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Embedding Ethics and CR in business

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Embedding Ethics and CR in business

  1. 1. How to Embed Ethics and Values with a Corporate Responsibility approach Toby Webb, Founder, Ethical Corporation & Stakeholder Intelligence www.ethicalcorp.com / toby.webb@ethicalcorp.com / tobywebb.blogspot.com October 2012
  2. 2. About my work in this field of ethics and CSR  Founded Ethical Corporation in 2001: EC researches corporate best practice in ethics, sustainability and corporate responsibility world-wide. 3000 corporate customers per year  Founded and Chaired the UK Working Group on Corporate Responsibility 2006-08. Co-authored UK CSR Policy for Prime Minister David Cameron  Lecturer on Corporate Responsibility at Birkbeck College, University of London, where I am studying my PhD  Also run Stakeholder Intelligence, a company providing company and market specific research, training and “critical friend” advisory to large companies around the world
  3. 3. The key messages of the presentation  Transparency is the first step towards sustainability  Engagement with stakeholders is now key to business innovation: New ideas don’t often come from the boardroom  Transparency, reporting and compliance programmes only take you so far: You can be transparent with a poor corporate culture (HSBC)  A poor corporate culture will inevitably lead to ethical breaches (Enron, Tyco, WorldCom, Banking Crisis, Coalgate…)
  4. 4. The key messages of the presentation  A strong corporate culture will lead to fewer ethical problems, and enable you to cut costs and seize opportunities to motivate talent and develop new products and services  A better or good corporate culture is only created one way: Holistically: Personality ain’t enough, today you can’t leave anything out…  Corporate responsibility or sustainability/CSR is the key to this: The only way to tackle “responsibility diffusion” in large organisations and manage risk is to embark on a CSR/Corporate Responsibility culture change in your business
  5. 5. Ethical Corporation survey: key results Do you believe companies in general understand what is generally necessary to embed CR in their business? (Sample: 99 Senior Managers)
  6. 6. Ethical Corporation survey: key results Which of the following statements apply to your company in its CR processes? (select all that apply)
  7. 7. Embedding activities Which three of the following CR embedding activities do you believe your company has most successfully addressed to date?
  8. 8. Embedding activities Ethics/CSR Goals and targets: what, when, how and why  Objectives, goals, targets, milestones: What is the difference for you and your company? How could you ensure your lower- level targets service your higher- level objectives?  Build your own: Would you prefer to use external tools or frameworks to define goals and targets, or create your own?  The long and short-term: What would help you in matching targets and timelines appropriately?
  9. 9. Embedding activities Ethics/CSR Goals and targets: what, when, how and why  Benchmarking: Are you aware of what others do, and how can you know what makes a good target in your case? What role is there for ongoing performance comparisons?  Going off-piste: How can you prepare for when results are not as planned? What about when the targets (or even the objectives) seem mistaken?? Remember: “No business plan survives first contact with the market”
  10. 10. Embedding activities Developing a CR road map - Six-phase approach  Phase 1: INSIGHT - consisting of stakeholder views, a science or fact-based understanding of the issues, and a benchmark of competitors and peers.  Phase 2: Making a public commitment in terms of the “headline goal” – perhaps reducing carbon by 30%, for example – but also in more qualitative terms where you need to.  Phase 3: Now that an overall target has been established, requires a baseline that says where you are now. Even for qualitative targets, you need to be able to say what the status is..
  11. 11. Embedding activities Developing an ethics/CSR road map - Six-phase approach  Phase 4: Allocating responsibility for action, you need to get the business to own the baseline, own the target and own the achievement of the goal.  Phase 5: Public reporting of progress – including annual reports. This is where you revisit what you said you’d do, and work to create the sense of continuity and recommitment.  Phase 6: Transparently revisit and challenge the original goal.
  12. 12. Case Studies – GE Ecomagination Reimagining the business & corporate culture through sustainability How CR added value In the five-year period following the inception of Ecomagination in May 2005, the company met or exceeded its goals by:  More than doubling its annual investment in clean R&D to $1.8bn in 2010.  Generating $18bn in revenues from Ecomagination products.  Reducing operational GHG emissions by 24% and energy intensity by 33%.  Reducing water use by 22%.  Cutting GE’s annual energy costs by $130m.
  13. 13. Case Studies – Marks & Spencer Plan A M&S imbues sustainability and ethics throughout the business Keeping the team on the side:  Ownership and management: Giving business units ownership of their budgets gives them the incentive to manage them well.  Finance team: Engage the finance team to provide a much better under- standing of the finances in specific areas of the business, supported by a rigorous process and methodology.  Green lens: Looking at the business through a different “green lens” means people spot new opportunities to reduce impacts and costs by less obvious means.  Innovation: Innovation is proactively supported via a central innovation fund to back initiatives too risky or long-term for business unit expenditure.
  14. 14. Case Studies – Marks & Spencer Plan A  Cross business: The business case needs to be addressed across the entire organisation, which may mean short-term trade-offs with a bigger long-term benefit.  Value chain: There are potentially much bigger benefits outside the organisation in the wider value chain, including many win/win opportunities for the company, suppliers and customers.  Not all benefits are about money: Aspects such as staff motivation and wellbeing, brand enhancement, supply chain resilience and partnership sometimes cannot or should not be monetised.  New revenue: Sustainability is not just about making a business more efficient; it’s also about creating new revenue streams from more sustainable products and services.
  15. 15. Case Studies – Petrobras CR post-crisis Re-establishing trust through corporate responsibility  Petrobras is the Brazillian state oil company. Brazil’s largest company. In 2012 it enjoys a reasonable reputation, but…  Turning point: In 2000, the company endured a series of industrial accidents and disasters.  Pegaso Plan: A programme for Excellence in Environmental and Operational Safety Management – US$1.4bn investment
  16. 16. Case Studies – Petrobras CR post-crisis Core objectives of Pegaso plan:  Rebuild trust  Redeploy investments in equipment, procedures and management  New senior EHS director reporting directly to the CEO  All results and assessments began to be reported in IR meetings  Emphasised internal comms to convey principles, empowered employees Crisis comms: Ensured its focus includes not only stopping the cause of the problem, but also making sure the company gets out into the community immediately to get any needed cleanup under way.
  17. 17. Embedding Ethics and CR in Governance  Clarify formal and explicit CR roles and responsibilities at board level, such as a CR champion on the board or a board-level committee.  Articulate the company’s CR strategy clearly, reflecting board responsibilities and accountabilities. Put it in the mission!  Encourage frank exchange and engagement at senior levels.  Avoid delegation of critical decision-making that senior leaders need to make for themselves.  Join-up high-level communications, linking to the company’s CR goals, objectives and strategy.
  18. 18. Embedding Ethics and CR in the value chain  Identify value chain impacts using your materiality process, including any significant unknowns.  Check the status of CR expectations shared with suppliers and customers, and work to ensure there is a shared understanding across partners about CR goals and responsibilities.  Seek high-level support for supply chain initiatives, to include – but also go beyond – buyers.
  19. 19. Embedding Ethics and CR in the value chain  Find ways to inspire supply chain partners to help craft and meet expectations, and surpass current good practice – from awards to more favourable contract terms, these incentives are likely to yield excellent results.  Give feedback to your supply chain partners, and help them with training, tools and support.  Let colleagues know about the added value from your efforts to engage the value chain in CR.
  20. 20. Embedding Ethics and CR in HR  Review the skills and personal qualities needed in different staff roles to achieve your Ethics and CR objectives: It’s not just about Codes of Conduct, and the ‘big stick’.  Speak to HR colleagues early on to discuss how they might help with developing and communicating Ethics and CR expectations, initiatives and culture throughout the organisation.  Differentiate your CR efforts for new hires and existing employees.  Document and communicate any added value your company has experienced from your efforts to engage people via HR, both risk reduction and expanded opportunities.
  21. 21. Conclusions and Recommendations  Champions are critical; cheerleaders even more so: Beware the temptation to “outsource” responsibility for CR issues solely to issue experts  Play with a full deck of cards: It’s no good identifying your most important sustainability issues if you find your peers and superiors aren’t interested in addressing them.  Don’t try to eat the elephant all at once: A bite at a time. Your road map is an invaluable tool.  Share stories and skills: Find ways to enable peer-to- peer learning, sharing and mentoring in your company.  Avoid the complacency trap: Ethics/CR isn’t something that can be “done” and left on a shelf – it’s a continual part of risk management and market creation.
  22. 22. Further reading and contact  “ How to Embed Sustainability and Corporate Responsibility in Management Processes” 2012 report. Available from: www.ethicalcorp.com/reports (much more in the report than in this presentation: Step by step and function by function guidebook to success…) Also see:  Tobywebb.blogspot.com  www.slideshare.net/tobiaswebb  www.stakeholderintel.com AND: 8000 articles to search and use at www.ethicalcorp.com

Editor's Notes

  • Notes for Toby:Embedding CR in operations is really about releasing CR to work its influence on the company. Embedding means working to ensure people and operations can experience the benefits and learn the lessons of CR regardless of whether they work inside a defined CR function. It requires a simultaneous top-down and bottom-up approach – to ensure consistency and shared values at the same time as local ownership of issues and impacts.
  • Notes for Toby:Embedding CR in operations is really about releasing CR to work its influence on the company. Embedding means working to ensure people and operations can experience the benefits and learn the lessons of CR regardless of whether they work inside a defined CR function. It requires a simultaneous top-down and bottom-up approach – to ensure consistency and shared values at the same time as local ownership of issues and impacts.
  • Notes for Toby:Embedding CR in operations is really about releasing CR to work its influence on the company. Embedding means working to ensure people and operations can experience the benefits and learn the lessons of CR regardless of whether they work inside a defined CR function. It requires a simultaneous top-down and bottom-up approach – to ensure consistency and shared values at the same time as local ownership of issues and impacts.
  • Notes for Toby:Embedding CR in operations is really about releasing CR to work its influence on the company. Embedding means working to ensure people and operations can experience the benefits and learn the lessons of CR regardless of whether they work inside a defined CR function. It requires a simultaneous top-down and bottom-up approach – to ensure consistency and shared values at the same time as local ownership of issues and impacts.
  • Notes for Toby:A clear majority of respondents – 55% – say that their C-suite is aware of the company’s corporate responsibility issues and the agenda faced, but just under a half believe CR to be a clear component of overall company strategy. Barely a third say that they are supported internally in meeting CR goals and objectives – demonstrating the importance of clear internal communication. Only 28% have robust dialogue with company owners/investors about the impact of CR on the business.
  • Notes for Toby:While companies are becoming comfortable with identifying the issues relevant to them and setting appropriate goals and targets, communicating CR and developing the crucial business case and developing a road map are more work in progress. (I will go into each of these points in more detail over the next few slides)
  • Notes for Toby: (Bullets are from the ‘Things to Think About’ section. Page 21)(I’ve pulled out two examples):Richard Ellis, group head of CSR at Alliance Boots, describes his company’s goal- setting as being driven by the local businesses, located in 25 countries worldwide. “Each business establishes goals that matter to them, taking account of the type of business, whether they’re in manufacturing, retailing, wholesaling, and also the country where they are based. Inevitably, those business units where there is more experience of the CSR agenda tend to have more detailed CSR programmes. What we encourage them to do is celebrate their achievements and share these best practices throughout our business.” Sarah Miskell, corporate responsibility and communications director at Warburtons, describes how her company set out on its goal of becoming the UK’s “most sustainable bakery”, and how this helped the company define its goals and targets. “When we started off, we did some benchmarking. We did some external bench- marking against the BITC (Business in the Community) framework, to help define what good performance looks like. We also had KPMG do an internal audit of our processes and systems. On top of that, we sought stakeholder views, chiefly what our employees thought – this helps identify any capability gaps internally. That process led to the development of our CR strategy framework.” Setting and delivering on targets requires a fuller implementation plan – a road map – to bring together a clarification of the company’sobjectives with the physical, financial, human and intellectual resources required to get there.
  • Notes for Toby: (Bullets are from the ‘Things to Think About’ section. Page 21)(I’ve pulled out two examples):Richard Ellis, group head of CSR at Alliance Boots, describes his company’s goal- setting as being driven by the local businesses, located in 25 countries worldwide. “Each business establishes goals that matter to them, taking account of the type of business, whether they’re in manufacturing, retailing, wholesaling, and also the country where they are based. Inevitably, those business units where there is more experience of the CSR agenda tend to have more detailed CSR programmes. What we encourage them to do is celebrate their achievements and share these best practices throughout our business.” Sarah Miskell, corporate responsibility and communications director at Warburtons, describes how her company set out on its goal of becoming the UK’s “most sustainable bakery”, and how this helped the company define its goals and targets. “When we started off, we did some benchmarking. We did some external bench- marking against the BITC (Business in the Community) framework, to help define what good performance looks like. We also had KPMG do an internal audit of our processes and systems. On top of that, we sought stakeholder views, chiefly what our employees thought – this helps identify any capability gaps internally. That process led to the development of our CR strategy framework.” Setting and delivering on targets requires a fuller implementation plan – a road map – to bring together a clarification of the company’sobjectives with the physical, financial, human and intellectual resources required to get there.
  • Notes for Toby: A road map helps spell out clearly – for your company and for external stakeholders – what you plan to do, how you plan to do it, and when. Developing your road map translates the big, audacious goals into concrete steps along the way. This will then allow you to take action against your operating processes and systems. It’s also a strategic means of managing expectations, by keeping colleagues, management and external stakeholders alike informed about your journey, even if it takes a while to get there. WHY CREATE A ROADMAP? Bill Blackburn, president of William Blackburn Consulting, and former vice-president and chief counsel at Baxter Healthcare, describes how a road map can clarify expectations, so they can be shared across the organisation. “One of the major weaknesses of companies that say they want to be sustainable is to proceed as if everybody knows what that means, when in fact everybody has their own idea what that means. It’s essential to create some simple documents that say what it is they are taking on. Without that, you find a lack of alignment in the organisation, and you don’t necessarily have the greatest efficiency in trying to achieve what sustainability really is.” (These are Mike Barry’s six phases of developing a CR road map, page 24. I’ve pasted the six phases in detail here):Barry says: “First, in phase 1, you need insight, consisting of stakeholder views, a science or fact-based understanding of the issues, and a benchmark of competitors and peers. Those three insights then inform what issues and what level of commitment you make.”20 Phase 2, according to Barry, involves making a public commitment in terms of the “headline goal” – perhaps reducing carbon by 30%, for example – but also in more qualitative terms where you need to. “Within the context of our carbon commitment, there are quantitative commitments we can take now, and also recognise we have a much bigger footprint through our suppliers, though we can’t make the commitment there yet. This is allocating into bite size chunks how you’re going to make the commitment.” The third phase, now that an overall target has been established, requires a baseline that says where you are now. Even for qualitative targets, you need to be able to say what the status is. Barry says: “If none of our suppliers are doing anything on carbon now, we can commit to be 100% working on it in five years.” Phase 4 involves allocating responsibility for action. This is much more important and complicated because you need to get the business to own the baseline, own the target and own the achievement of the goal. Barry points out: “A lot of this is cultural acceptance and local ownership. It also means making the business case specific to the business unit, as well as assigning specific responsibility for deliv- ering. This then translates into a day-to-day operational target and measurement for the responsible person, with progress reviewed monthly or quarterly to make sure everyone is on track.” Phase 5 is the public reporting of progress – including annual reports. This is where Marks & Spencer “revisits what we said we’d do, and work to create the sense of continuity and recommitment. I do get the sense there are some companies that shift the goalposts all the time. You need to revisit and check in with what you said you’d do to make sure you’ve got the right goals,” Barry says. Revisiting progress throughout implementation is an essential component of a road map, and is necessary to ensuring you’re on track. Barry says: “After implementing our plan, we worked out that our original biofuels commitment was going in the wrong direction. We still go on reporting our progress on it, but it’s on hold until second generation biofuels come through. Phase 6 is to transparently revisit and challenge the original goal.” A road map should assume a long journey and process of implementation. Mike Barry warns against short-term timelines: “It’s a great indicator of whether a company is really committed to sustainability whether they have strong, long-term 10-20 year time frames. You can’t achieve sustainability by pursuing random success stories on a year by year basis.”
  • Notes for Toby: A road map helps spell out clearly – for your company and for external stakeholders – what you plan to do, how you plan to do it, and when. Developing your road map translates the big, audacious goals into concrete steps along the way. This will then allow you to take action against your operating processes and systems. It’s also a strategic means of managing expectations, by keeping colleagues, management and external stakeholders alike informed about your journey, even if it takes a while to get there. WHY CREATE A ROADMAP? Bill Blackburn, president of William Blackburn Consulting, and former vice-president and chief counsel at Baxter Healthcare, describes how a road map can clarify expectations, so they can be shared across the organisation. “One of the major weaknesses of companies that say they want to be sustainable is to proceed as if everybody knows what that means, when in fact everybody has their own idea what that means. It’s essential to create some simple documents that say what it is they are taking on. Without that, you find a lack of alignment in the organisation, and you don’t necessarily have the greatest efficiency in trying to achieve what sustainability really is.” (These are Mike Barry’s six phases of developing a CR road map, page 24. I’ve pasted the six phases in detail here):Barry says: “First, in phase 1, you need insight, consisting of stakeholder views, a science or fact-based understanding of the issues, and a benchmark of competitors and peers. Those three insights then inform what issues and what level of commitment you make.”20 Phase 2, according to Barry, involves making a public commitment in terms of the “headline goal” – perhaps reducing carbon by 30%, for example – but also in more qualitative terms where you need to. “Within the context of our carbon commitment, there are quantitative commitments we can take now, and also recognise we have a much bigger footprint through our suppliers, though we can’t make the commitment there yet. This is allocating into bite size chunks how you’re going to make the commitment.” The third phase, now that an overall target has been established, requires a baseline that says where you are now. Even for qualitative targets, you need to be able to say what the status is. Barry says: “If none of our suppliers are doing anything on carbon now, we can commit to be 100% working on it in five years.” Phase 4 involves allocating responsibility for action. This is much more important and complicated because you need to get the business to own the baseline, own the target and own the achievement of the goal. Barry points out: “A lot of this is cultural acceptance and local ownership. It also means making the business case specific to the business unit, as well as assigning specific responsibility for deliv- ering. This then translates into a day-to-day operational target and measurement for the responsible person, with progress reviewed monthly or quarterly to make sure everyone is on track.” Phase 5 is the public reporting of progress – including annual reports. This is where Marks & Spencer “revisits what we said we’d do, and work to create the sense of continuity and recommitment. I do get the sense there are some companies that shift the goalposts all the time. You need to revisit and check in with what you said you’d do to make sure you’ve got the right goals,” Barry says. Revisiting progress throughout implementation is an essential component of a road map, and is necessary to ensuring you’re on track. Barry says: “After implementing our plan, we worked out that our original biofuels commitment was going in the wrong direction. We still go on reporting our progress on it, but it’s on hold until second generation biofuels come through. Phase 6 is to transparently revisit and challenge the original goal.” A road map should assume a long journey and process of implementation. Mike Barry warns against short-term timelines: “It’s a great indicator of whether a company is really committed to sustainability whether they have strong, long-term 10-20 year time frames. You can’t achieve sustainability by pursuing random success stories on a year by year basis.”
  • Notes for Toby: INTRO - The initiative acknowledges some of the great sustainability challenges of our time – depletion of oil and gas reserves, lack of access to clean water, demands on natural resources placed by rapid growth in emerging economies, and global recognition of the need to address climate change – and is intended to identify GE’s own role in meeting those challenges.GE identified key areas to improve on eg ‘clean’ R&D; reduce GHG; improve water efficiency. Each area carries specific commitments, and GE is further committed to keeping the public informed about its progress through engagement, reporting and further communications.EXTERNAL ENGAGEMENT - Ecomagination has also provided a powerful platform for the company to engage externally on sustainability issues – via a content-rich website, a strong presence on social media (especially Twitter and Facebook, where Ecomagination has over 85,000 “likes”) and an engaged external advisory board.
  • Notes for Toby: INTRO – Plan A (“Because there is no Plan B for the one planet we have”) became the company’s ambitious effort to become the world’s most sustainable retailer. It entails five pillars (Climate Change, Waste, Sustainable raw materials, Fair partner, Health) under which a range of many different sustainability commitments, goals and targets are organised, studied, revisited and renewed on a regular basis. Revisiting, Refining, Redefining - Throughout the process of producing and delivering on Plan A, the company has sought to review its progress and ensure the plans themselves – and the steps taken to implement them – remain relevant and challenging, and the right steps to take. At times, this has meant dropping or pausing one or more initiatives, such as the early commitment to use biofuels in the company’s delivery fleet. As controversy aboutbiofuelsunravelled, M&S suspended that particular goal, but instead put effort into electric, gas, hybrid and hydrogen fuel cell vehicle technologies, as well as second-generation (non-crop) biofuels. ABOUT THE BULLETS - The company’s Plan A report of 2012 summarises the main lessons of the preceding five years
  • Notes for Toby: 1ST BULLET - It marked a turning point in the way Petrobras was treated in the press and in public opinion, having previously been treated with a light touch. In response to the significant and varied damage caused by the accidents, then- CEO Henri Philippe Reichstul adopted a stance intended to demonstrate that he and the broader company understood and accepted the gravity of the situation. 2ND BULLET - Clarissa Lins describes the effort as: “Rebuilding trust through consistency of procedures and actions; a very coordinated effort to redeploy investments in equipment, procedures and management. The Pegasoprogramme really built in that direction. The new senior EHS director reported directly to the CEO. All the results and assessments began to be reported in quarterly IR meetings as well, on top of the company’s financial results.” Furthermore, the company undertook efforts to change mindsets inside the organisation. Strategic planning processes were revised to place equal weight on health and safety indicators as on production measures. And it began emphasising internal communications that aim to convey principles, not orders, empowering both management and rank and file employees to criticise, debate, refine concepts and reach a shared vision and ambition. 3RD BULLET - The company indicates that its sustainability investments and programmes are a necessary part of doing business, rather than an end in themselves.
  • Notes for Toby: 1ST BULLET - It marked a turning point in the way Petrobras was treated in the press and in public opinion, having previously been treated with a light touch. In response to the significant and varied damage caused by the accidents, then- CEO Henri Philippe Reichstul adopted a stance intended to demonstrate that he and the broader company understood and accepted the gravity of the situation. 2ND BULLET - Clarissa Lins describes the effort as: “Rebuilding trust through consistency of procedures and actions; a very coordinated effort to redeploy investments in equipment, procedures and management. The Pegasoprogramme really built in that direction. The new senior EHS director reported directly to the CEO. All the results and assessments began to be reported in quarterly IR meetings as well, on top of the company’s financial results.” Furthermore, the company undertook efforts to change mindsets inside the organisation. Strategic planning processes were revised to place equal weight on health and safety indicators as on production measures. And it began emphasising internal communications that aim to convey principles, not orders, empowering both management and rank and file employees to criticise, debate, refine concepts and reach a shared vision and ambition. 3RD BULLET - The company indicates that its sustainability investments and programmes are a necessary part of doing business, rather than an end in themselves.
  • Notes for Toby: (bullets are from Checklist on Page 41)INTRO - There are clear and growing examples of board and executive failures to meet stakeholders’ expectations on CR issues, which may sometimes come as a surprise to the companies involved. From allegations of nurturing a culture of risk-taking to the excessive executive pay packages that were the target of the “shareholder spring” of 2012 annual meetings, many boards appear caught out by stakeholder expectations. GOVERNANCE THROUGH COMMS - StéphaneVoisin (head of sustainability research at CréditAgricoleCheuvreux) says: “When we assess CR governance at a company, we look at the ability of management to integrate sustainability within the company’s overall strategy, and how this is presented in their strategy.” She highlights the importance of considering if the company’s CR report and reference documents are linked together. BOARDS TAKE CHARGE OF CR - Richard Ellis, group head of CSR at Alliance Boots, has established a process for managing corporate responsibility across the whole business. He says that what has helped him the most has been the establishment of a dedicated board social responsibility committee.
  • Notes for Toby: (bullets are from Checklist on Page 49)INTRO - Value chains are complex by definition, because they involve collaboration across different companies or partners, different industries and different perspectives. This complexity presents a source of some risk for companies, when the CR issues and impacts are unclear or more difficult to influence. The fact of this complexity is nothing new, yet companies from Nike to Apple have found themselves at the wrong end of stakeholder expectations and have had to develop new thinking and processes to address shortcomings and failures after the fact. ENVIRONMENTAL CREDENTIALS - For those companies undertaking lifecycle assessment or other rigorous environmental-footprint reduction exercises, the supply chain can prove to be a surprisingly significant source of risk and opportunity. CCE’s director of corporate responsibility and sustainability Joe Franses says: “We recognised early on that collaboration and partnership were absolutely key to innovative solutions. What that meant internally was, firstly, our procurement team was critical and we’ve worked with them to integrate sustainability into our supplier relationship management framework. We also worked with them to identify carbon hotspots in the supply chain, and identify our top tier suppliers.” In a similar way, Interface does not assess suppliers on process elements of management practices, or adherence to codes of conduct, when its key concern is to do with driving down the environmental impact of key feedstocks. Ramon Arratia, sustainability director at InterfaceFLOR, says: “Since we identified nylon in our carpets as the main contributor to our environmental footprint, it’s allowed us to ‘cut the fluff’ somewhat in our dealings with our suppliers. Now, instead of sending suppliers hundreds of questionnaires covering all sorts of issues and corporate policies, our supply chain managers can focus our supplier engagement down to the core question: can you cut 80-90% of the impact from your raw materials?” Dan Viederman, CEO of Verité, says: “In the value chain, companies still tend to think in terms of the activities they believe they should do – auditing, training, etc – which can be useful, but unless they’re connected to the intended achievement, the activities will likely achieve less than they could. Viederman says this requires companies to do more “thinking like an ecosystem”. He believes that companies have to ask themselves the extent that they are allowing social responsibility success rather than preventing it through their business processes. COLLABORATE ON SOCIAL RESPONSIBILITY - Viederman says: “Companies need to leverage better their procurement staff in a way that enhances social responsibility outcomes. There’s still a disconnect between what the CR teams want and what the business drivers ask for in the procurement context.”
  • Notes for Toby: (bullets are from Checklist on Page 49)INTRO - Value chains are complex by definition, because they involve collaboration across different companies or partners, different industries and different perspectives. This complexity presents a source of some risk for companies, when the CR issues and impacts are unclear or more difficult to influence. The fact of this complexity is nothing new, yet companies from Nike to Apple have found themselves at the wrong end of stakeholder expectations and have had to develop new thinking and processes to address shortcomings and failures after the fact. ENVIRONMENTAL CREDENTIALS - For those companies undertaking lifecycle assessment or other rigorous environmental-footprint reduction exercises, the supply chain can prove to be a surprisingly significant source of risk and opportunity. CCE’s director of corporate responsibility and sustainability Joe Franses says: “We recognised early on that collaboration and partnership were absolutely key to innovative solutions. What that meant internally was, firstly, our procurement team was critical and we’ve worked with them to integrate sustainability into our supplier relationship management framework. We also worked with them to identify carbon hotspots in the supply chain, and identify our top tier suppliers.” In a similar way, Interface does not assess suppliers on process elements of management practices, or adherence to codes of conduct, when its key concern is to do with driving down the environmental impact of key feedstocks. Ramon Arratia, sustainability director at InterfaceFLOR, says: “Since we identified nylon in our carpets as the main contributor to our environmental footprint, it’s allowed us to ‘cut the fluff’ somewhat in our dealings with our suppliers. Now, instead of sending suppliers hundreds of questionnaires covering all sorts of issues and corporate policies, our supply chain managers can focus our supplier engagement down to the core question: can you cut 80-90% of the impact from your raw materials?” Dan Viederman, CEO of Verité, says: “In the value chain, companies still tend to think in terms of the activities they believe they should do – auditing, training, etc – which can be useful, but unless they’re connected to the intended achievement, the activities will likely achieve less than they could. Viederman says this requires companies to do more “thinking like an ecosystem”. He believes that companies have to ask themselves the extent that they are allowing social responsibility success rather than preventing it through their business processes. COLLABORATE ON SOCIAL RESPONSIBILITY - Viederman says: “Companies need to leverage better their procurement staff in a way that enhances social responsibility outcomes. There’s still a disconnect between what the CR teams want and what the business drivers ask for in the procurement context.”
  • Notes for Toby: (bullets are from Checklist on Page 52)INTRO - Human resources are often key allies in your internal engagement efforts, and can be an effective bridge to external stakeholders as well. Employee training and codes of conduct, skills planning and development, orientation of new hires, performance management and change programmes are all critical CR functions typically carried out by HR. SUSTAINABILITY OF HR, AND SUSTAINABILITY THROUGH HR – According to Elaine Cohen, “The two aspects of human resources management in sustainability are: how does HR contribute to a business becoming sustainable, with the help of tools and processes that the HR function owns; and how does the HR function itself manage itself sustainably?” In other words, HR is both an agent for implementing a traditional sustainability programme within a company, and as a corporate function is itself subject to corporate responsibility issues, via their role in identifying, hiring and integrating people into the corporate structure. Diversity is one of the top line values many companies subscribe to in the CR realm, but putting it into practice can be difficult. Cohen says: “You must have in the recruitment pipeline more diverse candidates – HR can’t dictate who is hired, but diverse candidates must be included in the advanced stages of recruitment so there is equal opportunity. You must tailor recruitment processes and standards to accommodate a diversity of background and experience.” EXTENDING YOUR IMPACT - One of the key strengths of a good HR team is an ability to help people within all different corporate divisions and roles to make a contribution. Ellis says: “Everybody has a responsibility to be part of responsible business. We’re trying to create a culture and environment in which everyone sees they have a role to play.” Because HR is in close contact with nearly all employees on core elements of daily work, it can help make the connection effectively.
  • Notes for Toby:1ST BULLET - beware the temptation to “outsource” responsibility for CR issues solely to issue experts, as this is liable to result in a lack of understanding and ownership in your company. Colleagues in nearly all parts of the business need to have some basic shared understanding and commitment to ensure that all the disparate parts come together in the end. CR cannot be seen as the responsibility of the CR function. 2ND BULLET - All possible avenues for solving sustainability problems and creating effective future strategy need to be on the table and open to change. It’s no good identi- fying your most important sustainability issues if you find your peers and superiors aren’t interested in addressing them. Similarly, a stakeholder engagement initiative will be ineffective if it excludes important groups. But you may find that some of your first forays into CR embedding need to be limited in order to gain the acceptance of key decision makers. Be aware of the limitations of your efforts, and work to fill in the gaps as you go along 3RD BULLET - . Your road map is an invaluable tool. to help your colleagues see how the big challenges break down into manageable steps, while still keeping their eyes on the larger goal. Some sustainability challenges can seem so immense and overwhelming that people – and companies – can find themselves tuning out in despair, or minimising the scale of the problems as a means of rationalising their failure to solve them. 4th BULLET - Tap into the interests and enthusiasms employees already bring to work, and their desire to achieve success together. 5TH BULLET - An Accenture/UN Global Compact survey of nearly 800 global CEOs in 2010 found that an astonishing 81% of them believed they had already fully embedded sustain- ability into their companies’ strategies and operations.3 This is likely to be far from accurate in many cases, and may blind company leadership to the depth of opportunity that still exists in their CR implementation.

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