Ethical corporation lccge impact debate muckosy 14 07 10

Social & economic impact of big business on local communities WELCOME An Ethical Corporation and LCCGE roundtable debate, 14 July 2010 Pam Muckosy, pam.muckosy@ethicalcorp.com

From measurement to management  A marked shift in how companies are approaching this topic  How and why do companies measure socio-economic impacts?  A need to look beyond measures and KPIs:  Companies seek to measure what they do in order to report externally  But, increasingly the aim is to understand the external system in which the company works for better management of the business More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

The study, www.ethicalcorp.com/impact Looks at understanding the true impact of business.  In-depth interviews with >30 corporate sustainability, community programme and ethical sourcing managers  Survey of 116 sustainability professionals worldwide  Review of over 60 corporate sustainability reports  Literature review of initial impact research  Analysis of existing tools and processes available to help you measure impact  Case studies on companies that have begun to test impact measurement methods Conducted by Peter Davis, Isabelle Fredborg & Pam Muckosy More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

What drives a company’s approach? How a company approaches this topic is driven by a number of factors:  What is the company’s business?  Where does it operate?  What is the company trying to achieve?  Demonstrating accountability?  If so, to whom?  May be many different stakeholder groups who are reached in different ways  Seeking to understand its context  So that it can better manage its business More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Do companies measure impact? (n=116) More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Reasons companies measure impact (percentages, n=116) Communicate to stakeholders Build reputation Inform community programmes Other Secure a license to operate Encourage infrastructure development Monitor local activities that may do harm Increase supply chain effectiveness More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

What impacts companies measure (n=116) Economic livelihoods for local community Engagement, volunteering and charity Job creation Other Human rights Labour equality and rights Poverty and economic equality Local infrastructure Access to basic resources Tax contributions Gender equality More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Tying impact to performance or business strategy? (n=116) More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

4 models of socio-economic impact 1. Management of supply chain  What are the impacts of what we buy? 2. External benchmarking against globally- defined standards  GRI the best known 3. Management of ‘fence-line’ communities  What is the local impact of a company’s operation 4. Contribution to local economy  Corporate role in a host country’s development trajectory More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

#1. Supply chain management  Who?  Large retailers and branded goods companies  Why?  To respond to consumer and media pressure to ensure that supply chains do not contain labour, environmental and other abuses.  How  Questionnaires and audit processes of supplier sites and factories  Accountability to whom?  Demonstrating to customers that goods and services are abuse free  How it’s developing  Companies increasingly asking all suppliers, not just manufacturing sites, about their processes  Increasingly a genuine desire to understand value chain More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

I.e. Sedex  Exponential rise in the number of company standards  Often similar in scope but not co-ordinated in application  With the result that some factories found themselves almost always monitored to slightly different standards  Sedex seeks to help companies collaborate in their factory audits  Repository of information  Can still have company-specific questions/ issues raised  But bulk of information is shared More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

#2. External benchmarking  Who?  Many companies of all sizes  Why?  To respond to the pressures from international NGOs and others to report and  How  Audit against an externally-generated set of benchmark standards designed to allow comparability between companies.  Accountability to whom?  Primarily aimed at the global ‘CR community’  How it’s developing  More intelligent targeting of standards to be relevant to particular industries More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

I.e. GRI  GRI is “world’s most widely used sustainability reporting framework”  Seeks to make social reporting as comparable as financial reporting  Comprehensive reporting framework including:  Corporate internal processes, for example  Strategy and planning  Report parameters  Governance and engagement  Performance indicators on 6 key issue areas, including:  Environment  Human rights  Labour practices  Sector supplements developed  To tailor the broad framework more precisely to specific industries  Examples include: financial services, mining and metals, financial services and electric utilities  More being developed More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

#3. Managing fence-line communities  Who?  Predominantly extractive firms, or other industries with a significant local footprint  Why?  To understand the inter-relationship of the site and the local community and environment  To guide corporate managers in behaviours in relation to local people  How  Detailed assessment process to understand different aspects of the relationship and to establish relevant benchmark metrics  Accountability to whom?  Primarily designed to show accountability to local communities  However, also useful in demonstrating globally a responsible approach  How it’s developing  Such assessments increasingly required as part of the due diligence approach for new projects to get sign off More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

I.e. Anglo American SEAT Toolkit  “Socio-Economic Assessment Toolbox”  Designed to allow “operations to identify and manage their social and economic impacts (both positive and negative)”  Designed as a management tool for Anglo’s site operations in relation to their local communities  4 stage process:  Profile operation and local communities  Identify socio-economic impacts and share that assessment  Develop management responses to each impact  Report results to community  Reporting is relevant only as a communication tool with communities, not as a benchmarking exercise or compliance exercise. More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

#4. Contribution to local economy  Who?  Large companies with significant investments in particular countries  Why?  To understand the role that the company plays in the society and economy of the host country  To guide corporate managers in decision-making  How  Detailed analyses, conducted by development specialists  Accountability to whom?  Demonstrating to customers that goods and services are abuse free  How it’s developing  Companies More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

I.e. Unilever  Increasingly seeking to understand the part that its operations play in development  Reports commissioned from development specialists to understand impacts, e.g.:  Oxfam on operations in Indonesia  INSEAD study of operations in South Africa  Some key findings of South Africa study:  Unilever provides 0.9% of all tax revenues  For each direct Unilever employee, there are 22 further jobs created in the value chain.  Thus Unilever represents 0.8% of total employment in South Africa More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Sample strategic approach: DCED Standard, www.enterprise-development.org More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

A few existing models being reviewed WBCSD Value Accounting LBG Poverty Footprint of Business Five types of capital Good for Business Accounting for Sustainability More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Ideas raised during the debate  Address other motives such as: responding to investors, differentiation, product impact and innovation  What are the best units for measuring outcomes. $s, equality?  Include case studies on local developing country companies  Risk is a major motivator  Localisation of strategy is a must  How to work with in partnership with an NGO  Incorporate the role of stakeholder engagement  How can we assess ‘cultural integrity’?  What can companies do with their findings? Is a new business model required?  Are there any lessons or is there cross-over with environmental impact assessments? More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Social and economic impact Thank you The full report will be published in September at www.ethicalcorp.com/impact More info: visit www.ethicalcorp.com/impact or email Pam Muckosy at research@ethicalcorp.com

Ethical corporation lccge impact debate muckosy 14 07 10

by Ethical Corporation on Jul 16, 2010

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Ethical corporation lccge impact debate muckosy 14 07 10 — Presentation Transcript