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Ethical Corp Report Summary Csr Initiatives

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  • 1. N RE O O W PO N RT AL S E GUIDE TO INDUSTRY INITIATIVES IN CORPORATE SOCIAL RESPONSIBILITY Your guide to selecting the right multistakeholder initiative for your company EXECUTIVE SUMMARY The full report is available at www.ethicalcorp.com/initiatives © Ethical Corporation 2009 Call to order on +44 (0) 20 7375 7500
  • 2. Table of contents About this report and about us ................................................................6 Acknowledgements ....................................................................................7 Executive summary ....................................................................................8 List of acronyms ........................................................................................11 Definition of symbols ................................................................................12 Characteristics of initiatives ....................................................................14 Introduction................................................................................................15 SECTION 1: WHY INDUSTRY-BASED CSR INITIATIVES CAN BE IN YOUR COMPANY’S BEST INTEREST ..................16 1.1 Overview ..........................................................................................16 Box 1: Why do companies join an initiative? ................................17 1.2 Characteristics of initiatives ..........................................................18 1.3 Benefits of initiatives ....................................................................19 1.4 Creating roles and responsibilities for different partners........20 Figure 1: The ICI approach ............................................................20 1.5 Background to the initiative movement ....................................21 1.6 Drivers ..............................................................................................22 SECTION 2: IMPACT, EFFECTIVENESS AND PROFIT FROM INITIATIVE PRODUCTS AND SERVICES ....................23 2.1 Evaluating and selecting an initiative that is right for your company and judging the merits of alternative initiatives ....23 2.2 Formation and design ....................................................................23 2.3 Scale ................................................................................................23 2.4 Effectiveness and impact ..............................................................24 GUIDE TO INDUSTRY INITIATIVES IN CSR 2.5 Resources for sustaining initiatives..............................................25 2.6 Calculating costs ............................................................................26 2.7 The opportunity ..............................................................................26 2.8 13 challenges faced by initiatives and their corporate members................................................................................28 2
  • 3. TABLE OF CONTENTS SECTION 3: FORECASTING THE FUTURE OF INITIATIVES FOR CORPORATE GOOD ................................................................33 3.1 Initiative trends among market leaders ....................................33 3.2 Industry initiatives in the future..................................................36 Box 2: The role of civil society groups within industry-based initiatives ........................................................................................36 SECTION 4: PROFILES OF LEADING AND EMERGING INITIATIVES ..................................................................38 4.1 Agriculture ......................................................................................38 4.1.1 Better Cotton Initiative ..........................................................39 Box 3: Focusing on root causes ....................................................40 4.1.2 Better Sugarcane Initiative ....................................................42 4.1.3 Common Code for the Coffee Community Association ......44 4.1.4 Ethical Tea Partnership ..........................................................47 Box 4: Adapting monitoring ..........................................................48 4.1.5 Forest Stewardship Council ..................................................50 4.1.6 International Cocoa Initiative ................................................52 4.1.7 Round Table on Responsible Soy ........................................54 4.1.8 Roundtable on Sustainable Palm Oil ....................................56 4.1.9 UTZ CERTIFIED Good Inside ................................................58 Case study – Sara Lee ..........................................................................62 Company overview ........................................................................62 Sara Lee’s CSR initiatives ..............................................................62 Benefits of the 4C Association ......................................................63 UTZ CERTIFIED Good Inside ........................................................63 GUIDE TO INDUSTRY INITIATIVES IN CSR Figure 2: Growth curve of an initiative ..........................................64 Ethical Tea Partnership ..................................................................64 Resources and staffing....................................................................64 Communicating to stakeholders ..................................................65 4.2 Mining and natural resources ......................................................65 4.2.1 Marine Stewardship Council ................................................66 4.2.2 Initiative for Responsible Mining Assurance ........................68 4.2.3 International Council on Mining and Metals ........................69 4.2.4 Extractive Industries Transparency Initiative ........................71 4.2.5 Voluntary Principles on Security and Human Rights ..........73 3
  • 4. TABLE OF CONTENTS Box 5: Steps towards adopting the VPs ........................................75 Case study – Anglo American..............................................................76 Company overview ........................................................................76 The Anglo American brand ..........................................................76 Anglo American’s CSR initiatives ..................................................76 Anglo American’s involvement in the ICMM ................................76 Anglo American’s involvement in the EITI ....................................77 Anglo American’s involvement in the VPs ....................................77 Resources and staffing for initiative management........................77 Initiative challenges for Anglo American ......................................78 4.3 Manufacturing ................................................................................78 4.3.1 Automotive Industry Action Group ......................................79 4.3.2 Responsible Jewellery Council..............................................81 4.3.3 Electronics Industry Citizenship Coalition ............................84 4.3.4 Fair Labor Association ..........................................................86 4.3.5 International Council of Toy Industries CARE Process ........88 4.3.6 World Federation of the Sporting Goods Industry ..............90 4.3.7 Worldwide Responsible Accredited Production ..................91 Case study – Gap Inc. ..........................................................................93 Company overview ........................................................................93 Gap Inc.’s CSR initiatives ................................................................93 Gap Inc.’s path to joining initiatives ..............................................93 Assessing the value of initiatives....................................................94 Gap Inc.’s involvement with the SAI ..............................................94 Gap Inc.’s involvement in the ETI ..................................................95 Gap Inc.’s involvement in the BCI ..................................................96 GUIDE TO INDUSTRY INITIATIVES IN CSR Gap Inc.’s involvement with the BLIHR ..........................................96 Gap Inc.’s involvement in the Ceres network ................................97 Additional lessons from Gap Inc. on getting the most from initiatives ................................................................................97 The necessity for additional research ............................................98 Resources and staffing for initiative management........................98 Initiative challenges for Gap Inc. ..................................................98 Gap Inc.’s interpretation of the future of initiatives ......................99 4.4 Services ............................................................................................99 4.4.1 International Tourism Partnership ......................................100 4
  • 5. TABLE OF CONTENTS 4.4.2 The Equator Principles ........................................................101 4.4.3 Logistics and Transportation Corporate Citizenship Initiative ............................................................104 4.4.4 Media CSR Forum ................................................................105 Case study – ABN Amro ....................................................................107 Company overview ......................................................................107 ABN Amro’s CSR initiatives ..........................................................107 ABN Amro adopts the EPs ..........................................................107 ABN Amro’s ESE ethical screening strategy ................................108 Figure 3: The policy development process ................................108 Training and staffing for initiative management ........................109 Internal ABN Amro strategy ........................................................109 Initiative challenges for ABN Amro..............................................110 ABN Amro’s advantages in implementing the EPs ....................110 Figure 4: Initiatives can occur within a continuum ......................110 4.5 Retail ..............................................................................................110 4.5.1 Business Social Compliance Initiative ................................111 4.5.2 Global Social Compliance Programme ..............................112 4.6 Cross-industry................................................................................114 4.6.1 Ethical Trading Initiative ......................................................114 4.6.2 Global Reporting Initiative ..................................................116 4.6.3 Social Accountability International ....................................118 4.6.4 Fairtrade ..............................................................................121 Case study – Chiquita ........................................................................124 Company overview ......................................................................124 Chiquita’s CSR initiatives ..............................................................124 GUIDE TO INDUSTRY INITIATIVES IN CSR Chiquita’s involvement in SA8000 ................................................124 Chiquita’s involvement in the ETI ................................................125 CSR training ..................................................................................125 Resources and staffing for initiatives ..........................................125 Initiative benefits for Chiquita......................................................126 Initiative challenges for Chiquita ................................................126 Evolution of Chiquita’s CSR initiatives ........................................126 5
  • 6. TABLE OF CONTENTS SECTION 5: CRITICAL ANALYSIS OF INITIATIVES ............127 Footnotes..................................................................................................129 Sources ......................................................................................................131 APPENDICES: KEY MEMBERS IN EACH INITIATIVE ........133 Appendix A: Agricultural initiative members ........................................133 Appendix B: Natural resources and mining initiative members ............138 Appendix C: Manufactured products initiative members ......................140 Appendix D: Retail initiative members ..................................................143 Appendix E: Service industry initiative members ..................................144 Appendix F: Cross-industry initiative members......................................146 GUIDE TO INDUSTRY INITIATIVES IN CSR 6
  • 7. About this report and about us ABOUT THE REPORT Corporate social responsibility (CSR) has produced a new breed of organisations. Industry-based CSR initiatives are growing rapidly, in number and in membership. These initiatives emerged from the collaboration between various stakeholders interested in CSR for a given sector. These initiatives are usually managed by an organisation with a network structure that serves its member companies, while relying on their involvement. The research presented here is based on an analysis of 30 initiatives, lessons from 19 multinational corporations, as well as detailed studies on five multinational corporations. This report is for you if you want to know: • How will my company benefit from a joining an initiative? • Are initiatives considered to be good CSR? • How do I distinguish between a well-run initiative and a poorly-run initiative? • What should I consider when selecting which initiative to join? • Which initiative does my competition support? What challenges have they faced, and what benefits have they received? ABOUT US Ethical Corporation is a practical CSR think tank. GUIDE TO INDUSTRY INITIATIVES IN CSR Ethical Corporation produces robust and accessible business intelligence reports for business executives. Reports are based on in-depth research with leading multinational companies. This research also supports Ethical Corporation training workshops and commentary services. Ethical Corporation's research focuses on cutting edge ethical business management issues. 7
  • 8. Acknowledgements Ethical Corporation is grateful to Deborah Leipziger for leading this research. Deborah is a consultant, author and expert in the field of corporate social responsibility. Likewise, we are grateful to Jennifer Bauser for her research assistance. Corporate executives and other representatives from the following companies have collaborated with our researchers, sharing their lessons and insights on implementing initiatives: ABN Amro, Anglo American, Bacardi, Chiquita, Ford, Gap Inc., H&M, HP, IKEA, Sara Lee, Shell, Starbucks, TNT, Vancity, Volvo and Wal-Mart. Ethical Corporation appreciates the information shared by all 31 initiatives discussed in this report. Substantial contributions were provided by: the Better Sugarcane Initiative, the Voluntary Principles on Security and Human Rights, the 4C Association, the Electronics Industry Citizenship Coalition and the International Cocoa Initiative. The research has also been supported by representatives from various civil society organisations including: CAFOD (Catholic Agency for International Development), Oxfam America, Business for Social Responsibility, and academics from the Kennedy School of Government at Harvard Univer- sity, and Warwick Business School. GUIDE TO INDUSTRY INITIATIVES IN CSR 8
  • 9. Executive summary The rise of industry-based initiatives in CSR is one of the major transfor- mations in the landscape of corporate social responsibility. Over the past three years, initiatives have grown in number and their membership has continued to expand, as has their reach. Momentum is growing in developing countries around sustainability issues, and industry-based initiatives provide an architecture that allows for consultation between developed and developing countries and between the private and public sectors. Even within sectors, many of these coalitions allow for consultation between producers, buyers and retailers. Initiative organisations are intermediaries, bringing players to a table that is growing to address myriad issues, from environmental, to social, financial, ethical and anti-trust matters. Initiatives offer the possibility to create blueprints for change, allocating responsibilities among key actors, including governments, civil society and the private sector. Initiatives provide an interesting view into the field of CSR writ large; they are microcosms of CSR, where new trends and ideas are incubated and take root. Initiatives can be useful in establishing collective to-do lists for global society and identifying comparative advantages of individual companies in the realm of corporate citizenship. Initiatives can define roles for individual companies and distribute CSR activities by working in partner- ship. For an industry-based initiative to be successful, it must define roles for each partner, so they work with one another. GUIDE TO INDUSTRY INITIATIVES IN CSR 9
  • 10. EXECUTIVE SUMMARY Companies form and join industry initiatives for several reasons. A few of the reasons identified in the report are: 1. Organisations that manage industry initiatives provide a forum for dialogue on difficult and sensitive topics. 2. Economies of scale in CSR: industry-based initiatives develop and share common tools that are time-consuming to create. 3. Stakeholder engagement is easier and more time-effective in groups. 4. Initiatives can provide access to public funding for structural changes within the industry, within supply chains or regions. 5. CSR organisations serve as portals to disseminate information on CSR issues that are critical to a specific industry in a coordinated manner. 6. Initiatives develop common systems for monitoring, verification, certification and reporting. 7. Initiatives build consumer confidence and manage reputation risk better than a single company can on its own. Some initiatives are simply a code or set of principles that serve as a rough guide for corporate policy and overall business strategy. Others include a network of organisations that work in partnership; still others have evolved certification systems. While initiatives have many common characteristics and constraints, they also vary dramatically from each other. It is important to distinguish between initiatives that are developed through a multistakeholder consensus and those that are not. Whether or not they are multistake- GUIDE TO INDUSTRY INITIATIVES IN CSR holder in design affects expectations and the degree of legitimacy with which they are regarded. Initiatives that are not multistakeholder are able to move more quickly than those that adopt multistakeholder gover- nance systems. 10
  • 11. EXECUTIVE SUMMARY The organisational structures of initiatives share many common elements. For example, they usually: » include a wide range of corporate members; » adopt mechanisms for including perspectives from civil society; » strive to develop a coherent approach to promote corporate responsibility; » include a work plan; and » create tools, including some or all of the following: • codes of conduct; • protocols for monitoring and/or auditing; • indicators; • verification and/or certification; and • reporting mechanisms. GUIDE TO INDUSTRY INITIATIVES IN CSR 11
  • 12. List of acronyms 4C ASSOCIATION Common Code for the Coffee Community Association AIAG Automotive Industry Action Group BCI Better Cotton Initiative BLIHR BLIHR: Business Leaders Initiative on Human Rights BSCI Business Social Compliance Initiative BSI Better Sugarcane Initiative CARE International Council of Toy Industries CARE Process CERES Coalition for Environmentally Responsible Economies CSR corporate social responsibility ECF European Coffee Federation EICC Electronics Industry Citizenship Coalition EITI Extractive Industries Transparency Initiative EPS Equator Principles ETI Ethical Trading Initiative ETP Ethical Tea Partnership FLA Fair Labor Association FLO Fairtrade Labelling Organizations International FSC Forest Stewardship Council GRI Global Reporting Initiative GSCP Global Social Compliance Programme ICI International Cocoa Initiative ICMM International Council on Mining and Metals IFC International Finance Corporation ILO International Labour Organisation IRMA Initiative for Responsible Mining Assurance ITP International Tourism Partnership LTCCI Logistics and Transportation Corporate Citizenship Initiative GUIDE TO INDUSTRY INITIATIVES IN CSR MSC Marine Stewardship Council RJC Responsible Jewellery Council RSPO Roundtable on Sustainable Palm Oil RTRS Round Table on Responsible Soy SAI Social Accountability International SA8000 Social Accountability 8000 UNEP United Nations Environment Programme UTZ UTZ CERTIFIED Good Inside VPS Voluntary Principles on Security and Human Rights WRAP Worldwide Responsible Accredited Production WFSGIMCC World Federation of the Sporting Goods Industry Model Code of Conduct WWF World Wide Fund for Nature (formerly the World Wildlife Fund) 12
  • 13. Definition of symbols The following symbols are used throughout the report to help define the characteristics of each initiative. RE DITA LI N E S Accreditation agency DE Guidelines TI AC C GUI ON AG A complimentary organisation The organisation has developed a accredits certification and/or training reference for its members and other EN Y C bodies. companies on how to conduct a process such as reporting. NG M ENDE ITI Auditing methodology EP Independent monitoring AU D NT IND E TH O D The organisation has developed a The initiative conducts or recommends MO methodology or technique for auditing others to conduct evaluations of opera- G OL NI OGY a facility or process. TORIN tions or processes by an independent third-party. OF C O E Code of conduct or practice ATOR Indicators IC ND C OD S IND The initiative has developed a set of The initiative has developed U CT O rules and guidelines to describe how a indicators, or measures that indicate E IC T RP RA C company, or its employees or suppliers performance or change. should behave. EHENS PR Comprehensive range of issues B E RS H Membership M S CO M IV IP The organisation is working to address The initiative invites participants to ME E RA N a wide range of issues, rather than one join the initiative as members, usually UE G EO F I SS or two specific issues. for a fee. L ST Global standard CO M BA T I- Multi-commodity A L GLO M The organisation has developed a MU This is an initiative that addresses N DAR D ODITY standard which is followed by a very several different commodities rather wide range of companies and industries than just one. across many countries. ERNME GUIDE TO INDUSTRY INITIATIVES IN CSR TAKE Government involvement TIS Multistakeholder GOV NT L H O DE MU The initiative counts on government This is an alliance that includes I NV L participation. NT O balanced representation between LVEME R several categories: business, NGOs and civil society, labour, and mediating insti- tutions (such as government, academia, and the accounting world). 13
  • 14. DEFINITION OF SYMBOLS ERS H EGIC TN Partnerships AT Strategic philanthropy PAR IPS PH STR An initiative that promotes joint Includes philanthropic contributions ILAN projects between different stakehold- by an initiative that promote a TH ers, such as NGO-corporate partner- R OP Y specific long-term outcome. ships or government partnerships. CIPLES Principles A D P RT Third party assurance PRIN THIR Y A set of guidelines or policies to be The initiative features a mechanism A SS U followed by all parts of the company RA for attaining an independent and/or its suppliers. NCE evaluation that certain procedures are being followed to ensure social and/or environmental performance. CT L A DU Product label D P RT Third party certification THIR PR O AB An initiative that has developed Y Third party written certification CERTI EL a label or stamp to be placed on the ! that a product or process meets N FI goods produced to indicate that CATIO requirements. policies and procedures are in place to address social and/or environmen- tal issues. R EP S U PP LIC Public reporting AL Total supply chain TOT OR P UB LY The initiative regularly reports The initiative addresses the TI N G CHA to the public about the social and value chain in its entirety, IN environmental performance of its rather than just direct members. suppliers. TI N G Reporting ABILI Traceability OR CE TY TR A R EP The initiative had developed advice The initiative is developing for members on how and what to procedures and mechanisms to trace report. products through the supply chain to ensure that products and their components can be traced through the supply chain. GUIDE TO INDUSTRY INITIATIVES IN CSR D DA TI O N RE Shared database DA Validation or verification S HA TA N VALI O R VE R The initiative maintains a joint The initiative has systems in place BASE database of the suppliers of for corroborating information its members so as to facilitate IFI CATIO about social and/or environmental information sharing and conditions in a factory, company or collaborative efforts. country. 14
  • 15. Ethical Corporation report centre Recent publications cover topics such as anti-corruption, voluntary initiatives in CSR, emerging market issues, and managing carbon emissions. You can also visit Ethical Corporation’s website and download some free research papers: www.ethicalcorp.com/reports Anti-corruption, ethics and compliance in Russia Practical information to develop local compliance strategies and overcome corruption challenges. For more information, current prices or online ordering, visit: www.ethicalcorp.com/russia Anti-corruption, ethics and compliance in China and Counter corruption in your supply chain in China Learn more about the issues critical to your operational security, ethical management and success in China. For more information, current prices or online ordering, visit: www.ethicalcorp.com/china Best practices for designing effective ethics programmes Find out which ethics and compliance training is most effective and productive. For more information, current prices or online ordering, visit: www.ethicalcorp.com/ectraining How to manage carbon reduction, and make it pay A hands-on management briefing on real-life ways big UK companies cut carbon, and their costs. Order online or obtain more information at: www.ethicalcorp.com/crc Corporate greenhouse gas emissions reporting Learn how your competitors are calculating and verifying their GHG emissions – and discover which metrics and verification standards will work for you. For more information, current prices or online ordering, visit: www.ethicalcorp.com/greenhousegas Guide to industry initiatives in CSR Get the inside track from some of the world’s key industry-based initiatives. For more information, current prices or online ordering, visit: www.ethicalcorp.com/initiatives Job-specific guides for embedding CSR throughout your company Winning methods for integrating sustainability into operational departments including communications, finance and facilities. For more information, current prices or online ordering, visit: www.ethicalcorp.com/csr Essential strategies for effective emissions trading and offsetting With practical information from the leading companies, this report is everything you need to develop your company’s emissions trading and offsetting strategy. Including case studies from 15 companies across industry. For more information, current prices or online ordering, visit: www.ethicalcorp.com/emissionstrading The must-have guide to water ethics, footprinting, programmes and supply security Learn how water risks factor into your operations, and what you should do to ethically manage water use. For more information, current prices or online ordering, visit: www.ethicalcorp.com/water Order options: Secure online form: www.ethicalcorp.com/reports Ethical Corporation report order form Telephone: Client Services at +44 20 7375 7500 Email: research@ethicalcorp.com Mail this form to: 7–9 Fashion Street, Your information London, UK E1 6PX First name: ................................................................................ Last name:............................................................................ Company: ................................................................................................................................................................................ Telephone:................................................................................................................................................................................ 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  • 16. ETHICAL CORPORATION In-depth responsible business research, training and advisory Ethical Corporation produces robust and accessible business intelligence reports for business executives. Reports focus on cutting edge ethical business management issues are based on in-depth research with leading multinational companies. © Ethical Corporation 2009 All rights reserved
  • 17. ETHICAL CORPORATION In-depth responsible business research, training and advisory Ethical Corporation produces robust and accessible business intelligence reports for business executives. Reports focus on cutting edge ethical business management issues are based on in-depth research with leading multinational companies. © Ethical Corporation 2009 All rights reserved
  • 18. N RE O O W PO N RT AL S E GUIDE TO INDUSTRY INITIATIVES IN CORPORATE SOCIAL RESPONSIBILITY Your guide to selecting the right multistakeholder initiative for your company EXECUTIVE SUMMARY The full report is available at www.ethicalcorp.com/initiatives © Ethical Corporation 2009 Call to order on +44 (0) 20 7375 7500

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