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Salterbaxter - Directions Supplement - Boots

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Boots - Directions Supplement - Boots Prescription For a Responsible Business

Boots - Directions Supplement - Boots Prescription For a Responsible Business

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  • 1. DIRECTIONS MONTHLY SUPPLEMENT DECEMBER 07 TRENDS AND ISSUES IN THE WORLD OF CORPORATE REPORTING LEG ISLA TION ho BOO ne st y FOR TS PR ES EMPL LU VA BUS A RE ESCRIP OYEE COM INE SPON TIO sty ne ho MS SS SIB N Rem LE emb 25m er t o com g hon plet esty e th e co EGY urse RAT BAL ST GLO E AD RM E NC CLI T ILO MA US TR M TA OR ATE RF PE C HAN GE IN TE BR GR AT AN ED CR D
  • 2. Directions Monthly December 2007 Issue 18 Welcome to the December edition of Directions Monthly. In the past year we have seen private equity companies scrutinised over the takeovers of some of the most respected and trusted businesses. So this month we have invited Richard Ellis of Alliance Boots to provide his take on working with KKR, the challenges they faced and reasons why private equity firms are not really ‘barbarians’. He outlines his prescription for all businesses that are addressing the responsible business agenda and explains why it is so relevant to private equity-owned businesses. Lucie Harrild Pavan Athwal Everyone watched anxiously as Boots was taken over by KKR – so how has Boots continued to maintain such a healthy responsible business strategy? Following the merger between Alliance Boots’ CSR credentials were established UniChem plc and Boots Group plc, Alliance by the founders of the Company, the Boot Boots plc was formed on the 31 July 2006. family, in the 1850s. In 1914 electrically At the time there was doubt, particularly powered vehicles were introduced, in 1915 among the broader CSR community, as to a Combined Heat and Power Plant was first whether the new Company’s approach to established and in the 1930s glass and CSR would match that of Boots. In June cardboard were recycled. This agenda has this year the uncertainty grew further not suddenly been discovered by Boots. It is following the high profile private equity part of the DNA of the Company; it’s not an acquisition of Alliance Boots plc by KKR add on, but something which is embedded and Stefano Pessina. into the way business is done. The question on most commentators lips was The new owners could see that CSR was not – how would one of the UK’s most trusted a cost but a vital ingredient in the success of Richard Ellis companies be affected by this ownership Boots. The CSR activities gave the brand its Head of Corporate Social Responsibility, change and what impact would it have on personality. It was the reason why customers Alliance Boots their CSR credentials? Some six months on “TRUST Boots”. I can report it’s, “Business as usual”. But KKR and Stefano Pessina needed more Very few, if any, private equity-owned than just a compelling story – they needed businesses have successfully introduced a proper business case. They wanted to see CSR programmes. They have a reputation that this activity delivered economic as well for being secretive; very few people outside as environmental and social benefits. the world of private equity really understand how these businesses operate. This lack of Central to this is the information gathering transparency was one of the key drivers system, Credit 360. This provides the for the Walker Review. Whilst some “numbers” which enable the CSR agenda to recommendations have been made available be managed and KPIs to be set. It provides there is still further work to be done before the data in reports and various surveys such final publication. How Alliance Boots deals as the Business In The Community CR Index. with these issues could well impact the final Without it CSR would not have been taken version of this review. seriously at Board level. CSR today is judged in exactly the same way as any business At the heart of these findings is the need discipline. It is not given any special for increased stakeholder dialogue. This has “favours” but must deliver value in the been fundamental to the success of the same way as any Business Unit does. Boots programmes and is the central plank around which the new Company is building Through this process it was possible to its CSR strategy. describe the real benefits of pursuing CSR initiatives. For example, a range of transport ❝ For the paston-going two-way has maintained an five years Boots activities reduced the road kilometres driven on behalf of Boots by 8.5 million. This saved communications process with all its 5% in transport carbon dioxide emissions stakeholders. They have helped shape the and £1.4 million in fuel costs. It was because strategy and decide the priority areas; and we could articulate the business, as well as exactly the same process continues today as a private equity-owned company. ❞
  • 3. Directions Monthly December 2007 Issue 18 ❝ But KKR and Stefano Pessina needed more than just a compelling story they needed a proper business case. They wanted to see that this activity delivered economic as well as environmental and social benefits. ❞ the broader social and environmental Boots business understands the importance paper, cans and plastic. Such actions might benefits, that the new owners were willing of CSR to its brand, but as the new business not in themselves save the world, but they to encourage the “Business as usual” operates internationally some countries are send a very clear message to our people that approach. only just starting their CSR journey. All parts CSR is an important part of the business of the business need to be helped to improve agenda. It’s the start of our journey to create Talking about CSR in business language their performance and achieve their full 100,000 ambassadors for CSR across the to Stefano Pessina was key. He could potential. The first step on this journey for Company. understand the strategic relevance of some of our international colleagues begins supporting breast cancer charities when when they attend the CSR Training Course, But businesses, even passionate ones, cannot 79% of the employees were women and which equips them to become the tackle the responsible business agenda 83% of our customers are women! It wasn’t “champion” for CSR in their country. alone. The government could aid this process just about doing good things for their own by offering more incentives to companies sake but embedding these principles into As all parts of Alliance Boots become to follow sustainable practices. It needs the fabric of the business. familiar with this agenda it becomes possible to develop joined up thinking between to integrate Company-wide policies and central and local government on things The importance of CSR to the new business introduce worldwide campaigns such as the like the building of wind turbines – National was understood even before the acquisition. eradication of counterfeit drugs. government wants more but the local In the Prospectus document three very clear government planning process often hinders measurable CSR commitments were given and have been met… ❝ Communication of our achievements and aspirations will be key. I admire the this. Legislation can too often be a blunt instrument because it captures all companies way Marks & Spencer have communicated irrespective of their type or past CSR record. 1. That CSR reports written along Global their “Plan A” CSR strategy; it is a great For example: if laws were to be introduced Reporting Initiative guidelines would example of where a CSR programme requiring businesses to reduce their carbon continue to be produced – the first CSR has been aligned to business strategy footprint by a fixed percentage, what would report for Alliance Boots was launched successfully. This is not something Boots the base point be? For a Company like Alliance on the 9th October this year. has done previously but the new owners Boots that has been doing lots of things 2. That a Board CSR Committee would be are giving us the confidence to maximise across our property portfolio for five years, established to oversee CSR activities across the whole Company – the first the benefits of our CSR programmes. ❞ this would be much more difficult to do than for a company that had done nothing. meeting was in September 2007 and it Stakeholders want to know more about CSR comprises Ornella Barra, Marco Pagni and in particular climate change issues. My prescription for private equity-owned and Steve Duncan who are all full I think it’s fair to say the green consumer companies, which is equally applicable to Management Board Members. is on the march. But they personally don’t all businesses, is to understand where CSR 3. That Alliance Boots would complete the know what they can do to solve this problem sits within the business agenda and who BITC CR Index and allow its results to be and they don’t want to change their lifestyle is responsible at Board level. Explain CSR published – Ornella Barra formally signed too much. So they want to buy from brands in terms that the rest of the business the submission in November 2007 and that have done this for them. This means understands; don’t get bogged down with receipt has been acknowledged by BITC. when they buy our products they can take some of the CSR jargon, particularly around them home and enjoy them – safe in the carbon management. Make it relevant and There is clear leadership for this agenda. knowledge that we have done what can be measure and report on what you do. People at the very highest levels accept done to tackle climate change. responsibility for the delivery of CSR The new owners of Alliance Boots are, objectives. They do this because they This was why we worked with the Carbon after all, business people who want their understand the real value it delivers for the Trust to obtain “Carbon Labels” for our investments to succeed – they will listen business. Equally they recognise that they Botanics and Essentials shampoos. It shows and support strategies that deliver value are members of society and that we all consumers that we are serious about this and exceptional returns, as well social benefit from such activity. It is a passion agenda. Similarly we are encouraging our and environmental benefits. that lives on in the new Alliance Boots. people to bring their personal behaviours to work. At home we are used to recycling and Looking forward, what are the challenges? turning off lights. So why don’t we do similar things at work? We are encouraging such Well, CSR is now firmly embedded on the behaviours by taking away personal waste management agenda but we must integrate bins at Head Office. Now employees have it across the whole business. The former to segregate their own waste and recycle
  • 4. ABOUT US SALTERBAXTER ADVISE COMPANIES ON STRATEGY, BRANDING, CORPORATE COMMUNICATIONS AND DESIGN. Our clients are extremely varied and include FTSE 100 companies; some of the world’s most exclusive brands; independent, entrepreneurial businesses; world-leading educational establishments; law firms; private equity firms and media companies. We name companies, re-invent companies and re-position companies. We help companies communicate with shareholders and advise them on how to address corporate responsibility. We launch, brand and re-brand. A key area of our expertise is corporate reporting and we advise leading UK and European organisations on strategy and design for their financial and CR communications programmes. We currently work with 11 of the UK FTSE 100. Contact: Lucie Harrild Pavan Athwal lharrild@salterbaxter.com pathwal@salterbaxter.com Tel: +44 (0)20 7229 5720 Tel: +44 (0)20 7229 5720 Directions Monthly supplements our main Directions report. This report is published each year and is now regarded as the UK’s most comprehensive analysis of the trends and issues in CR communications. If you want a copy of the full Directions Annual Survey and Report, call us on the number below or email directions@salterbaxter.com This supplement is printed on Think Bright and is supplied by Howard Smith. It is an FSC (Forest Stewardship Council) 202 Kensington Church Street certified material and is 100% recyclable. London W8 4DP www.hspg.com Tel +44 (0)20 7229 5720 Printed by CTD, an ISO 14001 certified and FSC accredited Fax +44 (0)20 7229 5721 company. TT-COC-2142 ©1996 Forest Stewardship Council A.C www.salterbaxter.com www.ctdprinters.com