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Sustainability and CSR Stategies in German Companies / Esther Hoffmann


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Sustainability and CSR Stategies in German Companies / Esther Hoffmann

  1. 1. Sustainability and CSR Strategies in German Companies SITRA- Sustainable Economy Forum Excursion Berlin, November 6th, 2012 Dr. Esther Hoffmann, IÖW – Institute for Ecological Economy Research, Berlin
  2. 2. Content 1. Background: Institute for Ecological Economy (IÖW) 2. CSR and Sustainability Management a. Definition b. Developments & Trends c. Drivers 3. IÖW/future Ranking of Sustainability Reports a. Goals b. Evaluation Criteria c. Characteristics of Good Reports 4. Positive and Negative Examples 5. Sustainable Economy2
  3. 3. Institute for Ecological Economy Research (IÖW) (1) Private research institute • Founded in 1985 • Leading scientific institute in the field of practice-oriented sustainability research • Approx. 35 employees • Interdisciplinary scientists • Clients and sponsors: mainly public sector (German Ministries, EU, UNEP), also private foundations, NGOs, companies) • pursues the aim of making the economy more sustainable •
  4. 4. Institute for Ecological Economy Research (IÖW) (2) Topics • Sustainable Corporate Governance • Environmental Policy and Governance • Climate and Energy • Products and Consumption • Water and Land Management • Innovation and Technology • Environmental Services • Evaluation and Assessment • Participation and Communication4
  5. 5. Institute for Ecological Economy Research (IÖW) (3) Topic Sustainable Corporate Governance: • Sustainability Management & Corporate Social Responsibility (CSR) • Sustainability communications • Sustainable supply chains • Sustainable market and product development • Social Entrepreneurship • Corporate adaptation to climate change • Water Stewardship in business • Accompanying research: evaluation, monitoring5
  6. 6. Sustainability Management and Corporate Social Responsibility
  7. 7. The Term „Corporate Social Responsibility (CSR)“ • refers to the socially responsible management of businesses in the interest of their internal and external stakeholders • encompasses the socially and ecologically sustainable shaping of all phases of value creation which the company is able to influence • extends beyond legal requirements in the form of voluntary commitment • aims to create added value both commercially and socially • as such represents the company‟s contribution to sustainable development7
  8. 8. Sustainability Management or CSR? • German companies have a long tradition in environmental protection and environmental management • Labor unions are traditionally strong and traditional social aspects are well established • Environmental management systems have been enlarged to sustainability management in the early 2000ies • Subsequently, the term CSR entered the German debate • Companies with long tradition rather use the term sustainability management8
  9. 9. Developments in Sustainability and CSR Strategies • In the 90ies: focus on environmental issues in production and environmental management • In the early 2000ies • combination of environmental and social issues • Increasing relevance of product-related aspects and innovation processes • During the last years: • Materiality analyses and stakeholder integration • Strategic relevance of sustainability • Climate change dominates other environmental issues • Demographic change as driver for social aspects9 • Supply chain and international responsibility
  10. 10. Current Challenges in Sustainability Management / CSR • Responsible supply chain management • Business Case for Sustainability (company perspective) • Creating societal value (stakeholder perspective) • Shared value creation • Integrating sustainability in the core business • Sustainable product and service innovations • Environmental issues: biodiversity, water stewardship, resource efficiency10
  11. 11. Drivers for CSR or Sustainability Management • Financial Market • Sustainability Ratings, Carbon Disclosure Project, DVFA (Society of Investment Professionals in Germany) • Reputational Risks • Financial Pressure • Energy prices, Carbon prices (Emissions Trading), Resource prices and scarcity • Demographic Change • Attractive workplace • Increasing Standardization • GRI, Global Compact, German Sustainability Codex etc. • In some markets: market pressure through customers or competitors11
  12. 12. Stakeholder Groups Employees security of employment, income opportunities, working conditions, career Neighbouring Suppliers options, image community at Location possibilities of supply and noise delivery, conditions of pollution, emissions, volume supply, delivery and of traffic, environmental payment, solvency hazards, jobs Customers Companies Shareholders, range of services/products, environme Creditors, Banks, ntal impact/ Insurances friendliness, social conditions assets, return on of production, general capital, investment conditions, quality risks, liquidation value Authorities Competition abidance of laws and strategic regulations, quality of plans, competitive management, tax strategies, benchmarking honesty12 Clausen et al. (2001): The INEM Sustainability Reporting Guide, Berlin, p. 15.
  13. 13. IÖW/future Ranking of Sustainability Reports
  14. 14. The IÖW/future-Ranking of Sustainability Reports • Regular, criteria-based, transparent evaluation • of content and communicative quality • of sustainability and CR reports • of Germany„s 150 largest companies and of SMEs14
  15. 15. The IÖW/future-Ranking of Sustainability Reports: Development15
  16. 16. Aims of the IÖW/future-Ranking of Sustainability Reports • support discourse on sustainability requirements • provide guidance for companies and stakeholder • promote competition among sustainability reports • foster improvements in sustainability reporting • initiate learning • provide transparency on non-reporters16
  17. 17. Ranking Criteria17
  18. 18. Good Reporters… • report equally on social and environmental aspects • show integration of sustainability into overall corporate strategy and give an overview on relevant management systems • derive fields of action and comprehensive objectives based on branch and company specific challenges and comment on achievements and advancements • discuss openly critical questions and conflicts • provide a comprehensive data base, illustrate and interpret trends • provide information on internal and external performance assessments18
  19. 19. Positive and Negative Examples
  20. 20. CSR Neumarkter Lammsbräu (SME) (1) Company Description: organic brewery residing in Neumarkt Oberpfalz founded in 1628, since 1800 family enterprise since 1987 raw materials from organic farming since 1996 all 14 beers produced in a organic way main products: organic beers, non-alcohol beers, gluten-free beers , organic soft drinks, organic Soda around 100 employees first brewery which received the German Environmental Award20
  21. 21. CSR Neumarkter Lamsbräu (SME) 2 Environmental aspects: • high ecological standards (local sourcing, raw materials from organic farming, beer sold only in reusable containers and bottles, organic products) Social aspects: • communicative / participatory management style • tutor program for new employees • health management system Responsibility in the supply chain: • Long-standing relationships with suppliers and long-term high purchase prices21
  22. 22. CSR BMW Group (1) Company Description: Bayerische Motoren Werke AG (BMW; English: Bavarian Motor Works), headquartered in Munich, Germany motorcycle and engine manufacturing company also owns and produces the Mini brand and parent company of Rolls-Royce Motor Cars In 2010, the BMW group produced 1,481,253 automobiles and 112,271 motorcycles across all its brands In 2011 revenue € 4.9 billion. Sales rose to € 68.8 billion, about 95,000 employees worldwide Newsweek Green Ranking Top 500 Companies: ranks22 30th globally, 4th in Germany
  23. 23. CSR BMW Group (2) Environmental aspects: • high share of recycling materials • almost wastewater free production processes • fuel-efficient and emission-reducing technologies • electric / hybrid models, alternative drive concepts • Alternative mobility concepts Social aspects: • profit sharing, increase of wages if company is successful • flexible work schedules, individual working time account different forms of part-time working models, sabbaticals, retirement programs • high employee participation • coaching for future female leaders; Network "Women leaders in dialogue”23
  24. 24. CSR BMW Group (3) Responsibility in the supply chain: • partners that respect the ILO, the UN Global Compact, the OECD Guidelines and the ICC Charter sustainability requirements • Training and support, if requirements for the suppliers are not reached • Qualification Process (annually about 200 supplier), with main suppliers of times a year "Supplier Performance Review"24
  25. 25. CSR Deutsche Bank (1) Company Description: German global banking and financial services company with its headquarters in Frankfurt, Germany more than 100,000 employees in over 70 countries in 2009, Deutsche Bank was the largest foreign exchange dealer in the world with a market share of 21 percent26
  26. 26. CSR Deutsche Bank (2) • The whole banking branch is lacking behind in sustainability topics • Sustainability only partly integrated in investment criteria • Sustainable or green investment only a niche • Learning from or critical reflection of financial crisis not observable • Focus of CSR activities has for a long time been on Corporate Citizenship, Sponsoring27
  27. 27. Sustainable Economy
  28. 28. Companies’ Role in Improving a Sustainable Economy • companies are a central player: • they shape markets and needs (innovation processes and marketing) • through lobbying they influence policy-making • They hence have a large responsibility and opportunities to contribute to a development towards a sustainable economy • Companies should develop and sell products for real societal needs • So far, only a small share of German companies does fulfill these expectations29
  29. 29. Sustainable Economy • Globally fair distribution of resources, income and profits • Respecting boundaries of natural systems • Efficient resource and energy use • High rates of renewable energies and resources • Low emission rates • Changes in consumption patterns (sufficiency, reduced resource use, increase in shared usage, slower innovation cycles) • Other than economic values as success criteria (not only growth rates, profits, GDP but quality, happiness etc.) • Other types of companies (Social Entrepreneurs, cooperatives, collectives)30
  30. 30. Thank you. Dr. Esther Hoffmann,IÖW – Institute for Ecological Economy Research, Berlin November 6th, 2012