Presentation on theme: "UC Berkeley Center for Responsible Business &"— Presentation transcript:
1 CORPORATE RESPONSIBILITY LEADERSHIP WORKSHOP Embedding CR in Your Operations & Management UC BerkeleyCenter for Responsible Business &Business for Social ResponsibilityJuly 8-9, 2008
2 Program Schedule Day One Day Two Overview of CR & Global Trends CR Strategy Development ToolCase: Tale of Two Strategic ApproachesCR Metrics, Impact & Value ChainDay TwoDefining Your StakeholdersCommunicating & Branding Your CRStrategy Small Group WorkPreparing for the Future
3 Overview of Corporate Responsibility & Global Trends Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & ManagementOverview of Corporate Responsibility & Global TrendsProfessor Kellie A. McElhaneyHaas School of Business
4 A Short Story in Three Parts The Power of BusinessThe Challenges in the WorldA Solution in CSR
5 Part One is Short: It’s About the Power of Business.
6 There’s Been a Shift of Power & Resources 2006Company/CountryRevenue (Fortune Magazine) GDP (World Bank) [millions, USD]1United States13,201,8192Japan4,340,1333Germany2,906,6814People's Republic of China2,668,0715United Kingdom…2,345,01522Exxon Mobil339,93823Poland338,73324Austria322,44425Wal-Mart Stores315,65426Norway310,96027Saudi Arabia309,77828Royal Dutch Shell306,73129Denmark275,23730BP267,600
7 If you think it’s bad being exploited by global companies…try being ignored by one. - Jeffrey Sachs
8 There’s Been a Shift of Trust Expectations of Companies to Operate in Society’s Best Interests v. Perceived PerformanceGlobescan, 20058
9 Private Sector Has Lost Trust Trust in global institutions to “operate in society’s best interests”NGOs 2, Business ranks 11 (out of 12), only ahead of Parliament/CongressArmed ForcesNGOsUNReligious InstitutionsWTOGovernmentPress/ MediaTrade unions/ LaborWorld BankIMFGLOBAL COMPANIESParliament/ CongressNGOs more trusted, high credibilityEnvironics International, 2006
10 Part Two is Longer: It’s About the Challenges our World Faces
11 Water Climate Change Food Rich/ Poor Gap 1.1 B lack access to clean drinking water2.5 B lack access to proper sanitation5 M die from water-related disease (10 times killed in wars)Climate Change2006 hottest year on recordNeed 80% decrease by 2050 to prevent global catastropheClimate change is the greatest market failure the world has ever seen.- Sir Nicholas Stern, Former Chief Economist, World Bank.FoodGlobal food prices (grains & oils) have risen 54% in 2008In rich countries, we spend 10-20% of budget on food; in poor countries, 60-80%15M children die of hungerFor first time, levels of obesity approaching parity with levels of starvationRich/ Poor GapHalf of the world lives on less than $2/dayRichest 20% of countries account for 75% world’s incomeFrom this, disease, lack of healthcare, lack of education, lack of opportunity
12 The Third Part is a [piece of a] Solution: Corporate Social Responsibility (CSR)
15 Defining CSR Net Impact: Using the power of business to improve the world.Business for Social Responsibility (BSR):Companies being able to be commercially successful in ways that demonstrate respect for ethical values, people, community, and the environment.A Corporate Strategy Definition (McElhaney, 1998):A corporate strategy that is integrated with (1) core business objectives & (2) core competencies to create financial and social/environmental returns, and is embedded in corporate culture and day-to-day business operations.15
16 Strategic CSR CSR Strategy must fit two things: Core business objectives:Increase sales, penetrate new markets, engage employees, reduce operating expenses, improve reputation, protect brand, beat competitorsCore competencies:Technology, financial products &services, making markets, natural food, automobiles and transportation systems, travel & tourism.16
17 Global Citizenship/ CSR/ Sustainability Employee EngagementCommunity InvestmentPhilanthropyGovernment & Public RelationsGovernance & EthicsEnvironmental FootprintSupply Chain/ SourcingSocial/ Environmental Impact of Products & Services17
18 A Typical Corporate Strategy Hewlett Packard, 200618
19 A Typical CSR Strategy Supply Chain Community investment Safe products Cause marketingEnvironmental managementHuman rightsEmployeevolunteerismFair employee treatmentPhilanthropyBusiness ethicsProduct give-awaysCorporate governanceSocial/ environmental reportingSponsorshipsWorkplace diversityNon-Profit partnerships19
20 A Lost Opportunity……to utilize CSR as a powerful integratedbusiness strategy, not an add on.
21 What People Think CSR Is… Spending (a little bit of) the (whole lot of) money that you make.
22 What CSR Really Is…How you make (the whole lot of) money that you spend.
23 CSR is not about how you spend the money you make. It’s about how you makethe money you spend.23
24 The Triple Bottom Line Triple Bottom Line Triple Bottom Line EconomicTriple Bottom LineTriple Bottom LineJ. Elkington, SustainAbilitySocialEconomicEnvironmental
27 The Baby Parable & Four Approaches Save babies, one at a timeCharity workServe desperate needsTeach babies to swim-Empowerment work-Teach skills-Help people overcomeRun upstream to stop whoever is throwing the babies inAdvocacy workSee cause of suffering, work to stop itAnalyze why people throw babies in rivers (the University Professor!)Problem analysis“Big picture” viewEducate self, share knowledge
29 CSR Maturity Philanthropic Transactional Integrative Growth stage: Level of engagementLowHighImportance to missionPeripheralStrategicMagnitude of resourcesSmallBigScope of activitiesNarrowBroadInteraction levelSimpleIntensiveManagerial complexityInfrequentComplexStrategic valueModestMajorEXAMPLES ACTIONS:DonationGrantsEvent sponsorshipCause-related marketingEmployee volunteerismJoint-advocacyJoint-actionDeep partnershipsFinancing principlesChanging rules of industry
30 A CSR Landscape Transform multiple industries. Transform an industry. WORLDTransform multiple industries.INDUSTRYTransform an industry.Take responsibility for our full impact (social, environmental, economic).Take responsibility for adjacent industries.Take responsibility for global conditions (climate change, global inter-dependence, etc.).Be a beacon to others.Develop codes of conduct for the industry.Build strong coalitions to effect and enforce them.COMMUNITYBe a good neighbor.Innovate and demon-strate restorative business practices.Influence the industry indirectly, by example.Give something back.Support local communities (philanthro-py, direct programs, employee matching & volunt’ring.)Reduce waste, consumption and emissions.COMPANYRun a good businessProvide access to tools/ product.Disaster relief.
32 Whirlpool & Habitat for Humanity $25M commitment in 1999Given $34M, plus 73,000 refrigerators, ranges, household items to 36,000 homesPledged to give appliances to every house built through 2011Launched Building Blocks initiative in 2006, sending over 1000 employees & more volunteers to neighborhood for 1 week to build an entire blockFrom onset, was philanthropy; in 2004, became brand message“We make very large, very heavy metal machines, often with big motors. This puts a human face on what could be a very cold metal category.”Sponsored 2006 Reba McEntire Habitat for HumanityTour32
35 Brand, Employees & Consumers Who says social responsibility is a big influence in their impressions of companies?Product PurchaseWho considers corporate citizenship when buying a company’s product?49%79%Product BoycottsHow many people would boycott a product if they learned about negative citizenship practices?Employee RecruitmentWho considers social commitment when choosing an employer?76%77%
37 The Role of CSR in Business Inspires/ attracts employeesEnhances/ redefines the brandEnhances value propositionFosters distinctivenessTells a storyOpens access to new marketsIncreases license to operateImproves efficienciesIncreases trust and loyalty37
38 CSR Leaders May No Longer Finish Last Economist Intelligence Unit global study, “Doing Good: Business & Sustainability Challenge” 2007Sponsored by B of A, Orange, Kearney, SAPCompanies who rated selves highly on CSR saw 16% increase in profits, price growth of 45%, compared to poorly-rated at 7% / 12%May not be causal or proved, but executives believe it isAsked to name highest priority over next five years, 61% cited “communicating their practices to all stakeholders”
39 Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management CSR Frameworks Part 1: Context What is CSR? What is the role of business?CEO Aron Cramer, BSR
40 …but what’s behind all these activities? What is CSR?CSR is…Being energy efficientPublishing a sustainability reportGreening the supply chainHealthy working conditionsProducing a human rights policySignature philanthropic programHaving a social mission statementPartnering with nonprofitsDialogue with stakeholdersEnforcing a code of conduct…but what’s behind all these activities?
41 CSR is aligning business with the world’s needs Business has the potential to promote the wellbeing of the world through problem solving and wealth distribution.A just and sustainable world is indicated by the wellbeing of:Individual health, security and wellbeingSocietal health, security and wellbeingHealthy functioning ecosystems, natural resources and biodiversityIndividualSocietyEcosystemBusinessBusiness can contribute to society by:Developing solutionsInnovatingCreating financial wealthAllocating resources
42 The Emerging Business Case The world is increasing in complexity and understanding social and environmental issues is required for making informed business decisions.TechnologyPublic PolicyNatural ResourcesMaking sense of complexity & finding opportunitiesGlobalizationBusiness SuccessMarketsPopulationSupply Chain OperationsClimate ChangeCommunitiesCultural ValuesEnergyWarReligion
43 CSR can mean meeting essential global challenges through value creation Corporate leadership is not just about “reducing risk” but using business and markets to deliver social and environmental solutions.Philanthropy &Civil ActivismNon-market solutions for social/environmental needsCSR(Value Creation)Market solutions for social/environmental needsSocial & Environmental ValueNo ValueFailure to provide any valueFinancial OnlyFinancial gains with little or no societal valueMarket Value
44 Evolving Definitions of CSR Value CreationNowIntegration2000’sInnovation1990’sReaction1980’s
45 CSR Frameworks Part 2: Strategy Development Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & ManagementCSR Frameworks Part 2: Strategy Development
46 Approach Assessment: Where are we now? ImplementationStrategyVisioningAssessment: Where are we now?Visioning: Where do we want to be?Strategy: How do we get there?Implementation: Let’s get there.Testing: Will it work?
47 1. Assessment: Where are we now? ImplementationStrategyVisioningAssessment Components:Business Strategy: where is the business going over the next ten years?Internal Assessment: What are our existing policies and practices?Current Approach: How do we manage CSR today?Value Chain: What are the various touch points of our business? What opportunities and risks do they create?Reputation: How do important audiences – internal and external – view our company/industry?
48 2. Visioning: Where do we want to be? AssessmentImplementationStrategyVisioningVisioning Components:Leadership Profile: What is our company’s aspiration?Materiality Analysis: What are our most material issues?Prioritizing: Where do we want to make a mark? What is secondary?Internal Support: Will this vision get traction throughout the company?External Credibility: Will this strategy be credible with key stakeholders?
49 3. Strategy: How do we get there? AssessmentImplementationStrategyVisioningStrategy Components:Framing Questions: Will this aid our business, foster innovation, and mitigate risk?Value Chain: Can we integrate this strategy throughout the supply chain?Change Management: What changes will be needed to make the strategy effective?Systems Thinking: What levers must be influenced to make the strategy work?Relationships: What relationships do we need to execute this strategy?Communication: Can we communicate this strategy effectively?A good CSR strategy should help companies access: (1) financial capital, (2) human capital, (3) reputational capital, (4) natural capital, and (5) produce social capital.
50 4. Implementation: Let’s get there. AssessmentImplementationStrategyVisioningImplementation Components:Communication: Strategy must be conveyed clearly and effectively.Policy Development: Develop policies needed to implement strategy.Integration: Core business plays a role.Targets: Metrics (impacts, not only activities) and accountability introduced.Collaboration: Look for opportunities with industry and other partners.Reporting: Communicate our impacts to internal & external stakeholders.The integration segment just ahead will provide more guidance on implementation.
51 5. Testing: Make it credible and resilient. AssessmentImplementationStrategyVisioningTesting Components:Stakeholder Dialogue: Is the strategy credible to key opinion formers?Forecasting: What are the “unknown unknowns?”Refresh the Strategy: Assume that adjustments to strategy will be needed.
52 CSR Frameworks Part 3: Strategy Exercise Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & ManagementCSR Frameworks Part 3: Strategy Exercise
53 Exercise One: Rescue Our Reputation! Your consumer products company has been hit by a series of labor and quality scandals that has placed it in the bottom fifth of the annual Consume-A-Lot reputation rankings.Your CEO asks you, as the head of Public Affairs, to work with the head of CSR develop a three-step program to raise the company’s rankings to the 50th percentile in two years, and top quartile in three.You have not really worked with the head of CSR before, and have always wondered whether his boss, the General Counsel, really embraces corporate responsibility.What process will you use, and what will you recommend to the CEO?
54 Exercise Two: Open New Markets! Your food retailing company is taking advantage of market liberalization in India, and aims to be the #1 foreign retailer within five years.As head of strategy, you have never really thought about CSR, but know that the India plan can make or break your career.You want to make sure that your stores are viewed favorably in a notoriously difficult market.You want to develop a five year strategy that establishes your company as a leading corporate citizen in India.How will you develop a strategy, and what will it be?
55 Exercise Three: Innovate! Your new CEO has set innovation for society as the #1 objective for the company under her leadership.As the Vice President, Sustainability, for your consumer electronics company, you have been tasked with developing new product offerings.You have been asked to focus in particular on emerging markets with low to middle incomes, with the goal of increasing sales volume and generating economic opportunity for underserved communities.What process will you use, and what will the main points of your strategy be?
56 Exercise Four: Overcome the Skeptics! You are the head of CSR at a pharmaceutical company headed by a CEO who has made numerous cynical comments about “greenies” and “CSR as nothing but the flavor of the month.”At the same time, the Board has recently established a committee focusing on CSR, and with the three most powerful independent directors to the Committee.You have been asked to report to the Committee, with the CEO not present, on the three greatest risks and opportunities facing the company concerning sustainability.How will you develop your report, and make sure that it has real impact on the company’s thinking? How will you manage the CEO’s skepticism?
57 CSR Frameworks Part 4: Integration Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & ManagementCSR Frameworks Part 4: Integration
58 CSR Integration Framework How do we integrate CSR into the company? Purpose & VisionCore Business & Material IssuesStakeholderRelationsTransparentCommunicationBusiness ProcessesIndustryCollaborationPerformanceEvaluationImplementation Tools
59 Core Business & Material Issues Internal & External Alignment Internal & External Alignment If CSR is aligning business with the world’s needs, how do we ensure alignment throughout the process?Purpose & VisionCore Business & Material IssuesInternal & External AlignmentStakeholderRelationsTransparentCommunicationBusiness ProcessesIndustryCollaborationPerformanceEvaluationImplementation Tools
60 Purpose & VisionBSR ServicesVisioning & Strategy DevelopmentForecastingTrends R&DPurpose & Vision What impact do we want our business to have on society?Vision establishes a direction that can then enable:Prioritization of issues and opportunitiesAllocation of resourcesCommunication internally and externallyDevelopment of performance & measurementLeadershipAvoidance of risk is not a road map; it is neither anticipatory nor is it a destinationCSR vision statements should:Align with the company’s strategic objectivesAddress the company’s material social, community, and environmental impactsBe meaningful for employees and external stakeholdersWhere are we today?How do we get there?What is our vision for tomorrow?
61 BSR ServicesCSR AssessmentR&DMateriality AnalysisStakeholder EngagementStrategy DevelopmentConveningsCore Business & Material Issues What is the business case for CSR at our company and what issues should we focus on?Core Business & Material IssuesAn effective CSR strategy requires integration into the core business and understanding the following:Business Model: products, services, core competenciesBusiness Context: trends, relationship between business and external factorsMaterial Issues: areas with high impact on both business and societyIssues Relevant to BusinessIssues Impacting SocietyMaterial Issues
62 BSR ServicesCSR AssessmentStrategy DevelopmentSupply Chain StrategyBusiness ProcessesBusiness Processes How do we ensure that our everyday business processes are aligned with the vision?Effective execution throughout your business processes can be enabled by integrating CSR into:PoliciesProceduresStaffPerformance measuresStrategyMarketingSalesProductionManagementSourcingDesignHumanResources
63 BSR ServicesStakeholder EngagementWorking GroupsConveningsInternal & External Alignment How do we align our actions internally and externally to achieve our vision?Internal & External AlignmentAligning efforts internally and externally is critical to effectively executing a CSR strategy.Within the companyAlong the supply chainWithin the industryWith external stakeholdersWith the ecosystemEmployeesInvestorsSuppliersBuyers &ConsumersCompetitorsPartnersGovernmentCivil SocietyAir/Water/LandSpecies
64 Implementation Tools What practices will enable us to implement our CSR strategy? Implementation of the strategy depends on the following key practices:Stakeholder Engagement Industry Collaboration Performance Evaluation Transparent Communications
65 BSR ServicesEngagement Design & FacilitationStakeholder Engagement Internal Process DevelopmentStakeholder Engagement StrategyStakeholder EngagementStakeholder Engagement: What are external groups’ perspectives on the issues?What: Engaging with external groups in a two-way dialogue on key issuesWhy: To better understand and align business actions & stakeholder interestsBusiness Benefits:Gather information for decision-makingSecure trust and credibilityAnticipate and manage conflicts & trendsAssess performance and progressDevelop collaborative solutionsGain access to capital & markets
66 Industry Collaboration BSR ServicesWorking GroupsConveningsSupply Chain StrategyIndustry CollaborationIndustry Collaboration How can we collaborate with our industry to increase our impact?What: Collaborating with other companies in the same industry on key initiativesWhy: To increase impact of efforts, and in some cases share and thereby reduce costs and other barriers to improvementBusiness Benefits:Shared resourcesGreater influence as a collectiveExchange of knowledge & best practicesConsistent message & expectations across the industryLevel playing field
67 Performance Evaluation BSR ServicesMetrics DevelopmentAccountability SystemsInformation System StrategyPerformance Evaluation How do we measure progress and ensure accountability?What: Developing metrics to assess progress in key performance areas and having incentive structures in place to ensure accountabilityWhy: To understand how well desired objectives are being metBusiness Benefits:Better understanding of ROIMeasure progressGather information for reportingInform strategic planning
68 Transparent Communications BSR ServicesReportingMetrics DevelopmentCSR StrategyTransparent CommunicationsTransparent Communications How do we communicate our actions accurately, for to benefit of ourselves and our stakeholders?What: Communicating actions and performance openly to stakeholdersWhy: Discussing issues publicly demonstrates a company’s CSR commitment and creates accountability.Business Benefits:Clear, consistent communications to the publicEnhanced credibility with stakeholders & the public.Companies can take clear positions on issues that matter to themEngage and shape public discourse
69 In Closing… Characteristics of A Successful Sustainability Strategy Strengthens business competitivenessAligned with basic business strategySupported top to bottomGlobally coherentCredible externallyResilient in the face of change
70 Company Case Studies A Tale of Two Strategic Approaches GE & HP Director Stacey Smith, BSRKellie McElhaney
72 Background and Drivers Increasing investor inquiriesInvestor Relations exploring SRI and DJSI requirementsBegin to form a new definition of best-in-class companyWell-managedWell-governedCorporate CitizenshipNeed to build Corporate Citizenship pieceImportant commercial drivers in developmentEcoimaginationEmerging marketsDecision to create a report to address growing stakeholder inquiriesInsert image of GE’s ranking circa 1999In terms of market capitalization as at 31 March 2008, GE is the world's third largest company and also second in the BrandZ ranking. In the 1960s, aspects of U.S. tax laws and accounting practices led to a rise in the assembly of conglomerates. GE, which was a conglomerate long before the term was coined, is arguably the most successful organization of this type.In 2004, GE was recognized by a variety of observers, including:--The Financial Times and FORTUNE, which named GE the most respected and admired company, respectively.--GovernanceMetrics International, which gave GE a perfect score for its governance practices.--The Dow Jones Sustainability Index, which added GE to its list of highly selective companies chosen for their environmental, social and economic programs.
73 Starting point was a citizenship report First ActivitiesStarting point was a citizenship reportEngaged external support to guide themCreated SWOT on CR performance – delivered to BoardConducted high level materiality analysisMost data collection was in place (EHS, HR, etc.); other data not availableFirst report developed and published in 2005Engaged stakeholders to receive feedbackInsert image of first reportInvestors were askingweak in some areas but they knew they were strong in other areas(diversity, governance, compliance, EHS)
74 Launch of Commercial Actions Ecomagination – a research priority the cut across all business units signaling a joined up collaborative approachCompany to Country – product development driven by questions: “what are the social infrastructure needs of the country”Check ecomangination spellingCheck company to country titleInsert images of products
75 Results from First Report Identified key areas of weakness and began integration into GE systemPublic Responsibilities Committee redirected focus and inquiry from philanthropy to core citizenship agenda as determined by materiality analysisDeveloped Human Rights policy followed by worldwide roll out in subsequent yearsPut in place processes for water and waste data collection – two years to collect baseline and then set targetsBegan conducting business unit materiality analysesClarify name of Board CmteInsert image of ???Weaknesses: data collection and action on water and waste, lack of human rights program
76 Culture is top down and driven by one philosophy StructureCulture is top down and driven by one philosophy“Conductors” of the orchestra –collect and review business unit goals and deliverables and identify opportunities with support of external advisors; then work with business unit to push performanceNo central structure established – instead virtual work group across company comes together once a year to work on report; some strategy is developed at that timeBusiness units tasked with strategy and implementation based on materiality analysisInsert image of structure and business unitsBusiness unit materiality: issue results; some goverence starting to be identifiedOpportunity to provide leadership in emerging markets re citizenship issuesDo not analyze and debate, decide and execute
79 Working together across HP GC strategy workshopCross-functional company teamdefined an integrated GC strategy for FY07assessed GC relevance and prioritizationdetermined gaps, opportunities and mapped to company strategyidentified top three GC prioritiesdeveloped strategies and goalsgained commitment from BUs and Functions to integrate strategies and goals into business plansWhy did we come together?While preparing the 2006 Global Citizenship Report, specifically the materiality assessment, it became clear that not all businesses and functions had fully internalized the extent of transparency and the depth of information included in the report. The materiality assessment originally intended to be published in the report gave visibility to the fact that a public statement about HP’s global citizenship issues was being driven from the bottom up, in some cases likely without the awareness or agreement of Executives. The materiality assessment was subsequently not published, and it was decided that HP must first ensure that Executives in all involved groups have a deeper understanding of global citizenship issues and then assess the need for increased transparency and integration of GC into each business’ strategic planning process.
80 Current GC investments It was agreed that HP should drive for more investment in the framework categories:brand and differentiation.…and to continue work in critical areas such as employees, education privacy and compliance.We developed a framework to help operationalize our global citizenship efforts. Representatives from each BU and Function identified GC programs and investments for their respective organizations. Company-wide, our GC spending is distributed across the six categories of the pyramid/operational framework as indicated here, with the vast majority in the categories of employees and compliance, and the least investment for brand and differentiation. The team created a long list of global citizenship activities the company could drive, but recognized the need for sharp focus areas and ultimately chose a few topics to focus on moving forward: 1) energy, 2) product takeback/recycling, and 3) a responsible supply chain.
81 Recommended GC priorities EnergyImproving energy efficiency and innovation in our operations and products.Product take back and recyclingReducing product environmental impacts through leading-edge reuse and recycling solutions.Responsible supply chainRaising standards in HP’s global supply chain and ensuring responsible manufacturing for all products.Energy - Improving energy efficiency and innovation in our operations and products to support HP brand and differentiate HP from competitors.Product take back and recycling - Reducing product environmental impacts through leading-edge reuse and recycling solutions, to support HP brand and differentiate HP from competitors.Responsible supply chain - Raising standards in HP’s global supply chain and ensuring responsible manufacturing for all products, to increase access and help differentiate HP from competitors.
82 Proposed GC Goals Energy Product Take-Back & Recycling Reduce HP operations’ energy consumption and CO2 emissions by 15% by 2010Reduce energy used for data center cooling at HP by 50% by 2010Product Take-Back & RecyclingRecycle 1B pounds of material by 2007Set industry-leading vendor standards (for reuse and recycling) by early 2007Create consistent and convenient access to EOL services for commercial customers for improved customer loyalty and revenue around EOL services (internal goal)Raising standards in our Supply ChainEnsure that >75% of spend (>$40B) in product materials and distribution is with suppliers that conform to the EICC by 2008Complete China and E. Europe pilot training programs and release business impact results to set benchmark for industry in 2007Publish Supplier Toolkit for industry use in partnership with EICC members in 2007All goals are proposed goals, still under investigation and yet to be approved by various stakeholders.
83 Additional Points Discussed EnergyHalo: Establish tools to set travel reduction and carbon credit goals by 2008 (internal goal of 5% reduction)Lack of Energy Star related goal for productsProduct Take-Back & RecyclingOptimize % of recovery efficiencyEstablish next recycling/reuse goals, preferably as % of sales for external reportingRaising standards in our Supply ChainIntegrate materials and supply chain standards into the sales process for targeted customers by 2007 (internal goal)All goals are proposed goals, still under investigation and yet to be approved by various stakeholders.
84 Next stepsGain agreement on GC priorities from cross-company strategy teamReview proposed goals with internal stakeholders (in progress)Executive Council MembersGlobal Marketing CouncilSupply Chain BoardOthersPresent recommendations to ECIntegrate GC strategies into business plansPublicly announce new GC priorities & goals
85 Global Citizenship at HP Being an intellectual, economic and social assetHP strives to be an economic, intellectual and social asset to each country and community in which we do business. We believe the highest standards of honesty and integrity are critical to developing loyalty.HP is part of a complex global business system, through which thousands of companies and other organizations collaborate to provide high quality information technology products and services to millions of customers worldwide. Global citizenship is fundamental to every part of this system, as illustrated by HP's programs represented throughout this graphic.
86 Sustainable Products & Solutions Program Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & ManagementCorporate Responsibility (Sustainability) Metrics, Impact & the Value ChainTony KingsburyExecutive-on-LoanSustainable Products & Solutions ProgramUC Berkeley
87 Desired Outcomes Deeper understanding of CSR / Sustainability Metrics Understand the Value of measuring CSR / Sustainability MetricsUnderstand the need to be transparent and look across your value chainLearn how to identify and apply the key metrics for your company / organization
88 Topics Measuring Corporate Responsibility / Sustainability Sustainability…Why is This Important?Three P’s Approach Planet People Profit / ProsperityWhat’s Important for Your Organization?In-class examplesDiscussion of your key metrics (break-out?)Wrap–up discussion from break-outsConclusion
89 Sustainability – what is it? Webster Definition: “method of harvesting or using a resource so that the resource is not depleted or permanently damaged”World Commission on Environment and Development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”“The word ‘sustainability’ has been thrown around a lot. What it means to us is not seeing things piecemeal, not stressing business issues in one place and responsibility in another. To us, sustainability means running our business while being conscious of, and addressing its impacts, and addressing them everywhere.” …Nike
90 Sustainability – what is it? However you define sustainability, you need to realize that sustainability is a journey, not an endpoint…
91 Measuring Sustainability Why is This Important? "You only manage what you measure"How many of you know what mpg your car gets?...what it costs to fill-up your gas tank?How many gallons of water is used when you flush your toilet?... Or take a shower?How much does your organization pay to dispose or recycle your waste?Do your suppliers pay their employees a living wage?... Do they offer health benefits?When we Measure… we know what & how to improve!
92 ExampleIn 1995 Dow set a goal of improving it’s energy efficiency by 20% in 10 years.Starts with knowing how much energy was usedTracked progressTracked $ spent on improvementsTracked $ & energy saved from improvementsResults:22% Improvement (9 trillion btu’s saved)…$1 Billion spent on improvements$5 Billion+ saved from improvements.. and counting2005 goals seek another 25% improvement by 2015!Source:
93 ExampleImproving working conditions in contract garment factories remains a key part of our overall social responsibility strategy. Our approach, which involves factory monitoring, training, other capacity-building programs and engaging with stakeholders, gives us first-hand insight into factory conditions, and helps us measure progress against our standards. In 2006 we:Continued to employ a team of more than 90 people around the world dedicated to improving the lives of garment workers.Evaluated 425 new garment factories and rejected 18 percent for failing to comply with our Code of Vendor Conduct.Conducted 4,316 inspections in 2,053 garment factories around the world, covering 99.4 percent of garment factories approved for the entire fiscal year.Revoked our approval of 23 factories for compliance reasons, approximately 1.1 percent of our base.
94 Measuring Sustainability...Why is This Important? Trend in transparency throughout the value chain…
95 Measuring Sustainability...Why is This Important? Trend in transparency throughout the value chain…How many of you know your organizations carbon footprint?
96 Measuring Sustainability...Why is This Important? carbon footprint - example of what’s coming
97 Measuring Sustainability...Why is This Important? How many of you have heard of Wal-Mart’s Sustainability Initiative?“We soon realized (sustainability) …was something we could be proactive about, a business strategy. It's not an easy path, but we now see it as the greatest opportunity we have to create value for our customers, cut costs, increase morale, grow responsibly, and do the right thing for the planet.”Lee Scott, Wal-Mart CEO
98 Wal-Mart is beginning to ask it’s suppliers for Carbon Footprint data Are you ready to supply carbon data to your customers and stakeholders?What is the Opportunity?Reduction = $ savingsCarbon/CO2 is a green house gas = climate change reductionAbility to differentiate from competitorsLower cost, employee moral, hiring, reputation gains, ability to quickly supply data, etc.
100 Measuring Sustainability Planet (Environment) –What are common environmental measures?What’s important for your organization?
101 Common Planet (Environment) Metrics Energy use (direct & indirect)Emissions (direct & indirect)water - air - landClimate Change potential from your operationsRecycling & Use of Recycled MaterialsFresh Water UseMaterial Intensity… products, packaging, etc.Hazardous substances in your value chainBiodiversity… land use and activities that effect.etc.
102 Common Planet (Environment) Metrics EnvironmentalMaterials used by weight or volume.Percentage of materials used that are recycled input materials.Direct energy consumption by primary energy source.Indirect energy consumption by primary source.Total water withdrawal by source….Water sources significantly affected by withdrawal of water.Percentage and total volume of water recycled and reused.Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.Total direct and indirect greenhouse gas emissions by weight.Other relevant indirect greenhouse gas emissions by weight.Initiatives to reduce greenhouse gas emissions and reductions achieved.Emissions of ozone-depleting substances by weight.NOx, SOx, and other significant air emissions by type and weight.Total water discharge by quality and destination.Total weight of waste by type and disposal method.Total number and volume of significant spillsInitiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.Percentage of products sold and their packaging materials that are reclaimed by category.Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce.Total environmental protection expenditures and investments by type.Extracted from the Global Reporting Initiative
103 Common Planet (Environment) Metrics Product ResponsibilityLife cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such proceduresType of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.Extracted from the Global Reporting Initiative
104 Measuring Sustainability People / Society –What are common societal measurements?What is important for your organization?
105 Common People (Social) Metrics Labor Practices (around the world & throughout your value chain)Women & Minorities hiring and treatmentRatio of salary of men to women by employee categoryCorruption Policies & PracticesHuman Rights… Policies, Procurement, SuppliersCommunity Engagement & PracticesDonations, Volunteerism, etc.Turnover by age group, gender & regionRates of injury, lost days, absenteeism, etc.etc.
106 Measuring Social / People Impact Social: SocietyNature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.Percentage and total number of business units analyzed for risks related to corruption.Percentage of employees trained in organization's anti-corruption policies and procedures.Actions taken in response to incidents of corruption.Public policy positions and participation in public policy development and lobbying.Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. 5Extracted from the Global Reporting Initiative
107 Measuring Social / People Impact Social: Human Rights% and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.% of significant suppliers and contractors that have undergone screening on human rights and actions taken.Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.Total number of incidents of discrimination and actions taken.Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.Total number of incidents of violations involving rights of indigenous people and actions taken.Extracted from the Global Reporting Initiative
108 Measuring Social / People Impact Labor Practices & Decent WorkTotal workforce by employment type, employment contract, and region.Total number and rate of employee turnover by age group, gender, and region.Percentage of employees covered by collective bargaining agreements.Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.Average hours of training per year per employee by employee category.Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.Ratio of basic salary of men to women by employee category.Extracted from the Global Reporting Initiative
109 Measuring Sustainability Profit / Prosperity (Financial) –What are key Financial MeasurementsWhat are the important metrics for your organization?
110 Common Profit (Financial) Metrics Income & Profitability & GrowthInvestmentsPurchasing PracticesJoint Venture practicesDebt to Equity RatioRisks from operations and productsFinancial Assistance from GovernmentsPatents, New Products, etc.
111 Measuring Financial Impact Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.Financial implications and other risks and opportunities for the organization's activities due to climate change.Coverage of the organization's defined benefit plan obligations.Significant financial assistance received from government.Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.Understanding and describing significant indirect economic impacts, including the extent of impacts.Extracted from the Global Reporting Initiative
112 Measurement to Goals - SC Johnson Example Source: 2008 SCJ Public Report, Page 10
113 You Are Only As Green As Your Supply Chain (Herman Miller) Years ago Herman Miller decided to become an advocate for the environment, both because we believed it was the right thing to do andbecause we saw the potential for a clear business benefit. Ever since, we've been refining our processes to put our aspirations into practice. Our Perfect Vision campaign, launched in 2003, includes green goals such as no landfill waste, no hazardous waste, no air or water emissionsfrom manufacturing, and the use of 100% green energy, all by the year These are stringent targets our company cannot reach withoutengaging over 200 materials and components suppliers in the ongoing task of greening our global supply chain. As we've examined every aspect of our worldwide supply chain, we've learned one key lesson: A business, and the products it sells, can only be environmentally sustainable through a holistic approach to design, raw materials, production methods, packaging, shipping, recycling, and even marketing--across the entire value chain. It's far too large and complex a undertaking for any organization to go it alone and be truly effective. You know the saying, "It takes a village to raise a child." Well, it takes an entire supply chain to green a company.Here are three things we recommend to companies working with their suppliers on the long-term goal of going green.1. Design your products with sustainability as a core principal. At Herman Miller, we have a problem-solving, design-driven culture, so we spend a lot of time thinking about how to create our products. In 2001, when we were creating our Mirra chair, we had been working with architect Bill McDonough and chemist Michael Braungart, both leading-edge environmentalist thinkers, toward their vision of a "cradle-to-cradle" design that embraces sustainable materials in a closed-loop life cycle. As a result, we eliminated the use of a chemical called polyvinyl chloride in that chair. Now, PVC has advantages, including the fact that it is inexpensive and durable. However, PVC releases toxins during manufacturing and when it is burned. We decided not to use it and implemented that decision with the help of our suppliers. We embedded those cradle-to-cradle principals in our product development process for all new designs, beginning with Mirra. 2. Refine your goals and put them to paper. We aim to be fully sustainable by 2020, but we're holding ourselves accountable to interim goals along the way. For example, by 2010, 50% of our sales will come from products that conform to our own rigorous Design for the Environment standards, and we aim to reduce our environmental footprint by 80%. Achieving these goals requires paying attention not only to materials, including their chemical ingredients, but also to our sources of energy, to our manufacturing processes, and to our packaging. We don't want to reduce our impact in one area while ignoring it in another. Nor do we want to move our environmental impact upstream into our supply chain. 3. Embrace transparency and meaningful metrics. Our company, our customers, and our industry in general are moving inexorably toward more transparent reporting when it comes to the environment. And, like any other management issue, what gets measured gets managed. When it comes to our supply chain, several measures apply. We award points through our Supplier Quantification Process for formal environmental programs and active waste-reduction programs. We rate our suppliers according to how effectively they are working to help us reach our goals--from researching alternative materials to incorporating our measurable targets into their flow charts. And this is the crux of the issue: We're not only looking at our suppliers, but at our suppliers' suppliers. We have 12 years and a long way to go before reaching our self-imposed deadline for our Perfect Vision mission. By looking--and forcing change--outside our company as well as inside, we believe we can achieve this goal. By following the three steps above, we believe other companies can reach their green goals as well.Author: Brian Walker, CEO of Herman MillerSource:
114 Herman Miller You Are Only As Green As Your Supply Chain Key Points:Know your Value-chainEstablish Meaningful Goals (and share them)Be Prepared for a Transparent WorldThe right METRICS are the root to all three of these points
115 Break-out groupsDiscuss the key metrics for your organization as a groupCome back in 20 minutes prepared to present your:Key metrics?Why?How can you make sure they are implemented?
116 Break-out groups - Feedback Key metrics?Why?How can you make sure they are implemented?
117 Conclusion Measure your Organizations Sustainability Performance! Improvement begins with measurementTake into account the full value chainDetermine what is important for your organization and set goals!Be transparent… you can’t avoid it!Reputational impact comes from being able to document your improvementsOpportunities will flow from these activities!
118 Final Word."Not everything that can be counted counts, and not everything that counts can be counted."-- Albert Einstein
122 Stakeholder ValueStakeholders, both traditional and emerging, can play an important role in creating and maintaining business value.Stakeholders can supply key information regarding:emerging trends and impactsprogram implementation advise and partnershipcritical feedback regarding perceptions, expectations and performanceNot all stakeholders can provide this value and a company must take a strategic and disciplined approach to its stakeholder relations to ensure that this business tool delivers value.
123 Stakeholder – Evolving Definitions GovernmentCivil SocietyThought LeadersRemote CommunitiesSuppliersPartnersLocal CommunitiesEmployeesInvestorsCustomersTraditional stakeholders includeShareholdersEmployeesCustomersbusiness partnersCompanies often have reliable and sophisticated methods for relating to these stakeholders and incorporating their perspectives into business planning and execution.
124 Stakeholder – Evolving Definitions GovernmentCivil SocietyThought LeadersRemote CommunitiesSuppliersPartnersLocal CommunitiesEmployeesInvestorsCustomersEmerging stakeholders includegovernments and multi-lateral institutionsadvocacy/special interest groups and non-governmental organizationssocially responsible and other investorscommunity representativesthe environmentfuture generationsAs these stakeholders continue to evolve their influence, knowledge and potential value to companies, companies need to evolve methods to leverage the potential of these relationships for real business value.
126 Benefits of Engagement OpportunityEntrance to and expansion of marketsStrengthened license to operateTrusting relationshipsInformed/improved decision-makingIssues identification and managementContinuum: Awareness => One-way communication => Two-way communication => Issue resolution => Incorporation to business decisions => Issue anticipation => Business opportunities => Achieve business objectivesMitigation of risk, lower legal costsRisk“(We engage) to find solutions to shared challenges, everything from creating awareness about a topic to improving company performance on the environment and human rights, to finding solutions to societal challenges.” --Novo Nordisk
127 Exercise 1Are external stakeholders important to your business success?What role(s) can they play?
129 Iterative Questions Why Who What Why do you want to engage? What issues are most important?Who is the most relevant?
130 What Are The Issues? RISK OPPORTUNITY Financial – ability to impact financial performance of companyReputation – ability to impact company reputation and imageLitigation – ability to impact current/future litigationRegulation – ability to impact current/future regulationRISKOPPORTUNITY
131 Who is a Stakeholder?Those who are affected by or affect a company’s products or operations.GovernmentCivil SocietyThought LeadersRemote CommunitiesSuppliersPartnersLocal CommunitiesEmployeesInvestorsCustomersLet’s start by simplifying the world down to these basic components: people and nature. And yes, technically people are a part of nature, but let’s keep them separate for now for the purposes of discussion.Some people are happy overall, some are not.
132 Mapping Your Stakeholders KnowledgeStakeholder #2Stakeholder #4OrientationInfluence
133 Stakeholder Relations There is no best way to relate to traditional or emerging stakeholders, instead there exists a range of possible interactions that can serve the company’s business objectives.Companies can benefit from taking a disciplined approached to stakeholder relations that discriminates the type of interaction best needed based on the situation and the potential stakeholders.In a given situation, different points along this continuum might be most effective.IgnoreMessageConsultCollaborateMonitorAdvocateEngage
134 Stakeholder Relations Continuum IgnoreMessageConsultCollaborateMonitorAdvocateEngageIgnoreMonitorMessageAdvocateConsultEngageCollaborateNot directing communication or messages toward specific stakeholders and not monitoring or responding to their actions.Tracking the positions and actions of stakeholders through media scans, Internet searches, review of Web sites, review of list-serves, and talking with other parties.Typically “one-way” messaging toward specific stakeholders, sometimes for the purpose of “education.” These messages can come through direct advertising, media campaigns, letters, blogs, etc.Activities intended to enlist support for a specific effort or position. Often there may be an imbalance or implication of power/ influence affecting the relationship.Soliciting explicit feedback or input on a project or plan. No commitment regarding action related to the feedback/ input.Initiating or participating in two-way dialogue focused on mutual learning and solutions. It requires a commitment to openness.Explicit development of opportunities to work on shared objectives by the company and its stakeholders. Sometimes formalized in agreements; sometimes informal.
136 HP – Stakeholder Engagement Grid “These interactions help us better understand our markets and customers, develop effective approaches to global citizenship issues, and strengthen HP’s reputation.” --HPWhere would you put HP’s Stakeholder Engagement Grid on the SR Continuum? On the Opportunities Continuum?
137 When to Engage Stakeholders Engagement is substantive two-way interaction between a company and their stakeholders, focused on mutual learning and/or solutions.Engagement is most effective when:There is curiosity or concern regarding the impact of a company action or productThere is a need or desire to learn about issues or stakeholdersAll of the decisions related to a project or issue have not yet been madeThere is sufficient control or influence by the company regarding an issue
138 Types of Stakeholder Engagement Engagement may be used in different situations. It is often useful in following situations. Each situation requires a slightly different approach to ensure that the company can receive value.Crisis/IncidentCommunityTrends ForecastingBusiness Planning
139 Exercise 2Identify, by name or organization, a single stakeholder that is currently important to your company.What is your company curious about that the stakeholder could help shed light on?Articulate how you would invite this stakeholder to a conversation to discuss this topic.
140 Nike Deep Dive on Issues Large, multi-stakeholder dialogue Three issue focus areas40 business managers together with 40 external stakeholdersTwo days including polling, presentation by company and expert, small group work planning, commitmentsLaid groundwork for ongoing initiatives
141 Gap Stakeholder Mapping Determined focus area Thorough identification and researchCross-functional exercise to “map” stakeholdersDevelopment of plan for communication and engagementOngoing resource to guide strategy and reference additional engagement activities
142 Wal-Mart System-wide Sustained Engagement Identification of key systems of impact (packaging, textiles, GHG, buildings, etc.)Conduct research and analysisAssemble representatives from all key aspects of the system (producers, suppliers, experts, associations, government agencies, etc.)Create facilitated, long term forum for dialogue, commitments and innovation
145 Stakeholder Engagement Cycle PlanApplyDesign engagementPrepare company participantsEngage/DialogueEngageEvaluate engagement process & resultsApply engagement learningsFollow-up with stakeholdersIntegrateBuild internal capabilityClarify rolesEstablish processes & toolsIdentify & prioritize issuesIdentify & prioritize stakeholdersDefine engagement objectives and scopeHigh-level walk throughApply: Full cycle has 4 stages; first two have no reason unless you do the third; it makes no sense to do all this unless you’re going to do something with the information
146 Communicating & Branding CSR Kellie McElhaney, Haas School of Business
147 McElhaney’s Seven Principles of CSR & Branding Know ThyselfGet a Good FitBe ConsistentSimplifyWork from the Inside OutKnow Yours CustomerTell Your Story
149 CSR is a powerful predictor of brand…if known SocialResponsibilityEmotionalAppeal13Supports Good CausesEnvironmental ResponsibilityCommunity ResponsibilityFeel Good AboutAdmire and RespectTrustReputation QuotientSM(RQ)Vision &LeadershipProducts &Services62Market OpportunitiesExcellent LeadershipClear Vision for the FutureHigh QualityInnovativeValue for MoneyStands Behind45FinancialPerformanceWorkplaceEnvironmentOutperforms CompetitorsRecord of ProfitabilityLow Risk InvestmentGrowth ProspectsRewards Employees FairlyGood Place to WorkGood EmployeesSource: C. Fombrun, Reputation Institute, Harris Interactive
152 And Even They Have Enemies Requires banked goodwill in customers’ minds when these messages emerge.152
153 There Are Ready CSR Segments Females (employees, consumers, investors)Millennials/Gen Yers Ages (cause focus)LOHAS/ Ethical ConsumersMore educatedMore diverse (gender, sexual orientation, ethnicity)More affluent (enter Walmart)
154 LOHAS: Lifestyles of Health and Sustainability Strong environmental and social values, and base many purchase decisions accordinglyDon’t just buy organic food or energy efficient appliances, they’re active in all LOHAS-related product categories“The largest market segment you’ve never heard of”“As ‘green’ products make inroads among Wal-Mart’s budget-conscious masses, they are gathering cachet among an affluent new consumer category which marketers call LOHAS.” (7/17/06)Sources: The Natural Marketing Institute; Adler, Going Green.
155 They’re Growing 2006 Ethical Consumerism Report Key Milestone: Total Ethical Consumerism surpassed Tobacco & Alcohol spending in the UK for the first time in 2005.But, still need to push for forward movement and more alternatives across each of the ethical categories. In Food, Ethical spending only makes up about 5% of the typical market basket.Source: Co-Operative Bank,2006 Ethical Consumerism Report155
156 They’re Focused on Recycling & Local Shopping Source: Co-Operative Bank, 2006 Ethical Consumerism Report156
157 They’re Conscious Consumers More likely to buy from companies that:Manufacture energy efficient products (90%)Promote health & safety benefits (88%)Support fair labor & trade practices (88%)Commit to enviro-friendly practices (87%)Source: MORI 2008
158 In Other Words, Consumers Care If It’s… In me,On me,Or around me.
159 They’re the Millennials (ages 8-24) 89% said they are likely to switch brands if linked to cause83% will trust company more if socially responsible79% want to work for company that case about and contributes to society78% believe that companies have responsibility for making a difference in the world74% more likely to pay attention to a company’s overall messaging when they see that company has deep commitment to cause they care about69% consider companies’ CSR reputation when deciding where to shop61% feel personally responsible for making a difference in the world56% would refuse to work for an irresponsible corporationSource: Cone Millennial Cause Study159
160 Sign in Dreyer’s Ice Cream Scoop Shop, Berkeley, CA
166 CSR Opportunity: The Power of Women WOMEN more likely than men to:Volunteer in their local communitiesInvestigate a company’s environmental reputation before making a purchaseInvest in companies screened for different criteria including environmental practices, the hiring and promotion of women and minorities, labor practices and tobacco manufactureFactor CSR when job-searchingPurchase a product with a percentage of profit earmarked for charitable donationParticipate in company sponsored social programs166
167 The Power of Women More likely than men to: Indicate that it is important to ensure that workers inside and outside the U.S. are paid a living wage (68 percent versus 57 percent).Give corporations a “poor” rating for current CSR performance (18 percent versus 11 percent of men). Men are far more likely than women to rate companies as “excellent” or “good” (31 percent versus 13 percent, respectively).Indicate that it is extremely important for companies to make relevant donations to charities and philanthropies (27 percent versus 19 percent, respectively).Source: Fleishman Hillard – National Consumers League Study, “Rethinking Corporate Social Responsibility,” 2006
168 WOMEN: A Desirable Market Segment Women make over 80% of purchasing decisions in the United States (and influence most others)Women are less likely to act impulsively on brand loyalty, and are more likely to do research and weigh information before making purchasesSource: Faith Popcorn and Lys Marigold, 2000
169 March 2008, Goldman Sachs launched new initiative Will provide 10,000 women in developing countries and emerging markets with educational opportunities in business & managementPartnership with American & European universitiesWill contribute $100 million over five years, plus time & effort of employees
172 Tesco Green Club Card Points Issue: British carrier-bag consumption is a tangible and actionable issue that consumers can comprehend with 17 billion handed out to U.K. shoppers every year, equivalent to 280/adult.172
173 Tesco Green Club Card Points Tesco Green ClubCard Points ProgramRewards consumers with Clubcard points for re-using bags or recycling mobile phones & toner.Program launched with humorous TV ads featuring celebrities using alternative items for shopping bags (suitcase, golf bag, etc).Unclear what percent of Tesco’s annual $80 million media spend will go towards supporting this initiative.Consumer ConnectionBuilds confidence that individuals, acting together, can bring about change. Keeps the environment top of mind.ResultsSince 2006 launch, reduced # of new bags by nearly 300 million (14MM fewer plastic bags/week).However, is susceptible to “green-washing” complaints from critics, such as Friends of the Earth, who claim Tesco is only focusing the “small, insignificant” issues that are easy to communicate to consumers.Similarly, Ikea began charging 9 cents/bag; usage has dropped by 95%.173
177 A Brand Story Campaign for Real Beauty Campaign began with ''global study,'' commissioned by Dove that posed questions about beauty across countries.Repositioned its brand around self-esteem issuesCreated CampaignForRealBeauty.com to allow women toVote on provocative imagesJoin discussion groups on various beauty stereotypesParticipate in Dove Self-Esteem FundUses un-retouched images of women rather than modelsCommissioned study called The Dove Report: Challenging BeautyThe uniquely Me! Girl Scouts of America self-esteem programWorks through the Unilever Foundation to donate money. In addition, Unilever employees donate time to mentor girls as part of the program.Program uses activity books and simple exercises to help build self-confidence in girls177
180 & ImpactIncreased sales. U.S. sales rose 6% in one year to $500 million.Dollar sales jumped 2% in the month the campaign started.Heightened brand awareness. Ads received considerable press, more than 1 million women have visited dove.com and voted on images.Created buzz with the "water cooler effect"
181 Developing/ Refining Your CSR Strategies Small Group Exercise
182 Questions for You: What are your business objectives? What are your core competencies?What are the main drivers for CSR?Why would/ do you do it?What do you currently do today?
183 Start Here Your CSR strategy must only link to two things: Core business objectives:Increase sales, penetrate new markets, engage employees, reduce operating expenses, improve reputation, protect brand, beat competitorsCore competencies:Technology, financial products &services, making markets, natural food, automobiles and transportation systems, travel & tourism.183
184 Engage An Employee Team Dedicate a CSR leaderDevelop a multi-functional CSR strategy-development teamA CSR Council of champions, ambassadorsDetermine who needs to be thereGet a few cynics in earlyPlay with whomever shows upInvite in a few external stakeholdersClients, consumers, suppliers, NGOs, academicsSet out to develop your CSR strategy
185 A Suggested Strategy-Development Process Starting with business objectives & competencies….Determine where you want to play (babies, landscape, etc.)Assess current CSR (philanthropy) initiatives & plot to see clustersBenchmark industry, develop your competitive advantageSelect an issue for which you own [part of] the solutionDevelop a CSR strategy linked to your corporate strategy
186 A Suggested Strategy-Development Process Go long & deep: FOCUS, FOCUS, FOCUSSignature projectFewer projects, more focusMake longer-term commitment3-5 years, phases, etc.Teach CSR to your employeesThen engage, involve your employees in your CSRYou, as leader, stay involvedDevelop partnership(s)Determine KPIs, metricsCelebrate small winsTell your storyStories trump facts ten times out of ten, period.
187 What Will You Do on Monday Morning? What will you tweak?What will you toss?What will you develop/ do?How will you measure it?How will you communicate/ brand it?
189 Anticipating the Future Business has a key role to play in meeting global challenges.Many of the toughest CSR dilemmas have arisen when companies fail to understand the changing intersection of business and society.Business succeeds best when it is able to “get there early.”
190 The Value of Getting It Right; The Cost of Getting It Wrong What are some examples of CSR problems companies faced by not anticipating the social or environmental implications of business change?What companies have succeeded on their business and sustainability strategies by anticipating social change?Monsanto, Shell, Nike…
191 What’s Next?What changes will define the intersection of business and society over the next ten years?
192 Wisdom from Donald Rumsfeld “There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.”
193 Characteristics of the Emerging World Decentralization of information…and powerRise of emerging economiesTransparency as a givenResource scarcity and volatile commodity pricesReturn of the state
194 What sustainability challenges are we facing now and into the future?
195 Global Sustainability Challenges What does the future hold for global sustainability?Business has an essential opportunity to make a unique contribution to meeting critical global challenges. By leveraging innovation, employment, capacity building, and value creation, the world is likelier to achieve the objectives of the Millennium Development Goals:HealthHuman RightsWaterEconomic Well-BeingClimateBiodiversityEducationGlobal Security & Peace
196 Challenge #1: HealthNew and ongoing health threats further exacerbate need for stronger health systemsMore than 500,000 women still die each year of treatable and preventable complications of childbirth.12.2 million children die each year because they are not immunized.21.1 billion people in developing countries have inadequate access to water, and 2 billion lack basic sanitation.328% of all children in developing countries are estimated to be underweight or stunted.4Prevention measures for HIV/AIDS are failing to keep pace with growth of the epidemic.5New major health threats have arisen, including bioterrorism, SARS, and toxic chemical waste dumping.1Source: BBC
197 Challenge #2: Human Rights In the absence of effective governance or justice systems, business andinternational bodies are increasingly needed to advance human rightsThe rise of anti-terrorism policies has brought increasing claims of discrimination and racism.6Cases of violence and discrimination based on sexual orientation continue to occur in all regions of the world.6No developed country has effective policies to protect the rights of migrant workers.6Corporations are more accountable; shareholder resolutions regarding human rights are increasing annually.7Women’s global participation in paid employment increased to 39% over the past 15 years, illustrating the potential for business to have an impact on gender disparity.8Source: The Social Blog
198 Challenge #3: WaterFreshwater resources are becoming scarcer or more polluted,leading to a global crisis in access to clean waterIncreasing water shortages, scarcities, and stresses throughout the world due to increasing populations and agricultural demands.91.8 billion more people could be living without adequate access to water byGlaciers are retreating 10–15m/yr in the Himalayas, creating immense vulnerability for Central Asia.4>10 countries possess 60% of the world’s available fresh water supply.10In 60% of European cities, ground-water is being used at a faster rate than it can be replenished; where some water remains, the cost to capture it is exhorbitant.10
199 Challenge #4: Economic Wellbeing The widening of economic gaps is posing increased opportunities andchallenges for business in the developing worldBy 2050 the global population is expected to top 9 billion, with 8 billion forecast to live in developing countries.4The economic gap between rich and poor is further widening; in 2007, the richest 20% of the world’s population accounted for 75% of the world’s income.4Nearly three billion people, which is half the world’s population, survive on less than US$2 a day.430,000 children die daily as a result of extreme poverty.4Source: BBC
200 prompts the need for drastic cuts in global emissions Challenge #5: ClimateThe threat of dangerous climate change is increasingly becoming a reality, andprompts the need for drastic cuts in global emissionsSome 262 million people were affected by climate disasters annually from 2000 toBased on current trends and policies, energy-related CO2 emissions could rise by more than 50 percent over 2005 levels byIn the 21st century, average global temperatures could increase by more than 5°C.4Global temperature increases of 3–4°C could result in 330 million people being permanently or temporarily displaced through flooding.4To avoid drastic global impacts, it is estimated that rich nations would need to cut emissions by 30% by
201 Challenge #6: Biodiversity Despite greater conservation efforts, biodiversity loss is continuing at analarming rate and increasing the risk of ecological catastrophe20-50% of 9 of the world’s 14 biomes have been transformed to croplands.11Over the past century, humans have increased the species extinction rate by as much as three orders of magnitude.11Despite increased conservation efforts, deforestation continues at an alarming rate.5Biodiversity loss is increasing the likelihood of ecological surprises and catastrophes.11Unprecedented efforts in conservation and ecosystem management will be required if the rate of species loss is to be reduced.5
202 Challenge #7: Education In a future driven by globalization and information exchange, education is becomingeven more critical to the success of business and economic developmentEnrollment in primary education in the developing world rose from 80% to 88% between115 million children, 60% of whom are girls, have no access to formal schooling.12In many poor countries, people earn 10% higher wages with each additional year of schooling.12Members of society will increasingly create innovative and contextually-relevant applications for new knowledge.13
203 Challenge #8: Global Security & Peace Ongoing nuclear proliferation and new global challenges continue to posea threat to global security and peace.There are over 25,000 nuclear weapons in the world today.14The following countries are known to have nuclear weapons: China, France, India, Israel, Pakistan, United Kingdom, and the US.15New environmental challenges, such as climate change and access to water, are potential topics for conflict and are inextricably linked with global security issues.
204 Insight: Sustainability Outlook A project supported by 10 sponsoring companiesAssessing broad trends through the lens of markets, commons, technology, and policy based solutionsBased on two company/BSR/IFTF workshops and inputs from diverse range of experts
205 Insight: Sustainability Outlook Discussion: What lessons do you draw from the map?How do these affect your business/CR strategies?How do you forecast trends affecting your company?How would you use a map like this?Do these present risks, opportunities, or both?What’s missing?Exercise/Discussion: What three things will you take back to your company next week?
206 We Are It, Friends.Never forget that a small group of committed individuals can change the world. Indeed, it is the only thing that ever has.- Margaret Mead
207 Contact InformationKellie A. McElhaneyTony KingsburyAron CramerStacey Smith