CSR progress, leaders and laggards

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Speech slides on CR and companies that get it, and don\’t, from Pontis Foundation Conference, Bratislava, May 2009

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CSR progress, leaders and laggards

  1. 1. Ethics drivers, examples and outlook Pontis CR Conference, Bratislava, May 14 2009 Tobias Webb, Ethical Corporation Institute / Ethical Corporation magazine www.EthicalCorp.com
  2. 2. Overview: CSR driven by PR concerns CFO's very influential today! <ul><ul><li>&quot;Ways in which environmental, social, and/or governance programs improve companies’ financial performance&quot; </li></ul></ul><ul><ul><li>1) Reputation and/or brand equity = 79% </li></ul></ul><ul><ul><li>2) For talented employees = 52% </li></ul></ul><ul><ul><li>3) Meeting society’s expectations = 43% </li></ul></ul><ul><ul><li>4) Improving efficiency = 39% </li></ul></ul><ul><ul><li>5) Growth opportunities = 35% </li></ul></ul><ul><ul><li>6) Risk management = 24% </li></ul></ul><ul><ul><li>7) Strengthening competitive position = 14% </li></ul></ul><ul><ul><li>8) Improving access to capital = 3% </li></ul></ul><ul><ul><li>(Source: McKinsey February 2009 CFO survey &quot;Where value comes from“ section) </li></ul></ul>
  3. 3. Anti-corruption Regulatory and enforcement changes <ul><ul><li>Foreign Corrupt Practices Act 1977 </li></ul></ul><ul><ul><li>OECD anti-bribery convention 1997 </li></ul></ul><ul><ul><li>Corruption fines cost Siemens 1.3 - 1.6 billion dollars so far </li></ul></ul><ul><ul><li>BAE Executives have been questioned in U.S. </li></ul></ul><ul><ul><li>BAE spent £3 million reacting to Woolf report, 60 ethics execs </li></ul></ul><ul><ul><li>Corruption still common: construction , extractives , telecoms </li></ul></ul>
  4. 4. What’s happening now in anti-corruption? US/UK: Enforcement growing <ul><ul><li>Enforcers get tough: more cases, bigger penalties ( Intel ) </li></ul></ul><ul><ul><li>Regulators work together: co-operation and convergence </li></ul></ul><ul><ul><li>Business comes clean: self-disclosure and plea-bargaining </li></ul></ul><ul><ul><li>Litigation spin-offs: coupling FCPA charges with other prosecutions </li></ul></ul><ul><ul><li>European companies vulnerable! ( MAN Group ) </li></ul></ul><ul><ul><li>Stronger risk-based business case! </li></ul></ul>
  5. 5. What’s happening now in anti-corruption? Ethics vs. Compliance <ul><li>Big companies including values-based ethics programme alongside rules-based system </li></ul><ul><li>Heavy on leadership, employee engagement and innovation </li></ul><ul><li>Internal policies strengthened on new anti-corruption rules </li></ul><ul><li>Training is still a big part of ethics budgets - up to 90%! </li></ul><ul><li>Source: 'Best practices in designing effective ethics programmes‘. Ethical Corporation Institute Report, April 2009. www.EthicalCorpInstitute.com </li></ul>
  6. 6. CSR and reformed companies Companies that have learned: <ul><ul><li>Chiquita : Labour and environment </li></ul></ul><ul><ul><li>Unilever : Sourcing and entrepreneurship </li></ul></ul><ul><ul><li>Nike, IKEA, Timberland : Labour and environment </li></ul></ul><ul><ul><li>McDonald's : Sourcing and nutrition </li></ul></ul><ul><ul><li>Kraft : Sourcing and certification, Rainforest Alliance </li></ul></ul><ul><ul><li>Marks and Spencer : 100 targets on sustainability </li></ul></ul><ul><ul><li>Wal-Mart : Supplier scorecards, task forces on products </li></ul></ul>
  7. 7. CSR and reformed companies Some that struggle… <ul><ul><li>Nestle : Tokenistic approach, e.g. coffee </li></ul></ul><ul><ul><li>Coke : Poor on strategy, weak on climate change </li></ul></ul><ul><ul><li>Supermajor oil companies : Renewables/CCS </li></ul></ul><ul><ul><li>Construction industry : Still rife with corruption </li></ul></ul><ul><ul><li>Tesco : Weak on strategy, still reactive, lagging others </li></ul></ul><ul><ul><li>Banks: HSBC , (forestry), Barclays , (no head of CR!) </li></ul></ul><ul><ul><li>Virgin : Climate change financial product = 5000 airmiles… </li></ul></ul>
  8. 8. CSR and self regulation of companies Voluntary initiatives <ul><ul><li>Extractive Industries Transparency Initiative </li></ul></ul><ul><ul><li>Government and company led, weak on members </li></ul></ul><ul><ul><li>Kimberly Process </li></ul></ul><ul><ul><li>Effective on conflict diamonds, but political troubles… </li></ul></ul><ul><ul><li>Ethical Trading Initiative </li></ul></ul><ul><ul><li>Good on basic conditions, disagreements on wages </li></ul></ul><ul><ul><li>Business Social Compliance Initiative </li></ul></ul><ul><ul><li>Useful to get companies engaged, concerns about depth </li></ul></ul><ul><ul><li>UN Global Compact </li></ul></ul><ul><ul><li>A strong catalyst, no resources/remit for laggards </li></ul></ul><ul><ul><li>UN Principles for Responsible Investment </li></ul></ul><ul><ul><li>Wide take up, concerns about effectiveness </li></ul></ul><ul><ul><li>Global Reporting Initiative </li></ul></ul><ul><ul><li>- A useful toolkit, but not a standard, risks box ticking! </li></ul></ul>
  9. 9. The landscape going forward <ul><ul><li>Increasing legal/ regulatory pressures : </li></ul></ul><ul><ul><ul><li>Anti-corruption, </li></ul></ul></ul><ul><ul><ul><li>Maybe later on human rights </li></ul></ul></ul><ul><ul><ul><li>Financial regulation and social pressure on large companies! </li></ul></ul></ul><ul><ul><li>Expectations increasing: </li></ul></ul><ul><ul><ul><li>Increasingly impossible not to be engaged with communities </li></ul></ul></ul><ul><ul><ul><li>Governments realise their limitations, change procurement rules </li></ul></ul></ul><ul><ul><li>Consumer choices: </li></ul></ul><ul><ul><ul><li>Evidence that consumers increasingly interested, niche going mainstream </li></ul></ul></ul><ul><ul><li>Business-to-Business expectations: </li></ul></ul><ul><ul><ul><li>SD/CSR required as part of product/ service specifications </li></ul></ul></ul><ul><ul><ul><li>Technology will play a key role (both for low carbon and campaigners!) </li></ul></ul></ul>
  10. 10. Learning resources: <ul><ul><li>Ethical Corporation magazine www.EthicalCorp.com </li></ul></ul><ul><ul><li>Ethical Corporation Institute research reports: www.EthicalCorpInstitute.com </li></ul></ul><ul><ul><li>ClimateChangeCorp.com : Free daily and weekly news and analysis on business and climate change </li></ul></ul><ul><li>Contact me: [email_address] </li></ul>

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