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Corporate Responsibility
 Corporate Citizenship
Corporate Sustainability
Sustainability Reporting
         2009
       Rea...
Overview
• The basics and definitions
• Responsibility vs Irresponsibility
• Sustainability Trends
• Sustainability in Pra...
The Basics
Organisations today faces a three
     fold pressure to succeed:
• To be:
 –More
  innovative and
  competitive
 –More
  p...
Sustainability Reporting

                  …is an organisation’s
                   public account of its
               ...
Doing well by doing good - CSI
      Doing well by being good – CSR
Ensuring survival – Sustainable Development
Sustainability Framework
                               Corporate Responsibility
                               Managing r...
CS and the different interpretations
• Different strokes for different folks:
   – To Chinese consumers, the hallmark of a...
The Definitions
Theoretical Model




www.naturalstep.com
What drives business
              sustainability?


Changing Supply:     Changing Demand:   Changing Rules:

•Natural Res...
Sustainability’s Influence on
                 Corporate Functions
Function                 Impact
Marketing              ...
Lets Define…

                        • Sustainability
                           – Meeting the needs of the
             ...
Definitions (cont’d)
• Corporate sustainability
   – A business approach to create
     long term shareholder value
     b...
Definitions (cont’d)
• Corporate Citizenship (CC)
   – Considers the rights and responsibilities of companies within a
   ...
Definitions (cont’d)
• Corporate governance
   – Generally refers to the process by which organisations are
     directed,...
Definitions (cont’d)

• Integrated Sustainability Reporting (ISR)
   – Relates to non-financial reporting as suggested and...
Definitions (cont’d)
• In South Africa, it is expected that the Companies Act
  will be passed into law on July 1, 2009. T...
The Concept
• It is no longer just about being ethical and fair in
  our dealings, nor just about managing our social
  or...
The Drivers
The Business Case
Key Drivers
• Key driving forces include:
   – Investor and consumer demands and governmental and public
     pressure
   ...
Foundations of the business case
• An international imperative
   – The power of multinational companies
   – Universal ri...
What should business be doing
                    •   Commit to corporate action
                         – Incorporate lo...
Benefits of Sustainability
• Increased profit
• Increased access to capital – new sources (investment)
• Reduced operating...
Challenges of Sustainbility
•   Managing in an integrated manner the full lifecycle of CR strategy
    formulation, implem...
Challenges for individual
      companies
             • Discussion
             • How do we define
               sustain...
Objectives and motivations of
       sustainable companies
• Increased transparency and improved
  governance aimed at reb...
Strategic Map
 Risk Management                    Shareholder                        Social Innovation –
 – regulation and...
Responsibility and Sustainability Pathway

      Cost Saving         Resilience
       Efficiency        New Future




  ...
Responsibility and Sustainability Pathway

   Revenue Generation   New Revenue Streams




                           Inno...
Framework
• Eight core characteristics
    – Understanding society: understanding the role of each player in
      society...
Driving Forces
                   SRI
 Investor                          Government
 Demands                           Pre...
CSR and Sustainability Guides
                      Corporate Responsibility and sustainability implementation


         ...
Emerging Frameworks
TBL - CS Framework
                                           Market
                                           Impact
   ...
TBL Framework
Environmental                                       Social
Key Drivers:                                     ...
Stakeholder Framework
Employee                                                               Product
Relations            ...
Stakeholder issues
Stakeholders                     Key Issues
Shareholders                     Return on Investment
     ...
Issues Framework

                                                        Responsible Investment
                         ...
Issues Frameworks




www.labnet.co.uk & www. Parlermo.co.uk
Industry Sustainability Frameworks
                        Brand Management
                 Customer Relationship Managem...
Industry Framework
Industry             Economic                  Environmental                    Social
Financial Servic...
It’s not all about reporting…


It’s about management and
     business practices.
In the bigger scheme of things…
Sustainability and Corporate Responsibility
                      • Acts as a strategic le...
Effective CR requires companies to:
                    • Develop guidelines
                    • Build collaborative
   ...
Sustainability Trends

Reputation vs Risk vs Compliance
What about the recession?
                  •   According to a new study from Panel
                      Intelligence, 80...
Sustainability & recession
•   Responses from 65 sustainability executives of Fortune
    500 companies.
     –   Sustaina...
Green is the new black
           • Sustainability labels, virtual
             meetings and zero waste
             are t...
CS crossing the divide
     • Smart grid takes off – consumers getting serious
       and off the grid – own water, own he...
CS crossing the divide
• Green jobs hiring blitz – With more focus on energy
  efficiency and renewable energy more qualif...
CS crossing the divide
           •   Solar’s future luster - While solar
               installations have predominantly ...
What are people talking about – the
           Buzz Trend
• Global Warming/Climate
  change
• Renewable
  energy/Alternati...
The future …




• THE FUTURE….
  – CS will continue to spread across the supply chain and across
    borders. Climate cha...
Finding Solutions
• CS is no longer just about being good, managing the public image,
  or improving products: Sustainabil...
Fad or Trend?
•   A new class of consumer* –
    sustainability consumer
     – 30% of adults in the US
     – 40% of adul...
CSR Monitor 2007 – Global Study*
• Key Findings

   – Significant numbers of investors take a company’s social performance...
2009 GlobeScan Report
    • Consumers in India, Brazil and China scored the highest -- and
      those in the U.S., the lo...
Ethical Consumers
• Ethical Consumers worry about…
   – Organic meat, produce and baby food
   – Fair Trade coffee, tea, b...
But seriously how serious?*
•   Marks & Spencer – Plan A
      – Business wide 500M Pound eco-plan
           • Carbon neu...
More examples
GlaxoSmith   GlaxoSmithKline believes slashing prices and
Kleine       sharing patents will help the one in ...
What is a corporate’s responsibility?

What is typically corporate socially responsible
           behavior and what is no...
Lets Talk:

What about Tiger Brands and the
      R100 million fine?
  Sasol and the €100m fine?
Industries in the spotlight
•   Tobacco and Liquor Advertising – addiction to
    nicotine and alcohol (BAT, Distell)
•   ...
How may liters of water does it
take to make one hamburger?
    Or 1 tin of coke/beer?
Determining Sustainability
What best describes Sustainable
Development/CR/CC in your company?
  Stage 5                      The way we define busine...
Path to Corporate Responsibility
                  (Harvard Business Review)
                         5                   ...
Development of Citizenship
                Outside In/Inside Out
                               Stage 1           Stage 2 ...
Defining Sustainability
             •   Discussion – non-negotiables

                 – Senior Management
              ...
What is good citizenship?
What are corporate responsibilities?*
                   • Ethics, governance and acting
       ...
Inhibitors of Good Citizenship
• Lack of financial resources
• Lack of time to understand and implement
• Poor awareness a...
Its really very simple …. sustainable and
responsible business practices means…
• Discontinuing product offerings that are...
Is this serious stuff?
      Is anyone paying attention to this?
• Sustainability strategy and management
    – Anglo Amer...
If its any consolation…
                     It’s a journey.
              Some of us are starting out
Some of us are re-a...
Standards & Compliance
Frameworks & Guidelines
   Industry Initiatives

     Refer to Handout
Laws and compliance
                             International                               Local
Prescribed laws,       ...
Don’t let it scare you
• Select appropriate standards by asking
   – What material challenges face your company?
   – Are ...
One step at a time…
Governance                  JSE-SRI; King III, Companies Act
Report                      GRI – www.glo...
Industry Based Initiatives
•   The rise of industry based initiatives in CSR is one of the major
    transformations in th...
Global Compact

• The UNGC is a multi-stakeholder platform
  rooted in universally accepted conventions
  –   Human Rights...
UNGC – Membership
               Commitments
• Leadership commitment (board & management) – Letter
  to UN
• Willingness t...
UNGC – COP Reports
• CEO Statement of commitment
• Description of practical implementation of
  10 principles (1st year on...
Case Study – Global Sports
Case Study – Danisco
(2 indicators – 1st report)
Where do we start


What is the process
In summary…

                       Allowing external stakeholders to
                        Influence corporate strategy...
Managing CR – the process…
• Engaging Stakeholders
• Embedding citizenship in organisation
   – Structures and resources f...
Elements of integration



Stakeholder           Management
Engagement              Systems




          Reporting and
  ...
Let’s make it work!
• Engaging with stakeholders
   – By obtaining input and feedback, management
     systems can be deve...
Sustainability Process

                                                             1.
                                  ...
Sustainability Process (1)




http://www.wbcsd.org/web/images/case/Alcoa/sustainability-process.jpg
Sustainability Process (2)




www.fmcg-sustain.com.au/.../approaches/
Sustainability Process (3)
Sustainability Process (4)
                  www.melbournewater.au
Case Study: SAP
Strategic      •   Strategic Sustainability is:
                    – integral to the business model and fundamental
Susta...
What Should You Do?
•   Develop Capability:
     – Sustainability is becoming more important. Organisations need to develo...
Design and execute an implementation plan
•   Develop objectives and communicate objectives (communications)
•   Review or...
Implementation Groups
•   Define governance structures and
    management systems
     – The Board + Committees
     – Boa...
Process
• Sensitising – becoming aware of the issues
• Discovering – becoming aware through experimentalism – small
  proj...
Develop a supportive corporate culture

• Re-training may be required
• Exposure to new stakeholder
  groups may be requir...
Develop measures and standards of
                     performance
              •   Industry charters, BEE scorecards are...
• For CR and sustainability to
                           become part of the business,
Embedded   Sustainability company l...
Developing a strategy
• Benchmark locally
• Benchmark globally
• Benchmark against industry
• Benchmark against
  competit...
Effective Sustainability Management
• Be sure to get approval and buy-in from the executive
• Appoint a champion to drive ...
This is going to cost money…
                          •    Indicators of performance
                                – Re...
Stakeholder Engagement
Stakeholders
                                   Customers
                       Owners                      Media

      ...
Stakeholder
       Engagement and
          Management
• Identify all stakeholders
• Find out what are the
    imperatives...
Coca Cola
Stakeholder Engagement Methodology




          *www.cocacola.co.uk
Key Challenge
1. Failure to identify and engage with stakeholders is likely to result in sustainability
reports that are n...
Stakeholder engagement should inform
      future business strategies
                    • It assists with priority
     ...
Determining Risks, Impacts,
         Targets
         Materiality
Determine Risks
Materiality, Impact & Risk




www.kovet.hu
Materiality (1)




www.segro.com
Materiality (2)




www.merck.com
Materiality (3)




www.intel.com
Materiality (4)




www.omron.com
Risk Profiles (5)




www.gtnews.com
AIG Risk Profiling (6)




www.aig.com
Core - Basic
                            Working with indicators (1)          Specific - Basic

Marketplace               ...
Working with indicators (2)
Core                                                 Specific
Advanced                        ...
Fast Track Learning
Corporate Responsibility Mistakes
•   Lacking vision
     – It is not about “where are we now and what might we do about C...
CR Mistakes (cont’d)
•   Unsophisticated view of CR
     – Many companies do not separate the two roles of CR – protecting...
CR Mistakes (cont’d)
• Uneven approach
   – Making substantial commitment and achieving good CR performance in
     some d...
Working with actual reports
      and strategies
       Practical Session
Best Practice

Awards and Recognition
Accountability Rating
• Top 10 – 2006           • Top 10 – 2007
  –   BHP Billiton          –   BHP Billiton
  –   Anglo P...
Accountability Rating
• Assessed according to
  – Strategy, Governance, Performance Management,
    Stakeholder Involvemen...
SA – Accountability Ranking
1    BHP Billiton               78.6   26   Edgars Consolidated Stores         39.7
2    Anglo...
• High environmental impact classification
               – 2006: Anglo American PLC, Anglo
SRI Index         America Plat...
Others - SA Results
• SA Companies on the Dow Jones
  Sustainability World Index
  – African Bank Investments Ltd, Investe...
SA Sustainability Reporting Rewards
• Ernst & Young Excellence in Sustainability Reporting
   – 2006: Sasol (1st), Anglo A...
Reporting
Reporting Process
Why report?
•   In response to pressure from advocates and communities related to specific
    events or business practice...
From Annual Report to Sustainability
                      Report
•   Annual financial reports now need to include environ...
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
Corporate Responsibility and Sustainability 2009 - South Africa
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Corporate Responsibility and Sustainability 2009 - South Africa

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This presentation is aimed at CSR Managers and Sustainability Managers and deals with corporate responsibility, sustainability and sustainability reporting.

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  • Dear Graduates,

    CSR will create new carrier opportunities.
    Pl visit www.icsm.in . We are offering MBA-CSR, Phd. CSR

    Sanjeev Chaudhary
    Head Social Advisory & Marketing ICSM
    09990004033
       Reply 
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  • Excellent write up
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  • Still need to study it in detail. First impressions - GOOD.
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Transcript of "Corporate Responsibility and Sustainability 2009 - South Africa"

  1. 1. Corporate Responsibility Corporate Citizenship Corporate Sustainability Sustainability Reporting 2009 Reana Rossouw Next Generation Consultants
  2. 2. Overview • The basics and definitions • Responsibility vs Irresponsibility • Sustainability Trends • Sustainability in Practice – Case Studies • Strategy Development, implementation and integration • Reporting • Frameworks and Compliance
  3. 3. The Basics
  4. 4. Organisations today faces a three fold pressure to succeed: • To be: –More innovative and competitive –More productive and profitable –More responsible and sustainable
  5. 5. Sustainability Reporting …is an organisation’s public account of its economic, environmental and social performance in relation to its operations, products and services. • Note: Organisation includes corporate, governmental and non- governmental organisations *www.krikor.info
  6. 6. Doing well by doing good - CSI Doing well by being good – CSR Ensuring survival – Sustainable Development
  7. 7. Sustainability Framework Corporate Responsibility Managing risks and impacts across Economical, Social, Environmental dimensions Corporate Sustainability Corporate Citizenship Corporate Governance: Values, Beliefs, Principles, Compliance, Standards, Policies, Contexts, Frameworks, Principles, Definitions Guidelines
  8. 8. CS and the different interpretations • Different strokes for different folks: – To Chinese consumers, the hallmark of a socially responsible company is safe, high quality products – For Germans, it is secure employment – In Thailand, sustainable development is defined as holistic development which involves six dimensions: economic, social, environment, politics, technology and knowledge, and mental and spiritual balance. – In Bolivia, there is a particular emphasis on political dimensions (e.g. good governance and participation) and on the cultural and spiritual identity of diverse indigenous peoples – For Africans it is about proving legitimacy and credibility and ensuring poverty is alleviated – In South Africa what matters most is a company’s contribution to social needs such as healthcare and education
  9. 9. The Definitions
  10. 10. Theoretical Model www.naturalstep.com
  11. 11. What drives business sustainability? Changing Supply: Changing Demand: Changing Rules: •Natural Resources •Consumers •Policy & •Employees •Stakeholders Regulation •Capital Markets
  12. 12. Sustainability’s Influence on Corporate Functions Function Impact Marketing Changing consumer interests might lead to missed opportunities. The need to align sustainable consumption and production. Talent Management Talent pool’s growing interest in working with companies that attend to sustainability. Finance Stakeholders’ demand for increased transparency. Financial markets’ growing evaluation of companies’ sustainability efforts. Operations Eliminating energy inefficiencies in owned operations. Ensuring suppliers’ compliance with a code of conduct. Ensuring access to needed (and limited) resources, such as water and energy. Information Technology Need to minimize the energy inefficiencies in older technologies. Developing technologies to minimize the need for virgin materials used to provide value to consumers. Legal New regulations with which to comply. Strategy The very markets in which companies compete are poised for further change. In some industries, the adaptation of sustainability is paramount to corporate survival
  13. 13. Lets Define… • Sustainability – Meeting the needs of the present without compromising the ability of future generations to meet their own needs • Triple-bottom-line (TBL) – Considers, measures and refers to achieving a balance between integrated (economical) financial, social and environmental contributions and performance to society www.deloitte.uk
  14. 14. Definitions (cont’d) • Corporate sustainability – A business approach to create long term shareholder value by embracing opportunities and managing risks derived from economic, environmental and social developments • Sustainability reporting – Generic term for extra-non- financial reporting. Refers to the account an organisation gives to describe its performance on a number of sustainability dimensions such as economic, environmental, social, ethics, governance, product and market responsibility, performances and impacts.
  15. 15. Definitions (cont’d) • Corporate Citizenship (CC) – Considers the rights and responsibilities of companies within a broader societal context relating to: • Managing the enterprise – how efficiently and ethically the company governs, controls and manages its operations • Workplace practices – how it manages its employees, workplace conditions and employment practices • Third party interactions – how it engages external stakeholders in the company supply chain, marketplace, government and community • Environment – how it controls its impact on the environment • Transformation – how South African companies meet their obligations to help all citizens become meaningful economic participants • Product and market stewardship – how it markets, what it produces, how it goes about taking product to market and owning up to the promises made in marketing and product development
  16. 16. Definitions (cont’d) • Corporate governance – Generally refers to the process by which organisations are directed, controlled and held to account. It encompasses authority, accountability, stewardship, leadership, direction and the control exercised in the organisation • Corporate (Social) Responsibility (CSR) (CR) – A good corporate citizen (a responsible one) is one that has comprehensive policies and practices in place. These enable it to make decisions and conduct its operations ethically, meet legal requirements and show consideration for society, communities and the environment. • Corporate Social Investment (CSI) – Refers to a company’s contributions to society and community that are extraneous to its regular business activities.
  17. 17. Definitions (cont’d) • Integrated Sustainability Reporting (ISR) – Relates to non-financial reporting as suggested and outlined in the King Report on Corporate Governance for South Africa – namely reporting on the nature and extent of a company’s social, transformation, ethical, safety, health and environmental management practices and policies. • Most companies in South Africa use the GRI – Global Reporting Initiative as the benchmark for their reporting standards
  18. 18. Definitions (cont’d) • In South Africa, it is expected that the Companies Act will be passed into law on July 1, 2009. The Act will be effective from March 1, 2010. • The new provisions (in the Act) will be based on ‘King III’ which applies to all entities, regardless of the manner and form of incorporation and establishment. • King III recommends that sustainability reporting should – be focussed on substance over form and should transparently disclose information that is material, relevant, accessible, understandable and comparable with past performance of the company – be formalised as part of the company’s reporting processes – have independent assurance
  19. 19. The Concept • It is no longer just about being ethical and fair in our dealings, nor just about managing our social or environmental impacts, nor just about being a good neighbor in our local communities, although all of these are important • It is about turning social, economic and environmental challenges into opportunities for brand/product/process innovation, business development and competitive advantage. • CR is not only central to business strategy but is increasingly becoming a critical driver of business growth
  20. 20. The Drivers The Business Case
  21. 21. Key Drivers • Key driving forces include: – Investor and consumer demands and governmental and public pressure – Particularly important is the support from Socially Responsible Investing (SRI) Indices . – The corporate responsibility movement is now entering a mainstreaming phase aided by standardisation activities such as the GRI, the AA1000 series and the ISO2600 guide. – The field of responsible business strategy and practice is becoming one of the most dynamic and challenging subjects corporate leaders are facing today and possibly one of the most important ones for shaping the future of our world.
  22. 22. Foundations of the business case • An international imperative – The power of multinational companies – Universal rights and standards across developed and developing economies • A national imperative – Conscious effort to address past imbalances and exclusions – The socio economic benefits of a stable, more equitable society • Individual company rationale – it makes business sense – Strong brand and reputation – Employer of choice – Market Position – Trust of financial markets and increased shareholder value – New ‘green’ products/services and new markets • Both risk and opportunity management
  23. 23. What should business be doing • Commit to corporate action – Incorporate long-term measures into a definition of success, targeting profitability that is sustainable, and supported by a responsible record in managing social, environmental and employment matters • Understand the issues – Making operations environmentally and socially sustainable, making society sustainable, selling products responsibly, influencing suppliers • Use precedent and best practice – Comply with standards, codes and guidelines • Embed the right management approach – From board and executive level the authority for sustainability must be devolved throughout the organisation through all processes, systems and operations • Convert risks and opportunities into actions • Manage and measure performance www.leryco.co.uk • Communicate and report
  24. 24. Benefits of Sustainability • Increased profit • Increased access to capital – new sources (investment) • Reduced operating costs/increased operational efficiency (environmental practices) • Enhanced brand image and reputation • Increased sales and customer loyalty • Increased productivity and quality • Increased ability to attract and retain employees • Reduced regulatory oversight • Reducing risk and increased risk management • Competitive advantage • Increased market share
  25. 25. Challenges of Sustainbility • Managing in an integrated manner the full lifecycle of CR strategy formulation, implementation, evaluation and evolution incorporating stakeholder participation • Aligning responsibility strategy to corporate strategy focusing on: – Rationalising and harmonising the economic, compliance, ethical and sustainability dimensions of corporate responsibility and sustainability in the context of stakeholder requirements – Managing non-financial risk, particularly brand, reputation, local licence to operate and to performance instability as an integral part of corporate sustainability management – Integrating eco-design and other sustainability requirements into product and service offerings • Managing the sustainability performance requirements into product and service offerings • Managing the sustainability performance optimisation process to continually increase stakeholder satisfaction • Developing strategic responsibility and sustainability capabilities
  26. 26. Challenges for individual companies • Discussion • How do we define sustainability • What is our language • What matters to us most • What will drive us in future • What are our (company specific, industry specific) future risks and challenges • What is our 2020/2025 vision
  27. 27. Objectives and motivations of sustainable companies • Increased transparency and improved governance aimed at rebuilding public trust and investor confidence • Delivering wider societal value including support for health and human rights improvements and environmental protection • Contributing to regional development and global partnerships for sustainable development • Addressing in a balanced way the concerns of their key stakeholders
  28. 28. Strategic Map Risk Management Shareholder Social Innovation – – regulation and Value performance stability competitive policy – eco efficiency – fair globalisation Corporate Competitiveness Company Law Sustainable Corporate Stakeholder Corporate and compulsory Development Governance management - Sustainability regulation reputation Corporate Social Responsibility Investor Social demands SRI – Accountability - philanthropy ethics corporate Voluntary citizenship Regulation
  29. 29. Responsibility and Sustainability Pathway Cost Saving Resilience Efficiency New Future Innovation Compliance Reputation Connectivity Risk Stakeholders Management
  30. 30. Responsibility and Sustainability Pathway Revenue Generation New Revenue Streams Innovation Licence to Operate Revenue Protection Freedom to Operate
  31. 31. Framework • Eight core characteristics – Understanding society: understanding the role of each player in society – government, business, trade unions, non governmental organisations and civil society – Respecting environment: considering the cost of natural economics, placing a value on natural resources and calculating benefits – Building capacity: participating in partnerships and creating strategic networks and alliances – Questioning business as usual: challenging the way of doing things and being open to new ideas – Shareholder relations: identifying stakeholders, building relations, engaging in dialogue and balancing demands – Strategic view: taking a strategic view of the business environment – Harnessing diversity: respecting diversity and adapting to different situations – Quality control: feedback on the effectiveness of the CR process, communication and training programs should be an integral part of CR quality management
  32. 32. Driving Forces SRI Investor Government Demands Pressure Green Buying Corporate Regulation Responsibility and Sustainability Consumer Demands Public Public Pressure Confidence
  33. 33. CSR and Sustainability Guides Corporate Responsibility and sustainability implementation Brand and Reputation Management Corporate Corporate responsibility and Innovation, Production, Distribution sustainability sustainability performance strategic Social Capital Management management management Environmental Capital Management Stakeholder Engagement Corporate Responsibility and Sustainability principles, best practices – case studies – trends Reference sector specific CSR/CS Systems
  34. 34. Emerging Frameworks
  35. 35. TBL - CS Framework Market Impact Social Industry Impact Product Impact Clients SUSTAINABILITY SUSTAINBILITY Brand Impact Economic Suppliers Environmental Impact Impact Governance Compliance Transformation
  36. 36. TBL Framework Environmental Social Key Drivers: Key Drivers: Climate Change Making operations socially sustainable Escalating operating costs Making society sustainable National Energy Efficiency strategy and accord Selling products responsibly Whitepaper on renewable energy Influencing suppliers Green Building Council of SA Risks Risks: Unquantified supply and cost risks for operations Loss of business due to failure to achieve scorecard objectives Escalating building operating costs Government censure and loss of business Penalties and sanctions Operational restrictions Reputational damage Additional regulations Opportunities: Opportunities: Lower carbon footprints High BEE ratings Decreasing operating costs Business partner of choice Productivity gains Government business opportunities Reputational gains Reputation gains Focus Areas: Focus Areas: Water Consumption BEE; Employment Equity and skills development; Workplace Fuel consumption conditions and policies; Occupational health & safety Electricity Consumption Employee wellness; HIV/Aids; Enterprise Development Waste and Effluent Management Corporate Social Investment; Ethical consumerism Emissions and climate change Responsible marketing and advertising; Product pricing Carbon trading Product access; Packaging & Waste; Preferential procurement Environmental rehabilitation Product sourcing and traceability
  37. 37. Stakeholder Framework Employee Product Relations Product Stewardship Development Product Customer Access Relations Market Stewardship Supplier Product Relations Social Impact Knowledge Product Broker Management Relations Brand Stewardship Product Shareholder Distribution/ Relations Marketing Pricing Sales Practices Practices Community Relations Marketing Communication Sponsorship & Public Practices Practices Investor Relations Practices Relations
  38. 38. Stakeholder issues Stakeholders Key Issues Shareholders Return on Investment Corporate Governance Employees Salary & Benefits Health & Safety Training & Development Equal Opportunities Communications Consumers Price/Value Easy access to products/services/ distribution Quality of product Advertising policy Business Partners Jobs sustained Payment of bills Technology transfer Government and Community Tax contribution Local economic impact Transfer pricing policies Charity contributions Community investment Commercial sponsorship Environment Sustainable raw materials Emissions – water/air Energy efficiency Waste management Reduced packaging Recycling
  39. 39. Issues Framework Responsible Investment Products Responsible Drinking Services Responsible Consumption Zero Carbon footprint Zero Omissions Recycling Reduction of electricity CS Environment Stakeholders Medical Aid for the poor Medical Aid for retirees Incentives for green/healthy living Employer of Choice
  40. 40. Issues Frameworks www.labnet.co.uk & www. Parlermo.co.uk
  41. 41. Industry Sustainability Frameworks Brand Management Customer Relationship Management Social Economical Innovation Management Piracy Protection Supply Chain Management Privacy Protection Occupational Health & Safety Market Opportunities Stakeholder Engagement Price Risk Management Standards for Suppliers Access & Impact Products/Services Social Integration Business Risks & Opportunities Product Quality & Lifecycle Management Climate Change Strategy Responsible Marketing Environmental Policy & management Human Rights & Corruption Operational Environmental Footprint Capacity Building Operational Eco Efficiency Corporate Social Investment Packaging Raw Material Sourcing Biodiversity Recycling Transport & Logistics Environmental Emissions/Carbon Hazardous Substances
  42. 42. Industry Framework Industry Economic Environmental Social Financial Services •Anti Crime •Business Risks and •Code of Ethics in •Brand Management Opportunities Investments/Financing •Customer Management •Financial Products & Services •Occupational Health & Safety •Stakeholder Engagement •Business Risks/Project •Financial Inclusion Finance •Standards for suppliers •Environmental Policy •Carbon Footprint Retailers •Customer Management •Environmental Policy/Climate •Health & Safety •Health & Nutrition Strategy •Standards for Suppliers •Emerging Markets •Genetically Modified Organisms •Reduced Packaging •Raw Material Sourcing Media •Brand Management •Environmental management •Code of Ethics for Advertising •Customer Management systems •Editorial policy •Lobbying Activities •Hazardous substances •Ethical Conduct •Product Piracy •Eco-efficiency •Protection of Children •Volatile Organic Compounds •Stakeholder Engagement Telecommunications •Brand Management •Climate Strategy •Digital Inclusion •Customer Relationship •Electro Magnetic Fields •Impact of Telecommunication Management •Environmental Services •Privacy Protection Policy/Management System •Stakeholder Engagement •Service Development •Operational Eco-Efficiency •Standards for Suppliers
  43. 43. It’s not all about reporting… It’s about management and business practices.
  44. 44. In the bigger scheme of things… Sustainability and Corporate Responsibility • Acts as a strategic lever • Supports marketing messages & brand values • Supports and underwrites business objectives, business development and business growth • Delivers on shareholder value and wealth • Adds strategic and economic value to the organisation • Creates a new future
  45. 45. Effective CR requires companies to: • Develop guidelines • Build collaborative partnerships • Engage with external stakeholders • Develop indicators to measure progress • Measure results and impacts • Incorporate CR into strategic business decisions and activities • Build social capital among management
  46. 46. Sustainability Trends Reputation vs Risk vs Compliance
  47. 47. What about the recession? • According to a new study from Panel Intelligence, 80 percent of sustainability leaders surveyed (65 execs from Fortune 500 companies) in November say they intend to maintain or increase spending in areas related to sustainability next year. In fact, they reported that sustainability and clean technology spending, as a percentage of corporate revenues, is expected to increase 73 percent through 2010. • Another recent study by A.T. Kearney reveals that, as a result of “ecoflation” (based on future analysis of increases in commodity prices, environmental and governmental policy and climate situations), packaged goods companies may expect a reduction in earnings of 19 to 47 percent in the next decade if they do not implement adequate sustainability measures. That’s nothing short of startling. Thankfully, unlike much of the rest of the business world of late, optimism and sound business sense do not seem to be in short supply among corporate responsibility leaders of some of the world’s leading companies. www.coneinc.com
  48. 48. Sustainability & recession • Responses from 65 sustainability executives of Fortune 500 companies. – Sustainability and clean technology spending - as a percentage of corporate revenues - is expected to increase 73 percent through 2010. – Eighty-two percent of respondents rated energy efficiency as the most important area of current focus and investment. – Corporate spending on sustainable waste management initiatives is expected to grow by 20 percent in 2009, the highest percentage increase of any subcategory. – Cost savings, revenue generation and brand strength are the most important drivers of environmental and clean technology initiatives. – Nearly 55 percent of respondents observe no financial criteria (i.e. ROI, payback period) when evaluating sustainability projects for their respective organizations. – A majority of respondents believe capital remains available for sustainability projects. • Business practices are an additional purchasing influence, as today's savvy consumers are now asking "Is this a good company?" and "What does it stand for?" • The environment and economic development are among the top four causes consumers want companies to address, along with health and education • Consumers may become activists if companies engage in negative business practices; 85 percent would consider switching to another company's products/services • Relevant and compelling communication are key to breaking through www.mckinsey.com
  49. 49. Green is the new black • Sustainability labels, virtual meetings and zero waste are the order of the day • Bottomline - Six Rs – rethink, refuse, reduce, reuse, repair and recycle • Closer tie between Green Marketing and Overall Brand Image • Environmental and social responsibility initiatives will be tied into overall brand communications.
  50. 50. CS crossing the divide • Smart grid takes off – consumers getting serious and off the grid – own water, own heating, own energy, own recycling • Year of the carbon market – While the U.S. hasn’t adopted any federal carbon regulations, 850 U.S. cities representing all 50 states have adopted the standards laid out by the Kyoto Protocol. • Green building sets the code – More and more cities are adjusting commercial building code to lessen the environmental impact of the building. • Banks for the new economy – Motivated in part by the failings of large financial institutions in 2008, banks, particularly smaller firms, will focus on creating long term personal relationships and will invest in things that matter to their members. And right now, members want to bank with sustainable institutions; firms that are showing that they care about their environmental impact.
  51. 51. CS crossing the divide • Green jobs hiring blitz – With more focus on energy efficiency and renewable energy more qualified individuals will be needed to fill empty slots. One study estimated that number to be 4.2 million over the next 30 years. Two sectors expected to lead this job creation are manufacturing and utilities. • Tapping into water conservation – Of the earth’s natural resources, water is one of the most undervalued relative to its diminishing availability. The often easy, but previously overlooked, water efficiency measures are gaining recognition for their ability to save the firm money with little extra cost. • Get on the bus – According to the American Public Transportation Association (APTA), public transit use saw a 50-year high in 2007. Another study found 76% of individuals surveyed support public funding for the improvement and expansion of transit and 80% consider increased investment in public transit as an increase in their quality of life. Millions of government funded dollars are set to expire in 2009, if not used or specific projects began.
  52. 52. CS crossing the divide • Solar’s future luster - While solar installations have predominantly been photovoltaic (PV) systems for home and businesses, utility scale solar farms and concentrated solar thermal plants are set to surge. This growth will be accelerated by an increase in venture capital investment and an extension on the life of federal tax credits. • 'Go green’ goes down – Businesses will no longer be able to say they have gone green and have little to show for it. Consumers will want to see the long term sustainable efforts businesses are making. Being green as become more common, which means firms will need to be authentic and internally committed to being sustainable. • Biomimicry – a new language, a new future, going back to nature for future sustainable solutions
  53. 53. What are people talking about – the Buzz Trend • Global Warming/Climate change • Renewable energy/Alternative fuels • Resource conservation • Carbon Emissions • Pollution • Packaging/Plastic • Transportation • Toxins • Organics www.greenconsumer.com
  54. 54. The future … • THE FUTURE…. – CS will continue to spread across the supply chain and across borders. Climate change, urbanisation, and poverty are global challenges that require global solutions. With their capital, power, and innovative potential, firms have a moral responsibility to help solve these problems. As a result, CS has to consider an ever increasing range of social and environmental factors from around the globe. Finally, globalisation results in an intensified scramble for resources, capital, labour and market share. CS helps companies to raise their attractiveness as a customer, partner, employer, or supplier.
  55. 55. Finding Solutions • CS is no longer just about being good, managing the public image, or improving products: Sustainability and efficiency initiatives save costs and increase the value of the company. The FTSE4Good Index and the emergence of external CS rankings highlight how companies are increasingly assessed in terms of their sustainability and CSR activities. • Solution-oriented CSR is the key vehicle to promote sustainability. CS could be the business blueprint for the future. It will reshape business ecosystems, changing the way companies are organized and engage with their stakeholders. In a customer-driven economy, CSR will be actively managed, an integral part of company strategy, and a hard factor for company success. It will impact the nature of competition, foster the development of sustainability related innovations, and facilitate the emergence of new, more successful, business models. As companies are forced to become more socially and environmentally responsible CSR will move into boardrooms and tighten its influence on decision-making processes. For the future world of business, CS is clearly not a short-term phenomenon, but a trend-driven necessity.
  56. 56. Fad or Trend? • A new class of consumer* – sustainability consumer – 30% of adults in the US – 40% of adults in Europe – “people who value wealth, the environment, social justice, personal development and sustainable living – Make purchasing and charitable decisions based on their own morals – morals they expect the corporations they buy from to respect – Sustainability consumers are behind the international expansion of organic food sales – Sustainability investors make 50% of all investment decisions and are driving socially responsible investments * www.ethicalconsumer.com
  57. 57. CSR Monitor 2007 – Global Study* • Key Findings – Significant numbers of investors take a company’s social performance into consideration when making investment decisions – 61% – In wealthy countries, social responsibility makes a greater contribution to corporate reputation than brand image – 49% of CSR factors compared to 35% for brand image and 10% for financial management – Companies that ignore social responsibility place market share at risk – 42% will punish socially irresponsible companies – Views and behaviors of opinion leaders indicate that consumers social expectations of companies will continue grow – North American consumers represent the most socially demanding market for companies – Two distinct groups of citizens making up a third of the world are engaged in pressurising companies to assume greater social responsibility – conventional activists and social activists *Mckinsey Research
  58. 58. 2009 GlobeScan Report • Consumers in India, Brazil and China scored the highest -- and those in the U.S., the lowest -- for green behavior among the countries included the Greendex survey conducted by Globescan • Green building is on the rise, spurring new technologies that save energy and money while creating more healthful workplaces. • There is a green race taking place in the automobile industry, with every major manufacturer planning to introduce electric vehicles. • The leading consumer product makers and retailers are starting to rigorously assess the environmental impact of their products using sophisticated metrics, sending signals up the supply chain that tomorrow’s products will need to hew to higher levels of environmental responsibility. www.greenbiz.com
  59. 59. Ethical Consumers • Ethical Consumers worry about… – Organic meat, produce and baby food – Fair Trade coffee, tea, bananas, chocolate, honey – Paper/Timber certified as sustainably managed by the Forest Stewardship Council – Energy-efficient light bulbs and renewable energy – Unleaded petrol and low-sulphur diesel – Recycled paper – Landfill and the management of natural resources such as water, the environment and healthy food
  60. 60. But seriously how serious?* • Marks & Spencer – Plan A – Business wide 500M Pound eco-plan • Carbon neutral, no waste to landfill, extend sustainable sourcing, set new standards in ethical trading and help customers and employees live a healthier lifestyle • Tesco’s – “making sustainability a significant driver of consumption” 500 M Pound plan – Developing a carbon counter “carbon calorie” value of all products, introduce green loyalty card points for customers who buy organic, fairtrade and biodegradable products, increase range of energy-efficient goods • MacDonald’s health drives pays off – sales growth of 5.8% since introducing new advertising campaign introducing healthy eating and exercise • Danone, Kellogg’s, Kraft, Nestle, Tesco, PepsiCo, Morrisons have launched 4m Pound campaign to promote GDA labels (guideline daily amount) for healthier eating – committed to produce more responsible food products • Kellogg’s Special K products have become mega brands with over 500m Pounds in retail sales per year – Special K bars 286m Pounds per year – 10 000 steps per day has increased brand awareness and market share by more than 35% - “being a responsible corporate citizen is working for us” * Food Review – February 2007
  61. 61. More examples GlaxoSmith GlaxoSmithKline believes slashing prices and Kleine sharing patents will help the one in six people in the world suffering from a neglected tropical disease Walmart Ethical retailing – From Evil Empire to jolly green giant Barclays Reducing the number of unbanked and providing access to affordable credit through its Financial Inclusion programme Unilever Establishment of a sustainable agriculture initiative to secure a sustainable supply of raw materials necessary to deliver the business and its brands. Wolseley The development of an innovative new centre for the building and construction sector to showcase technology and products that are designed to address sustainability concerns.
  62. 62. What is a corporate’s responsibility? What is typically corporate socially responsible behavior and what is not?
  63. 63. Lets Talk: What about Tiger Brands and the R100 million fine? Sasol and the €100m fine?
  64. 64. Industries in the spotlight • Tobacco and Liquor Advertising – addiction to nicotine and alcohol (BAT, Distell) • Total ban of advertising to children (Youth brands) - Kellogg's • Obesity amongst world population - McDonalds • Consumer Boycotts – Gillette and L’Oreal – animal testing • Heinz – tuna fishing nets harming dolphins • Lesbian/Gay rights – Phillip Morris – US election campaigns • Caterpillar – War in Iraq • Nestle, Nescare and Nescafe – from babies to mothers • Starbucks – from coffee to drugs • Nike and Gap – child labour • Coke – anti globalisation – more precious than water • Sarah Lee – food porn • Enron, Worldcom, Parmalat – internal corruption • Cape plc – exploited mineworkers in unhealthy asbestos mines • De Beers – Blood diamonds in Africa • Saambou, Masterbond. Fidentia and Leisurenet – defrauding investors • Banks – excessive credit, exorbitant fees • Telkom - monopoly
  65. 65. How may liters of water does it take to make one hamburger? Or 1 tin of coke/beer?
  66. 66. Determining Sustainability
  67. 67. What best describes Sustainable Development/CR/CC in your company? Stage 5 The way we define business: Strategic Transforming Embedded in the corporate DNA Stage 4 An integrated concept: Integrated Commitment TBL, + economic, social and environmental Factors Stage 3 Stakeholder Coherence Innovative Engagement and Management Stage 2 Functionality: Capacity Engaged Philanthropy, community relations Environmental protection Stage 1 Just the basics: Credibility Elementary Jobs, Profit, Taxes
  68. 68. Path to Corporate Responsibility (Harvard Business Review) 5 1 Defensive Stage Civil Stage Unexpected Criticism Collective actions Activists, Media, Customers Advocacy Responds – via crises communications Education strategy Practices 4 Strategic Stage 2 Realign strategy to address Compliance Stage business practices Policies, Reputation Management, Competitive Edge Risk Management King II, JSE SRI, GRI, BEE, etc. 3 Managerial Stage Standards – Past PR & Communication
  69. 69. Development of Citizenship Outside In/Inside Out Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Compliant Engaged innovative Integrated Transforming Relating to Issues Defensive Reactive Responsive Pro-Active Defining society: Management Policies Programmes Systems Outside In Stakeholder Unilateral Interactive Mutual Partnership Multi- Relationships Influence Organisational Alliances Transparency Flank Public Public Assurance Full Exposure Protection Relationships Reporting Responding Citizenship Jobs, Profits & Philanthropy, Responsible Sustainability Change the to society: Concept Taxes Environmental to or Triple Game Inside Out Protection Stakeholders Bottom Line Strategic Legal Reputation Business Value Market Intent Compliance Case Proposition Creation or Social change Leadership Lip service, Supporter, in Steward, on Champion, in Visionary, out of touch the loop top of it front of it ahead of the pack Structure Marginal: Functional Cross Organisational Mainstream: Staff Driven ownership functional alignment Business coordination Driven
  70. 70. Defining Sustainability • Discussion – non-negotiables – Senior Management commitment and understanding – Establishing sustainability objectives – Leadership on key issues – Establishing partnerships – Integration of sustainability throughout the Organisation – Sustainability management systems , measurement and reporting – Framework for stakeholder engagement – Enabling innovation – Building capacity – Effective corporate governance
  71. 71. What is good citizenship? What are corporate responsibilities?* • Ethics, governance and acting responsibly • Responsibility towards society • Serving broader stakeholder interests • Good HR Practices and employment equity • Good environmental practices • Product and market stewardship • Focus wider than the pursuit of profits • Assist government with socio- economic agenda • Ensuring long term business survival *Corporate Citizenship Handbook
  72. 72. Inhibitors of Good Citizenship • Lack of financial resources • Lack of time to understand and implement • Poor awareness and knowledge of the subject area • Lack of skills and understanding of the subject area • Poor management buy-in in the importance of responsible business practices • Employees not interested – see it as a burden • No real business benefit evident to executive management • Poor executive support
  73. 73. Its really very simple …. sustainable and responsible business practices means… • Discontinuing product offerings that are considered harmful but not illegal • Selecting suppliers based on their sustainable business practices • Choosing manufacturing and packaging materials that are the most environmentally friendly • Providing full disclosure of product content • Developing programs that support employee well being • Establishing guidelines for marketing to children • Providing increased access for disabled populations • Respecting privacy of consumer information • Developing process improvements such as eliminating the use of hazardous waste materials • Ensuring everybody can afford your product
  74. 74. Is this serious stuff? Is anyone paying attention to this? • Sustainability strategy and management – Anglo American, Anglo Platinum, Exxaro, Kumba, Liberty, Mondi, Pick & Pay, Santam • Stakeholder engagement – Engen, Sasol, Exxaro • HR management and development, skills development and training, BEE & Transformation – Old Mutual, Rand Merchant Bank, Liberty Group, Absa, Engen • Enterprise Development – Anglo Plat & American • Customer Care and Satisfaction – Nedbank & Liberty • Supply Chain Management – Metropolitan, SAB • Emissions, air pollution and carbon footprint – ArcelorMittalo, Exxaro, Mondi • CSI – Absa, Engen • Energy use, efficiency and renewables – Anglo American, Engen, Exxaro
  75. 75. If its any consolation… It’s a journey. Some of us are starting out Some of us are re-aligning and re-focusing, re-adjusting Some of us are perfecting Some of us are benchmarking already.
  76. 76. Standards & Compliance Frameworks & Guidelines Industry Initiatives Refer to Handout
  77. 77. Laws and compliance International Local Prescribed laws, •Universal Declaration of Human •SA Constitution & Bill of Rights aspirational principles Rights •Companies Act conventions and •International Labour Organisation •Basic Conditions of Employment Act standards (ILO) Standards •Labour Relations Act •ISO 9000 •Occupational Health & Safety Act •ISO 14001 •National Environmental Management Act •OHSAS 18000 •Mineral & Petroleum Resources Dev. Act •OECD Guidelines •National Water Act •Ecocert •Directors Fiduciary Duties •Fairtrade and Ethical Trading Initiative •Common law & judicial precedent •Kyoto Protocol •NOSA grading •Equator Principles •National Small Business Act •AA1000 •Environmental Management Act Guidelines •Global Reporting Initiative •King II •AA 1000 Series •JSE Listing Requirements •SA8000 Standard •JSE SRI Index •UN Global Compact •New Partnership for Africa’s •Sigma Guidelines Development (NEPAD) •Dow Jones Sustainability Index •FTSE4Good Index Transformation Initiatives •“Region-specific” Initiatives •Broad Based BEE Act •Employment Equity Act •Skills Development Act •Industry Charters •Preferential Procurement Act
  78. 78. Don’t let it scare you • Select appropriate standards by asking – What material challenges face your company? – Are there any codes or standards that you cannot avoid? – What are the expectations of the marketplace and your shareholders in relation to the management of non-financial issues? – Categorise the standards…which standards relate to the different stages of business management i.e. planning, implementation, accounting and reporting – or categorise according to functional business unit i.e. HR, marketing etc? – Which business strategies and management practices, add value and economic growth and contribute to social cohesion? • In choosing a standard, companies may need to take in more than one context, i.e. the industry, geography, political context, regulatory environment • The chosen standards should further business goals and strategy and improve business efficiency
  79. 79. One step at a time… Governance JSE-SRI; King III, Companies Act Report GRI – www.globalreporting.org Assurance AA1000 Assurance Standard AA1000 Stakeholder Engagement Standard Issues Management Tool www.accountability.org.uk Carbon Disclosure Project www.cdproject.net Industry Standards Equator Principles (financial) Ethical Trading (retail) Forest Stewardship (paper) IT DEPENDS ON WHO YOU ARE IT DEPENDS ON WHAT YOU (Industry) WANT TO DO/ACHIEVE
  80. 80. Industry Based Initiatives • The rise of industry based initiatives in CSR is one of the major transformations in the landscape of CSR • Momentum is growing in developing countries around sustainability issues, and industry initiatives provide an architecture that allows for consultation between – Developed and developing countries – Private and public sectors – Producers, buyers and retailers • Industry based initiatives can be useful in – Establishing collective to-do lists – Identifying comparative advantages of individual companies – Defining roles for individual companies – Distributing CSR activities by working in partnership – Stakeholder engagement is easier – Providing common systems for monitoring, verification, certification and reporting – Building consumer confidence and managing reputation risk better than a single company can on its own – Providing economies of scale and access to public funding for structural changes within an industry, within supply chains or regions – Serving as portals for dissemination of information in a coordinated manner
  81. 81. Global Compact • The UNGC is a multi-stakeholder platform rooted in universally accepted conventions – Human Rights – Labour Standards – Environmental Principles – Anti Corruption Principles • More than 6000 participants in 120 Countries • SA – Sasol, Nedbank, Eskom, etc. 40 signatories • SA – Part of GRI and Sustainability Reporting process
  82. 82. UNGC – Membership Commitments • Leadership commitment (board & management) – Letter to UN • Willingness to engage in continuous performance improvement (set strategic & operational goals, measuring results, communication internally and externally) • Openness to dialogue and learning around critical issues (participate in events local and global, engage in stakeholder engagement and dialogue) • Commitment to transparency, accountability and public disclosure (annual COP – Communication on Progress) – COP – Report against at least 2 indicators • Labour, environment, human rights, anti corruption
  83. 83. UNGC – COP Reports • CEO Statement of commitment • Description of practical implementation of 10 principles (1st year only 2 indicators) • Definition of performance indicators & measurement of outcomes (GRI/ETHOS) • Post on GC website and own plus communication to stakeholders • Verification – external consultants, stakeholder feedback, peer review
  84. 84. Case Study – Global Sports
  85. 85. Case Study – Danisco (2 indicators – 1st report)
  86. 86. Where do we start What is the process
  87. 87. In summary… Allowing external stakeholders to Influence corporate strategy to ensure the future sustainability of the company and all its stakeholders. Its about owning up to your responsibilities Changing and adapting business strategy and operations to support Its about the learning in the process the new responsibilities of becoming more responsible It is a new awareness and consciousness
  88. 88. Managing CR – the process… • Engaging Stakeholders • Embedding citizenship in organisation – Structures and resources for managing corporate citizenship – CEO involvement – Management commitment • Communicating citizenship – Reporting – Referencing codes and standards – Verifying reports
  89. 89. Elements of integration Stakeholder Management Engagement Systems Reporting and Verification
  90. 90. Let’s make it work! • Engaging with stakeholders – By obtaining input and feedback, management systems can be developed and changed • Embed management systems and actions – Developing a framework to translate policy into management systems and actions, and to entrench responsible and considerate behavior across all management structures • Reporting should follow performance – Reporting becomes a logical extension of responsible citizenship practices, using it as a tool to support the process, focusing on issues that are material, setting targets derived from action plans and tracking performance
  91. 91. Sustainability Process 1. Identify Stakeholders 2. 10. Initial Identification Assess, Redefine and re-map Of material issues 3. 9. Determine and define Measure, monitor Engagement, objective and And assess performance scope Stakeholder Engagement 8. 4. Operationalise Establish engagement And internalise learnings Plan & period schedule 7. 5. Understand material Determine and define Aspects, identify opportunities Ways of engaging that work And risk 6. Build and strengthen capacity
  92. 92. Sustainability Process (1) http://www.wbcsd.org/web/images/case/Alcoa/sustainability-process.jpg
  93. 93. Sustainability Process (2) www.fmcg-sustain.com.au/.../approaches/
  94. 94. Sustainability Process (3)
  95. 95. Sustainability Process (4) www.melbournewater.au
  96. 96. Case Study: SAP
  97. 97. Strategic • Strategic Sustainability is: – integral to the business model and fundamental Sustainability to the business – a source of differentiation, builds organisational reputation with key stakeholders and helps branding – gives a leading edge through innovation, patents, licences, low cost, speed to market and first mover advantage – hard to copy – builds margin and returns via increased prices, lower costs, lower assets; and importantly – it is likely to be specific to the company, in the organisation’s upstream business processes and is often externally focused • Tactical Sustainability, on the other hand, is: – an ‘add on’ and does not impact core business – every company can do it. It is not a source of differentiation; it offers no real leading edge (and in the case of carbon will become purely a compliance issue), and is easy to copy by competitors. It does not build margin because all firms use it and customers can compare and bargain. Tactical Sustainability is likely to be generic to the industry, in the organisation’s downstream processes and often internally focused.
  98. 98. What Should You Do? • Develop Capability: – Sustainability is becoming more important. Organisations need to develop the capability to scan the external environment for changes in legislation, pressure from key customers, consumers and competitors, cost increases in key inputs, technology opportunities, etc. • Bottom Line Focus: – During this economic crisis, economic performance is even more important. Set sustainability strategies with higher expectations of economic benefits and focus on those sustainability initiatives that attract customers and consumers, and address costs, without being capital intensive. • Link to Business Strategy: – Consider how your approach to sustainability aligns with your overarching business strategy and differentiates your offer and market position from your competitors. The more strategic your approach, the greater the benefits will be. • Set Targets: – Research / develop targets, measures and controls and report regularly. • Resource Appropriately: – If you have a sustainability strategy, allocate good people, assign clear responsibilities, clarify priorities, coordinate/simplify the multiple initiatives , and share/replicate successes. • Build Capacity: – If you don’t have a sustainability strategy, educate managers and seek out best practice (including results), pilot various approaches and demonstrate results, audit key areas to identify improvement opportunities, prepare a strategy to prioritise and coordinate the overall approach.
  99. 99. Design and execute an implementation plan • Develop objectives and communicate objectives (communications) • Review organisational structure to provide for new processes and systems (human resources) • Create committees for specific development areas, and ensure it is part of job descriptions. Reward systems should also be developed. (management) • Business planning must be modified to reflect new priorities • Management information systems must be enhanced to reflect new information requirements (information technology) • Marketing activities require enhanced market research efforts, which influence the way products are designed, produced, packaged, marketed and promoted (marketing & sales) • Production processes and operating procedures must be assessed against regulations, industry practices or new standards (production) • Regulatory requirements must be identified (corporate affairs) • Managers responsible for procurement must reassess (buyers) their choice of suppliers, to ensure sustainable and responsible objectives are being met right throughout the supply chain • Financial planning should consider capital requirements for process changes and the effect of new mechanisms (finance) It involves the whole organisation!
  100. 100. Implementation Groups • Define governance structures and management systems – The Board + Committees – Board structure, accountability, remuneration – Board composition • Stakeholder management – Identify stakeholders – Engaging stakeholders – Identifying stakeholder requirements – Responding to stakeholders concerns • Reputation Management – Identify and assess issues influencing reputation – Conduct Corporate Reputation Audit – Evaluate shareholder and stakeholder activism issues • Risk Management – Identifying, evaluation, managing and monitoring material risks pertaining to sustainability – Implementing governance and risk management plan • Reporting on material risks and progress on measures www.volkswagen.com
  101. 101. Process • Sensitising – becoming aware of the issues • Discovering – becoming aware through experimentalism – small projects and concrete projects • Embedding – linking structure and strategy with systems • Routinising – linking CR to the company’s core competencies
  102. 102. Develop a supportive corporate culture • Re-training may be required • Exposure to new stakeholder groups may be required • The importance of change and the impact of change needs to be explained to all levels within the organisation • The lead must come from senior executives and the board
  103. 103. Develop measures and standards of performance • Industry charters, BEE scorecards are already public measurement tools, others will have to be developed • Other compliance issues both global and local reporting initiatives need to be studied to ensure relevance and appropriateness of reports • Industry specific sustainability initiatives need to be evaluated: – Clothing Industry (Ethical Clothing) – Retail Industry (Fairtrade) – Mining Industry (Kimberly Process) – Petrochemicals & Manufacturing Industry (Kyoto Agreement) – Liquor Industry (Dublin Principles)
  104. 104. • For CR and sustainability to become part of the business, Embedded Sustainability company leadership must – Take ownership of the consequences of corporate behaviour and the company's inter- connectedness in society – Understand the broad social and environmental risks, challenges, opportunities – Understand the possible progression and consequences for the company of economic, environmental and social impacts – Drive appropriate responses as an integral part of the core business strategy and long-term value – Embed CR into corporate value systems
  105. 105. Developing a strategy • Benchmark locally • Benchmark globally • Benchmark against industry • Benchmark against competitors • Benchmark outside the industry www.cadbury.com
  106. 106. Effective Sustainability Management • Be sure to get approval and buy-in from the executive • Appoint a champion to drive the process • Engage senior management and make them understand the rational for the company’s sustainability agenda • Make sustainability issues relevant for the management team in the context of their business operations • Ensure that they are involved in co-creating the companies sustainability policies, criteria and measures • Fine-tune, with management a population of sustainability measurement indicators that are appropriate and relevant for the business • Agree on targets against which to be measured in relation to each sustainability indicator • Embed the process in the organisation’s management system in a rigorous and structured way • Measure, monitor and provide feedback on a regular basis
  107. 107. This is going to cost money… • Indicators of performance – Realistic levels of expenditure (how much?) – Expenditure within the definition of CR & CS – Continuity of expenditure – Staff participation – Partnerships – Stakeholder participation – Application of non-cash resources – Reporting on outcomes – Reporting on business benefits www.dfic.co.uk
  108. 108. Stakeholder Engagement
  109. 109. Stakeholders Customers Owners Media Employees Consumers Shareholders/ Suppliers Investors Local Communities Corporation Financiers Local Society Authorities Provincial Lobby Groups Government National Environment Future Government Generations
  110. 110. Stakeholder Engagement and Management • Identify all stakeholders • Find out what are the imperatives • Define the key drivers (needs and expectations) • Enter into dialogue • Understand the challenges, obstacles and conflicts • Develop indicators of performance • *www.stakeholdermap.com
  111. 111. Coca Cola Stakeholder Engagement Methodology *www.cocacola.co.uk
  112. 112. Key Challenge 1. Failure to identify and engage with stakeholders is likely to result in sustainability reports that are not suitable and, more damaging, that lead to poor performance by (a) damaging customer satisfaction and perceptions, (b) adversely affecting employee motivation and morale, (c) damaging relationships in the supply chain, and (d) possibly compromising an organization's reputation with the wider community. 2. Balancing stakeholder expectations in a way that does not compromise the long-term sustainability of the organization.
  113. 113. Stakeholder engagement should inform future business strategies • It assists with priority determination • Confirms material risks • Set sustainable development policies and objectives • Developed by internal stakeholders in response to external stakeholder expectations • Responses to stakeholder issues through policies and strategies must be clear, concise and measurable – determine level of aggregation www.gsk.com
  114. 114. Determining Risks, Impacts, Targets Materiality
  115. 115. Determine Risks
  116. 116. Materiality, Impact & Risk www.kovet.hu
  117. 117. Materiality (1) www.segro.com
  118. 118. Materiality (2) www.merck.com
  119. 119. Materiality (3) www.intel.com
  120. 120. Materiality (4) www.omron.com
  121. 121. Risk Profiles (5) www.gtnews.com
  122. 122. AIG Risk Profiling (6) www.aig.com
  123. 123. Core - Basic Working with indicators (1) Specific - Basic Marketplace Marketplace •Customer complaints about products and services •Complaints about late payments of bills •Advertising complaints upheld •Average time to pay bills to suppliers •Upheld cases of anti-competitive behaviour •Proportion of suppliers and partners screened for human rights •Customer satisfaction levels compliance •Provision for customers with special needs •Proportion of suppliers and partners meeting expected Environment standards on human rights •Overall energy consumption •Perception of the company's performance on human rights by •Water usage its customers •Solid waste produced by weight •Proportion of company’s managers meeting the company’s •Upheld cases of prosecution for environmental offences standards on human rights within their area of operation •CO2/greenhouse gas emissions •Perception of the company’s performance on human rights by •Other emissions (eg Ozone, Radiation, SOX, NOX etc.) its employees •Net CO2/greenhouse gas measures and offsetting effect Environment Workplace •Use of recycled material •Workforce profile by Gender •Percentage of waste recycled •Workforce profile by Race Workplace •Workforce profile by Disability •Pay and conditions compared against local equivalent averages •Workforce profile by Age •Workforce profile compared to community profile for travel to •Staff absenteeism work area for gender, race, disability and age •Number of legal non-compliances on health and safety and •Perception of the company's performance on human rights by equal opportunities legislation its employees •Number of staff grievances Community •Upheld cases of corrupt or unprofessional behaviour •Perception of the company's performance on human rights by •Number of recordable incidents (fatal and non-fatal)including the local community sub-contractors •Staff turnover •Value of training and development provided to staff •Perception measures of the company by its employees •Existence of confidential grievance procedures for workers Community •Cash value of company support as % of pre-tax profit •Individual value of staff time, gifts in kind and management costs
  124. 124. Working with indicators (2) Core Specific Advanced Advanced Marketplace Marketplace •Social impact, cost or benefits, of the company’s •Customer loyalty measures core products and services •Recognising and catering for diversity in advertising and product labelling Environment •Environmental impact over the supply chain Community •Environmental impact, costs or benefits of •Project progress and achievement measures companies core products and services •Leverage of other resources Workplace •Impact evaluations of the effects of downsizing, restructuring etc. Community •Impact evaluations carried out on community programmes •Perception measures of the company as a good neighbour
  125. 125. Fast Track Learning
  126. 126. Corporate Responsibility Mistakes • Lacking vision – It is not about “where are we now and what might we do about CR”. – It is about “where do we want to be in 10 years time” – Then it’s about “what and how do we need to change to bring about our vision for the next ten years” • Oblivious to the scale of required change – The magnitude of change, the required new creative and innovative thinking is not about selectively modifying existing business practices – It is about new, more responsible and smarter ways to create shareholder value and wealth • Sub strategic – It is not a staff function at a sub-strategic level with little connection to the strategy of the business, its core competencies and capabilities or management know-how – It requires an understanding of the significance of the range of issues that contribute to CR and the ways that it may affect business. This means to address the possibility of changing systems in the core of the business, changing incentive systems, changing the focus of decision-making, and management systems in the core of the business while implementing CR projects in specific business units
  127. 127. CR Mistakes (cont’d) • Unsophisticated view of CR – Many companies do not separate the two roles of CR – protecting the assets of the firm and providing a basis for the creation of new value • Inability to hear outside voices – CR demands new views from a range of stakeholders. With no clear distinction between value protection and value creation, it is not easy to engage stakeholders in appropriate ways, to ask them appropriate questions and to listen, understand and adhere to their suggestions • Sticking with old managerial competencies – Few have recognised that the competencies required in the past may not meet the needs of the future. I.e. stakeholder engagement, product development, environmental management, risk management are new management skills development areas • One worldview approach – Many CR programs, focus only or a company’s home country specific compliance requirements. This does not do justice to the real difference between CR agendas across countries, or specific communities and stakeholders. Excessive uniformity is an almost universal mistake in CR.
  128. 128. CR Mistakes (cont’d) • Uneven approach – Making substantial commitment and achieving good CR performance in some divisions, or business areas, while other parts of the company might view it as irresponsible. E.g. many companies have made carbon- neutrality pledges without tackling other big CR issues such as child labour or unsafe working conditions. – In doing so they often create the impression that their CR are driven by image considerations rather than a deep-seated conviction that requires CR as a core business asset. • Non-participative management – Many CR programs have been formulated and implemented through top- down directives, not matched by the requirements to make CR a part of company culture and procedures. – Best practice requires companies to manage CR through a network of ‘change champions’ but this is rarely practiced • Failure to see CR as innovation – The failure to see that CR is best practiced on a continuous innovation process that links CR to a company’s business model. Many companies are seeking to be more innovative for competitive reasons, yet few regard their CR programs as directed to value protection or value creation or as innovation in its own right.
  129. 129. Working with actual reports and strategies Practical Session
  130. 130. Best Practice Awards and Recognition
  131. 131. Accountability Rating • Top 10 – 2006 • Top 10 – 2007 – BHP Billiton – BHP Billiton – Anglo Platinum – Sasol – Anglo American – Lonmin – Nedbank Group – Anglo American – Sasol – Nedbank Group – SAB Miller – Anglo Platinum – Anglogold Ashanti – Gold Fields – Santam – Barloworld – Barloworld – Anglogold Ashanti – Kumba Resources – Santam
  132. 132. Accountability Rating • Assessed according to – Strategy, Governance, Performance Management, Stakeholder Involvement, Public Disclosure, Assurance • Key Trends – Materials sector – mining, chemical, metals and glass, oil and gas – best performing sector – Followed by Financial sector (38%) and industrial sector (35%), retail/FMCG sector (29%)
  133. 133. SA – Accountability Ranking 1 BHP Billiton 78.6 26 Edgars Consolidated Stores 39.7 2 Anglo Platinum 70.1 27 Richemont Securities 38.8 3 Anglo American 69.4 28 Investec Ltd 38.1 4 Nedbank Group 67.4 29 Investec Plc 38.1 5 Sasol 66.0 30 Unitrans 37.4 6 SAB Miller 61.6 31 Firstrand Group 37.0 7 Anglogold Ashanti 54.9 32 AECI 36.4 8 Santam 54.7 33 Allied Electronics Group 35.5 9 Barlowworld 54.2 34 Liberty Group 34.8 10 Kumba Resources 53.8 35 Network Healthcare Holdings 32.8 11 Harmony Gold 52.9 36 Imperial Holdings 31.7 12 Massmart Holdings 51.3 37 JD Group 30.1 13 Aveng 49.1 38 Old Mutual 25.2 14 Sappi 48.9 39 Nampak 24.9 15 Impala Platinum Holdings 48.4 40 Datatec 24.1 16 Telkom SA 48.0 41 Super Group 24.0 17 Absa Group 46.6 42 Dimension Data Holdings 22.6 18 Pick & Pay Stores 46.6 43 Shoprite Holdings 22.5 19 Standard Bank Group 45.7 44 Murray & Roberts Holdings 20.0 20 Woolworths Holdings 45.1 45 New Clicks Holdings 19.3 21 MTN Group 43.0 46 Steinhoff International Holdings 19.0 22 Bidvest Group 41.7 47 Mittal Steel 18.9 23 Gold Fields 41.7 48 The Spar Group 16.9 24 Metropolitan Holdings 41.1 49 Naspers 14.5 25 Sanlam 40.0 50 Remgro 13.0
  134. 134. • High environmental impact classification – 2006: Anglo American PLC, Anglo SRI Index America Platinum Corp Ltd, Impala Platinum Holdings Ltd, Oceana Group Ltd, Sasol Ltd, Tongaat-Hulett Group Ltd – 2007: Anglo American, Anglogold Ashanti, Aveng, Gold Fields, Group Five, Highveld Steel, Illovo Sugar, Merafe Resources, Sasol, Tongaat Hulett • Medium environmental impact classification – 2006: Edgars, Medi Clinic, Telkom, Woolworths – 2007: Massmart • Low environmental impact classification – 2006: Liberty, Nedbank, Remgro – 2007: Absa Group, African Bank Investments • Set criteria to measure environmental, social, corporate governance and broader economic practices - Also consider policies, management, performance and reporting
  135. 135. Others - SA Results • SA Companies on the Dow Jones Sustainability World Index – African Bank Investments Ltd, Investec Ltd, Nedbank Group Ltd, Bidvest Group Ltd • Good Governance Awards – Focuses on remuneration practices, corporate ethics and integrity, risk management, BBBEE and transformation • Overall Winner - 2006 – FirstRand Group – 2007 – FirstRand Group
  136. 136. SA Sustainability Reporting Rewards • Ernst & Young Excellence in Sustainability Reporting – 2006: Sasol (1st), Anglo American Platinum (2nd), Bidvest (3rd), BHP Billiton(4th), Kumba Resources(5th) – 2007: Sasol, Barloworld, Massmart Holdings, Nedbank Group, Absa Group, Telkom, Kumba Resources, Anglogold Ashanti, Edgars Consolidated Stores and Aspen Pharmacare Holdings. – Focuses on sustainability context, report content and boundary, triple bottom line impacts, report quality and effectiveness, assurance and credibility • ACCA South Africa Awards – Anglo Platinum, Spier (1st runner up), African Bank & Sasol (jointly 2nd runner up), Woolworths (best improved report), Massmart (best newcomer) – Focus on completeness, credibility, communication
  137. 137. Reporting
  138. 138. Reporting Process
  139. 139. Why report? • In response to pressure from advocates and communities related to specific events or business practices • It is an effort to strengthen the reputation and market competitiveness, • Maintain the ‘licence to operate’ • Demonstrate a serious commitment to a code of conduct to which organisations subscribe • Maintain and strengthen trust with community and advocacy groups, investors, consumers and other stakeholders • Link disparate functions such as finance, marketing, R&D and operations into a more strategic vision and operation, opening new conversations that pave the way for discovery and innovation • Identify trouble spots and unanticipated opportunities, in supply chains, among customers, communities or regulators, or in the areas of reputation and brand management • Access and measure the value of sustainability practices in the organisation in relations to the organisation’s overall business strategy and competitiveness • Reduce share price volatility and uncertainty occasioned by surprise, untimely or incomplete disclosure
  140. 140. From Annual Report to Sustainability Report • Annual financial reports now need to include environmental, social and economic impact and not just focus on publishing of historical financial results. – Description of commitment to economic, environmental and social goals – Performance against benchmarks, targets and industry norms – Major challenges for the organisation in integrating financial performance with environmental and social performance – Percentage of board directors that are independent, non-executive directors • Profitability – Increase/decrease in retained earnings at the end of the period, used to calculate return on average capital employed – Total recycling and reuse of water – Organisation’s indirect economic impacts • Taxes and subsidies – Subsidies received broken down by country or region – Total sum of all taxes of all types paid broken down by country or region

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