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Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
Salterbaxter Directions 2008
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Salterbaxter Directions 2008

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2008 The year sustainability got tough. …

2008 The year sustainability got tough.
2008 saw some really hard to handle issues ruse to the surface. they are complex, full of paradoxes and beset with conflicting agendas. we put these tough issues in the spotlight and identify the difference between CR housekeeping and CR leadership.

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  • 1. directions the full report 2008 trends in corporate responsibility 2007/08
  • 2. CoNTENTS 01 BIoFUELS Thirst for fuel vs 04/ Dr Peter Cotgreave Director of Public Affairs, hunger for food The Royal Society Page 02 05/ Chris Carter Director of Corporate Affairs, British Sugar plc 06/ Sagarika Chatterjee Associate Director, F&C Asset Management plc 09/ Dick Searle PACKAGING Are we suffocating Chief Executive, under the weight of the packaging The Packaging Federation problem? Page 08 11/ Alasdair James Director of Waste, Recycling & Packaging, Tesco plc 13/ Leo Horn-Phathanothai National Coordinator, CHINA It’s not as black UK-China Sustainable and white as a panda Page 12 Development Dialogue, DEFRA 17/ David Grayson Director, Doughty Centre CREDIT CRUNCH for Corporate Responsibility, Will corporate responsibility crack Cranfield University 18/ Barry Clavin We have a strongly held belief that most things could be made better under the strain of the credit – they just need better insight, brighter ideas, more creative thought. Ethical Policies Manager, crunch? Page 16 The Co-operative Group And so our offer to clients is all about creative re-thinking. Re-thinking 202 Kensington Church Street their entire business proposition; re-thinking their branding, vision and London W8 4DP 20/ David Godden Chief Operating Officer, values; re-thinking how they should approach corporate responsibility; Tel +44 (0)20 7229 5720 Land Securities Trillium re-thinking how they engage with their employees; re-thinking what the www.salterbaxter.com web can do for them; re-thinking how to communicate with shareholders. 26/ Top 50 European companies For many years now we have helps new ideas flourish and breaks boundaries. It sheds these issues cannot be debated outside of the This approach seen businesses starting to do their CR But ANALYSIS housekeeping.new light on old some small, there have been leaders and Some big and problems and turns some new problems inside out. context of the economic climate we are operating in – And if you are looking for the analysis Are businesses making the tables you usually find at the end of criticism of those that are lagging behind. But now things are getting a tough issue itself. So we have also invited discussion shift from CR 1.0 to 2.0? Directions, these are now online at: tough. 2008 saw some really hard to handle issues risebetter. surface Most importantly it helps clients do things to the on the topic “Is corporate responsibility going to be Page 22 www.salterbaxter-rethinktank.com – and it’s not as if tackling sustainability isn’t a challenge in the first smashed by the credit crunch?” /directions/analysis place. This year we sense a clear focus our attentionare are: that aren’t The main areas we difference: these on issues To find ways forward businesses need to be – Brand and reputation just hard to handle, they are complex, full of paradoxes and beset with communicating about these big issues and inviting – CR/Sustainability conflicting agendas making it really tough for businesses to develop clear stakeholders in to help create solutions – it’s going – Corporate reporting strategies or tactics to deal with them. It’s almost as if the work to date to be incredibly difficult for them to work this out on has just been – Employee engagementreal challenge ahead – and not all the groundwork for the their own. But are they ready, willing or able? It’s going – Digital communications businesses will be ready to face up to the scale of this challenge. to take a shift in their approach from focusing on CR housekeeping to broadening their outlook to true To mirror the online world, it’s as if CRvaried and include FTSEbravecompanies; Our clients are extremely 1.0 is over. This is the 100 sustainability and how they function amongst shifting new world of CR 2.0. major multinationals; some of the world’s most exclusive brands; We are launching the economic, environmental and social agendas all law firms; private equity firms; world-leading educational around them. This is theCover photography by to 2.0 andat shift from CR 1.0 Lee Funnell Re-think tank, an online forum establishments and this year’s Directions we have invited comment NIGEL SALTER So for independent, entrepreneurial businesses. we’ve researched what the biggest 50 companies www.graphicphoto.com for everyone to share their from specialists and businesses who are battling with across Europe are doingPage 08–11there are any Liam Bailey to see if photography by views. Join the debate at: DIRECToR, these conflicts, trying to find a way through the maze indications of change. We hope you on Heaven 42, Cover printed find it illuminating. SALTERBAXTER of economic, social and environmental pressures We’ve thrown downFSC (Forest Stewardship Council) the gauntlet on how salterbaxter-rethinktank.com LUCIE HARRILD involved. There are uncomfortable trade-offs at every businesses need to engage in the toughest of Horne certified. Supplied by Robert www.roberthorne.co.uk hEAD of CR PRACTICE, turn and even some generally held beliefs exposed sustainability issues. And as part of the debate we SALTERBAXTER as myths. The issues we If you would like to find put in the spotlight are: have launched the Re-think printed This is a place certified Text tank. on Think Bright, FSC with 50% recycled content. Supplied by Biofuels – saint or get in Packaging – scourge of out more, please sinner? where everyone can air their views, discuss possible Howard Smith www.hspg.com touch: the developed world or energy and waste saviour? ways forward, find information and network to find For more information on FSC go to And China – derailing global sustainability or partners who are tackling the same things. Discussion www.fscpaper.co.uk Nigel Salter alleviating poverty and implementing world class and debate is essential for progress, so ISO 14001 certified log on to Printed by CTD, an nsalter@ salterbaxter.com technologies? Plenty of debate there. environmental www.salterbaxter-rethinktank.com to have your say. and FSC accredited company. Louise Dudley-Williams TT-COC-2142 ©1996 Forest Stewardship Council A.C. www.ctdprinters.com ldudley-williams@salterbaxter.com Copyright © 2008 salterbaxter Copyright © 2008 salterbaxter SALTERBAXTER DIRECTIoNS 2008
  • 3. 02/03 531 million 6.7 billion vehicles on the road people in the world hunger For Fuel Five hundred million cars, one planet. our thirst For carbon intensive Fuels means something has to change. is it possible For Food every second Five people are born and two people die. with an extra three mouths a second to Feed, can we that bioFuels still hold the answer? aFFord to lose crop growing land to bioFuel production? During 2008 we’ve seen biofuels go from the answer to our prayers on transport and climate change, to the pariah of the world’s food supply and agents of rainforest destruction. So which one are they? Well it’s just not that simple. Crops that take over food-growing land, or cause the clearing of our precious rainforest carbon sinks can’t be a direct substitute to fossil-based fuels. But is that the end of the road for biofuels? What are the alternatives? And after the early rush of enthusiasm, what should a business do with commitments already made? Should others continue to introduce biofuels into carbon management programmes and green transport policies? With a changing agenda, knee-jerk reactions to this issue won’t do the business or the agenda itself any good. But it’s not clear which way to turn – our three contributors shed some light on how they see this issue developing. SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 4. BIOFuElS 04/05 can bioFuels maKe a positive diFFerence? is their impact really understood? dr peter cotgreave preordained dogma. What is required is rational the considered approach to biofuels DireCtor of PuBliC AffAirS, debate based on all the available evidence. the technology taken by the uK and eu so far offers Can biofuels help? The answer the royAl SoCiety royal Society recently published a report based on hope for the future. Policy must provide industry is yes provided they are produced a year-long study that concluded that biofuels have with a clear way forward so that long-term energy is one of the biggest issues in the uK. real potential but that we must have the systems in investment can be directed with confidence to efficiently and sustainably. how do we meet our growing energy needs while place to ensure that investment is put into the most ‘good’ biofuels. industry must in turn ensure that also tackling climate change and doing all of this efficient and sustainable types and practices. it is responsible in its investment, ensuring that in a secure environment? it is an incredibly complex We are at a critical point in relation to biofuels supplies are properly assessed for their overall agreement in March 2007 to introduce a renewable problem, yet if you are to believe the hype of various policy. the uK and eu have suggested adjusting impact. those who chase the quick and easy energy Directive with binding targets for renewables lobby groups you could be forgiven for thinking it is the targets, to allow time to gain a greater profit could destroy the biofuels industry and and biofuels. not. Soundbite campaigning has become the order understanding of the impacts of these biofuels. deprive us of a useful tool in tackling climate transport accounts for one quarter of all of the day, with each technology in turn pitched as they have recognised the problems but have not change and energy issues. greenhouse gas emissions. however, transport a silver bullet or a catastrophe with ‘evidence’ to forgotten the fact that there are examples of ‘good’ is the only significant sector which has not shown back up the case. in this environment it is difficult biofuels which can play an immediate and important a reduction in emissions against the 1990 Kyoto for policy-makers to make rational decisions based part in helping to tackle climate change without baseline year. on the contrary, transport emissions on an assessment of all the evidence. triggering other crises. have increased sharply – by 12% in the uK – and the current debate on biofuels is a classic Biofuels must be part of a sensible debate are continuing to rise. the conclusion is clear: unless example of this. We have seen biofuels presented about energy that looks at all the technologies. transport emissions are brought under control, as a totally green alternative to fossil fuels and that debate must include energy efficiency and longer term climate change goals will be jeopardised. massive subsidies thrown at specific crops in some seek to address the need to meet energy demand But can biofuels help? the answer is yes provided countries. We were then told that biofuels were the and effectively tackle climate change while not chris carter they are produced efficiently and sustainably. main reason for global food shortages and rising creating other serious problems. DireCtor of CorPorAte AffAirS, on 22 November 2007 lord rooker, on behalf prices. the fact is, like most things, it is never that Science and technology underpin most of BritiSh SugAr PlC of DefrA, opened the uK’s first bioethanol plant simple. Assessing these fuels is a complex task our lives. electricity, transport, computers, phones, at British Sugar’s Wissington facility in Norfolk with made even more complicated by the diversity of products that fall under the biofuels banner. it is this diversity that makes it foolish to iPods, medicines – without science we would have none of these things that we take for granted. it also offers us the potential to solve many of the problems 55,000 tonnes per year is the Biofuels are being introduced throughout the world to address two main issues: climate change and fuel security. Because they are produced from renewable a capacity of 55,000 tonnes/year. this delivers a greenhouse gas emissions saving of 71% reported under the uK’s renewable transport fuel obligation decry the technology and call for blanket moratoria. that we face. Whether it is meeting energy needs, capacity of the UK’s sources like plants or waste materials, biofuels (rtfo), compared to petrol. it is also highly We should be looking to see what practices in the tackling climate change or feeding the world – we first bioethanol plant. can make a contribution by avoiding burning fossil sustainable. Detailed standards governing soil, air, industry are causing problems and seek to replace need to make our judgements and our policy based energy reserves and lessening dependence on water, biodiversity and social operating practices them with good practice that is also common. on real evidence about the risks and benefits. oil imports. the relative importance of these two are set out in a sustainability manual, available for these good and bad practices do not only objectives depends where you are. in Brazil and the public scrutiny. relate to what crops are being used. We also need uSA, biofuels programmes have been introduced At a time when biofuels are under the spotlight, to look at where the crops are being grown. Are they displacing food crops, are rainforests being cleared to grow them, can they be used to restore degraded We are at a critical point in relation 12% increase in UK mainly for fuel security reasons. in Britain the main driver is climate change, although continued high oil prices may increase future emphasis on this British success story demonstrates that biofuels can make a positive and immediate contribution to tackling the urgent issues of transport emissions and land, are people being exploited in the farming of to biofuels policy. The uK and Eu transport emissions, fuel security. fuel security. them and many other factors? have suggested adjusting the targets, and continuing to rise. Both the eu and uK regard climate change government support is needed to introduce, in relation to the increase in global food prices as a key policy issue, and have set ambitious goals and enforce, performance standards in the rtfo to allow time to gain a greater caused by biofuels we have seen estimates that to address it. the uK has taken a lead in europe and renewable energy Directive to ensure that range from 3% through to 75% and the lobbyists understanding of the impacts of by agreeing a long-term target to cut emissions by biofuels – from all sources – deliver what they on all sides will choose the numbers that best fit their these biofuels. 60% by 2050, and supported the eu heads of State claim to. To you have r sa sal y go reth terbax to inkt ter- a dire nk.com cti / biof ons/ uels SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 5. BIOFuElS 06/07 3 reasons to thinK hard about bioFuels – unless the industry taKes action this year sagariKa chatterjee rainforests and peat bogs – these are critical carbon to find industry solutions to sustainability challenges. ASSoCiAte DireCtor, sinks and in need of protection to mitigate the Biofuels could be a real climate Biofuels could be a real climate change solution, f&C ASSet MANAgeMeNt PlC impacts of climate change. change solution, but investment must but investment must be put into the most energy- efficient and sustainable types. in 2006, the capital markets witnessed a series of 2 Is the company exposed significantly be put into the most energy-efficient governments should not throw out biofuels initial public offerings (iPos) of biofuel companies. to political risks? and sustainable types. targets, but instead review how incentives and Promising high returns, energy independence and Biofuels crops have been criticised for public policies can encourage a sustainable biofuels a way to reduce greenhouse gas emissions from competing with food crops and contributing to food industry. in addition to Brazilian ethanol, there are transport, the fledgling biofuels industry shot to price inflation, severely impacting the food intake savings than many first generation biofuels. other biofuels that offer carbon savings, including prominence in the City as the latest hot investment. and nutrition of low-income people in emerging however, second generation biofuels are far from biodiesel based on used cooking oil and ethanol two years on, chastened by a series of profit markets. Biofuels were discussed at the uN’s recent commercialisation and still in the research and from municipal waste. greenergy international is warnings that have disappointed investors, World food Summit, but countries were unable to development stage, with virtually no opportunities among a handful of biofuels producers managing the biofuels industry has been stunned by an reach any agreement on the extent to which biofuels for an investor such as f&C to invest in publicly carbon savings and sourcing impacts proactively; aggressive political backlash, led by environmental contribute to food security concerns and failed to listed second generation biofuels companies. it buys ethanol from Brazil, palm oil from members campaigners, that has steadily snowballed into a agree on public policies for tackling this. it remains f&C’s analysis is that the biofuels industry of the roundtable on Sustainable Palm oil and soy chorus of concerns voiced by united Nations’ food unclear to f&C to what extent biofuels have partly has itself to blame for the political backlash. from members of the roundtable on responsible Soy. and agriculture officials and the organisation for contributed to food price inflation, with potential Companies underestimated the supply chain in spite of the obstacles, it may yet be possible economic Cooperation and Development (oeCD). contributory factors including land availability, environmental risks involved in feedstocks for to create a sustainable biofuels industry. to rebuild for investors like f&C, who seek to invest in population growth and speculation. one thing is biofuels; they miscalculated political concerns public confidence and to deliver sustainable climate change solutions, first generation biofuels clear – the lack of agreement among global public about food security and food price inflation; they investment returns, the biofuels industry must take producers have become unattractive as investment policy-makers increases political uncertainty for mistakenly believed that governments would turn action in 2008. f&C encourages companies and opportunities. Biofuels present political risks, with investors. Meanwhile, campaign groups have a ‘blind eye’ to negative impacts when devising government to take the following four key actions speculation that governments may reverse current questioned how smallholder farmers will benefit biofuels targets; and they failed to work together before the year end: biofuels-related targets and incentives, and exposure from biofuels, and allegations of human rights to commodities markets means profit margins are abuses have surfaced; including forcible removal squeezed. in looking at any company involved in of farmers to make way for biofuels crops in biofuels, our three main concerns are: Columbia, and of slave labour on Brazilian FOuR KEy aCTIONS TO CREaTE a SuSTaINaBlE BIOFuElS INDuSTRy sugarcane plantations. 1 3 1 are the carbon savings genuine? Governments need to set a clearer Global industry-wide standards must Brazilian ethanol, derived from sugarcane, 3 are second generation biofuels on the horizon? political and regulatory framework for be implemented to ensure biofuels have produces less greenhouse gas emissions than oil and gas majors, including BP, Chevron and a sustainable and competitive biofuels a net positive impact on ecosystems. conventional transport fuels, but uS corn-based total, have made investments in second generation industry, and remove European and US This needs to happen fast, as biofuels ethanol has emerged as energy intensive; and biofuels (e.g. lignocelluloses), which may have lower trade barriers such as tariffs on Brazilian ethanol producers face a profit margin squeeze due to in some cases produces more greenhouse gas sustainability impacts and offer higher carbon imports. Governments need to promote investment rising commodity prices, and many are sourcing emissions than are saved. A further concern is the in new technology, as this will be key to the low-cost feedstocks regardless of the long-term extent to which uS corn-based ethanol contributes industry’s success. Biofuels policies must enhance environmental damage they cause. The new to food price inflation; faced with government Biofuels producers face a profit margin climate change prevention strategies and subsidies Roundtable on Sustainable Biofuels presents subsidies for ethanol and protection from cheaper squeeze due to rising commodity prices, should be linked to achieving real carbon savings. an opportunity for this. Brazilian imports, uS farmers have switched from and many are sourcing low-cost 2 4 producing food crops to producing crops for ethanol. The biofuels industry needs to work The industry must engage more actively environmentalists have also linked biodiesel based feedstocks regardless of the long-term more closely with governments to promote in the public debate about biofuels and on palm oil with the destruction of tropical environmental damage they cause. political objectives on carbon savings, demonstrate transparency on carbon technology, food prices, food security savings and sourcing impacts. The and international development. biofuels industry stands at a crossroads and must To s The industry also needs to collectively address public concerns. If companies h thou are yo encourage governments to do not convince the public that they will move g ur salt hts go support easier distribution towards sustainable business models, they may find ret erba to of biofuels. that governments change course on the targets and hink x ter- ta subsidies that are driving their industry’s growth. dire nk.com ctio / biof ns/ uels SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 6. 08/09 ARE WE ENVIRONMENTAL SAINT OR SINNER? THE PARADOX OF PACKAGING DICK SEARLE SUFFOCATING chIEf ExEcUTIvE, ThE PAcKAGInG fEDErATIOn Where did all this packaging come from? 50 years ago very little of the packaging that exists today had even been invented. As the affluence of the consumer society increased dramatically, there was a seismic change in the variety of packaging UNDER THE available in all types of materials but particularly in plastics. This was driven by customer demand for a wider range of products and convenience and led to the explosive growth in supermarkets WEIGHT OF THE (which wouldn’t exist without modern packaging) – accompanied by moves to weekly shopping as storage facilities in the home developed and packaging enabled product protection including vastly extended product lifetimes. Many brands PACKAGING and sectors were also ‘created’ and defined by their packaging. So is packaging as big an issue as consumers, the media and politicians seem to think? Particularly at a time when PROBLEM? food prices and security of supply are a major issue? Overall, our packaging ‘consumption’ in the UK puts us at number seven in the EU league table and our growth per head is one of the lowest – indeed in the last seven years, packaging growth at 3% is less than one fifth of GDP and consumer spending growth over the same period. So what are its real environmental impacts? Packaging is highly visible, particularly once it is used. It receives an enormous amount of media and It has to be said, packaging gets a lot of bad press. Whether it’s plastic bags at political focus – at a level wholly disproportionate to supermarkets or over-packaged items using an array of plastic and cardboard, most its true impact. Less than 20% of household people have a pet hate linked to packaging. Landfill is full of it, recycling rates aren’t waste is packaging and the amount of packaging climbing quickly enough – and nobody wants rubbish in hedgerows or on beaches. going to landfill is less than 3% of total landfill. It feels like we are suffocating under a mountain of packaging waste. Its carbon footprint is less than 2% of the UK’s footprint and the carbon impact of the wastage But is it really that simple – is packaging really the scourge of our society? Would we that it prevents would be much higher than be better off without it? Should other consumer issues be getting more attention? The this figure. The growing use of plastics for load paradoxes within the packaging debate make it difficult for businesses to explain where wrapping has also enabled transportation efforts should be focused. We’ve asked Dick Searle, Chief Executive of The Packaging economies as lighter loads are moved. Federation and Alasdair James, Director of Waste, Recycling & Packaging at Tesco plc The whole issue of the material used is highly to drill a bit deeper into the packaging paradox – waste creator or waste saver? complex with the first consideration always that the packaging works. Environmental impact covers a range of issues including carbon footprint, SALTErBAxTEr DIRECTIONS 2008 SALTErBAxTEr DIRECTIONS 2008
  • 7. Is fresh thin PACKAGING to prolong king needed 5 10/11 our shelf li recyclability, ‘sustainability’, replenishability and security of supply are a major issue? A recent Without pa ckaging, w fe? have to reve e would eit rt her weight. not one of these should be the sole survey by one retailer discovered that twice seen in the to shopping pattern determinant of the material used. It is the overall as many of its customers were worried 50s or watc s last accelerate h net environmental impact that has to be assessed about ‘excessive packaging’ as were worried as the incre climate change sends meth ase in food – providing the pack functionality is correct. about global warming! As a result of modern ane levels waste soaring. packaging and distribution methods, food The problem is that most consumers look waste in the UK is 3%, where in less developed countries like russia and India, at used packaging with little thought for food waste is +40%. With food supply, the role that it’s played in getting goods safely from producer to point of usage. security and cost at the forefront of most DITCH PACKAGING? Best before : Better than packaging? before Waste: consumers’ minds, packaging is playing NOT AN OPTION Would incr Energy: Lots wasted ea without pa se dramatically a vital role in minimising waste and wrong issu on the ckaging? contrary to popular belief, the whole maximising availability, choice and value. es? Price to pa y: Potentially high? packaging supply chain has been working for The Government’s obsession with ALASDAIR jAMES decades to minimise the impact of packaging. ‘one-trip bags’ as an environmental menace director of waste, Most recently, the focus has been on primary and a totem of the throwaway society is recycling & Packaging, packaging but a substantial amount of packaging another example of getting it wrong. True, tesco Plc is used for actually getting the goods into retailer they are very unsightly as litter but they outlets and is never seen by consumers. And most don’t throw themselves away – people do it! it sometimes feels as if packaging carries the weight 4 Can we reuse it? of what is seen as excessive is more to do with gift Prompting behavioural change is good but of the nation’s environmental ambitions on its Packaging and recycling should always Household experience or retail methodology including theft leading the public to believe that bags are shoulders: if we can banish it, we will be cured from be considered together. as the Uk government waste minimisation. The problem is that most consumers a major threat to the environment is not every eco-ailment around. of course, this simply continues to build a coherent recycling look at used packaging with little thought for the – it trivialises a very important debate. isn’t true. without packaging, we would either have infrastructure, we can support them by choosing Less than role that it’s played in getting goods safely from producer to point of usage and the role it continues A recent Government advertising campaign pointed out that 40% of carbon emissions to revert to shopping patterns last seen in the 50s or watch climate change accelerate as the increase to use packaging that most councils accept for recycling – such as Pet – over materials like PVc 20% to play in preserving products until they are used. were linked to household activities such in food waste sends methane levels soaring. which few can handle yet. of household waste Arguably, the biggest area of criticism is fruit, as car use and home heating – massive However, this highly tangible example of waste is packaging vegetable and meat packaging in supermarkets contributors to the UK’s footprint – and is important to our customers and, as a responsible 5 What’s its carbon footprint? (mostly in plastics) and yet this represents just massively more than that of packaging. If the – and responsive – retailer, we are doing what we when thinking about how you pack a product, 1% of all packaging used. What consumers don’t Government wants to see a serious reduction can to reduce it. it pays to look at the big picture, not just the product see is all the packaging used to get goods into in consumers’ carbon footprints, it needs to we have approached the problem by introducing in isolation. we’ve done a great deal of work recently Packaging store which are then sold loose. A recent survey stop trivialising the message by focusing on a simple check-list which allows us to make the best to understand carbon footprints and know that, by one retailer showed that more energy was used issues like packaging. decisions for the environment. while packaging typically makes up a small part of in ‘loose’ apples than those pre-packed in fours. the overall footprint, there are opportunities here to Less than And another retailer saw wastage levels double when all their fruit was sold loose – and the Whether packaging is a ‘Saint’ 1 Does it do its job? it hardly needs saying but the whole point of make a real difference. we now receive new world wine in barrels and bottle it ourselves in this country 2% environmental impact of that waste was far or ‘Sinner’ will be, like beauty, packaging is to keep a product in peak condition to save thousands of tonnes of glass from being of the Uk’s carbon greater than that of the packaging ‘saved’. in the eye of the beholder. until it has reached the customer’s home or been shipped half way round the planet. this new footprint And what about all the focus on recycling consumed. this is why, despite some vocal approach is cheaper, more efficient and much – and should we countenance the remainder being As long as consumers want to buy the opposition, we still sell soft fruit in sturdy plastic better for the environment. put into landfill? The packaging industry welcomes widest range of goods all day and every day, trays. without them, millions of strawberries, the use of recycled materials but the availability there will be a need for modern packaging. peaches and avocados would wind up in the bin. By 2010, we aim to have reduced the packing Food waste of these is constrained by the quality of recyclate Without it, there would have to be a return to on all the products we sell by 25%. it is a stretching currently delivered from the household waste living styles of 50 years ago. There would be 2 Can we use less of it? target but, by stating our ambitions clearly, we stream. consumer concern is primarily prompted no supermarkets, much less choice, vastly we spend £600m every year on packaging know that everyone in our business – and in all Only by the apparent lack of facilities in many areas for the collection of waste packaging. The extent to increased product wastage and a general return to austerity experienced only by those of us of so it is in our interest to keep on finding ways to reduce what we use. this can be a simple case of those businesses that supply us – can appreciate what we are trying to achieve. 3% which plastics should be recycled in the UK is a more advanced years! The packaging supply light-weight wine bottles and tin cans, or rethinking the real challenge now is to communicate matter of considerable debate – particularly in the chain will continue, as it has for many years, how we package a whole range. last year, we to our customers the reductions we are making in the Uk’s supply chain context of what makes most environmental sense. to strive to minimise the impact of packaging dropped bulky blister packs from our electrical and why the packaging that remains is essential, Our performance in using unrecyclable packaging whilst continuing to provide the wherewithal products and used shrink wrap instead. we saved and not the whim of unthinking manufacturers or waste (mostly plastics) for energy production is for consumers to live as they do. Life is about 72 tonnes of mixed packaging as a result. retailers. we must get better at explaining why one of the poorest in Europe so we shouldn’t be choices and as long as consumers choose to strawberries sold in a plastic tray are likely to be sending to landfill those materials that could be live as they do now, modern packaging will 3 Is there a better material? greener than those without, and we must help To r e used to generate energy. There is an urgent need continue to be an integral and necessary part them to embrace innovations that may not feel M&S ad ab once we’ve thought about the perfect design, ’ vie out salt w for more joined-up thinking between local of their lives. Whether packaging is a ‘Saint’ we can think about the best material to make it from. quite right first time, like wine sold in cartons or reth erba go to authority, industry targets and improvements or ‘Sinner’ will be, like beauty, in the eye of we are trying to increase the amount of recycled shower gel in pouches. inkt xter a - in packaging recycling. the beholder. But, as a major contributor to content in the materials we buy. for instance, we there is still a lot of work to be done but dire nk.com ctio / So is packaging as big an issue as the way in which society functions, it’s difficult now sell our freshly baked buns and cakes in clear it is work worth doing – and our customers will pac n kag s/ consumers, the media and politicians seem to to see many products which have made a plastic boxes made from 50% recycled Pet. thank us for it. ing think? Particularly at a time when food prices and more significant change to consumer lifestyles. SALTErBAxTEr DIRECTIONS 2008 SALTErBAxTEr DIRECTIONS 2008
  • 8. 12/13 ENVIRONMENTAL DEGRADATION vs ECONOMIC GROWTH IN CHINA: IT’S NOT AS BLACK AND 80% of the world’s zips and toys WHITE AS A PANDA are produced in China YET 58% of Chinese exports come from foreign-invested enterprises A growing economy 106 billionaires in Chin ent BUT a damaged environm YET there are 300 milli a on people living below the povert China is now buildin y line g 2 power stations ever y week BUT it is set to become the w largest producer of orld’s wind power by 2020 The US produces 19 tonnes of CO2 per capita BUT China produces 10 million people with no access to only 4.7 tonnes electricity BUT by 2020 there may be 140 millio n cars on China’s roads When you look at the facts and figures, China’s development rate can be mind LEO HORN-PHATHANOTHAI but public debate has often been one-sided and boggling. On the one hand, millions are benefiting from an improving economy vindictive: politicians and the media alike have NatioNal CoordiNator, and opportunities. On the other hand, millions are locked in poverty and oppression UK-ChiNa SUStaiNable over-indulged in vilifying China as the number one and the environmental cost of that developing economy is almost catastrophic. developmeNt dialogUe, global eco-delinquent. this narrow typecasting of deFra China as villain is fundamentally misleading and So how do foreign, responsible business investors reconcile their role working with blinds us to the opportunities that China’s arguably the most important economy in the modern world, which is also a country China’s environmental crisis has caused much transformation presents us with. of contradictions? there are no easy answers, but leo horn-phathanothai, National public concern in the West. this is understandable: China’s environmental ills have been widely Coordinator for the UK-China Sustainable development dialogue, deFra, discusses as the world’s top emitter of greenhouse gases, documented and reported on. many of the dizzying the changes in China. China’s domestic environmental problems have statistics about China’s air and water pollution, global impacts, and therefore should concern us all. its acquisition of natural resources abroad, and its SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 9. ChINa 14/15 all this is significant because it means that Underlying all this is the reality of global China has the potential to be a major positive interdependency. this interdependency is ecological influence on the international scene. by dint as well as economic. China is the global manufacturing of its sheer market size, whatever technology hub of the world. export trade rather than domestic China adopts is likely to become an industry norm. consumption is driving China’s growing pollution China will be an increasingly important contributor and resource demands. the average Chinese to the setting and protection of global standards. person in fact consumes very little: 48% of Chinese live in China 1.3 billion people as a heavyweight in global trade and environmental gdp goes to savings. on the other hand, China is ther than r t trade ra ption is driving negotiations, China will have a strong vested interest the world’s third largest exporter, after the United Expo in creating predictable international environmental States and germany. onsum domestic c ing pollution rules under which its businesses operate, and w AND the average China’s gro under which its own goods and services are traded. there is of course an important moral On a more upbeat note, China’s life expectancy is 72 dimension to the debate that needs to be taken into account. alongside pollution and environmental environmental crisis is also presenting depletion, poverty reduction has been the most huge commercial opportunities that the notable output of China’s rapid growth. indeed international business and investment China has rendered a great service to humanity: communities are just waking up to. without her we would be nowhere near achieving the millennium development goal of halving impacts on global commodity markets are well poverty in the world: China has been responsible Significantly, most of China’s exports are coverage rate, and treatment of 70% wastewater known, and will not be repeated here. Suffice to for 80-85% of global poverty reduction in the primary goods or manufactured products that create and 60% residential garbage in urban areas by say that China’s environmental crisis is real and last 20 years. heavy pollution and require intensive resource uses. 2010. these objectives are backed by a raft of it is planetary in scale. China’s per capita ecological footprint is still a whopping 40% of China’s energy use goes into measures designed to mobilise massive investment as a resident of beijing, i am reminded of low, at 1.5 global hectares per person, compared its exports. With tighter environmental regulation and knowledge transfers from the private sector. this almost every day as i breathe in the thick soup to a world average of 2.2, a whopping 9.7 for the in the West, the manufacturing of many energy- these cover legislative change, fiscal and financial of cough-inducing urban smog. it is worth recalling United States and 5.6 for the UK (according to intensive goods has shifted to China. this means incentives, regulatory reform, public private however that air pollution is not a modern Chinese the WWF). We should be fair. economic growth that the West has effectively outsourced much of its partnerships, training and education, and subsidies invention: not very long ago (in the winter of 1952) is fundamental to China’s future and China has a energy consumption and pollution often to facilities to research and development. the ‘london fog’ claimed the lives of thousands right to develop. with lower efficiency and environmental standards perceptive investment analysts such as of people. if one could peer back in time from the in China. morgan Stanley’s Stephen roach see in these london eye, the view in the 1950s would not have in short, we are getting all the ‘goods’ at changes signs of a new ‘commodity-lite’ model of been worth the ride! a cheap price, while China absorbs most of the development in China, “in effect retrofitting China’s the broader point here is that China is in the In short, we are getting all the ‘goods’ ‘bads’ such as pollution and a depleted environment. commodity-guzzling production platform with more midst of its industrialisation drive, and nowhere responsibility, clearly, is shared. commodity-efficient technologies”. the government has this kind of transformation been a clean one. at a cheap price, while China absorbs the Chinese government has set specific is indeed stepping up its investment to support this by 2015 China will have completed its first round most of the ‘bads’. targets for environment conservation in its current economy-wide environmental upgrading. of industrial modernisation, by which time it will five-year plan, including reduction in energy intensity the environmental protection industry in have reached a level of economic development by 20%, reduction in the emission of major particular will benefit from targeted programmes comparable to most western countries in 1960. pollutants by 10%, attainment of 20% forest of support aimed at building up specific market in the sixties the environmental movement had segments. Key industries benefiting from policy only just started to emerge in the US. support include water treatment, air purification, in comparative terms the Chinese government natural gas, hydropower and solar power. these is responding much sooner and resolutely to the market segments have huge growth potential. environmental problems caused by industrialisation. deutsche bank predicts the growth of demand for the government’s macroeconomic plan for 2006-10 water treatment, waste gas treatment and natural is the nation’s first to focus on a comprehensive gas will reach 20% per year and that for solar power range of sustainable development priorities. will be as high as 35% per year. China is also serious about meeting the international thus China has become a global laboratory commitments it has made. the recent White paper of change and an incubator of technological, design on environmental protection in China reaffirms and policy innovations. To you have China’s commitment to sign and ratify international We can point fingers and cry foul play, but r sa sal y go obligations. Under the montreal protocol, China ible for we’ll have much more to gain from constructive reth terbax to has already adopted more than 100 policies and China w as respons over t y engagement with China. China is hungry for the inkt a dire nk.com ter- global p 0-85% of the last 20 years measures to reduce ozone-depleting substances technology, investment and know-how needed to ctio / (odS), accounting for half all odS eliminated by 8 remedy the damaging consequences of economic chin ns/ in reduction developing nations. growth. responsible governments and smart a businesses should see vast opportunities in this. SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 10. 16/17 minutes”. And – one might add – it will then take far longer to rebuild than it did to establish in the first place. In contrast, in the tough economic conditions that we are likely to experience for several years at least, businesses are going to be looking for every means possible to differentiate themselves from competitors; and to make themselves more attractive to customers and talented employees. And, contrary to popular misconceptions, responsible business can save a firm money – or even make money – rather than necessarily having to create extra costs. Furthermore, employees whose loyalty and commitment to ‘go the extra mile’ will be even more important to help businesses to get through the lean years, will be de-motivated by any perceived backsliding on the corporate responsibility commitment. Doing good in the good times takes vision. Sticking with it in the tough times, takes vision and determination. Of course, those companies who do not take their commitment seriously, who have just paid lip-service and treated it as ‘a launch, a lunch and a logo’ – a bolt-on to business operations and not built-in to business purpose and strategy – these companies will probably peel off. They will be no loss. On the contrary, it will sharpen the gap between the committed and others. For the committed, it should speed up the process of innovation: finding more cost-effective and creative ways of improving sustainability. Already, we are seeing how escalating oil prices are stimulating more smart money to go into green energy projects. Similarly, companies are now trying to find more efficient ways of advancing their commitment to be a responsible business. During the aftermath of the dotcom bubble bursting, some of the big information and communications technology companies chose to give staff unpaid leave, or half-pay secondments to community DaviD Grayson organisations where they could keep using their skills, with a job to come back to in the business, DIrecTOr, DOugHTy cenTre FOr cOrpOrATe reSpOnSIbIlITy, rather than laying people off. It will be that kind of crAnFIelD unIverSITy ingenuity and sharing of the short-term pain that will differentiate the best companies through the With all businesses currently looking at how to survive the economic slump, various commentators have suggested that the recession. Hard times do not have to mean a are corporate responsibility practitioners feeling the heat from the finance current economic downturn is going to be bad reversal of long-term commitments to sustainability department? Or are they being consulted on ways to help the business move for corporate responsibility. It is just as plausible and business responsibility if managers use their forward? Does that mean they can tackle the toughest issues in sustainability to argue the opposite: that hard times could entrepreneurial flair and creativity. or will they be fighting for survival? Will consumers continue to support and improve the embedding of responsible business. champion responsible businesses and look for products that last, or go for the How so? businesses which have spent the past cheapest on the shelf whatever the consequences? decade painstakingly establishing their credentials for corporate responsibility are not going to There might well be a bit of all these things in corporate responsibility and throw that away lightly. Indeed, aborting their To s h sustainability in the short-term future while businesses accommodate the downturn. commitment now would create a reputation thou are yo ghts ur but where will corporate responsibility and sustainable business practices end up? for being superficial and deceptive about their sal go We get the low down from David grayson at the Doughty centre for corporate reth terbax to original commitment. Such a negative reputation, inkt ter- a responsibility at cranfield university, the consumer view from barry clavin at The once created, would be very hard to shake off. dire nk.com co-operative group and the business view from David godden, chair of the corporate cred ctio / “It takes twenty years to build a reputation,” n responsibility committee at land Securities and cOO at land Securities Trillium. says Warren buffet, “and it can be lost in five itcru s/ nch SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 11. CREDIT CRUNCH 18/19 arE ETHiCaL ConsUMErs a overall household spend and are estimated to stand at well over £33bn. Though, as economists point For some products, the emotional attachment to the underlying ethical issue has ensured that FaCTor in KEEPinG sUsTainaBiLiTy out, this has been achieved against a backdrop of relative economic prosperity and still accounts for, certain ethical purchases are firmly entrenched for a core constituency of consumers. The uK Fairtrade on THE BUsinEss aGEnDa EvEn at best, just five per cent of overall consumer spend. markets stand at over £500 million and loyalty to DUrinG THE CrEDiT CrUnCH? The received wisdom goes that when money is tight our rational side comes to the fore and the Fairtrade brand for certain purchases (e.g. coffee) is well embedded. At a time when the global food pushes emotional attachments, brand loyalty etc. crisis may have contributed to 100 million people Barry CLavin to one side. So the potential for ethical products being pushed further into poverty, it is hard to eTHIcAl pOlIcIeS MAnAger, and services to survive, or even prosper, in an conceive of those informed consumers switching THe cO-OperATIve grOup economic downturn, may be reliant on the extent their priorities to marginal cost savings. likewise, to which they can satisfy these two drivers: the for consumers concerned about animal welfare, For the last ten years, when faced with the question depth of emotional attachment to an issue, or the it is hard to conceive of such consumers switching “How big can ethical consumerism become?” appeal to our rational side. from free-range eggs, purchases of which are now economists have tended to have a stock response more common than for those produced under ready: “First, let’s see how it deals with a recession!” intensive conditions. So, as we enter an economic downturn, Inevitably, some will find it more difficult to all eyes are on ethical consumerism and certain prosper in a downturn. For example, the organics reputations are on the line. market, in particular box schemes, may find that predicting the effect the credit crunch will have they need to convey a stronger emotional or rational on ethical consumerism is difficult, because it’s not argument to secure ongoing consumer loyalty. a situation we’ve had to deal with before. At the time With rising energy prices, consumers are of the last recession, in the early 1990s, ethical already looking at managing their utility and fuel consumerism as a market was wholly insignificant: costs more efficiently. In a time of economic the International Fair Trade Association was in its prosperity it has been difficult to engage many infancy and brands such as café Direct had yet to consumers on the most basic (if not tokenistic) be launched in the uK. As such, economists’ energy efficiency measures: two thirds of people reticence reflects, in part, their analysis of charitable still boil more water than needed in the kettle. giving as a model for ethical shopping. The Indeed, this is also a reflection of the fact that when contention is that they both reflect an economic money is not scarce, time is valued as a more decision that is almost totally emotional rather than scarce resource and influences numerous poor rational, as well as reflecting our propensity to be sustainability decisions, e.g. it’s so much quicker good when we can afford to be good. charitable to use a tumble dryer than line dry. giving, unsurprisingly, tends to fall during a An economic downturn could refocus recession, as it did in the last recession. consumer minds and spark off the sustainability It is probably fair to say that had a significant agenda in many unexpected ways. There is already downturn come earlier in its growth, ethical anecdotal evidence that people are choosing to consumerism may have been dealt a severe blow: drive slower to save on petrol, to waste less food consumer awareness of ethical consumerism was (gordon brown will be pleased), or to walk to low, there was limited availability, often raised prices, their local shops. Of course, the vulnerable need and quality was questionable. However, these early to be protected but an economic slowdown could, issues have been mostly overcome, and advocates in many ways, turn out to be good for sustainability. of ethical consumerism are quick to point to the Indeed, we may be moving towards a ‘quality’ growth in sales of ethical products and services over agenda and away from a ‘quantity’ agenda wherein the last ten years, which have consistently outgrown as consumers we feel more satisfied by the quality of the food we buy rather than the quantity. And this can only be good for sustainability. However, the bigger risk is that it will be politicians rather than consumers who go into knee-jerk mode and take the opportunity to de-prioritise green issues. At a time when the global food crisis may have contributed to 100 million people being pushed further into poverty, To it is hard to conceive of those informed you have r sa consumers switching their priorities to sal y go reth terbax to marginal cost savings. inkt ter- a dire nk.com cred ctions/ / itcru nch SALTERBAXTER DIRECTIONS 2008 DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 12. CREDIT CRUNCH 20/21 sUsTainaBLE BUsinEssEs WiTH The tension comes EMBEDDED Cr MUsT LooK To THE when those who haven’t LonG TErM For THE rEWarDs discovered the value see corporate responsibility purely as a cost. DaviD GoDDEn but that is not to say there aren’t pressures. cHIeF OperATIng OFFIcer, We know the value of efficiencies and of working lAnD SecurITIeS TrIllIuM with our customers, but we have to assess carefully the financial and sustainability value of our projects. property and finance have been two sectors hit hard Many of these pressures are growing around the by the credit crunch and the resulting economic crisis climate change agenda. The carbon reduction that seems to be unfolding before us. It is no secret commitment is currently due to come into force that the property sector has been feeling the pain in 2010 and will put carbon emissions trading into of the credit crunch. but at the same time the sector play for lower energy users. The price of carbon is one of growth in sustainability terms. The past is going to become more and more important to five years have shown a marked increase in the investment decisions. regulation from government understanding of sustainable building design, the on zero-carbon housing and on the use of on-site necessity of responsible operations, the value of sources of renewable energy are going to be very environmental management and the understanding of difficult to implement economically. So in the current the effect buildings have on communities. Of course, market, property companies are going to have some as in most sectors, there are pockets of good and difficult decisions to make. new and innovative ways not so good practice, and there are varying degrees of building will be needed. And that is one reason of understanding of the true value which is added to why businesses should not shy away from corporate business through a focus on corporate responsibility responsibility and sustainability in a tough market and sustainability. Architects and building contractors – they are drivers of innovation which provide new probably understand the roles they can play more ways of generating value for the business. clearly than agents and lenders but on the whole it In the current economic climate, businesses is a sector whose understanding and therefore its are right to question everything they do to make activities are on the up. So do these two trends sit sure they are ready to face any challenges ahead. together – an economic slowdown and a commitment but if sustainability and corporate responsibility are to corporate responsibility? The common denominator genuinely integrated into the business and delivering is value. When a business understands what is value, then the commitment to them should remain. meant by corporate responsibility, and can therefore That is the view land Securities is taking. use it as a business decision-making tool for the benefit of all stakeholders (the bottom line included), then the trends sit together. The management team of any business is looking for ways to maximise and Corporate responsibility is not build value. The tension comes when those who an add on for Land Securities, haven’t discovered the value see corporate responsibility purely as a cost. it is a must have. But that is A significant part of land Securities’ business not to say there aren’t pressures. is based in the long term – buildings can take We know the value of efficiencies 15 years to go from design to occupation. So a and of working with our customers, retreat from adopting innovative building techniques that will pay environmental and financial dividends but we have to assess carefully when a project is completed is not just the wrong the financial and sustainability thing to do, it is costly. It is a similar story in value of our projects. other areas of our business: retail parks without engagement with the community would be car parks without customers; offices without a focus on delivering service and developing relationships To s h with its occupants would be costly shells. corporate thou are yo ghts ur responsibility is not an add on for land Securities, sal go reth terbax to it is a must have. inkt ter- a dire nk.com cred ctions/ / itcru nch SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 13. ARE BUSINESSES 22/23 MAKING THE SHIFT NESTLÉ GLAXOSMITHKLINE CONTRIBUTING TO FROM CR 1.0 TO 2.0? NUTRITION AND wELL-BEING PACKAGING SUSTAINABLE AGRICULTURE GLOBAL HEALTH PUBLIC POLICY & ROYAL DUTCH SHELL EXTERNAL AFFAIRS DIFFICULT OIL CLIMATE CHANGE LUCIE HARRILD HEAD OF CR PRACTICE, So 2008 appears to be the year when CR has become a two-speed affair. Are businesses simply doing housekeeping or are they facing up to some of the tougher, more fundamental sustainability issues? SO wHAT ARE SALTERBAXTER Unfortunately in a world where issues around climate change, energy security and globalisation sit firmly under the heading of corporate sustainability headaches, the housekeeping approach is not THE ISSUES BEING TACKLED? The following pages provide our overall assessment the final solution. Businesses need to talk about where they stand on the more complex challenges that don’t have a KPI attached or a right or wrong answer, and look for innovative solutions. That’s the next step in sustainability – what we are calling the shift from ‘CR 1.0 to 2.0’. Part of the shift to CR 2.0 is how businesses are working with stakeholders to find a way through of the top 50 European companies. We’ve identified the complexities and conflicts thrown up by sustainability. It’s not about single-handedly solving the world’s problems and then putting out a press release, but working through an approach and how they the ones that have now made that shift to CR 2.0, see the future developing. tackling the big issues outside of what are now To get an overview of who is doing what, we’ve done an assessment of the top 50 European recognised as ‘business as usual’ issues. Here are companies, as ranked by the FT (March 2008). We based our research on external communications, a mark of whether businesses are confident enough to talk about their views on the big issues as an just some of the companies that have made the organisation. And we limited time spent on each company to only a few hours – so if we couldn’t find shift to CR 2.0, with a few of the the key issues within that time then they don’t have very effective communications! Here is a list of issues and impact areas that they the questions we considered and why: communicate as important to them. ROYAL BANK OF SCOTLAND FINANCIAL CRIME SELLING AND LENDING PRACTICES 1 Is the business showing signs of embedding corporate responsibility and FINANCIAL INCLUSION sustainability into its strategy and articulating where it sees the business value? If a business has not addressed how to embed corporate responsibility it is unlikely to be moving beyond the housekeeping approach. TELEFÓNICA 2 Is the business engaging with stakeholders? DIGITAL INCLUSION Having a dialogue with stakeholders outside of the business is more likely to provoke a RESPONSIBLE USE move to CR 2.0 and encourage businesses to address tough issues. OF ICT INTERACTIvE 3 Does the business work through a materiality process to define its issues? GENERATIONS Those that do are more likely to spot big issues coming over the horizon, even if they AND CHILD vOLKSwAGEN aren’t ready to tackle them yet. XSTRATA FATALITY PREvENTION PROTECTION 4 What issues is the business considering? CLIMATE CHANGE BIODIvERSITY GLOBALISATION & We used this to assess whether the really complex issues are being talked about, or whether more standard environmental and social impacts were the ones being covered. LOCAL RESPONSIBILITY DEMOGRAPHIC CHANGE 5 And lastly, do we think the business is making a shift from CR 1.0 to 2.0? & EMPLOYMENT MEGACITIES, RURAL EXODUS SALTERBAXTER DIRECTIONS 2008 DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 14. 24/25 CHANGING FROM CR 1.0 TO 2.0 INvOLvES COMPANIES TACKLING THE CONFLICTS THAT wILL AFFECT THEIR BUSINESS We set the boundaries and distinguished what are still conducting housekeeping – just on a large we felt warrants being given the mark of CR 2.0. scale. One key issue addressed across the sector If a business has: not addressed how to embed is the impact on communities, with the majority corporate responsibility; not actively engaged its of the companies considering the end of life of stakeholders; and not assessed the impacts of the their operations. Not only is the environment of 58% OF REPORTS ARE SUSTAINABILITY big issues and prioritised tackling them, then it is the particular site following the closure of the unlikely to be moving beyond the housekeeping mine considered, but also the economic impact REPORTS, 30% ARE CORPORATE approach. Overall it was found that, although 80% of the action such as the removal of employment RESPONSIBILITY OR CSR REPORTS. 22 of businesses have integrated sustainability into their and its effect. 74% SUCCESSFULLY ARTICULATE wHAT CR OR % business strategy, only 22% of them are effectively However, in other sectors there is less SUSTAINABILITY REALLY MEANS TO THEIR BUSINESS, communicating their approach to complex issues evidence of companies tackling more than just the GOING BEYOND SAYING THAT IT IS jUST THE RIGHT and making the shift to CR 2.0. housekeeping areas. There are some good examples THING TO DO. 80% HAvE INTEGRATED CR AND SUSTAINABILITY INTO THE ONGOING BUSINESS The energy and fuel sector appears to be at of companies making inroads on embedding CR STRATEGY AND DISCUSS HOw IT wILL ENABLE the forefront of making the shift. This sector is often into their business, even integrating CR concerns THE BUSINESS TO BE SUCCESSFUL. in the headlines being challenged on big issues that into products and services, for example in the life are both hard to handle and where the potential insurance sector. That’s a big step forward and solutions conflict with each other. How do you certainly part of a move from CR 1.0 to 2.0. But secure energy and fuel supplies at the right cost there are also a significant number of companies while tackling climate change, safeguarding the that are stationary at CR 1.0. environment, operating responsibly and safely, and The banking sector shows signs of tackling conducting business in areas of the world that are some of the hardest hitting issues as identified unstable with risks to the business and the people through dialogue with stakeholders, such as 22% OF THE TOP 50 EUROPEAN who live and work there? There are no black and financial inclusion and capability. There is evidence COMPANIES ARE TALKING ABOUT white answers for this sector for certain. And, to of this sector integrating CR into business strategy, THE COMPLEX ISSUES OF CR 2.0 make it even more of a challenge, a trust deficit is communicating an understanding of the importance AND BEGINNING THE SHIFT. developing and general society is getting more and they place on it. The current turmoil and accusations more disillusioned with what they are hearing from of financial irresponsibility would, however, suggest this sector about what the future holds. So it is that their collective radar has been switched off. encouraging to see some of those companies really It'll be interesting to see how the sector responds hitting CR 2.0 head on and openly discussing the next year! challenges they face. There is a feeling that a ‘two-speed’ approach As we anticipated, the mining sector as a to CR is developing: those that are rising to the whole is moving toward CR 2.0 with strong CR challenge of really tough sustainability issues, and strategies and engagement in place. Although those that are sticking to incremental improvements material issues have been developed following in their housekeeping. The overall trend looks like dialogue with stakeholders, some organisations this: the answers to the majority of our questions indicate that there are signs of a beginning of a shift from CR 1.0 to 2.0 as more businesses show signs ANALYSIS CONTENTS of embedding CR and sustainability into their strategies. But those who are really tackling CR 2.0 Sector Page and talking about it are a minority. AUTOMOBILES 26 So this is the year that sustainability got tough. BANKS 26 At present, too few of the top 50 European companies 60% EFFECTIvELY COMMUNICATE are effectively communicating on how or why they HOw THEY ASSESS MATERIALITY. ELECTRONICS & EQUIPMENT 28 are tackling the most complex issues. There are 78% ARE ENGAGING wITH STAKEHOLDERS FOOD & CONSUMER GOODS 28 no more easy choices, but the business case for AND INCORPORATING THEIR EXPECTATIONS GAS, WATER & MULTIUTILITIES 29 INSURANCE 30 tackling these challenges is strong. It will not be an OF THE BUSINESS INTO THEIR APPROACH. easy task, but businesses need to learn from others MINING 31 within their sectors and be willing to take on the OIL & GAS 32 challenge to make the shift in this testing time. PHARMACEUTICALS 34 TELECOMS & TECHNOLOGY 34 TOBACCO 35 SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 15. ANALYSIS BY SECTOR AND FT EURO RANKING 26/27 VOLKSwAGEN HSBC » CONTINUED inconsistent as on the website issues identified are related to customer groups. Although INTESA SANPAOLO BBVA Volkswagen’s sustainability communications some very hard issues are addressed, this Communications are focused on the formation CR is discussed on equal par with corporate 21 FT EURO RANK 26 FT EURO RANK 33 FT EURO RANK AUTOmObilES are an example of absolute best practice, inconsistent approach to the prioritising and bANKS of the new group. Although working towards bANKS reputation so at first it’s a little dubious tackling the key material issues for this sector rationalising of some 14 issues leaves the CR 2.0 status by tackling both housekeeping as to whether the business will show any and considering issues much larger than it. reader unclear as to how or why issues are and thorny issues, the structure of issues is understanding of moving away from compliance The communications, based on these issues, being tackled. a little unclear. The current report is split into to tackling the hardest hitting issues. But are well thought out, easy to understand and an economic report and social report – the encouragingly, BBVA communicates a really to the point. This approach is embedded as social section looks at all stakeholders and good understanding of stakeholder expectations ‘doing business as usual’ and is being used BANCO SANTANDER the banks’ responsibilities, and the economic and the issues that are prioritised. The bank to form long-term strategy. Throughout the section sheds light on the banks’ value adding also shows good progress on integrating CR website and sustainability report, stakeholders’ 13 FT EURO RANK Although there is little information within the capacity. And online you will find information into the fabric of the business with a strategy bANKS expectations are referenced and the resulting online CR web pages, there is a good overview on environmental objectives. Perhaps a simple and business model demonstrating that all actions described. Volkswagen is looking at of where sustainability fits into the business explanation of this could be the challenges in group activities are aimed at ‘building a future’. all aspects of its operations and the possible structure. The map of sustainability focuses bringing together the focus of the two major Although the web structure is based on the implications. Dialogue is transparent and on business operations, where issues are banks and communicating it as one? A section ‘major issues’ affecting the business, as frequent with use of success stories and, addressed in order to ensure the continued identifying the issues that are most important identified by stakeholder expectations, there more unusually, the disclosure of problems. success and stability of the business. The to stakeholders is developed to discuss is no clear rationale for why they are prioritised Globalisation, and the challenges and materiality study with detailed analysis of how the business rationalises the way it in that order. The issues also appear to be opportunities this presents, is one of the the financial sector’s main reputational risks tackles them with a section on ‘improvement general housekeeping issues with ‘customer issues looked at in depth. determines which issues are addressed. objectives’. If volume is anything to go by then focus’ and ‘financial inclusion’ being the first These appear to be those that have impact on clients and customers are the main focus. The two impact areas identified. the ‘confidence of society in the bank’ leading need to assist customers in the investment DAImLER the reader to question whether the integration sector and the protection of savings is of CR into the business is really apparent? Given the current climate in the industry, identified as a top priority. Although such SBERBANK OF RUSSIA 30 FT EURO RANK Daimler is at a relatively early stage of issues are identified, they are not really AUTOmObilES incorporating sustainability into its business, it is fair to say responsible financial advice discussed in depth. With minimal communications on CR issues, 42 FT EURO RANK with a sustainability committee established to customers is one of the key issues the bANKS the bank is primarily committed to domestic in July this year. It is currently working on bank needs to address, however the bias of and international programmes to further embedding sustainability as part of business stakeholder engagement towards customers, and the frequent mention of reputational risk UNICREDITO ITALIANO develop social welfare. Reporting as part of strategy rather than a separate consideration. the annual report only, there is no indication Although the communications look very results in a lack of communication on its Another example from the banking sector of the business tackling any hard-hitting 27 FT EURO RANK impressive with a magazine, interactive wider responsibilities. bANKS that has a clear focus on communicating issues; in fact even the housekeeping is a report and downloadable report all entitled value added, ‘expressing in monetary terms bare minimum. ‘360 Degrees’, the issues are unfortunately the relationship between the business and relatively introspective, and the analysis BNP PARIBAS the socio-economic system with which it isn’t quite as comprehensive as 360 degrees It seems to be a trend within the banking interacts’. A little unsure of its understanding ROYAL BANK OF SCOTLAND would suggest. It would be interesting to 25 FT EURO RANK of reasons for tackling certain issues, the bANKS understand how Daimler has analysed its sector that a large part of the CR report is group makes statements such as: ‘during The current CR report is titled ‘10 issues that 45 FT EURO RANK material issues and whether this process focused on the structure of the business units 2007, the media and the public focused bANKS matter most’, with a website following the involved its stakeholders. Daimler would also with BNP Paribas at the forefront. The reader their attention on global climate change and same structure. CR is central to the way the benefit from making communications more finds little on the approach to sustainable UniCredit Group stepped forward to address business is managed. This is reflected by the open and transparent with information easier development and issue areas until page 76 this vital issue’. The group appears to be identification of both the areas where they to find as well as being more comprehensive. of a 211-page report! Although the group’s working on a process where it can define can have the most impact, and the issues It’s a good start, but Daimler has a long way responsibilities are identified as integral priority areas through internal analysis of that can make the most difference to RBS. to go to be in the same league as Volkswagen. and ‘rooted in its founding values’, there is its impact on stakeholders. For the 2007 Senior management also appear to have a unfortunately little if any understanding of reporting period, focus was placed on clear understanding of the risks these issues the key impact areas. Communications with ‘The Art Experience’ described as a ‘formative present. There is clear rationale behind how HSBC stakeholders are merely listed and there is no clarity on reasons to engage. In fairness year for the bank’s international activities in these hard to handle issues are prioritised, culture’ – this is part of its aim to ensure all emphasising that RBS is clearly at level CR 2.0. HSBC has a sustainability strategy, which it appears to be a work in progress and the employees understand what is required for From large-scale quantitative opinion surveys 4 FT EURO RANK bANKS recognises that its continued financial bank does have a committee responsible for long-term sustainable growth, including the to small, local sessions on issues, the bank success depends on the way it manages identifying the challenges for the following year issues most material to stakeholders. has a sound stakeholder dialogue process and addresses issues material to the – let’s hope that big issues will be part of this! in place which reassures that this is not a business. It also shows an understanding passing trend but a way of doing business. that these ‘non-financial’ issues need to be Watch this space next year though. integrated into the way HSBC does business. Following various initiatives to engage with stakeholders, climate change, forestry, and sustainable lending and finance are the issues identified as key impact areas. A number of ‘key sustainable issues’ are identified and broken down by customer group. This is SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 16. ANALYSIS BY SECTOR AND FT EURO RANKING 28/29 SIEmENS NESTLÉ » CONTINUED making the point that its sustainability work is more than housekeeping, but there isn’t EDF SUEz CR is part and parcel of Siemens’ core values always a black and white answer to the issues EDF isn’t articulating the pressing conflicts Suez is upfront about five big and complex 22 FT EURO RANK 9 FT EURO RANK 31 FT EURO RANK ElEcTRONicS and driven from the top. Communications they are tackling. There is definitely room gAS, wATER & in the energy sector in the same way as Suez gAS, wATER & issues that the energy sector is facing, & EqUipmENT mUlTiUTiliTiES mUlTiUTiliTiES appear to be promising, stating high aims for more but it will be fascinating to see and E.ON are, but it is looking at big issues. with a monster document of pages upon of being the ‘Best-in-Class’ in CR – although how Nestlé progress this as it’s looking like It references its activities in stakeholder pages of box-ticking information. Other unfortunately there is no real explanation the beginnings of a real shift from standard engagement and discusses how the sector communications primarily consist of of how or what this actually means. There CR 1.0 to embedded and challenging CR 2.0. needs to develop over the next few years. uninspiring web pages. Suez is on the is evidence of understanding stakeholder However, housekeeping issues dominate journey, however it needs to work a lot more expectations – but little evidence of engaging the report and the articulation of big global on its communications approach. The initial with them in any dialogue. Compliance is UNILEVER issues that are full of complexities is lacking. pages of the report are interesting though and identified as its ‘number one priority’, followed Although tackling such issues as fuel poverty put Suez amongst those energy companies by climate protection and education. Siemens 20 FT EURO RANK Unilever does describe sustainability as an is important, there is more EDF could be battling with the complexities of its sector FOOd & insist that managers and employees must cONSUmER gOOdS integral part of the way it does business and doing. EDF does demonstrate in its business and how to balance conflicting economic, comply with all regulations. Could this be a crucial factor to growth, and indeed to even strategy and values that sustainability is an environmental and energy policy pressures. identified as a priority purely as a result of existing as a business. The general sense of integrated part of the business. So a lot of Interestingly, stakeholder engagement isn’t recent media attention, or an example of a sustainability being embedded in the business very positive sustainability work going on presented as much more than standard business tackling a hard to handle issue? is quite strong. And through the supply chain but perhaps without the complexity and activity. Perhaps more engagement would In their own words this ‘program should not and the sustainable agriculture initiatives context that others in the sector are clearly push it along that journey a bit faster. be understood merely as a response to past there are some really difficult issues being thinking about. actions, but is aimed at achieving long-term tackled – water, biofuels and palm oil to name changes in the thinking and behavior’ a few. However what is missing is the context IBERDROLA of Siemens managers and employees. – why they are tough issues, how the agendas change and how Unilever navigates a path E.ON Responding to media attention or tackling a 36 FT EURO RANK Iberdrola has a lot of sustainability work thorny issue – this is a difficult one to judge! through that. Otherwise it feels more like a This sector is beset by controversy and gAS, wATER & happening on the ground and is also showing 14 FT EURO RANK mUlTiUTiliTiES list of initiatives and achievements rather than gAS, wATER & E.ON hits this head on – it confronts the signs of integrating it into the business strategy, mUlTiUTiliTiES a dialogue with stakeholders about how the conflicting objectives of energy supply, price with commitments to sustainable development ABB business is sustainable. This is a tough one. Based on actual activity in the business and environment, the negative public and and renewable energy. But the communications stakeholder opinion it receives and the do not show signs of the business wrestling The language used to define CR and we know that Unilever is at CR 2.0. But its technical complexities of the various types with the really tough issues in sustainability. 50 FT EURO RANK ElEcTRONicS sustainability makes it difficult to understand communications don’t reflect this – so for of energy the sector provides. However, And the report is such a long document & EqUipmENT what issues are a priority for ABB. Sustainability now it has to be CR 1.0. although the report appears to be hard hitting that it stops communicating with the reader is referred to as balancing economic success, it doesn't actually get to grips with the issues and just discloses activity. There is factual environmental stewardship and social progress as we had hoped. Stakeholder engagement information about energy policy in Europe to benefit all stakeholders. With little mention L’ORÉAL is mentioned quite often but it comes across but the connections between that and the of strategy, it’s not clear if sustainability or more as the company justifying its actions, company’s views gets lost. CR is integrated into the business at all, even 35 FT EURO RANK There is some level of articulation of CR at rather than giving much exposure to the views FOOd & though CR is identified as one of seven priority cONSUmER gOOdS a strategy level but any sense of integration of the stakeholders themselves. The bold areas that form the issues of focus. Priority or embedded CR is lost when you find the actual approach relies on the housekeeping communications approach of talking about RwE areas are also fragmented. Attention on the the paradoxes in the energy sector is confined high impact issue of climate change, has no of environmental and social impacts of the to the report – it would be great to see a more RWE doesn’t seem to have tackled its sector- 44 FT EURO RANK clear rationale behind it, and gets lost amongst operations of the business. So the big issues integrated set of communications in the same gAS, wATER & specific issues in the way E.ON and Suez mUlTiUTiliTiES the other priorities which are more general in this sector don’t really feature – things like vein to engage a broader audience. E.ON is have – it’s still quite a predictable approach, – like CR itself! the perception of beauty, teenage anorexia still at CR 1.0 but with the relevant issues focused on identifying straightforward material and the choice of models. L’Oréal do feature being raised, we are hopeful to see them impacts and not getting across its thoughts diversity as a significant issue and rightly so, moving to CR 2.0 in the near future. on the big issues. In fact the company openly NESTLÉ but the context of why it matters so much in this sector and why they should be leaders declares it is struggling to keep pace with society’s demands and the loss of confidence Nestlé’s ‘Creating Shared Value’ approach isn’t well explained – apart from mentioning in energy suppliers. No doubt there is plenty of 3 FT EURO RANK FOOd & for 2008 gives a good insight into how it is that there isn’t just one type of beauty in the work going into managing operational impacts cONSUmER gOOdS integrating sustainability into the business world. L’Oréal could go a lot further with its but in comparison to others and in light of what – in short how sustainability brings value to sustainability approach, go beyond monitoring this research is looking into, RWE rather fades shareholders and stakeholders, and is not just operational impacts and really tackle societal into the background. a bolt-on to operations. By virtue of its supply pressures in the sector. Especially given that chain, Nestlé is tackling some significant it has The Body Shop to learn from! issues around sustainable agriculture, energy and biofuels, water supplies and nutrition. Interestingly, it is putting those tough issues into a global context in its report, discussing the complexities around the issues before describing its own actions. So Nestlé is developing an approach that both embeds sustainability into the business while also SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 17. ANALYSIS BY SECTOR AND FT EURO RANKING 30/31 ENEL AxA ARCELORmITTAL ANGLO AmERICAN 47 FT EURO RANK ENEL communicates sustainability in a few 39 FT EURO RANK AXA’s communications really focus on 16 FT EURO RANK As a new organisation, ArcelorMittal is at the 34 FT EURO RANK Safety and health are major issues for the iNSURANcE miNiNg miNiNg gAS, wATER & ways – in a lengthy report, online and in embedding sustainable development into the beginning of its CR communications and organisation as targets for zero harm aren’t mUlTiUTiliTiES a stakeholder report. In fact, stakeholder business – obviously that is very important and approach. It is the only mining company to opt being met. However, the company is clearly communications are extensive and there is an the report covers a lot of information about for a CR rather than sustainability report. With aiming to lead this sector by aiming for interesting tool to gather stakeholder feedback product developments, tackling environmental the recent merger of Arcelor and Mittal Steel best practice policies on the big issues it that is then disclosed in the report. But ENEL protection and health for example. However, in June 2006, management appear to have is tackling. Although sustainability is clearly is operating a housekeeping approach, this research is looking for evidence of going made CR a priority for the new business to embedded in the company strategy and it however hard to manage some of the impacts beyond that. And there is some – recognising create a strategy and commitments befitting does engage with stakeholders, information are. It does recognise the challenge of energy the difficulties of the economic climate and a world leader. In terms of its approach, this is missing on how the issues have been supply, price and environment and how changes in demographics for the insurance is an example of strategic best practice with established and prioritised. If Anglo American difficult balancing those demands is – but it industry, recognising that financial protection excellent communications on stakeholder can demonstrate this, it will shift to CR 2.0. is a reference not a strategy. So ENEL is not and sustainable development go hand in hand. engagement and the establishment of in the same league as some in its peer group. But that recognition is not translated into benchmarks to measure against in future. views. There is little evidence of stakeholder 12 commitments have been established xSTRATA engagement and with a long report and through its materiality assessment so it ALLIANz straightforward web pages, communications remains to be seen whether these will be 43 FT EURO RANK From HIV and Aids to biodiversity, community are generally not very engaging either. So tackled with the appropriate level of depth. miNiNg impact, water and air emissions, Xstrata has 28 FT EURO RANK Allianz addresses materiality and stakeholder some interesting work but to reach CR 2.0 It’s not made the shift to CR 2.0 yet, but addressed a range of material issues in its iNSURANcE engagement in a clear and logical way. Plus there is more to do. we have high hopes for this company on the communications. Reporting is well documented it integrates the issues it has identified into basis of its strategy – and everything appears with good disclosure, score cards and targets products and services, displaying an embedded to be moving quickly in the right direction. on all of their issues. It has engaged with approach – key topics are the impacts climate GENERALI its stakeholders in order to form the material change and demographic change have on issues and prioritise these accordingly. the insurance sector. And these are of course 49 FT EURO RANK iNSURANcE Generali very much takes the housekeeping RIO TINTO Above all there is a high level of transparency key concerns. There is an underlying sense approach, although granted with a strong throughout the report, information is easy of the difficulty in tackling these issues and focus on meeting stakeholders’ needs. The 18 FT EURO RANK Rio Tinto reports on its sustainable to find and simple to understand. However, miNiNg the lack of a black and white answer, but report is lengthy and it is hard to get a sense development activities in the form of a review it could be argued that these material issues no real discussion about the complexities or of how issues are prioritised, materiality or contained within the annual report. Although should be part of doing ‘business as usual’. how Allianz decides on its approach. It feels even the impact the business approach is there is much reference to the materiality Xstrata has the right process in place to like Allianz is more at the CR 1.0 end of the having. Compared to the others in the sector, process, key issues or priorities are difficult establish these issues but we’re keen to see scale than CR 2.0 – but there is definitely it is very underwhelming. to establish among all the topics covered on them developed in future to consider wider material to work with. both the corporate website and printed report. impacts. As Xstrata currently does not report Strategy is described in detail but there is little on the impact of its supply chain we would information on the results. Rio Tinto admits expect to see this made an immediate priority. ING it does not report on all of its material issues – claiming it will publicly communicate on 32 FT EURO RANK ING engages with stakeholders, considers them if enough external interest is received. BHP BILLITON iNSURANcE a variety of issues, and has evidence of Communications would benefit from being sustainability being incorporated into business more transparent with regards to Rio Tinto’s 48 FT EURO RANK BHP Billiton has created logical and easy strategy and embedded into products and operations. For example, providing the actual miNiNg to follow communications on sustainability services. It recognises the importance criteria used to determine whether a site on both its website and report. Information of engaging employees. All positive, but is suitable for development rather than is accessible, provided in detail and also unfortunately this is only evidence of being describing a process that is used would be summarised – important for readers looking stationary at CR 1.0. There are some really more meaningful. for an overview. Stakeholders are clearly big challenges in sustainable finance and identified and have been engaged with to investment that aren’t easily solved and it establish key issues. Of particular interest looks like ING isn’t ready to get out there and is the section entitled ‘what others say’. talk about them. So there is an opportunity BHP Billiton invited sustainability peers to for this business, if it is ready to take it. provide their perspectives on its key issues and level of response. It is likely we will see this style of communication more often in future as it supports trust and transparency. SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 18. ANALYSIS BY SECTOR AND FT EURO RANKING 32/33 GAzPROm BP ENI STATOILHYDRO » CONTINUED as a serious challenge for the industry – and one which also ‘represents new business Gazprom produces an environmental report BP’s materiality matrix is very thorough and 2007 is identified as an important year for opportunities’. But StatoilHydro does appear 1 FT EURO RANK 5 FT EURO RANK 11 FT EURO RANK Oil & gAS – not that surprising given the nature of the Oil & gAS emphasises the issues that help deliver the Oil & gAS ENI as sustainability has become an integral to see the real value and reason for engaging business and the huge impact it has on the business strategy. Those that ‘have attracted part of corporate processes. Importance with stakeholders with a section of the reporting environment. Although saying that, there is a high level of public exposure and awareness’ is placed on qualifying for indices such as dedicated to the initiatives in place. Although no evidence of an understanding of how CR are also considered very important for DJSI and FTSE4Good. Great use of interactive tackling some thorny issues, it doesn’t explain fits into the fabric of the business or the real inclusion in the current report. However, BP’s features online allow ENI to explain its much more than the business benefits of impact of its operations. Little evidence of communications on CR are confusing as it ‘conceptual model of sustainability’ where doing so. Clarity in its communications would understanding of the complexity of the issues is difficult to distinguish between what is social development and environmental help this business make the shift to CR 2.0. that need to be addressed was found. It goes identified as housekeeping issues and those protection are part of the long-term benefits without saying that social issues wouldn’t be felt to be the hard to handle issues. There is that it can provide to the communities in addressed in this type of report – but upon no doubt that BP has a clear understanding which it operates. ENI communicates how BG GROUP reviewing the website nothing could be found of its most material issues – however, due being responsible can contribute to the there either. Various environmental issues to the structure of the communications the efficient management of an organisation – 37 FT EURO RANK For BG Group, CR stands for its core approach Oil & gAS are described but there is little evidence in most significant are not brought to light. however it’s unclear whether CR is identified to business and how it integrates business its communications of how they are either as an add-on or part of the fabric of the principles into practice. Communications clearly prioritised or linked to the business strategy. business. It can only be assumed that the show how CR is integrated into business There is little reference to stakeholders of the TOTAL importance placed on each identified issue processes, discussing stakeholder engagement programmes and value through to corporate business and no dialogue appears to be in is reflected by the order in which they appear place to identify the thorny issues that this It is quite difficult to work through how Total in communications. ENI may well be tackling governance. To determine which issues to 6 FT EURO RANK business should be paying attention to. Oil & gAS defines and ranks the issues most material hard-hitting issues such as climate change focus and report on, BG Group undertakes a to the business. Going by the structure of the but unfortunately it is not clear to the reader thorough risk and impact assessment. Due to communications there appear to be many. why it is doing so. the nature of the business it is no surprise that ROYAL DUTCH SHELL Perhaps the focus on biofuels, on the landing climate change is defined as the number one priority and one that the group identifies it can page of the CR section where the reader finds 2 FT EURO RANK Oil & gAS Communications are well structured and a special publication on work in the area, is ROSNEFT actively tackle. Although hard to handle issues are a priority for the group, unfortunately the user gets a clear sense of the prioritised an indication of the importance placed on the issues. Top line information on an issue issue. With only generalised statements, the Sustainable development appears under it does not distinguish the importance 23 FT EURO RANK within the report is further backed by detailed importance of each issue is not really addressed. Oil & gAS the ‘Social Issues’ tab of Rosneft’s website between these, and those that are general content online. Sustainable development is It’s not clear how Total defines CR although it navigation, emphasising the types of issues housekeeping, as through the materiality identified as the ‘right thing to do’, good for the does communicate an understanding of the prioritised. The CR strategy and initiatives assessment, it also considers ‘working to high business and helps ‘meet the world’s growing need to secure the longer-term future of energy, (explained in a very long report!) are more standards’ and ‘stakeholder engagement’ as need for energy in economically, socially and and hence the existence of the business, based on donations and charitable giving than key issues. Taking good steps in the direction environmentally responsible ways’. Issues of explaining the need to focus on biomass and specific long-term initiatives or programmes. of CR 2.0 but still at 1.0. focus are those that will enable the business solar energy processes, along with evidence Given the nature of the business the reader to create value and reduce operational and of investment areas. All in all the reader is left would expect more environmental issues to financial risk. It sees no trade-off between unclear as to what the business is tackling be considered or communicated as important. LUKOIL being profitable and responsible, understanding and why. However, it is fair to say the issues tackled the need to identify, assess and manage do match up to what they consider CR to 41 FT EURO RANK The sustainable development report is found Oil & gAS impact on stakeholders. Shell goes through be. The business strives ‘to achieve not only within the social section of Lukoil’s very a process of opening itself up to an external high production and financial results, but unstructured website. Placed within the ‘About assessment to judge whether it selected the also to make a considerable contribution in Us’ section, Lukoil defines CR as supporting most important topics to report on this year, development and prosperity of the country long-term economic growth, social stability, how well these hard-hitting issues were dealt and improvement of living conditions of its prosperity and progress in the regions where with and how it responded to stakeholder citizens’. They also consider stakeholders to it operates. Its issues of focus are also very interest. Shell is clearly on track, from use of be shareholders, company employees and broad with only ‘social and environmental’ an ‘auditable content selection process’, to their families, population of the regions of issues identified. Aside from priority areas tackling the hardest issues hitting the industry. presence, and society as a whole. identified as health protection and safety of Communications effectively prioritise the issues personnel and communities in the areas that are most material to the company, and of where Lukoil operates, there is little evidence greatest interest to Shell’s stakeholders, in STATOILHYDRO of the business tackling the hard issues facing the sector. For now this company is stationary addition to covering one of the most significant topics facing our world – climate change. Although StatoilHydro appears to be primarily at CR 1.0 and needs to engage with its 24 FT EURO RANK Oil & gAS driven by the need to create shareholder value, stakeholders to appreciate what is expected of the group does clearly communicate the need the business and where its responsibilities lie. to consider CR as a factor in helping it remain competitive and efficient. Unfortunately, reasons for focus on particular issues, aside from the direct business benefits rather than the responsible thing to do, couldn’t be found. Climate change, the first priority, is identified SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 19. ANALYSIS BY SECTOR AND FT EURO RANKING 34/35 ROCHE SANOFI-AVENTIS TELEFÓNICA FRANCE TÉLÉCOm 7 FT EURO RANK Roche is aware of the importance of stakeholder 19 FT EURO RANK Sanofi-Aventis has great communications on 10 FT EURO RANK Telefónica approaches a wide range of 29 FT EURO RANK France Télécom is the company behind the pHARmAcEUTicAlS engagement and it is an integral part of its pHARmAcEUTicAlS its sustainability issues which give a really TElEcOmS & TEcHNOlOgY issues relating to the organisation. Activities TElEcOmS & TEcHNOlOgY brand ‘Orange’. For this reason, expectations business strategy. However, there appears to positive impression. Unfortunately, an in-depth are clearly not only for the financial benefit of were high for France Télécom’s CR be a gap between the company strategy and read shows this work is at a relatively early the company. Telefónica is actually trying to communications. Although its work ticks its approach to addressing material issues stage and much more needs to be done just promote responsible progress. Issues such as all the boxes, the messages are a little flat. within its communications. Strategy has been to get up to speed tackling the issues that ‘the digital divide, accessibility, use of ICT and Stakeholders are clearly being engaged with formulated without evidence, or disclosure, of matter, let alone going beyond them. A thorough child protection’ are all explained clearly with throughout the business and are an integral considering external stakeholders’ expectations. materiality analysis has been performed, transparent information on performance and part of company strategy. The establishment Material issues were established at the start however Sanofi-Aventis has not managed to targets. This responsible approach is clearly of its material issues is thorough and considers of the year and Roche has begun collecting tackle all these issues, of which the end of embedded in all aspects of the company and all stakeholders, however the outcomes are information on each. Although ‘relationship with product life cycle and influence on law-makers its communications. The result is easy to introspective issues rather than the further stakeholders’ is considered a material issue, are two examples. understand, relevant and engaging. A great reaching impacts we were looking for. The which we would argue should be part of doing example of a company that has taken the report would also benefit from disclosure on business as usual. Next year, we hope to see steps to CR 2.0. feedback and priorities for the organisation. Roche conducting its materiality assessment BASF with all its stakeholder groups and taking the next step towards CR 2.0. 46 FT EURO RANK For the first time, BASF has combined its NOKIA DEUTSCHE TELEKOm pHARmAcEUTicAlS financial and sustainability report into one publication. The result is evidence of a coherent, 15 FT EURO RANK At first glance the communications on the 40 FT EURO RANK Deutsche Telekom, the name behind NOVARTIS integrated strategy that sits within the business TElEcOmS & TEcHNOlOgY website appear well laid out, simple to find, TElEcOmS & TEcHNOlOgY T-Mobile, is currently reviewing its CR practice principles. Within its communications, BASF with an easy to navigate online report. Once and realigning responsibilities. As a result, 12 FT EURO RANK It was difficult to find all CR information for has identified its key material issues and has you scratch the surface of the content, you it has published ‘Facts & Figures’ which pHARmAcEUTicAlS Novartis as the communications are a little produced information on these through the find a wealth of information hidden beneath is an interim report for 2007. Deutsche fragmented. There is a corporate citizenship report, the website and short videos as well. the surface. Nokia is doing some great work Telekom has a long way to go in terms of its section contained within the annual report, Stakeholders’ considerations have been here but could do with communicating these CR communications, although it has been a separate corporate citizenship review, a considered with regular engagement evident. activities in a more obvious way. Its accessibility reporting on these issues since 1996. microsite, policies and guideline documents. The work investigating demographic change micro site is a prime example of this: great Hopefully, this is what Deutsche Telekom is Further information is available on specific is well thought out and relevant. BASF is content but hard to find. Engagement with working on and we can hope to see the full topics as brochures and case studies, and considering the much wider reaching issues stakeholders is referenced throughout its report next year. There is a fair amount of there is also a separate performance report. and has a strong sustainability strategy to communications and key issues are thorough work to be developed if it wishes to be in the The result is confusion, much repetition and ensure its future. and relevant as a result. Although Nokia has same league as its competitors. However difficulties in finding complete information. established its material issues, these are we are hopeful as the organisation intends Although there is evidence of stakeholder mainly issues that we would expect to see as to ‘develop a CR strategy, which takes into engagement and identification of material VODAFONE doing business as usual – considering the account the needs of society, the market issues, coverage seems lightweight and environment, supply chain and human rights. and our stakeholders in equal measure’. standard for the sector. So the next step for 8 FT EURO RANK Vodafone has taken a clear, transparent Accessibility as its priority goes beyond this Novartis is to streamline all this information, TElEcOmS & approach to CR communications. All and is considered in depth. Is the business BRITISH AmERICAN TOBACCO TEcHNOlOgY make the content easier to find, and delve communications have been designed to at the next stage? Almost, but not just yet. into these issues. be easy to understand and easy to follow. The strategy too, has been simplified with the 38 FT EURO RANK The most interesting part of BAT’s business as a whole applying ‘One Strategy’ TObAccO communications is a Q&A section of the GLAxOSmITHKLINE as opposed to different techniques in different recent report where the CEO addresses the markets. Vodafone applies a simple strap line question that everyone wants answers to. 17 FT EURO RANK Communications show evidence of material to its material issues ‘we said, we have, we ‘How can a tobacco company be sustainable pHARmAcEUTicAlS issues being tackled head on. GSK examines will’. This simple breakdown means that its and is CR used as a PR spin?’ BAT is open its contribution towards global health, ethical progress is easy to understand and can be for dialogue with all of its stakeholders to conduct, and access to medicines. However, tracked over the years. This open and debate the highly controversial issues it needs the real strength is that GSK looks in-depth transparent method of communication really to be addressing and there is evidence that at each issue and discloses far more than its works for Vodafone and is the highlight of all it is. Working with various scientific bodies competitors. It has transparent communications its CR communications. and health communities, it is working across all its issues. A prime example of this towards developing and introducing potentially is the voluntary disclosure of GSK’s political reduced-risk products, identified as its number donations and the reasons behind them. one priority. Its sustainability agenda also GSK’s latest CR report entitled ‘Answering the addresses the key issues of concern around questions that matter’ also does exactly what business operations, as well as the issues its title proposes. It is obvious that GSK is related to the nature of the products. BAT has working on building trust in the organisation no problem addressing general housekeeping through this transparent disclosure. The result issues, although the thorny issues are definitely is incredibly engaging communications that much harder to handle for a business of this really do answer the questions that matter. kind, so it warrants the mark of CR 2.0. SALTERBAXTER DIRECTIONS 2008 SALTERBAXTER DIRECTIONS 2008
  • 20. CoNTENTS There’s now more discussion, opinion, research and insighT available online aT The salTerbaxTer BIoFUELS Thirst for fuel vs 04/ Dr Peter Cotgreave re-ThinkDirector of Publiconline forum focusing on The main hunger for food Tank, an Affairs, The Royal Society Page 02 corporaTe communicaTion issues ThaT businesses 05/ Chris Carter are needing To consider. To find ouT more visiT Director of Corporate Affairs, British Sugar plc salterbaxter-rethinktank.com 06/ Sagarika Chatterjee Associate Director, F&C Asset Management plc 09/ Dick Searle PACKAGING Are we suffocating Chief Executive, under the weight of the packaging The Packaging Federation problem? Page 08 11/ Alasdair James Director of Waste, Recycling & Packaging, Tesco plc 13/ Leo Horn-Phathanothai National Coordinator, CHINA It’s not as black UK-China Sustainable and white as a panda Page 12 Development Dialogue, DEFRA 17/ David Grayson Director, Doughty Centre CREDIT CRUNCH for Corporate Responsibility, Will corporate responsibility crack Cranfield University 18/ Barry Clavin We have a strongly held belief that most things could be made better under the strain of the credit – they just need better insight, brighter ideas, more creative thought. Ethical Policies Manager, crunch? Page 16 The Co-operative Group And so our offer to clients is all about creative re-thinking. Re-thinking 202 Kensington Church Street their entire business proposition; re-thinking their branding, vision and London W8 4DP 20/ David Godden Chief Operating Officer, values; re-thinking how they should approach corporate responsibility; Tel +44 (0)20 7229 5720 Land Securities Trillium re-thinking how they engage with their employees; re-thinking what the www.salterbaxter.com web can do for them; re-thinking how to communicate with shareholders. 26/ Top 50 European companies ANALYSIS This approach helps new ideas flourish and breaks boundaries. It sheds And if you are looking for the analysis new light on old problems and turns some new problems inside out. Are businesses making the tables you usually find at the end of shift from CR 1.0 to 2.0? Directions, these are now online at: Most importantly it helps clients do things better. Page 22 www.salterbaxter-rethinktank.com The main areas we focus our attention on are: /directions/analysis – Brand and reputation – CR/Sustainability JoIN THE DEBATE AT THE RE-THINK TANK – Corporate reporting – Employee engagement – Digital communications The Re-think tank is the place where commonly held views are challenged, new ideas flourish and boundaries are broken. Our clients are extremely varied and include FTSE 100 companies; major multinationals; some of the world’s most exclusive brands; We are launching the law firms; private equity firms; world-leading educational Re-think tank, an online forum find articles, opinions and research on the big business You’ll establishments and independent, entrepreneurial businesses. Cover photography by Lee Funnell at for everyone to share their and communications issues of the day, from sustainability to www.graphicphoto.com Page 08–11 photography by Liam Bailey views. Join the debate at: more effective digital marketing. Regular contributors include Cover printed on Heaven 42, leading players and thinkers in all the fields we operate in – FSC (Forest Stewardship Council) salterbaxter-rethinktank.comyou’ll be in good company. so certified. Supplied by Robert Horne www.roberthorne.co.uk Text printed on Think Bright, FSC certified with 50% recycled content. Supplied by Howard Smith www.hspg.com If you would like to find out more, For more information on FSC go to please get in touch: www.fscpaper.co.uk Nigel Salter Printed by CTD, an ISO 14001 certified and FSC accredited company. nsalter@ salterbaxter.com TT-COC-2142 ©1996 Forest Stewardship Louise Dudley-Williams Council A.C. www.ctdprinters.com Copyright © 2008 salterbaxter ldudley-williams@salterbaxter.com Copyright © 2008 salterbaxter SALTERBAXTER DIRECTIoNS 2008
  • 21. 202 Kensington Church Street London W8 4DP Tel +44 (0)20 7229 5720 www.salterbaxter.com

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