Gearing Up: From corporate responsibility to meaningful impact National Environmental Partnership Summit, May 2006

Question: Are voluntary initiatives likely to make a significant difference in the world? Answer: Not if they continue to operate in isolation of mainstream governance systems. “The key challenge for business – and for governments – is now to work out how to drive the current generation of responses to such challenges as climate change… to the necessary scale.”

Millennium Development Goals By 2015, the world will: –Eradicate extreme poverty and hunger. –Achieve universal primary education. –Promote gender equality and empower women. –Reduce child mortality. –Improve maternal health. –Combat HIV/AIDS, malaria and other diseases. –Ensure environmental sustainability. –Develop a global partnership for development.

Megatrends Geo-politics Poverty/Hunger Disease Ecosystems Under Pressure Changing Demographics Terrorism Urban Influx Non-renewable Resource Depletion Wall Street Expectations Emerging Economies Rising Standard of Living Instant News Globalization 6.3 Billion and Counting

Industry Issues Reputation Revenue Transparency/ Corruption “Resource Curse” Climate Change Carbon Constraints Human Rights Post-production Legacy Finite Resource Base Activist Campaigns HIV/AIDS Urban Air Pollution Cross-border Legal Liability Security Eroded Trust Deforestation Water Pollution Water Supply

Stakeholders Investors Customers Financial Institutions NGOs Employees Business Partners Competitors Media Multilateral organizations Communities Governments

Complexity Investors Customers Financial Institutions NGOs Employees Business Partners Competitors Governments Media Multilateral organizations Communities Geo-politics Poverty/Hunger Disease Globalization Ecosystems Under Pressure 6.3 Billion and Counting Changing Demographics Terrorism Urban Influx Non-renewable Resource Depletion Wall Street Expectations Emerging Economies Rising Standard of Living Reputation Revenue Transparency/ Corruption “Resource Curse” Climate Change Carbon Constraints Human Rights Post-production Legacy Finite Resource Base Activist Campaigns HIV/AIDS Urban Air Pollution Cross-border Legal Liability Security Instant News Eroded Trust Deforestation Water Pollution Water Supply

Progress? Climate Change Objective IPCC: 60% reduction of GHG emissions from 1990 levels SuccessDuPont: Beat its 65% reduction target Bigger Picture Globally: GHG emissions have increased 9% from 1990 levels

Progress? HIV/AIDS Objective MDGs: Halt and begin to reverse the spread of HIV/AIDS Success DaimlerChrysler SA: care and treatment for employees and family - 23,000 covered Bigger Picture Less than 10% of 6M people in poorest nations receive necessary ARVs

Progress? Corruption Objective OECD: Combat bribery in connection with international business Success BP: Under anti-bribery policy, 165 dismissals and 29 contract terminations in 2003 Bigger Picture World Bank study shows overall deterioration in control of corruption

Corporate Social Responsibility – Hitting Limits –Too peripheral from core business –Too isolated from one another –Too disconnected from wider systems

Corporate Social Responsibility – Hitting Limits

Gearing Up –Market solutions –Corporate leadership –Wider collaboration in ‘progressive alliances’ –Leveraging capabilities –An enabling environment – pre-conditions for scale –Civil society organizations bring credibility –Responsible lobbying

Gearing Up

1 st Gear: 3 rd Gear: 5 th Gear: Compliance Partnership Re-engineer Who is involved Stakeholder Engagement CR Activity Business Case Key Drivers PR & legal departments ‘Traditional stakeholders’ Philanthropy Unclear NGO’s, media CR experts / CEO’s 2-way dialogue non-traditional Incremental improvement Risk/reputation management NGO’s, leading businesses Senior Execs / Boards Progressive alliances Business models/systems Long-term business case Governments

Gearing Up Which gear are we in today? –Who is engaged? –How well are efforts linked to wider governance frameworks? –What is the impact to our core business? Where do we want to be by 2010? –Which gear do we want to be in? –What are the barriers to change? How can we overcome them? –How can we co-evolve wider governance frameworks? How can we achieve scale? –What system-level changes are required? –Do scale-focused progressive alliances exist? –Who needs to offer what incentives to foster innovation?

Conclusions –‘Corporate Responsibility’ has made achievements in narrowly defined areas, but currently lacks the capacity to deliver real progress on key sustainable development challenges. –Governments remain central – as conveners, facilitators, and in setting a course and developing incentives. –Business can bring fresh perspectives, test new policy frameworks, evolve innovative and more efficient models, and transfer skills and technologies. –…but trust will only come with greater transparency and engagement.

“…the world’s environmental problems will get resolved, in one way or another, within the lifetimes of the children and young adults alive today. The only question is whether they will become resolved in pleasant ways of our own choice, or in unpleasant ways not of our choice, such as warfare, genocide, starvation, disease, epidemics, and collapses of societies.” - Collapse: How Societies Choose to Fail or Succeed, Jared Diamond The Future