A presentation looking at trends, drivers, actions, strategy and business ethics, why they matter, who does them well and what the business case is today

1. CSR,
Strategy,
Ethics
and
Governance
Toby
Webb,
Founder,
Ethical
Corpora=on
and
Stakeholder
Intelligence.
Lecturer,
Corporate
Responsibility,
Birkbeck,
University
of
London
September
2013
Tobias.Webb@stakeholderintel.com
Tobiaswebb.blogspot.com

2. What
is
CSR
today?
• CSR
is
about
how
you
run
your
business
when
no-­‐
one
is
watching
• It
covers:
Ethics,
Integrity,
Products,
Services,
Consumers,
Investors,
An=-­‐corrup=on,
Suppliers,
Tax
payments,
Market
Ethics,
Employees,
Civil
society
and
the
Environment…

3. CSR
today
=
Sustainable
Business
• Sustainable
business
does
not
happen
without
strategy
• Strategy
does
not
happen
without
Governance
• Governance
does
not
happen
without
Ethics
• Ethics
do
not
happen
without
Stakeholder
Engagement
Paul
Polman,
Unilever
CEO

4. Who
are
some
of
the
leaders?
Unilever
-­‐
Ten
year
journey
towards
sustainable
growth
Applies
right
across
the
value
chain
Responsibility
for
own
direct
opera=ons
Also
for
suppliers,
distributors
and
how
consumers
use
Unilever
brands
Underpinning
the
Plan
are
around
60
targets
Marks
and
Spencer
Launched
Plan
A
in
January
2007,
seXng
out
100
commitments
to
achieve
in
5
years
Now
extended
Plan
A
to
180
commitments
to
achieve
by
2015
Ul=mate
goal
of
becoming
the
world's
most
sustainable
major
retailer

5. Who
are
some
of
the
leaders?
General
Electric
-­‐
Eco-­‐Innova=on
as
business
strategy
EcomaginaBon
business
unit
mainstream
focus
on
business
innova=on
and
sustainable
industrial
products
$2.3
billion
invested
in
“Ecomagina=on”
products
in
2011
Reduced
GHG
emissions
30%
since
2004
Reduced
wastewater
by
45%
since
2006
2011
-­‐
Siemens
reorganised
opera=ons
into
four
core
business
units:
Energy
-­‐
efficiency
in
energy
produc=on
and
distribu=on,
including
oil,
gas
and
renewables
Healthcare
-­‐
supplying
technology
(medical
imaging
equipment
and
healthcare
IT)
Industry
-­‐
providing
soeware
and
technology
services
Infrastructure
and
ciBes
-­‐
sustainable
technologies
(smart
grid
equipment
and
rail
vehicles)

6. Who
are
some
of
the
leaders?
Golden
Agri
Resources
–
A
model
for
sustainable
palm
oil
• 2010
-­‐
announced
ground-­‐breaking
deal
with
The
Forest
Trust
to
help
prepare
for
Roundtable
on
Sustainable
Palm
Oil
(RSPO)
cer=fica=on
by
December
2015
• Engagement
with
local
NGOs
for
monitoring
of
sustainable
agriculture
implementa=on
• Working
with
Greenpeace
and
interna=onal
NGOs
• Won
back
business
from
Nestle
and
Unilever:
Share
price
went
up!
“No
deforesta=on”
commitment:
Now
extended
to
pulp
&
paper
Sister
company
APP
in
Feb
2013

7. Why
do
they
choose
to
lead?
Unilever
Marks
and
Spencer
General
Electric
Siemens
Golden
Agri
Resources
• Securing
supply
• Customer
trust
• Low
carbon
future
• UrbanisaBon
• Market
access

8. How
do
they
engage
with
stakeholders?
• Dialogue
with
civil
society
• Consul=ng
experts
on
agriculture,
trust,
ethics.
urbanisa=on,
climate
change,
energy
futures
• By
using
guidance
and
standards
• Listening
to
their
employees
• Watching
trends
emerge
ISO
26000
Guidance
‘Standard’

9. Key
guidance
for
CSR
and
Sustainability
• ISO
26000
• Dow
Jones
Sustainability
Indexes
• FTSE4Good
Index
• Global
Repor=ng
Ini=a=ve
Guidelines
• OECD
Guidelines
• UN
Global
Compact
• Transparency
Int.
BUT:
Guidance
not
the
whole
solu=on:
You
must
study
your
own
Risk
and
Opportuni=es

10.
• Ten
year
journey
towards
sustainable
growth
with
50
tough
targets
• Aim
to
bring
safe
drinking
water
to
500
million
people
• 2011:
Increased
propor=on
of
pornolio
that
meets
highest
nutriBonal
standards
from
22%
in
2010
to
25%
in
2011
• Aim:
Halve
the
greenhouse
gas
impact
of
products
across
the
lifecycle
by
2020
• 2020
aim:
Source
100%
of
agricultural
raw
materials
sustainably
• Sustainably
sourced
raw
materials
up
from
24%
in
2011
to
36%
in
2012

11. Unilever:
Business
Benefits
of
Sustainability

12. Siemens
and
Green
Business
Strategy
• 2011:
Products
and
solu=ons
in
Environmental
Pornolio
generated
revenue
of
€29.9
billion:
41%
of
total
revenue
• Objec=ve:
Grow
annual
revenue
to
€40
billion
by
2014
–with
new,
innova=ve
products
and
excep=onal
growth
in
fields
like
renewable
energy.

13. Siemens
and
Business
Ethics
• Huge
corrup=on
scandal,
resul=ng
in
$1.6bn
in
fines
in
2008
• Company
has
re-­‐organised
as
a
result,
beser
repor=ng
and
world
class
anB-­‐
corrupBon
processes
• Forced
by
World
Bank
to
spend
spend
$100
million
on
an=-­‐corrup=on
awareness
ini=a=ves
world-­‐
wide

14. How
do
these
examples
link
to
stakeholder
engagement?
• Employee
engagement
drives
innova=on
and
ideas
• NGO
partnerships
bring
science,
experience
credibility
• CommuniBes
have
increasing
power
&
influence
• Social
media
means
no
company
escapes
scru=ny
• Big
business
want
a
long
term
vision
from
Governments:
And
policies
and
incen=ves
that
enable
investment
and
longer
term
planning:
So
must
lead
by
example

15.
Social
Media
means
no
escape
from
the
public
eye

16. How
do
CSR
and
Sustainability
improve
Business?
• Consumers
want
to
trust
brands,
not
products
• Leading
companies
turning
sustainability
into
opportunity
all
over
the
world:
New
products
/
mo=vated
people
/
cost
savings
• 9
billion
people
means
less
resources
and
innova=on
will
be
essen=al:
Sustainability
=
risk
reducBon
• Corporate
roles
in
changing
inefficient
systems
will
be
vital:
The
winning
companies
recognise
CSR
is
systems
change
• CSR
and
Sustainability
=
Smarter
business

17.
Harvard
Business
School
Professor
Robert
Eccles,
Harvard
Business
School

18. Do
other
companies
make
money
from
CSR
and
sustainability?
London
Business
School
&
Harvard
Business
School
research:
• Firms
with
beser
CSR
performance
face
significantly
lower
capital
constraints
• Beser
stakeholder
engagement
and
transparency
around
CSR
performance,
are
important
in
further
reducing
capital
constraints
• That
the
rela=on
is
driven
by
both
the
social
and
the
environmental
dimension
of
CSR
"CORPORATE
SOCIAL
RESPONSIBILITY
AND
ACCESS
TO
FINANCE"
Available
at:
h;p://ssrn.com/abstract=1847085

19. Five
ways
ethics
and
governance
are
linked
to
CSR
and
Sustainability
1. CSR
and
Sustainability
cannot
exist
without
Business
Ethics
2. Business
Ethics
cannot
exist
without
good
Corporate
Governance.
Ethics
always
begins
and
ends
with
leaders
3. Good
Corporate
Governance
is
now
seen
by
interna=onal
investors
as
part
of
good
management
by
boards
4. Poor
Corporate
Governance
is
priced
into
share
valuaBons
by
analysts
and
large
interna=onal
investors
5. Good
Corporate
Governance
begins
with
Rule
Compliance

20. Why
Transparency
Ma^ers
• Compliance
with
interna=onal
best
prac=ce
in
Governance
and
behaviour
expecta=ons
=
The
first
step
to
building
investor
and
stakeholder
trust
–
AnB-­‐
corrupBon
is
a
vital
part
of
this
• BUT:
Compliance
alone
is
not
enough!
• Transparency
is
an
under-­‐valued
method
of
building
trust,
both
from
Markets
Lack
of
transparency
affects
trust

21. Why
Transparency
Ma^ers
• Responsible
ownership
is
about
being
accountable
to
shareholders
• That’s
true
for
businesses
in
Indonesia
too…
• Fact:
Investors
reward
beser
managed
(governed)
companies!
$18
Trillion
in
Interna=onal
Investor
Assets

22. Conclusion:
Eight
Key
Steps
to
Global
Ethical
Governance
1. Adopt
best
pracBce
in
Interna=onal
Corporate
Governance
2. Go
beyond
Compliance:
Develop
and
integrate
Ethics
3. Lead
from
the
top
of
the
company
on
Ethics
4. Use
Ethics
to
build
strategy
in
CSR
and
Sustainability
5. Engage
employees,
partners,
suppliers
and
civil
society
in
strategy
and
policy
development
6. Use
engagement
to
drive
innovaBon
in
Governance,
Prac=ce,
Product
and
Service
Innova=on
across
your
business
7. Embed
ethics,
CSR
and
Sustainability
into
your
business
every
day
8. Never
forget:
Ethics,
Governance
and
CSR
are
how
smart
business
will
be
done
in
the
21st
Century

23. Engaging
Employees:
The
Business
Case
• Employee
percep=ons
of
corporate
social
responsibility
have
a
major
impact
on
organizaBonal
commitment
• Contribu=on
of
CSR
to
organiza=onal
commitment
is
at
least
as
great
as
job
sa=sfac=on
• Managers
at
nine
out
of
ten
of
the
UK’s
top
50
best
workplaces
believe
corporate
social
responsibility
affects
employees’
moBvaBon,
sa=sfac=on
and
loyalty
“9
out
of
10
of
key
barriers
to
successful
change
are
people
related”(PricewaterhouseCoopers)

24. Employee
engagement:
The
numbers
• Engaged
employees
generate
43%
more
revenue
(Hay
Group)
• Disengaged
workers
costs
the
UK
£44bn
a
year
(IES)
and
the
US
between
$270bn
and
$343bn
(Gallup)
in
lost
annual
produc=vity
• Engaged
employees
have
2.7
sick
days
per
year,
rather
than
the
6.2
disengaged
employees
take
(Gallup)
• Engaged
employees
are
87%
less
likely
to
leave.
(Corporate
Leadership
Council)
• 67%
of
engaged
employees
advocate
their
organisa=ons,
compared
to
only
3%
of
disengaged
employees.
(Gallup)
• 59%
of
engaged
employees
say
“work
brings
out
their
most
crea=ve
ideas”,
compared
to
only
3%
of
disengaged
employees.
(Gallup)
Source:
Engaging
for
Success:
enhancing
performance
through
employee
engagement,
David
MacLeod
and
Nita
Clarke,
2009

25. How
do
leading
companies
engage
employees
in
Ethics?
• CSR
Champions
Networks:
HSBC,
Alliance
Boots,
Reed,
Accenture,
PWC,
Novo
Nordisk
• Embedding
in
job
func=ons:
At
Nike,
ethics
and
environmental
issues
co-­‐managed
by
head
of
CR
and
relevant
heads
of
department.
Nike:
Head
of
compliance
reports
to
both
head
of
CR
and
head
of
all
sourcing

26. Lessons
from
Novo
Nordisk:
Appraisals
and
the
balanced
scorecard
• Novo
Nordisk
Employee
appraisal
system
called
3P:
People,
Performance,
Process
• Includes
financial
and
non-­‐financial
targets
• Included
in
staff
appraisals,
twice
a
year.
At
the
end
of
each
full
year,
total
performance
scores
based
on
performance
against
CSR
targets
• Wide
variety
of
issues
included
in
Novo
Nordisk’s
balanced
scorecard:
Those
used
depend
on
job
func=on
Novo:
On
qualita=ve
measures
assessment
is
made
by
direct
line
managers

27. How
leading
companies
engage
CEOs
and
the
board
on
sustainability
• Link
CSR/Sustainability
with
corporate
governance
best
pracBce:
managing
risk/providing
investor
re-­‐assurance
• Cost
savings:
From
opera=ons
and
the
supply
chain
AND
the
value
for
reputa=on
• Real
life
examples
of
how
managing
CSR
issues
benefits
business
• Take
them
into
the
supply
chain!
Present
industry
best
prac=ce
to
the
board:
Talk
about
winning

28. Embedding
CSR:
Six
Phases
• Phase
1:
INSIGHT
-­‐
stakeholder
views,
science
based
understanding
of
issues,
benchmark
of
compe=tors
and
peers
• Phase
2:
Public
commitment
of
the
“headline
goal”
–
reducing
carbon
by
30%,
reducing
injuries
• Phase
3:
Establish
a
baseline
for
today

29. Embedding
CSR:
Six
Phases
• Phase
4:
AllocaBng
responsibility
for
acBon,
the
business
must
own
the
baseline,
own
the
target
and
own
the
achievement
• Phase
5:
Public
reporBng
of
progress.
Revisit
what
you
said
you’d
do,
create
the
sense
of
con=nuity
and
recommitment
• Phase
6:
Transparently
revisit
and
challenge
the
original
goal

30. Key
lessons
for
Governance
• Clarify
CR
roles
and
responsibiliBes
at
board
level,
CR
champion
on
the
board,
board-­‐level
commisee
• ArBculate
CR
strategy
clearly,
reflec=ng
board
responsibili=es
and
accountabili=es.
Put
it
in
the
mission!
• Encourage
frank
exchange
and
engagement
at
senior
levels
• Avoid
delegaBon
of
cri=cal
decision-­‐making
that
senior
leaders
need
to
make
• Join-­‐up
high-­‐level
communicaBons,
linking
to
the
company’s
CR
goals,
objec=ves
and
strategy

31. Conclusions:
Embedding
CSR
• Champions
and
cheerleaders
are
cri=cal:
Don’t
“outsource”
responsibility
for
CR
issues:
Manage
internally
• Don’t
try
to
eat
the
elephant
all
at
once:
A
bite
at
a
=me.
Your
road
map
is
an
invaluable
tool.

32. Conclusions:
Embedding
CSR
• Share
stories
and
skills:
Find
ways
to
enable
peer-­‐
to-­‐
peer
learning
and
mentoring
• Avoid
the
complacency
trap:
Ethics/CR
isn’t
something
that
can
be
“done”
and
lee
on
a
shelf
–
it’s
a
con=nual
part
of
risk
management
and
market
crea=on…
More
informa=on:
An
80
page
management
Report
on
Embedding
CSR
from;
hsp://reports.ethicalcorp.com/reports/

33. Thank you!