Keays Hranb Social Auditing
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Keays Hranb Social Auditing



Presentation on social auditing to NB Human Resources Association

Presentation on social auditing to NB Human Resources Association



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    Keays Hranb Social Auditing Keays Hranb Social Auditing Presentation Transcript

    • Social Auditing for Corporate Responsibility A Presentation to the Human Resources Association of New Brunswick
    • Presentation Outline Brief history of corporate responsibility Development of CR programs Social auditing Principles Criteria Process Transitioning to social auditing 2
    • 3 Elements of Sustainable Development Three balanced objectives The concept of sustainable development combines three LIVEABLE objectives : ENVIRONMENT SOCIAL Economic Effectiveness SUSTAINABLE Social Justice Environmental Protection FAIR VIABLE and means for achieving them which fall within the province of governance and management. ECONOMIC 3
    • Different Name – Same Job Corporate Social Responsibility Initially, the social dimension Corporate Responsibility of sustainable development Corporate Citizenship received less attention than Sustainability the environment and only in Social, Ethical and Environmental recent years have social Responsibility aspects become more prominent Sustainable Development Triple Bottom Line SD has evolved to encompass ideas of: good governance including transparency and accountability; inclusiveness and stakeholder perspective, particularly in relation to those who are most vulnerable. 4
    • Corporate Responsibility – Some History 1916 – John Maurice Clark (Economist) "if men are responsible for the known results of their actions, business responsibilities must include the known results of business dealings, whether these have been recognised by law or not." 1930s – Theodore Kreps (Stanford Professor) Introduced the subject of Business and Social Welfare First to use the term “social audit” 1942 – Peter Drucker (Writer, Management Consultant) Argued that companies have a social dimension as well as an economic purpose in his book, “The Future of Industrial Man.” 1953 – Howard Bowen (Economist, University of Iowa President) Defined corporate social responsibilities as "the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society." 5
    • Opposition to the Notion that Companies have Social Responsibilities In 1962, Milton Friedman, in “Capitalism and Freedom,” stated “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.” “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say engages in free and open competition without deception or fraud.” 6
    • Visionary Thinking 1919 – George Eastman, founder of Kodak Gave one-third of his own holdings of company to his employees and later fulfilled what he felt was a responsibility to employees with the establishment of retirement annuity, life insurance, and disability benefit plans. He fostered music, endowed learning, scientific research and teaching, promoted health, helping the needy and made his own city a centre of the arts. The Old Age Pension Act was passed in Canada in 1927 Social Security Legislation was passed in the US in 1935 Private Pension Funds not regulated in the US until 1974 7
    • Visionary Thinking 1930 – David Packard, co-founder of Hewlett Packard “I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.” 8
    • Social Responsibility Model 1991 – Archie Carroll Proposed a model that contains the four categories of corporate responsibility in decreasing order of importance: 1. Economic - be profitable 2. Legal - obey the law 3. Ethical - do what is right and fair and avoid harm 4. Discretional / philanthropic - be a good corporate citizen Thought to reflect the evolution of business and society interaction 9
    • Realizing the problems At the present moment, do we have these 3 elements in balance? Social Environmental How do we know? Economic 10
    • Typical CR Performance Indicators Environmental Performance Social Performance Energy Inputs Health & Safety Workplace Diversity Water Usage Labour / Management Relations Effluent and Air Emissions Investment & Procurement Practices Greenhouse Gas Emissions Business Ethics Land & Ecosystem Use Indigenous Peoples Product Life Cycle Reputation Marketing Communications Incidents & Non-compliances Customer Privacy Economic Performance Profit, Earnings & Income Investment in Intellectual Capital Employee Compensation Indirect Economic Impacts Customer Satisfaction 11
    • Steps to Implement a CR Strategy Guiding Guiding 1. Build the business case Principles for Principles for 2. Pre-planning decisions Sustainability Sustainability __________ __________ 3. Map out the implementation process __________ __________ 4. Identify key issues and data - _____ _____ benchmarking 5. Stakeholder engagement Su sta 6. Develop performance metrics Ch inabil Stakeholder alle it Response nge y 7. Collect information and data s 8. Communicate on progress Risk Accountability 9. Verify and assure Management 10. Evaluate and evolve Training & Diversity Community Investment Health & Safety Environment Ethical conduct Employment 12
    • Materiality Identification of key issues requires an examination of materiality. Materiality is determining the relevance and significance of an issue to an organization and its stakeholders. A material issue is an issue that will influence the decisions, actions and performance of an organization or its stakeholders. Drivers Stakeholder response Investor confidence Business risk 13
    • The Materiality Test It will be necessary to prioritize issues, subject to periodic review An emerging common approach is to focus on… Those issues that have significant current or potential impact on the company Those issues that are of significant concern to stakeholders Those issues over which the company has a reasonable degree of control 14
    • Stakeholder Engagement 1. Identify the key stakeholders the Important considerations sustainability program will engage 2. Determine the extent of How your company has identified stakeholder engagement and at its key stakeholders what stages How you solicit their input a) Identification of issues How their input is considered in the b) Development performance company’s decision-making indicators processes and in determining c) Feedback on company performance material issues d) Formal verification of company performance 3. Undertake stakeholder engagement at the appropriate stages 15
    • Stakeholder Engagement Engagement strategies Stakeholder advisory panel Expert advice Surveys (internet, phone, mail-out) Customer research Community liaison committees Tracking community / customer / supplier complaints Focus groups Local representatives One-to-one Road shows Stakeholder Public meetings or forums Partnerships including alliances, collaborative projects, initiatives or ventures 16
    • Performance Indicators Select appropriate and meaningful indicators Factors that genuinely reflect the health of your business How your business significantly impacts on society and the environment Measures of performance, not just management processes Ensure that selected indicators make sense to your business and your stakeholders (materiality) Linked to corporate policies Performance trends Sector benchmarking Explain the shortfalls Consider the Global Reporting Initiative (GRI) G3 Reporting Indicators ISO 14031 ‘Environmental management – Environmental performance evaluation – Guidelines’ can provide good information 17
    • Internal Auditing Internal Audits typically examine: Governance Policies Governance Roles and responsibilities Report and review Risk Management Hazard / aspect analysis Operational controls Risk Emergency response Control Management Control Monitoring and measurement Corrective action 18
    • In the Context of Sustainability… Governance What are the exposures for my organization? How do we know? Do we engage the right people? Are we providing guidance? Risk Management What processes exist to manage risk? Is our evaluation current? Control How effective are the controls in our processes? How confident are we in these controls? When did we last check? 19
    • Social Auditing What is now coming to be called Social Auditing is similar in many ways to Financial Auditing except that it is about everything else that an organization does apart from handling money. Definition: a process that enables an organization to assess and demonstrate its social, economic, and environmental benefits and limitations. It is a way of measuring the extent to which an organization lives up to the shared values and objectives it has committed itself to. 20
    • Social Auditing Provides an assessment of the impact of an organization' non- s financial objectives through systematically and regularly monitoring its performance and the views of its stakeholders. Requires the involvement of stakeholders… employees, clients, volunteers, funding agencies, contractors, suppliers and local residents interested in the organization. Typically completed by the organization themselves and those directly involved. External verification of the social audit' accuracy and objectivity is often s necessary and could form part of the public disclosure process. 21
    • Why Social Audits? To permit the enterprise to effectively monitor performance. To permit the “stakeholders” in the enterprise affect its behaviour. To allow enterprise to report on its achievements based on verified evidence rather than on anecdote and unsubstantiated claims. Permits those who invest in the enterprise and its stakeholders to judge if it is achieving the values which it set out to achieve. 22
    • Social Auditing Before a Social Audit can take place you have to be clear about: What you are trying to do as an organization (objectives) – both internally and externally How you are going to do it (action plans) How you will measure and record the extent to which you are doing it (indicators) 23
    • Steps to Conduct a Social Audit 1. Assemble organization and secure agreement and commitment. 2. Define and prioritize the organization’s objectives and establish the action it intends to perform to meet them. 3. Identify the organization’s “stakeholders.” 4. Agree upon indicators, information, benchmarks and targets. 5. Data gathering systems put in place (social accounting). 6. Collating, analyzing and interpreting results. 7. External verification process (second- or third-party). 8. Disclosure and act on results. 24
    • Social Accounting Social accounting is a method to measure, analyze and present social and society results. The key concepts are Account map: Table including the key social objectives and their quantitative and qualitative indicators/measurements Budget: Final set of measurements including the measurement plan with time schedule and responsibilities. Indicators are always expressed so that they allow performance to be measured. Bookkeeping: Information to be gathered routinely during the year and collection and filing of evidence (records). Record: An evidence of a social event in social bookkeeping. Social accounts: Analysis and summary of the past year’s social bookkeeping. Social audit: The process by which an external and independent party reviews and checks the social bookkeeping and social accounts and verifies the contents and interpretations presented. 25
    • Social Auditing Criteria Social Accountability (SA) 8000 ISO/WD 26000 UN Global Compact OECD Guidelines for Multinational Enterprises Agenda 21 CERES Bellagio Principles Earth Charter OECD Principles of Corporate Governance Universal Declaration of Human Rights Fairtrade Labelling Organization International Fairtrade Standards ILO Indigenous and Tribal Peoples Convention 26
    • SA8000 An auditable certification standard based on International Labour Organization (ILO) conventions, the UN’s Universal Declaration of Human Rights and the UN Convention on the Rights of the Child Elements of the Standard: Child Labor Forced Labor Health and Safety Freedom of Association and Right to Collective Bargaining Discrimination Discipline Working Hours Compensation Management Systems Applicability Manufacturers and wholesalers/retailers with global supply chains Option to certify to SA8000 by an accredited third party or membership in Corporate Involvement Program (CIP) 27
    • ISO/DIS 26000 Guidance on Social Responsibility Target date of publication – 2010 Guidance standard, not a requirements standard, therefore not possible to become certified Core Subjects of Social Responsibility that “should” be addressed by organizations – Community involvement and development – Human rights – Labour practices – Fair operating practices – Consumer issues – The environment 28
    • Global Reporting Initiative (GRI) Multi-stakeholder process and institution that has set out to develop and promote a globally applicable framework for reporting on sustainability issues. The GRI guidelines set out reporting principles and specific indicators to guide the development of sustainability reports for companies and other organizations Launched in 1997 by NGO Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Program (UNEP) in order to develop a global sustainable reporting framework. Third version (G3) released GRI framework is organized into five components: Vision and Strategy, Organizational Profile, Governance, GRI Index and Performance Indicators 29
    • GRI Application Levels C C+ B B+ A A+ Report on Certain Report on All Report on All G3 Profile Elements Elements Elements Disclosures Report Externally Assured Report Externally Assured Report Externally Assured Required for Required for Each Mgmt Approach Not Required Each Indicator Indicator Category Disclosures Category Report Core & Report on 10+ Report on 20+ Sector Performance Indicators Indicators Supplement Indicators Indicators 30
    • A Measure of Social Performance Organized by Canada’s leading news publications Employers are evaluated by the editors of Canada' Top 100 s Employers using eight criteria: 1. Physical Workplace; 2. Work Atmosphere & Social; 3. Health, Financial & Family Benefits; 4. Vacation & Time Off; 5. Employee Communications; 6. Performance Management; 7. Training & Skills Development; and 8. Community Involvement. 31
    • An Example from Planned Lifetime Advocacy Network (PLAN) Key Element Relationships are the heart of everything we do Aspect of Key Consultation Based Data Based Stakeholder Group Element Indicators Indicators Personal Networks Family members Lifetime Members Statistical profile of are making a overall satisfaction networks difference rating with networks Network records – have long term goals been met? Overall satisfaction How happy are Members Staff turnover with the quality of people at PLAN? Employees Facilitator turnover relationships Increase in membership PLAN communicates Facilitators and Administrative Printed material clearly on roles and members know what employees prepared for families, relationships to expect from PLAN Facilitators focus people and Focus People facilitators 32
    • Transitioning to Sustainability Auditing Audit Scope Look at other policy commitments – health and safety, employment equity, anti-harassment, information security, procurement Increase stakeholder group – suppliers and customers, community, interest groups, administrative departments, corporate and board level management Audit Criteria If it cannot be defined within existing objectives and KPI’s, consider GRI G3 as an initial benchmark Other standards Audit Team Involve non-operational personnel – HR, purchasing, IT, Sales Audit Process Cannot be done in a few days – data gathering process could be lengthy 33
    • Potential Issues Social Auditing has excellent promise as a management tool but some potential problems remain: Reporting organization can deliberately limit audit scope in order to avoid controversies. Process can be managed internally to the disadvantage of some external stakeholders. Some significant stakeholders may be omitted. Organization may use arbitrary or inappropriate indicators to evaluate outcomes. The standards, independence and honesty of the auditor may be open to question. 34
    • Gaining Experience The first auditing cycle will require a lot of work, but the subsequent rounds are expected to be easier. To facilitate the process, consider focusing on the following: Ensure management’s long-term commitment. Ensure adequate resources - required skills and enough time. Plan the collection of information and storing of records well. Make a timeline of bookkeeping and information collection and stick to it. Start preparing the accounts already in the bookkeeping phase. A summary version of the accounts can be a good way of communicating the central findings in an interesting way to the stakeholders and the public. Make observations and write down your experiences throughout the process to make it easier to improve the next year’s process 35
    • Conclusions Sustainability has to be defined by the organization before it can be assessed Management commitment is essential Objectives, indicators and data gathering are essential elements The sustainability audit process requires stakeholder engagement The audit process will be longer and will require a different skill set The audit should be considered an integral part of implementing a sustainability program 36
    • Discussion… Glenn Keays, MSC, CEA(SFM), EMS(LA) Senior Consultant, Management Systems & Sustainability 506-450-0168