatives. Since 2008, eight students from
Switzerland, Germany and Austria travel each year for two to three weeks to conduct voluntary
work in a country with Geberit representation. They replace old, defective plumbing systems in
public institutions such as schools, homes or hospitals and organise local community education
activities on water and sanitation. Examples of this contribution include a school building in a
township in South Africa, a hospice for cancer patients in Romania and a school of the Swiss
Foundation Usthi in India.
Geberit Switzerland has also supported Helvetas for the last three years in its water campaign.
New Geberit customers who recommend a particular toilet model to others are rewarded with a
commission either paid directly in cash or doubled by Geberit and donated to Helvetas. Geberit
selected Helvetas for the partnership because of their common dedication to the issues of water
and sanitation.
Opportunities: Water, the lack thereof, and the need to conserve this precious resource will
continue to preoccupy Geberit. On the one hand, it is caught between demands for ever-cheaper
products and on the other, expectations on firms for sustainable production. Geberit sees a future
role for the private sector in shaping framework conditions and in contributing to initiatives such
as the Millennium Development Goals or to networks such as the Global Compact or specific
water networks.
Holcim has also successfully formed a partnership in the non-profit sector. It has a long-
established strategic partnership with the Swiss Red Cross to ensure access to water
and shelter for people in conflict-affected areas. Through this partnership, Holcim is
actively engaged in humanitarian aid and has recently received the Humagora Award for
its commitment. This annual award honours the most successful partnership between a
company and a non-profit organisation. However, as shown in the profile below, Holcim’s
CSR policy goes much further.
Holcim - CSR as a social investment for a sustainable business strategy
Holcim was founded in 1912 and is a leading cement and concrete company with 50 subsidiaries
on all continents. The CSR programme has been a part of the company’s sustainable
development business strategy for the last ten years. This strategy focuses on renewable energy,
the environment, climate, water, biodiversity, social responsibility and stakeholder engagement.
Activities: CSR activities emphasise infrastructure (e.g., support for the construction of individual
housing), education (e.g., vocational training for masons) and community development (e.g.,
community projects to promote human rights). In addition, microcredits are given to small
businesses to strengthen their long-term outlook. Another key CSR activity is in the area of
stakeholder engagement. Cooperation with local stakeholders establishes a direct relationship
with the company, ensures regular dialogue, and promotes local ownership. These in turn
strengthen project sustainability. Central to CSR activities is Holcim’s philosophy of social
investment that states that CSR is not philanthropic but strategic and is therefore a core part of
Holcim’s business. The separate Holcim Foundation, "Foundation for Sustainable Construction"
focuses exclusively on the field of sustainable construction.
Employees: The global CSR department (based in Switzerland) currently has 3 employees. An
estimated 200 local employees are engaged in the field of social sustainability in the various
KEK – CDC Consultants 22The private sector in international cooperation
subsidiaries worldwide. While the profiles of the on-site employees vary considerably, a majority
have a technical educational background or training in the social sector. CSR employees are
generally experts with specific, thematic knowledge in a defined area. More generally, it is very
important for CSR employees to show initiative, be engaged and motivated, and have strong
communication skills because CSR is caught in the tension between the company’s interests and
those of local stakeholders.
Case study: Holcim Apasco's "Mi Casa" programme in Mexico supports poor people to construct
their own homes and gives them access to affordable building materials. Since 1996, Holcim
Apasco brings together the experts necessary to develop integrated housing solutions. Within 8
years (2000-2008) "Mi Casa" supported the construction and renovation of approximately
250,000 homes across the country. This programme is based on the findings of a previous
Holcim survey that indicated that, when building their own homes, people require particular
support in safety and legal advice as well as financial assistance.
Opportunities: The challenge of the social investments concept is in selecting the "right" projects
in which to invest. Compliance with international standards is also important and needs to be
monitored regularly. In addition, Holcim believes that its inclusive business model provides
opportunities to support the spread of sustainable development while opening up new markets in
certain areas.
Companies expend large amounts of money annually for natural disasters and other
issues. The Centre for Philanthropy Studies estimates the amount of donations from
companies in 2009 at CHF 1 billion. 20
It is noteworthy that many international companies (Kuoni, Swatch Group) devote their
CSR activities on their employees, value chains, policies (labour rights, child protection,
etc.), without expanding to target groups abroad. A further tendency is that the smaller
and more "Swiss" the company, the more the philanthropic commitment through CSR is
related directly to production or employees, or on funding institutions in Switzerland,
often in the context of sponsorship of sporting or cultural events.
The situation in Germany also shows that companies are increasingly engaging
themselves in the most pressing social challenges. A 2012 study by the Bertelsmann
Foundation compared industries and examined the social responsibility of 51 German
companies abroad. 21 Four overarching CSR issues were identified across different
industries: environmental protection, responsible management of the value chain,
support for local community development and staff recruitment and promotion. 22
3.2.4 Networks
Numerous networks and consulting firms have been established at the interface
between the private sector and development cooperation. While most operate
internationally, some, such as Philias, focus primarily on the Swiss market.
The United Nations Global Compact is the most important international network,
founded in 2000, and sees itself as "a strategic policy initiative for businesses that are
committed to aligning their operations and strategies with ten universally accepted
20
http://ceps.unibas.ch/service/philanthropie-in-zahlen/
21
http://www.endeva.org/fileadmin/user_upload/publications/CSR_Weltweit_final_handout.pdf.pdf
22
Bertelsmann Stiftung (2012), S.10
KEK – CDC Consultants 23You can also read
