Winning with Integrity - EITC 28th Nov 00 Mallen Baker Impact on Society Director

“Business has never operated against a background in which there has been such immense potential. Equally, however, it has never faced such rapid change, such intense competition, such uncertainty - and so many risks.” Source: Chatham House Forum - Uncharted Waters 1998

Does it matter to you if... Your company has a poor reputation for honesty and trustworthiness? Your customers have a bad opinion of your impact on the environment? It’s difficult to attract and retain good people? Your organisation is unattractive to business partners?

Growing expectations on business Business Customers Government NGOs Society Employees Shareholders

Increased pressure from stakeholders ranked second most important issue facing business by 750 CEOs surveyed “Most Respected Companies Survey” Financial Times / PwC Dec 7th 1999

What can social responsibility do for you? Improve Build Protect Competitiveness the Workforce Reputation

Business Competitiveness Strengthened relationships with customers and suppliers The ability to recruit and retain key staff Efficient use of natural resources and energy and reduction of costs

Customers - Millennium Poll on CSR 2 in 3 want companies to contribute to broader societal goals 1 in 2 paying attention to social behavior of companies 1 in 5 rewarded / punished corporate behaviour past year

Building the people Maximising the contribution and effectiveness of all your staff (managing diversity) Becoming an employer of choice, able to attract the best staff Providing continual development within a framework of respect for work-life balance to retain the staff you have

Employees - attracting and holding on to the talent A study conducted by McKinsey, “The War for Talent”, published in 1998 found that only 3% of companies responding believed they had enough talent to reach their objectives in five years. MORI research throughout the 1990s consistently found that the vast majority of people believed that a company that supports the community is a good company to work for. Bain & Co found that those companies that have the highest employee retention also have the greatest customer retention.

Protecting Reputation Managing the key stakeholder relationships that could affect the business Minimising risk of exposure to environmental accidents or human rights violations Developing a positive relationship with local communities

Reputation may be your biggest asset Intangibles can represent a large part of your market capitalisation (96% for Coca Cola, 83% for IBM) Last year, a poll of 25,000 citizens across 23 countries on 6 continents showed that perceptions of companies around the world are shaped more by corporate citizenship (56%) than either product quality (40%) or business fundamentals (34%).

Impact on Society Marketplace Environment Workplace Community

The Issues Marketplace Impact on society of core products and services Issues around buying and selling Supply chain Vulnerable customers Cause related marketing Workplace Workforce diversity Work-life balance health and safety human rights training and lifelong learning Environment Emissions to air, land and water Use of natural resources Environmental risk Transport impacts Impact on environment of core products and services Community Impact on local operations on the community Business investment in community

What does the report cover? The best business case arguments Consistent view of what constitutes quality of management Recommended impact indicators - an essential core

Impact Indicators Marketplace Customer satisfaction levels Advertising complaints upheld Upheld cases of anti-competitive behaviour Average time to pay bills Social impact of goods / services Workplace Workforce profile Staff absenteeism / grievances Pay and conditions compared against local equivalent averages Perception measures Environment Energy consumption Water usage Solid waste produced Greenhouse gas emissions Impact of goods / services Community Cash value of community support Value of staff time and in kind support Leverage of other resources Perception measures - company as good neighbour

Community Impact Cash value of community investment as a percentage of pre-tax profits Value of individual time and in-kind support Value of combined time and in-kind support Project progress against milestone targets Leverage of other resources Perception measures of company as good neighbour Assessment of community investment outcomes 1 2 3

Issues to consider in measuring CCI Some things easy to measure - such as literacy rates - but we should avoid placing emphasis on the things that are easy to measure rather than those which are important How does one define the aspects of what makes a healthy community? At the end of the day, it’s what the community thinks is important - and that may change!

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