Consumer Safety and Corporate Responsibility Report 2012


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A research report by Ethical Corporation on the links between CR and product and consumer safety. Contains analysis of trends and leading companies.

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Consumer Safety and Corporate Responsibility Report 2012

  2. 2. CORPORATE RESPONSIBILITYAND CONSUMER PRODUCTHEALTH AND SAFETYJanuary 2012© Ethical Corporation CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETYACKNOWLEDGEMENTSThis report has been researched and written by Ian Welsh and Judy Kuszewski,with assistance from Jean-Philippe Renaut and Mariane Jang, for EthicalCorporation, the independent provider of business intelligence for sustainability.It has been supported financially by Pirelli.The writers would like to thank the following for their time and input:Filippo Bettini, Pirelli; Martin Charter, Center for Sustainable Design;John Elkington, Volans Ventures; Hannah Jones, Nike; Bob Langert, McDonald’s;and, Dave Stangis, Campbell Soup. 3
  3. 3. Contents 6 Foreword 7 Executive summary 10 1. Introduction and context 11 1.1 From defensive to strategic 11 1.2 Our survey results 13 Box: Not enough CR focus on product safety 15 Box: The connected consumer 16 2. Methodology 16 2.1 Company selection 17 Box: Our 15 benchmarked brands 18 2.2 Four assessment criteria 19 3. Findings 19 3.1 Fifteen companies in review 19 3.2 R&D leads the way 19 3.3 Processes and Management a top priority 19 3.4 Health and Safety Standards an emerging priorityCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 20 3.5 Communication plays a strong support role 21 4. Deep Dive: R&D 21 4.1 What we reviewed 21 4.2 Findings 22 Box: Consumer trust 23 4.3 Next steps 23 4.4 Emerging themes 24 5. Deep Dive: Health and Safety Processes and Management 24 5.1 What we reviewed 24 5.2 Findings 25 Box: Mattel’s corporate responsibility organization 26 5.3 Next steps 26 Box: Linking consumer safety and CR 27 5.4 Emerging themes 28 6. Deep Dive: Health and Safety Standards 28 Box: Product health and safety and the ISO 26000 standard 29 6.1 What we reviewed 29 6.2 Findings 30 Box: European Road Safety Charter and tire labeling galvanize action 31 6.3 Next steps 32 Box: Brand collaboration – supply chain detox 32 6.4 Emerging themes 33 Box: World Health Organization: a decade of road safety to come 4
  4. 4. 34 7. Deep Dive: External Communications34 7.1 What we reviewed34 7.2 Findings35 Box: Communicating with consumers36 7.3 The message divide37 Box: Consumers, products and reporting38 7.4 Next steps39 7.5 Emerging themes40 8. Conclusions and recommendations40 8.1 R&D40 8.2 Systems and processes41 8.3 Standards41 8.4 Communications CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 5
  5. 5. Foreword By Toby Webb, Ethical Corporation Ethical Corporation is delighted to present to you this, our latest research, on the links between corporate sustainability and consumer product safety. At first it appears obvious that there is a clear link between corporate sustainability and product safety. Without safe and reliable products no company can retain a license to operate and market share. Manufacturing safe products is a fundamental of business success and continuity. Clearly product safety is a vital baseline from which companies can become increasingly more sustainable. Yet as our research has uncovered, there are major variations in how large companies link up their product safety and sustainability thinking. As part of our in-depth research, alongside interviews with major international consumer brands, we surveyed more than 150 of our readers. The results may surprise you. We found that whilst 88% of respondents said consumer safety is a core part of their company’s corporate responsibility concerns, more than half of respondents (55%) agreed with our qualitative findings that there are major differences between leader and follower companies in the area. If we consider this alongside the findingCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY that 86% of those surveyed said they believe consumer product safety is increasing in importance for responsible companies, these results demonstrate that safety and sustainability is an area of opportunity and innovation for large companies. This report highlights the practices of some leading companies. It also clearly shows that there are immense opportunities for companies to improve practices, link up sustainability and product safety, and build customer trust and corporate reputation whilst reducing risk. Toby Webb is founder and chair of Ethical Corporation, and co-founder of Stakeholder Intelligence. 6
  6. 6. Executive summary This report is the product of a research study into consumer product health and safety as part of the corporate responsibility (CR) agenda. While companies have been introduced to environmentally and socially responsible ways of doing business, it is not clear whether and how the safety and health aspects of their products are evident in this agenda. Why is this important? At its most basic, the responsibility to provide safe and healthy products is part of the company’s core promise to consumers. It’s also the subject of a great deal of regulation and legislation in many countries. So, why does it need to be an explicit element of a company’s corporate responsi- bility strategy? As companies have advanced and matured in their implementation of CR strategies, they have increasingly recognized the value of integration across a variety of issues. This allows better performance across a wide range of topics, and more reliable identification of risks across the various social, economic and environ- mental pillars. Product health and safety is no different – corporate responsibility is simply doing good business. Bringing the social and environmental elements into the core of business practice reduces risks and increases opportunities broadly. CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY ABOUT THE RESEARCH This research included: Development of a simple assessment methodology covering consumer product health and safety aspects of Research & Development, Processes and Management, Standards and Communications. Review of 15 global companies’ websites and reports and assessment against our methodology. A survey of 150 Ethical Corporation readers on their attitudes to consumer product health and safety issues. Interviews with a selection of companies and experts on the relevant issues. RESULTS AND THEMES The fifteen companies’ results are organized into tertiles (see box) according to their overall scores. Our core findings are organized into themes: R&D This area appears to be the best-developed for the companies represented. Leading practices include product design and development for special groups of users, and paying attention to consumers’ use habits and context as well as the products themselves. But there is little evidence that this activity is linked to the broader social and environmental aspects of sustainability and corporate responsibility. 7
  7. 7. Processes and management HOW THE COMPANIES Another big priority for our companies is their approach to internal processes and STACK UP systems to ensure product health and safety is integrated into daily practice. Good practices involve dedicated teams with responsibility for product health and safety; Our results group the 15 staff empowerment mechanisms to encourage responsibility for potential issues; companies into tertiles: and health and safety as a contributor to overall product quality programs. But these efforts often appear to be isolated to a particular set of risks or issues, while 1st: BMW in other cases, they are limited to meeting current regulations. Campbell Soup Ikea Standards Johnson & Johnson The use of standards to improve product health and safety performance is less L’Oréal consistent across our companies, with many differences visible between different Mattel sectors. Leading companies are involved in collaborative efforts including Pirelli competitors to raise practices across the board. The majority of companies we Toyota reviewed are focused more on meeting today’s requirements than on actively pursuing improved standards in the future, but notable initiatives such as the new 2nd: Motorola ISO 26000 social responsibility guidance standard and the European Road Safety Nike Charter are encouraging a new focus in this direction. Novo Nordisk Communications 3rd: 3M All the companies we reviewed include product health and safety information in HPCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY their core corporate sustainability reports and websites, but the nature and quality McDonalds of the information varies considerably. We do not feel it is appropriate for all Philips companies to communicate and engage in dialogue with stakeholders in the same way on these is sues, given differences in sectors and the perception of risk associated with products. The GRI Sustainability Reporting Guidelines provide good advice to companies on communicating information across the product lifecycle. RECOMMENDATIONS There are many opportunities for companies to realize value to stakeholders and to the business from a more integrated approach to product health and safety as part of their corporate responsibility strategy. Our top recommendations and observations include: • Consider a lifecycle assessment of health and safety aspects as a basic part of the design process. This helps to identify health and safety aspects at all stages of the product lifecycle. • Analyze the health and safety profile of products in conjunction with environ- mental, accessibility or other social factors – not in isolation. • Make sure product health and safety has an explicit internal approach with clear responsibilities. • Ensure your processes for follow-up – especially after-sales monitoring – are robust and part of your ongoing internal communications. • Look for opportunities to collaborate with competitors or across supply chains to build standards that address product health and safety issues consistently, effectively and reliably. 8
  8. 8. • Advocate for higher standards and regulations – ie both voluntary and mandatory – as a means of improving your own ability to meet expectations. • Use a wide variety of communications tools to convey product health and safety information, from websites to product labels, to ensure people find the infor- mation they need when they need it. Encourage feedback from your consumers, and take note of it. • Consider reporting on the entire process of product design and development, including lifecycle analysis, to empower users to understand and take control of sustainability factors through consumption.JOIN THE DEBATE As among the first research of its kind, this report introduces a new way of thinking about a long-established agenda. We welcome your thoughts and comments. CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 9
  9. 9. 1. Introduction and context Health and safety is a long-established basic element of corporate responsibility. Thanks to decades of campaigning, awareness-raising and responsible action, accidents in the workplace, home and community are thankfully much lower than in the past. Even in high-risk heavy industries such as mining and manufacturing, employees are generally now much safer. The rates of injury from automotive accidents have reduced around the world thanks to improved product design and user awareness. Consumers themselves are much more aware of safety issues in their own lives, from baby toys to use of electrical appliances. Yet we don’t tend to think of consumer product safety as part of the formal “corporate responsibility” agenda. The result of a movement that emerged from environmentalism and gradually embraced wider corporate impacts on society, today’s corporate responsibility community often overlooks the fundamental responsibility of a company to ensure its products are safe when users encounter them. Why this may be is unclear. It may reflect a general assumption that product safety is so basic a responsibility as to be assumed rather than highlighted: a “hygiene factor” rather than a source of excellence or differentiation; a “settled” issue ratherCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY than an “emerging” one. This view is quickly, if temporarily, overturned in the event of a consumer safety disaster of some sort. Consider the case of Johnson & Johnson, whose McNeil Healthcare division was at the center of a major product-tampering scandal in the 1980s. The company’s Tylenol (paracetamol/acetaminophen) brand had been the subject of cyanide poisoning in the US, killing seven people. The incident sparked a massive product recall, and major company introspection about the various vulnerabilities their products display. The results included a range of product and packaging innovations, such as tamper-resistant bottles and boxes, and the introduction of caplets to replace traditional capsules. Significant in the company’s ability to emerge with its reputation intact was an open communications campaign, visibly led by senior management, to ensure information was spread and trust re-established with the public. Similarly, Toyota was forced to recall a range of products in 2009 and 2010 due to a possible design fault related to operation of the brakes in some ranges of car models. In contrast to Johnson & Johnson, Toyota came under intense criticism for appearing to deny the existence of a problem, dodging responsibility and resisting the expensive and difficult measures associated with addressing it. The result was a seriously damaged public reputation, even when the company had begun the episode on a high note, in light of their strong sales and high levels of perceived product quality.1 1 See Gardner, Stephen, “Toyota’s recall – Reputation crash”, Ethical Corporation, October 2010. 10
  10. 10. 1.1 FROM DEFENSIVE TO Corporate responsibility has taken many forms over many years. Experts and STRATEGIC commentators have attempted to chart its evolution so they can better identify what CR does and how it works, and what companies should be doing today to realize its full value. We will look briefly at this overall history to get a sense of where the issue of consumer safety falls in the CR canon, and where its future evolution may lead. CR expert Simon Zadek, writing in the Harvard Business Review in 2004,2 identified five “stages” of organizational learning for companies as they embed corporate responsibility in their business practices. • The Defensive stage is characterized by a denial of the existence of problems or of a responsibility to address them. Companies do this to defend themselves against reputational attacks that could damage sales and productivity in the short term. • Companies at the Compliant stage adopt a policy of complying with legislation and rules, and regard this as a cost of doing business. This is to mitigate losses in economic value in the medium term from reputation and litigation risks. CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY • At the Managerial stage, companies appoint managers with responsibility for CR issues and developing responsible business programs that begin to integrate the agenda into the day-to-day operations. Companies take these steps to continue to mitigate medium-term value loss, but also to achieve longer-term gains. • The Strategic stage sees companies integrating CR into core business strategies that enhances economic value in the long term and gives the company first mover advantages over its rivals. • The final Civil stage is when the company promotes broad industry participation in CR to enhance the long-term economic gains of all. In truth, most companies’ CR efforts are likely to display elements at all of these various stages, so that, while they do build on one another, the different stages nevertheless coexist, in order to meet a variety of needs and expectations. So how does health and safety fit into this larger picture? Do leading companies regard the health and safety aspects of their products as a risk to be managed and downplayed, or an opportunity to be exploited? That’s what we set out to study through this report. 1.2 OUR SURVEY RESULTS As a starting point, to find out what the corporate responsibility and sustainable business community thought about the interaction between CR and consumer product health and safety, we surveyed a sample of 150 Ethical Corporation readers in December 2011.2 Zadek, Simon, The Path to Corporate Responsibility, Harvard Business Review, December 2004. 11
  11. 11. 1. Do you consider the consumer safety aspects of products to be specifically part of a companys corporate responsibility concerns? n Yes, a core concern 88% n Yes, a minor concern 7% n No, its a separate issue 5% n No, its not an issue 0% Total 100% 2. What do you consider to be the main corporate responsibility aims related to consumer safety? n Ensuring compliance with laws and regulations 13% n Identifying and limiting risks associated with products 42% n Identifying opportunities for product development or innovation 9% n Improving or maintaining consumer confidence in products 9% n Ensuring a coherent management approach across all relevant issues 27% Total 100% 3. Which of these areas do you believe it is most important for companies to focus their efforts in this regard? n Research and development: recognizing and addressing safety aspectsCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY in product design and development 34% n Processes and management: working to ensure internal clarity and alignment inside the company to produce good outcomes 18% n Standards: developing and applying credible minimum standards for product safety 29% n Communications: working to ensure product users have sufficient information and understanding of product safety risks and best use 19% Total 100% 4. Do you believe consumer safety is an area of best practice in corporate responsibility? n Yes, most companies attend to this issue thoroughly 16% n Yes, but there are clear differences between leaders and followers on this issue 55% n No, there is little best practice to be found 13% n No, most companies do not recognise product health and safety in the context of CR 16% Total 100% 5. Do you think consumer product safety is increasing in importance on the CR agenda? n Yes, its increasing significantly 32% n Yes, its increasing a little 54% n No, it will remain where it is today 14% n No, its not a CR issue 0% Total 100% 12
  12. 12. Key results: • Unsurprisingly perhaps, our survey respondents said overwhelmingly that consumer safety is a core corporate responsibility concern. • They picked out “identifying and limiting risks” and “ensuring a coherent management approach” as the principal CR aims relating to consumer safety. • Developing standards and R&D are the areas where companies should focus efforts, our survey said. • A majority of respondents said that consumer safety is an area of best practice for CR, but that there are clear differences between the companies that perform best and the rest. • 86% said that consumer product safety is increasing in importance on the CR agenda, with around a third saying this is a significant increase and just over a half saying this increase is only a little. CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Not enough CR focus on product safety Bob Langert, corporate vice-president for sustainability at McDonald’s, believes that the corporate responsibility community does not focus enough on health and safety issues. “They focus on human rights and the environment, and hardly ever do you see product safety mentioned. It is a largely ignored issue.”3 Langert contrasts the CR community in general with companies in the food and beverage sector. “The importance and priority of product safety is well understood by companies where their products are eaten or drunk by customers, but not by the CR community. I think these issues are dismissed.” The survey results indicate that the interplay between consumer safety and brands’ developing corporate responsibility agenda is in flux, and we wanted to identify more closely how this is developing and particularly the contrast for brands operating in different sectors.3 December 13 2011, email interview with Ethical Corporation. 13
  13. 13. And so, in the sections that follow, we explore: Methodology How we understand the elements of consumer safety in the context of corporate responsibility, and how we assessed these in our subject companies. Findings Our benchmark results, how the companies we reviewed compare with each other and the results of an Ethical Corporation survey. Deep Dive: R&D A look in depth at how product research and development activities take on the consumer health and safety agenda. Deep Dive: Processes and Management We look at how the companies in our survey are structured to integrate consumer health and safety in their operational CR strategy. Deep Dive: Health and Safety Standards We review the survey companies’ use of internal and external standards to guide their health and safety performance.CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Deep Dive: Communications We look at the most effective tools the surveyed companies use for communi- cating, engaging and reporting on the relevant safety issues with a variety of audiences. Conclusions and Recommendations We summarize our main observations on best practice in this area with a checklist for managers, and a view on where we believe the agenda is headed. We are unaware of any other such surveys of consumer health and safety in the context of the broader corporate responsibility agenda, and we therefore offer the results of this research as a contribution to the wider debate and development of corporate responsibility thinking and management. You may agree or disagree with our methods or findings; or you may have thoughts on how this effort should best evolve in the future. We welcome any thoughts, challenge and feedback. 14
  14. 14. The connected consumer All aspects of how brands interact with their consumers are dramatically changing. The internet and, more recently, the explosion in use of social media, have combined to create a new breed of more informed and connected consumer. In its Smarter Commerce4 report, IBM describes these consumers as “empowered by technology, transparency and an abundance of information”. They “expect to engage with companies when and how they want, through physical, digital and mobile means”. Hannah Jones, vice-president for sustainable business and innovation at Nike, agrees. Nike regularly researches what their consumers – who are typically young – want. “They don’t talk in terms of ‘corporate responsibility’ or ‘sustainability’ but they do know that they want to live in a better world,” Jones says.5 “Modern consumers are connected using the internet and, especially, social media. They are much more informed and critical, and require CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY and expect transparency in ways that past consumers didn’t.” Dave Stangis, vice-president for corporate social responsibility and sustainability at Campbell Soup, welcomes transparency in the food sector but cautions that too much information can sometimes mean that consumers find themselves confused. “More and more companies embrace transparency in products and consumers are becoming more sophisticated about what they want in their diet.”6 This is an opportunity for a company to help its consumers use its products better. Campbell’s Kitchen – which Stangis describes as “an online community where hundreds of thousands of people look for recipes and how to use products while making healthy choices” – is a good example.4 Smarter Commerce: Redefining commerce in the age of the customer, IBM 2011.5 September 23 2011, interview with Ethical Corporation.6 November 11 2011, interview with Ethical Corporation. 15
  15. 15. 2. Methodology As a key part of opening this dialogue on consumer safety, we want to be clear about just what we reviewed and how we arrived at our conclusions. Our method- ology is simple and straightforward, focused on a few factors we believe are at the heart of this subject. Sustainability ratings and rankings are nothing new, and in fact, in some cases, are so well established they have themselves come in for criticism.7 Ratings are often accused of rewarding the wrong things (such as systems or processes, or good reporting, rather than good performance). It can be argued that ratings may be gamed by providing the right words or the right sort of formats that catch the eye of the raters. It can also be argued that ratings are insufficiently flexible to take account of differences between companies, regions, sectors and many other factors. We view this as an initial exercise, and therefore, we don’t propose our rating to be used to make judgments or differentiations between companies; nor do we publish detailed scores. We do, however, want to encourage greater discussion of consumer safety in the corporate responsibility agenda, and leave it to others to determine how best to use this rating in the future.CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 2.1 COMPANY SELECTION We identified a group of 15 companies from leading global brands. The companies in question range from automotive to electronics, pharmaceuticals to food, toys to beauty products and others. We chose the companies to provide a spread of information across a wide range of industries and geographies, to help identify best practices at a high level. We also focused on companies experienced in the overall corporate responsibility agenda, in the belief we may see evidence of how they view the role product health and safety plays in this agenda. 7 See for example the Rate the Raters research program at for a review of strengths, weaknesses and future options for sustainability ratings and rankings. 16
  16. 16. Our 15 benchmarked brands3M – The multinational manufacturer of a vast array of consumer, business and industrial brands andproducts. Global turnover in 2010 was $27bn (€21bn), with 80,000 employees.BMW – A manufacturer of premium cars and motorbikes, and incorporating Mini and Rolls-Royce, theBMW Group had turnover of €60bn in 2010, with 95,000 employees.Campbell Soup Company – A global manufacturer and marketer of foods and simple meals, includingsoup, baked snacks and beverages, with turnover of $7.7bn (€5.9bn) in the year to July 31 2011.Ikea – The Sweden-based international furniture brand had turnover of €23.1bn in 2010, with 280 storesin 28 countries and 127,000 employees.HP – One of the world’s largest IT companies with 325,000 employees, and which includes printing,personal computing, software, services and IT infrastructure in its portfolio. HP’s turnover in the year toOctober 2011 was $127bn (€97bn).Johnson and Johnson – The international healthcare products brand has 116,000 employees at 250operating companies in 60 countries worldwide, and turnover of $62bn (€47bn) in 2010. CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETYL’Oréal – The cosmetics company had €19.5bn turnover in 2010, operating in 130 countries with 66,600employees.Mattel – The world’s largest toy company by revenue turned over $5.9bn (€4.5bn) in 2010, with 31,000employees based in 43 countries. Mattel has sales in over 150 countries worldwide.McDonald’s – The fastfood chain is the biggest in the world, with 2010 turnover of $24bn (€18bn), over33,000 outlets and 400,000 employees.Motorola Mobility – Formerly the mobile devices division of Motorola (until a split in January 2011) andshortly to be acquired by Google, the smartphone and desk-top box manufacturer has 19,000 employeesand turnover of $11.5bn (€8.8bn) in 2010.Nike – The global sportswear clothing and equipment manufacturer’s array of brands turned over $19bn(€15bn) in 2010 and has 34,400 employees.Novo Nordisk – Danish pharmaceutical giant that specializes in diabetes care, with 61bn kroner (€8.2bn)turnover in 2010 and 32,000 employees.Philips – Netherlands-based, the multinational electronics company has 119,000 employees and €25bnturnover in 2010.Pirelli – One of the leading premium tire manufacturers, the company had turnover of €5.8bn in 2011,and 30,000 employees.Toyota – The one-time leading car maker by units manufactured, the company had turnover of $236bn(€181bn) in 2010, and 318,000 employees worldwide.Note: Company turnover figures are most recently available as at mid-December 2011. 17
  17. 17. 2.2 FOUR ASSESSMENT Our assessment is based on four simple criteria: CRITERIA • R&D How is consumer safety considered in product development? We looked for evidence of how the company perceives the risks and issues associated with its products as well as the specific needs of its customers. We wanted to know how consumer safety is seen to enhance other attributes of products, and whether it is linked to environmental or social factors at the design stage. • Health and Safety Processes and Management What steps does the company take internally to ensure product safety is under- stood and integrated into operations? We looked for evidence that these steps are integrated into other business processes, to deliver on company commit- ments. • Health and Safety Standards Does the company make use of any internal or external standards for consumer safety? We reviewed whether the company takes part in initiatives with government or industry to agree higher performance standards over time. • CommunicationCORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY What efforts does the company make to communicate with consumers and engage in dialogue on product safety issues, eg via product labeling, use instructions, advertising, web forums and corporate communications? We reviewed whether these communications are targeted for different users or different purposes, how the issues are positioned in reports and other corporate-level communications, and whether they are integrated with other sustainability issues. You can learn more about how we understood the issues in detail, and our findings, in each of the Deep Dive sections that follow in this report. To make this assessment, we reviewed company websites and sustainability reports for each of the nominated companies, and reviewed each criterion based on the depth of information provided. Our assessment included not only making a determination against our criteria, but also identifying examples of good practices. We recognize that some companies may have much more activity taking place than is visible in their reports and on their websites, but felt this to be an appropriate boundary for this exercise. Analysis was cross-checked by multiple team members to ensure consistency across the group of companies. We followed up with a set of interviews with some of the good-practice companies that appear in this survey. Quotes from those interviews appear throughout this report. 18
  18. 18. 3. Findings3.1 FIFTEEN COMPANIES As an early exercise in assessing corporate responsibility and consumer safety, IN REVIEW we’ve grouped our results into three batches: Lots of leaders Eight out of the 15 companies show very strong results across the board: BMW Campbell Soup Ikea Johnson & Johnson L’Oréal Mattel Pirelli Toyota A strong center Three of the 15 show solid fundamentals, with a degree of room for improvement: Motorola Nike Novo Nordisk Along the learning curve CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Four of the 15 showed more mixed results, but with many good strengths: 3M HP McDonald’s Philips3.2 R&D LEADS THE WAY The strongest results overall were achieved in the R&D criterion. This is excellent news as it indicates that consumer safety occupies a strong position in companies’ earliest efforts to design and develop their products. Leaders: BMW, Campbell Soup, Ikea, Johnson & Johnson, L ’Oréal, Mattel, Motorola, Novo Nordisk, Pirelli and Toyota each scored a full four points. (See Deep Dive: R&D.) 3.3 PROCESSES AND We also saw strong results in the Health and Safety Processes and Management MANAGEMENT A category. This demonstrates the steps companies have taken to integrate the issue TOP PRIORITY into their operations and into their day-to-day corporate responsibility activities. Leaders: BMW, Campbell Soup, Ikea, Johnson & Johnson, L ’Oréal, Mattel, Pirelli and Toyota all achieved full marks. (See Deep Dive: Processes and Management.)3.4 HEALTH AND SAFETY The use of internal and external standards – and how these are developed – to STANDARDS AN help ground the company’s approach to consumer product safety is certainly EMERGING PROPERTY established, but shows the lowest marks overall in our survey. 19
  19. 19. Leaders: BMW and Toyota lead the pack with four points, while a further eight companies score three. (See Deep Dive: Product Health and Safety Standards.) 3.5 COMMUNICATION Companies’ efforts to communicate and engage with employees, consumers and PLAYS A STRONG other stakeholders about their consumer safety factors shows a recognition of how SUPPORT ROLE important this issue is for many audiences. Leaders: Campbell Soup, Ikea, Johnson & Johnson, L ’Oréal, Mattel, Novo Nordisk and Pirelli all achieved a full four points. (See Deep Dive: External Communications.)CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 20
  20. 20. 4. Deep Dive: R&D We looked first of all at how the companies in our benchmark considered consumer safety issues right from the start, through their research and product development activities. We wanted to know: what role does product safety play in the company’s basic thinking about their products – and how does this reflect a wider corporate responsibility agenda – before they’re off the drawing board?4.1 WHAT WE REVIEWED We looked for evidence of consumer health and safety playing a role in the company’s R&D activities broadly. We asked: • Does the company work to understand consumer needs and hazards associated with products? • Does the company consider the needs of specific groups of consumers? • Is product health and safety considered a pathway for better product development and enhanced user experience? • Is product safety considered alongside environmental and social considerations? CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY At its highest level, this means product safety is closely linked to delivering consumers’ basic needs and expectations, and is understood in the context of the company’s overall values, commitments and sustainability context. 4.2 FINDINGS The R&D side of consumer health and safety is one of the best-developed dimen- sions of the issues as shown in our benchmark. It is also where some of the highest scores appear. The majority of companies in our benchmark displayed advanced levels of understanding in this area, with fully 10 out of the 14 surveyed achieving top marks on this criterion. Key to this criterion is looking well beyond the products themselves, to achieve a deep understanding of how customers and consumers actually use the company’s products – regardless of their intended use. The companies that do best show a real appreciation for: Who their customers are Several companies give particular consideration to the special needs of children or other groups who use their products. Both Ikea and Nike dedicate special attention to the growth and developmental needs of children – as well as their tendency to use products in an unorthodox fashion. Novo Nordisk is focused on patient habits pertaining to medication and lifestyle. This demonstrates that, in considering how they design their products, the companies understand the user as much as the function their products seek to fill, and are thus better able to anticipate and avoid hazards. 21
  21. 21. The particular use environment of the company’s products The circumstances in which how a company’s products are used can have a great impact on their safety. For instance, Motorola has made a priority of identifying hazardous situations for mobile phone use – such as driving – and resolving these through the product design process. Similarly, Toyota has identified the circumstances in which users may encounter the most urgent safety problems – such as parking, pre-crash and rescue situations – and adapted their product design accordingly. The bodily and cultural dimensions of their products Campbell’s Soup is one of a vanguard of food products companies that recognize the public health impacts associated with processed foods, and view the product development process as an opportunity to meet these needs for a wide population. Similarly, Johnson & Johnson and L ’Oréal work to identify opportunities to link safety to innovation, creativity and value in product development.CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Relatively few companies have made a concrete link between their safety approach and their understanding of wider social, environmental and sustainability values and commitments. Exceptions to this include Pirelli, which clearly links product safety with increased fuel efficiency and with their fundamental product offering to consumers (see box). Similarly, Mattel demonstrates a recognition of product safety at the heart of fulfilling customer expectations, but this is not elaborated upon in detail. Consumer trust Consumers have significant level of trust in their favorite brands, but this comes with responsibility, especially regarding product safety. Filippo Bettini, sustainability and risk governance director at Pirelli, says this is something his company recognizes. “We are a company that our customers trust, and this motivates us to continually improve our products as well as provide support for a steady advancement in regulations. A fundamental development for us are the new European tire labeling regulations,8 both in terms of transparency in product performance – which is healthy for competition in our industry – and the good benefits for end consumers.” Bettini argues that Pirelli’s customers “expect more proactive information about what it means to have a safe tire on their car”.9 8 For more on the new European tire regulations see box on p31. 9 October 27 2011, interview with Ethical Corporation. 22
  22. 22. According to Martin Charter, director of the Center for Sustainable Design, University of the Creative Arts (Surrey, UK), this link is lacking for most companies, even those who take sustainable design seriously. “In my experience, most companies do it as eco-design, not sustainable product design – that is, integrating the social pillar, including health and safety – in the product context,” he says. “The social element of sustainable design is still weakly addressed in most cases.”10 Charter believes companies don’t in fact address ‘health and safety’ as a single concept. “The concept of health – quite separate from safety – seems to carry a much more nebulous qualitative feel. Safety does relate to health, but it’s much more defined around risk.” This qualitative aspect, he argues, makes it that much more difficult for companies to conceive of the sustainability impacts of products in the round, or to identify opportunities to build benefits through sustainable design, in addition to mitigating risks. Ultimately, it’s a question of recognizing health and safety aspects wherever they occur, not just in the consumer-use phase. “If you’re thinking about the lifecycle, there are often a great many questions of health and safety in the supply chain. It’s not just about the use phase.” CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY 4.3 NEXT STEPS Our benchmark shows that for leading companies at least, consumer product health and safety is clearly on the map in the product design and development process. What seems most lacking is a link to the company’s broader corporate responsi- bility impacts and strategy. We would encourage companies to consider how the safety of their products may help or hinder their efforts to reduce environmental impacts, increase accessibility, or build trust with users and the public. 4.4 EMERGING THEMES • R&D is the opportunity to design out risks and design in social and environ- mental benefits for users. • R&D is not just about the product, but about the use and its context as well. Who uses it and how? • There is an opportunity for improved outcomes if companies link consumer safety to environment and social outcomes more explicitly.10 December 21 2011, interview with Ethical Corporation. 23
  23. 23. 5 Deep Dive: Health and Safety Processes and Management We examined companies’ approaches to managing consumer health and safety in their many internal systems and processes. As with environmental and social impacts, this management is essential to ensure the issues are adequately addressed. The key question: How do companies ensure product health and safety is part of day-to-day operations? 5.1 WHAT WE REVIEWED We looked at companies’ descriptions of their internal management processes for evidence that product health and safety plays a role. We asked: • What steps does the company take internally to ensure product safety is understood and integrated into operations? • Are these steps linked to any other processes to ensure positive product environmental or social attributes? Leaders • Are there specific company commitments or policies with respect to product BMW safety? Campbell Soup Ikea • Are staff rewarded for good product safety performance?CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Johnson & Johnson L’Oréal • How does the company deal with product safety monitoring after sales? Mattel Pirelli A robust set of processes and management help ensure that on a day-to-day basis, Toyota the company pays due attention to product health and safety, reducing the likelihood of problems and ensuring the right response when problems arise. 5.2 FINDINGS Processes and management make a strong showing in our benchmark, with over half (eight) of the 15 companies scoring full marks. But there is considerable variation in the ways companies achieve this. As companies will be aware, the presence of a policy or procedure is not enough by itself to ensure it is adequately implemented. The procedures need to be tied into steps that empower employees to make good decisions, with conscious monitoring and evaluation. Some examples: L’Oréal has a dedicated International Safety Evaluation Division to assess products against medical and scientific research. This includes safety evaluations of both ingredients and finished products, as well as long-term use monitoring after products are introduced to the market. Internal communications mechanisms allow reports of adverse reactions to be reported quickly for evaluation and response. Pirelli’s approach clearly links corporate responsibility with product safety, under the umbrella of product quality. Sustainability management systems therefore have a strong product safety component. There are numerous staff awareness initiatives on product safety. 24
  24. 24. Mattel’s corporateresponsibility CEOorganization CORPORATE RESPONSIBILITY GLOBAL PRODUCT INTEGRITY GLOBAL SUSTAINABILITY Partners with Government Affairs to Sets strategy for and oversees implementation analyze pending and new regulations of environmental, health and safety and to incorporate them into internal regulatory compliance product standards Drives the development of Mattel’s Responds to consumer inquiries and sustainability strategy provides information to them about Oversees implementation of our Global our products Manufacturing Principles (GMP) and related CORPORATE RESPONSIBILITY AND CONSUMER PRODUCT HEALTH AND SAFETY Gathers information directly from consumers social compliance initiatives about existing or emerging issues and Provides specialized training and evaluations communicates with appropriate Mattel to strengthen competencies and mitigate risk departments so that product and process improvements can be made Oversees implementation and compliance with laws, regulations, and corporate policies and procedures in the areas of product safety and quality CORPORATE AFFAIRS Coordinates internal communications to Mattel employees around the world Engages with external stakeholders regarding issues of interest and seeks CORPORATE RESPONSIBILITY AUDIT to develop mutually agreeable solutions when appropriate Verifies compliance with laws, regulations Monitors and analyzes emerging legislation and corporate procedures around quality, and regulations, represents Mattel before safety, environment and social compliance governmental bodies around the world Identifies and proposes solutions to manage Directs public reporting on corporate future risks to the business responsibility matters including ranking profiles and preparation of this and similar reports Directs Mattel’s philanthropic endeavors, including the Mattel Children’s Foundation Source: Playing Responsibly, Mattel’s 2009 Global Citizenship Report 25