Hill+Knowlton Strategies

Maybe the format of CSR reports isn’t keeping you up at night (OK, it’s not keeping me up at night either) but each year, I find it fascinating to review the CSR Trends 2010 report from PricewaterhouseCoopers’ Sustainable Business Solutions practice and Craib Design & Communications.

If you haven’t had a chance to review the report – PwC and Craib do a great job of sifting through hundreds of reports mainly from Europe, Japan, Australia, The United States and Canada, reviewing trends and providing a useful snapshot of the differing expectations business cultures have about CSR reporting – and the best practices you may want to emulate. The report doesn’t address truthfulness, instead it delves into how effective companies are in communicating their CSR strategies and performance.

No surprise, there is still a significant difference in how much North American companies report on CSR in comparison to their European counterparts. Virtually 100% of European companies surveyed had CSR information on their corporate website – and 81% published a CSR report. North American companies are further behind than I would expect, with 80% of American and 72% of Canadian companies posting CSR information on their website, but only 37% of Canadian companies and 40% of American companies following up with a published CSR report.

One of the things I was surprised to see in the report is how few companies are taking greater advantage of the benefit of websites and the social web for communicating their CSR commitment. Although 28% of American companies surveyed are using blogs to engage with stakeholders, that is more than double the rate of Europe and Canada. Of all the companies surveyed, while 48% are using CSR microsites, just 35% are leveraging video (particularly for stakeholder testimonials) and only 23% are using interactive diagrams or maps.

The lower use of interactive maps and diagrams particularly surprises me, given that graphics are such an incredibly powerful way to communicate complex information – and websites are a perfect vector for interactive visual mapping and diagrams. Given how many graphics are developed for printed CSR reports, companies clearly understand the value in making complex information clear with the use of design. So, I am a little astonished that more companies are not considering how they could translate these to better leverage the attributes of the web.  (If you are really keen, the report covers some very impressive “best practices” in online communications and interactivity starting on page 42 – such as my personal favourite, Stora Enso’s sustainability microsite (which I wrote about previously here, and is a client of H&K Finland.) 

Bottom line? Move ahead of the pack by first – talking about your CSR activities, and second, building your CSR reporting into every aspect of your communications. Use the attributes of the communication tools you already have to make your CSR reporting come alive.

@TaraKnightHK

At ResponsAbility, our goal is to share and celebrate best practices and new ideas in corporate responsibility.

We share highlighted news items, offer our expertise and provide insight into ways corporations can improve their social standing. It’s also important for our readers to know we also practice what we preach.  Every year, Hill & Knowlton’s DC office hosts a toy drive for needy families around the holiday season. We do it not because it improves our reputation, but because it feels good.

I’m one of the fortunate individuals who looked forward to this holiday season every year. Food would always be on the table, a fire in the fireplace, and a Christmas tree with presents underneath every year.  As a new parent, I can truly appreciate what my parents did to make my holiday a bit brighter.  My daughter, just four months old, will hopefully look back years from now and remember with fondness the family holidays.

But as a new parent, it also breaks my heart to know some kids might wake up and not have a gift to open, a large dinner on the table or even a warm fire to sit next to. That’s exactly why I’m so proud of our agency for making a real difference.  We’re proud to be working with Martha’s Table to collect food and toys for families in need.

There are so many ways you can help kids smile this holiday season. Just by donating canned goods, toys or even clothing, you can bring a smile to a child’s face and relief to a parent’s heart. This holiday season, let’s make a difference together.  Forget bottom lines, smiles are worth millions.

I stumbled upon an article recently about the summary of the recent removal of Shell from the Dow Jones Sustainability Index (DJSI).

According to the article in The Responsible Investor, Dow Jones and its partner SAM, dropped Shell from the index in September.  DJSI rules allow for elimination of companies from the Index following extraordinary events (for example, BP was removed in June following the Gulf of Mexico oil spill) however, there seems to be no specific reason given for the decision to remove Shell from the index that I have come across. It’s pretty clear that Royal Dutch Shell (in a post on their website) was very surprised by the move too.

Curious, I decided to look up Shell’s most recent Sustainability Report (2009). Sustainable development happens to account for 20 percent of their executive compensation scorecard.  For 2010, the Dow Jones sustainability Indexes assessment of Shell’s performance accounts for half of the sustainable development element in the scorecard for members of the Executive Committee. It’s no surprise that Shell is seriously re-considering this executive bonus program as a result (“Shell to review Dow Jones Sustainability Index as bonus metric after being dumped from benchmark“). Being dropped (unceremoniously) from the DJSI is a serious hit to potential compensation, and there are likely a lot of concerned executives about this event.

What I hadn’t realized (until I dug a bit) is that this is part of a wider trend for Dutch businesses to seriously consider, and link, sustainability performance with senior management compensation packages. In fact, Royal Dutch Shell is one of a number of Dutch companies (including Dutch life sciences giant DSM, and postal operator TNT). According to Sustainable Sourcing this kind of incentive plan was pioneered by Akzo Nobel which based its long-term bonus payment structure according to its position in the Dow Jones sustainability index for chemical companies.

I am now very curious about other companies tying their executive bonus packages with external sustainability indices. Clearly, this kind of association will cause real shifts in decision making around sustainability within organizations. Do you know of North American companies who are experimenting with new models for their senior management compensation packages?

@TaraKnightHK

By Andy Cuneo, Senior Account Executive, Washington, D.C.

It’s one thing to preach energy sustainability – it’s another lead by example. That’s just what the White House is doing here, as President Obama is having solar panels placed atop the beautiful mansion at 1600 Pennsylvania Avenue. The panels will serve as a means to power the entire house – from press room to the President’s basketball court – serves as a reminder of the differences we can make – one panel at a time.

President Jimmy Carter was the first to implement solar panels when he had them built to heat the White House water. President Carter made a famous prediction that day, saying: “In the year 2000 this solar water heater behind me will still be here supplying cheap, efficient energy. A generation from now this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be just a small part of one the greatest and most exciting adventures ever undertaken by the American people.”

President Obama and many others around the U.S. are relying on new energy means to power this country. For generations, we’ve relied heavily on coal and foreign oil to heat our homes, power our transportation, towns and cities.  Today, we have an incredible opportunity to do what no generation has done prior. We can utilize advanced technologies to take advantage of the wind and solar energy we have in the U.S. Plus, technology is also allowing us to safely obtain near infinite amounts of natural gas and use nuclear as yet another means.

President Obama took the first step. He’s placed solar panels on his residence.  What will you do to match?

Hill & Knowlton works with the CASEnergy Coalition,  the America’s Natural Gas Alliance and other companies within the solar and wind energy sectors.

Last week, I had the opportunity to review the final draft of the International Standard ISO 26000, Guidance on Social Responsibility with Robert White, who sits as a Canadian Representative and Expert Member of ISO 26000 Social Responsibility Working Group. Approved in September, the ISO 26000 guidelines will be officially published in November 1, 2010.

If you haven’t been following the story, it’s been a long wait for this standard – ISO 26000 has been in development for well over five years. Given that CSR as an area of business concern is relatively new, rapidly evolving, and frequently difficult to accurately define, it’s no surprise that this document has been subject to vigorous overview and discussion. A multi-stakeholder effort, 400 people took part in developing the standard, which makes it ISO’s biggest working group to date.

So what is it? ISO 26000 sets out an international consensus on definitions and principles of Social Responsibility (SR); identifies seven core issues to be addressed, and provides guidance on how to integrate Social Responsibility throughout the operations of an organization. Significantly, the standard has been intentionally written to be accessible to non-specialists, and unlike many other ISO standards, it is a voluntary guidance standard, meaning it is not eligible for certification.

You can review an overview of the contents of ISO 26000 here. If you are looking for the ‘quick hit” version, ISO 26000 defines seven core principles of Social Responsibility, as: Accountability, Transparency, Ethical Behavior, Respect for Stakeholder Interests, Respect for the Rule of Law, Respect for International Norms of Behavior and Respect for Human Rights.

Under these principles of SR, the guidelines lay out an additional seven core subjects to consider in integrating Social Responsibility in an organization. These are organizational governance; human rights; labour practices; the environment; fair operating practices; consumer issues; and community involvement and development. Economic aspects, as well as aspects relating to health and safety and the value chain, are dealt with within each of these core subject areas.

Final word? For organizations that feel daunted in even considering or initiating a Social Responsibility program, or processes, ISO 26000 will provide valuable structure and guidance in helping to shape and define Social Responsibility for organizations big or small (or just smaller). For those organizations already leading the way, ISO 26000 may help illuminate areas where Social Responsibility governance or practice is not as developed as it could be, and provide guidelines for improvement. In short – there is something here for everyone to learn.

Which organizations do you think are already leading here? Are “the leaders” too far ahead to benefit from this guidance? I am very curious if organizations that do not currently track their CSR policies/programs will choose to take advantage of this effort and utilize the ISO 26000 guidance standard prior to implementing CSR reporting or policies.

@TaraKnightHK

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I feel one of the most pervasive characterizations of CSR is that companies experience a financial penalty as result of subscribing to or integrating CSR practices and policies into their business. Of course, the recent Wall Street Journal  “The Case Against CSR” op-ed is one example of the disconnect that many people have of the value of CSR to a profitable business (Boston College’s The Voice of Corporate Citizenship provides an excellent overview of some of the commentary.)

Making a business case for CSR within a company whose corporate culture believes that integrating CSR comes with a significant cost to the bottom line is a huge challenge.   Recently I have been circulating a couple studies with my colleagues that have been really helpful in reframing this “CSR costs money” debate.

An August 2010 working paper from Harvard Business School, The Impact of Corporate Social Responsibility on Investment Recommendations delves into how sell-side analysts perceive CSR information, and how this information affects their recommendations. The researchers reviewed a large sample of US firms over 16 years, examining the ways corporate CSR activity is communicated to investors through analysts, and how it this affects public equity markets. Analysts’ recommendations can substantially affect stock prices and trade volume. The researchers found that firms with strong CSR strategies are perceived to be value-creating, especially over time, and this is reflected in analyst’s positive recommendations for these firms.

Another collaborative study, Does Corporate Social Responsibility Affect the Cost of Capital? from Principles for Responsible Investment, used a sample of 12,915 U.S. firms. This study found firms with a better CSR score had a lower cost of equity capital – even after controlling for firm-specific issues or type of industry. The study found that CSR investment particularly in improving responsible employee relations, environmental policies, and product strategies substantially contributed to reducing a firms’ cost of equity.

It’s clear that investors are looking for, and paying attention to CSR information. Investors with Bloomberg’s Professional market data service for example are able to access carbon disclosure information supplied to the Carbon Disclosure Project (CDP) by the world’s largest firms.  Analysts and investors are certainly accessing information about CSR policies and practices, and considering this in their investment decisions. CSR may need investment, but whether environmental, social or governance related – smart companies are leveraging strong CSR  practice as a positive factor in improving their market valuation.

@TaraKnightHK

By Andy Cuneo, Senior Account Executive, Washington D.C.

As a former student at Boston’s Northeastern University, our institution’s former president, a man I respect and admire, would work tirelessly to build Northeastern’s reputation on the U.S. News & World Report college rankings. He succeeded in moving NU from high 150’s into the top 100.

A new ranking, reported on by the Washington Post, takes into account a new standard ranking produced by Washington Monthly that looks at three distinct categories when rating institutions: Social Mobility (recruiting and graduating of low-income students), Research (production of cutting edge scholarships and PhD’s) and Service (encouraging students to give something back to their community).

You’ll see in the report that public colleges fair amazing well – far better than private institutions. But what I really like about this rating system is that it’s not just an alternative way to view success and opportunity in higher education institutions, but rather what prospective students are now looking for in their college experience. In July, USA Today’s Trevor Hughes illustrates that point here.

In addition, more institutions are making the most of their opportunity to become more sustainable. We’ve written on this blog work being done by our local universities here in DC. 

There is a growing enthusiasm from our next generation. I remember stepping onto campus for the first time more than 11 years ago, ambitious in thinking I could change the world. And these people are doing it!

It’s a powerful question. Certainly, the last type of question I expected to see leading me into a corporate global sustainability microsite. Amazingly, it wasn’t my first surprise during my visit to the Stora Enso Global Responsibility site.

Stora Enso’s CSR microsite is ambitious. An integrated paper, packaging and wood products company based in Helsinki, Finland, Stora Enso is one of the world’s largest pulp and paper manufacturers, with operations in Europe, Latin America and Asia. Stora Enso and Hill & Knowlton’s Helsinki office built this global sustainability site to communicate Stora Enso’s commitment to sustainability. I was introduced to the site by a colleague, Jari Lähdevuori, who is part of the H&K project team that developed the microsite.

If you haven’t had a chance to take a tour, allow me to offer you a brief overview of the site. In addition to questions like “Do plantations cause violence and death?,” the site also asks visitors “How much does the forest industry accelerate climate change?” and “Does recycling paper really do any good?” Each of these questions are answered by different employees of the Stora Enso company and its stakeholder groups (including customers, forest owners and activists).

I was seriously impressed when I toured the site and found a one-on-one interview between Sini Harkki,  Greenpeace’s Nordic forest campaigner and Stora Enso CEO Jouko Karvinen where they speak quite frankly about the challenges and efforts of Stora Enso’s forestry policies. The site also includes experiential elements such as “How to build a plantation” , a module on “Lessons Learned”, and a “Test Yourself” knowledge section narrated by Carrot Mob Finland.

I asked my colleague on the project team, Jari Lähdevuori, to tell me a bit more about how this project came about:

Tara: What was the reason for the site?

Jari says: “Stora Enso felt the communications about their commitment to sustainability were lost in the wash of messages from mainstream media and Non-Governmental Organizations, which seemed to have much greater reach and impact. Stora Enso did not feel their own sustainability messages were reaching the general public on a global scale.

Stora Enso wanted to communicate their sustainability policies and practices directly to the public, and bring more attention to these topics. To do that effectively, our team felt we needed compelling and entertaining content – hence, the global responsibility site.”

Tara: It’s no surprise that the site has been successful. What has the feedback been?

Jari says: “The internal feedback from Stora Enso has been very good – the site is seen as a very fresh way of communicating sustainability in a credible manner. People who have seen the site are very impressed. In fact, Stora Enso’s Head of Communications Lauri Peltola was asked if it can be used as a CSR case study at the G20 summit. It has been an exceptionally powerful way of communicating – and demonstrating – how they do business.”

Stora Enso’s Global Responsibility microsite is clearly a great example of companies really ‘walking the talk” and using the power of new media technologies to approach CSR communications with transparency and credibility by making corporate CSR practices accessible for the average person.

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Hard to believe that the end of another summer is upon us.  Earlier this month I was on Cape Cod, enjoying a week of vacation, which included eating a lot of fresh seafood.   The menu included cod (of course), clams, flounder, haddock, lobster and scallops.  All of it was delicious, but with every bite there was a little remorse.  Ever since I first read the United Nations Environment Program’s (UNEP’s) prediction that the world’s fisheries could be depleted by 2050, I have suffered a tinge of guilt with every plate of broiled scrod, every cup of seafood stew, every lobster roll.

According to UNEP, 30 percent of global fish stocks have already collapsed – meaning that they now yield 10 percent or less of their previous potential.  I also know full well that some one billion people around the world, most of them from developing countries, rely on seafood as their primary source of protein and a major source of their sustenance.

Responsible fisheries management and improved practices here in the U.S. and around the world are a good start and help alleviate some of my guilt.  Fish farms also have a role to play in meeting the world’s growing demand for seafood, but they are not without their challenges or critics.  And while I’m intrigued by the promise of genetically altered fish, there are many unanswered questions and many associated risks still to be addressed.

Although my concerns about the health and vitality of the world’s fisheries are rooted in a desire for ecological sustainability and preserving biodiversity, a connection between overfishing and societal health and wellness (in America at least) is becoming increasingly clear.  I’m talking specifically about portion sizes and how (and how much) we consume.  The seafood platters I saw this summer were huge – as big, or bigger, than I can ever remember.  This trend isn’t limited to fish, and it certainly isn’t limited to Cape Cod.

A new report from the Center for Science in the Public Interest (CSPI) shows that at restaurants across the country, “regular” portions are now super-sized:  two, three (or more) times USDA and FDA recommendations.  No surprise then that CSPI believes this is contributing directly to the two-thirds of adults and one-third of children who are obese or overweight.

The same nation that now heralds the organic, fair-trade and locally-grown food movements is the same one that spawned the massive portion trend and the “endless,” “bottomless,” “unlimited,” “all you can eat” buffet.  I’m no expert on the economics of running a restaurant, but I’ve never understood how these buffets can be profitable.  Nor do I understand how such limitless consumption – of seafood or any other food – can be sustainable.

Businesses must make a profit, but there is increasing evidence that they can do so by encouraging sustainable consumption on the part of their customers.  From the television programs we watch, to the clothes we wear, to the toys we buy our kids, businesses play a major – maybe even a central – role in conditioning us as consumers.  Businesses help us define what constitutes value and normalcy in the products and services we consume. 

This is a discussion that every company in every sector should be having and many are, encouraged and aided by a great Business for Social Responsibility report – The New Frontier in Sustainability: The Business Opportunity in Tackling Sustainable Consumption.  Clearly, it’s bigger than restaurants – but food (and seafood in particular) is great place to start.

More often than not this summer, my wife and I shared the huge seafood platters at the restaurants and clam shacks we frequented.  If any of them had offered half-sized portions for half the price, they would have seen a lot more of my business.  Don’t tell them, but I would even have paid a little more than half.

I had the opportunity recently to do a bit of digging into best practices and trends for corporate responsibility reporting – and it was a fascinating journey. CSR (or ESG – Environmental, Social and Governance) concerns and reporting are clearly moving to the forefront of corporate agendas.

There are a few more obvious trends – corporate responsibility reporting formats are clearly headed away from large volume hard print copies and towards digital solutions such as websites and online formats as reports get more detailed. Finding easy-to-manage ways to organize large volumes of information is especially true for organizations using integrated reporting frameworks to incorporate financial and non-financial indicators into a single report. (A couple of excellent resources in this area are: Corporate Register’s CR Reporting Awards  and CSR Trends 3)

In the wake of a number of corporate actions which have publically (and dramatically) not met their CSR reputations, there is a lively debate about evaluating the breadth and credibility of corporate CSR reporting. With a more skeptical audience, there is a significant appetite for more transparency, independent verification of CSR reporting, and engaging stakeholder participation to validate key aspects of corporate CSR reports.

The Chartered Accountants of Canada recently released a report, Environmental, Social and Governance (ESG) Issues in Institutional Investor Decision Making, which provides another window into why these trends have become more prevalent. As investors are increasingly concerned with the environmental management aspects of CSR as a risk mitigation strategy, especially long-term investments, CSR (or ESG) reporting is also becoming critical data in making investment decisions. In fact, their report identifies that reporting on environmental, social and governance elements of the business are now being seen by some investors as a proxy for evaluating the quality of management of a company. Jennifer Hicks wrote about this growing interest in Triple Pundit.

Of course, this trend is frustrated by the lack of truly comparable metrics to evaluate CSR or ESG reporting between companies. Although the Global Reporting Initiative seems to be emerging as a favored standard, Corporate Register’s 2010 CR Reporting Awards report indicates the second most popular option is a completely customized reporting framework.   

For companies looking to initiate or improve their CSR (and ESG) reporting, making the choice between a global standard or custom framework will be difficult. A global reporting standard might enable their investors and stakeholders to perform better comparable analysis on their CSR performance relative to the market, where a custom reporting system could be a better fit to the company’s needs. In the meantime, companies should be conscious that reporting their CSR activity is critical not just for their corporate reputation – but potentially their financial success as well.