Posts Tagged ‘Corporate Responsibility’

Update on ISO 26000 (Guidance on Social Responsibility)

posted by Tara Knight

This is an update to a post I previously wrote about the publication of ISO 26000

Since the official publishing of the long-awaited ISO 26000 (Guidance on social responsibility) code in November 2010, many companies have been excitedly leveraging the standard to their business process.  

The ISO 26000 code is intended to provide an international consensus on definitions and principles of Social Responsibility and guidance for integrate it throughout the operations of an organization. Unlike many other ISO standards, the working group that developed ISO 26000 decided that it would not be appropriate to be a certifiable standard – but that hasn’t stopped consultants from offering to certify it. 

To the ISO 26000 working groups’ surprise, it turns out that ISO’s national standards bodies are not bound by that decision. So, national ISO bodies are offering to certifying national variations of the international standard. Under the ISO system, the national bodies are within their organization rules to offer this certification. It is certainly creating a lot of confusion for an international code that expressly states is not intended or appropriately “certifiable” not to mention, creating a host of national versions of what is supposed to be one international consensus.

It is an example of how companies are clearly seeing value in CSR – why would organizations so ardently seek independent verification for their CSR policy if it didn’t offer them some reputational or organization value? However, to ‘get back to the basics” the aim of CSR – and the ISO 26000 standard – is to create and follow the policy and principals of social responsibility – not just acquire the symbols of it.

@TaraKnightHK
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What Makes a Nation? How governments view CSR

posted by Tara Knight

Please excuse me for being a bit behind in reading my news, but I just came across the June of 2010 German Government announcement to officially adopt a National Strategy for Corporate Social Responsibility. A Just Means article (A National Action Plan for CSR) was what piqued my interest, and I decided to take a better look at how governments were integrating social responsibility principals into their governing policies and actions.

Germany is joining a number of countries, such as Great Britain, Sweden, the Netherlands, India and Poland who have created separate institutions and positions of a CSR Minister or an Ambassador for CSR implementation. It is fascinating to me the different approaches each government has taken to tackling CSR principles within their governing policies and programs.

In this regard, North America is playing catch-up. At this time, the United States Government does not have a coordinated or explicit CSR approach, plan or policy.  The U.S. government has recognized some dimensions of CSR by taking a series of steps in areas such as environmental policy, anti-corruption and bribery, and child labour. Further, true to its entrepreneurial roots, the U.S. government does endorse CSR activities by providing awards to companies, such as the Department of State’s Award for Corporate Excellence.

In 2006, the Canadian Government held a series of four National Roundtables on CSR, and from these roundtables in April of 2009, the Canadian government announced their “National” CSR strategy Building the Canadian Advantage.  Most narrowly however, the strategy was designed only to assist Canadian mining, oil and gas companies in meeting their social and environmental responsibilities when operating abroad

In the U.S. and Canada, one could most convincingly argue that these governments have ultimately only loosely addressed CSR within the four key roles of governments in global CSR identified by the World Bank: endorsing, facilitating, partnering and mandating. It was therefore with great pleasure that I read the German Government’s Action Plan for CSR, where they indicated a very broad and deep mandate for CSR within Germany:

“The development of a national strategy to promote corporate social responsibility (CSR) was undertaken with the aim of making a contribution to meeting the core challenges facing us in the globalised world of the 21st century. In Germany, corporate social responsibility is a fundamental element in the country’s social market economy system….

Corporate social responsibility is not however a substitute for political action. Rather, it augments the responsibility borne by the political sector and civil society and goes beyond what is required by law. The reason: Tapping the potential CSR offers requires the combined efforts of society as a whole. Neither the political sector nor business nor civil society is able to master the enormous challenges of our times single-handedly.”

What more can I say? A CSR policy well said, and I will be watching Germany’s progress with interest.

@TaraKnightHK

A CSR tale of two mines: when the path chosen makes all the difference

posted by Tara Knight

In November of 2010, the Canadian government rejected an $800 million copper-gold project of Taseko Mines, called “Prosperity” in my home province of B.C. Although the federal government ultimately cited environmental concerns in declining the license to operate, relations between the company and the First Nations communities in the areas around the mine really hit rock bottom during a federal environmental review process for the project.

Taseko’s “Prosperity” mine had potential to generate significant economic wealth for the Williams Lake region of BC, an area hard-hit by other economic factors and desperately in need of jobs. However critical stakeholders, such as the First Nations in the area of the proposed mine believed their communities would not benefit from the mine in their territory and actively opposed the project during the environmental review.

Interestingly, on the same day the Canadian government rejected the Taseko Mines Prosperity project, it approved a $915 million copper-gold project (“Mount Milligan”) in a different area of the province. In speaking about its decision, the federal government indicated that the Mount Milligan project (Prosperity mine rejected, Mt. Milligan approved) had designed appropriate mitigation measures and minimized environmental impacts and that as a result, was likely to cause significant adverse environmental effects. 

In further contrast to how Taseko Mines managed key stakeholders such as the First Nations communities in the area around their proposed mine, Thompson Creek Metals (Mount Milligan copper-gold project) reached out to First Nations communities in a meaningful way, and adopted Principles for Sustainable Relationships with First Nations, a framework developed by the Association for Mineral Exploration BC.

The Mount Milligan project had First Nations support in the form of a revenue-sharing agreement between the province and the McLeod Lake Indian Band – only the second such deal in the province. Further, Thompson Creek Metals partnered with post-secondary institutions to create an environmental training employment program for First Nations – allowing them to participate in project operations.

Although neither mine is without opposition, nor serious environmental and local concerns, it is an interesting contrast of the employment of two very different stakeholder strategies. It is also a powerful narrative about the power of relationship building for economic prosperity, and recognizing stakeholder dynamics as a critical component in a company’s social license to operate.

What is the cost of developing a solid CSR program that incorporates social and environmental responsibility concerns into the cost of business? In this tale of two mines, the path chosen made all the difference.

Disclosure: Taseko Mines and Thompson Creek Metals are not clients of Hill & Knowlton.

Factoring CSR performance in executive pay

posted by Tara Knight

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

New “standard” for CSR? ISO 26000 gets official November 2010

posted by Tara Knight

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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Stock market says: CSR = $$

posted by Tara Knight

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

Do plantations cause violence and death?

posted by Tara Knight

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.

Trends in CSR Reporting

posted by Tara Knight

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.

Catholic University Starts ‘Panel’ Discussion

posted by Andrew Cuneo

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

Catholic University is seeing the sunny side of electricity production by unveiling this week that more than 1,000 solar panels will be installed at the school in Northeast Washington, D.C.  A Washington Post article noted that by installing the 1,088 solar panels, the school expects it will save more than 340,000 kilowatts of energy each year. To put that in perspective, that totals less than one percent of the annual energy needs of the school but is enough to power at least two radio stations for a full year.

This is a great step in making the university more environmentally friendly and one others should take a close look at.  More colleges and universities, particularly those based in urban areas, should view to the progress being made at Catholic University as a stepping stone to their sustainability as well.

 

 

 

Waiter, There’s a Fly in My Soup

posted by Andrew Cuneo

By Drew Arnold, Assistant Account Executive, H&K Northwest

 

The ability to cook and eat good food is one of my highest priorities.  I am grateful that I have the luxury to know how to cook great meals.  My skills in the kitchen were developed the same way many of us learn how to cook – through family experiences and recipes passed down, modified and savored.  The act of eating is, if not spiritual, at least a private moment.  It is often anchored with family and friends.

 

Consider though the massive industries in place that allow the food to be delivered from farm to fork.  Recently these industries have been under scrutiny following food contamination and gross negligence; a far cry from a romanticized dinner setting.

 

Increased government scrutiny has led to bills that are being considered in Congress to revamp the U.S. food safety system.  These changes will lead to the largest overhaul of the country’s food safety system since FDR.  Take a look at a bill that passed the House here, and a great summary from the Packer here.

 

Some critics are worried about increased government involvement and the take-on costs farm businesses would have to endure.  Indeed, food producers will have to pay fees to support an infrastructure to monitor the safety of the country’s food.  Producers that maintain stellar safety records might see this added cost as an unnecessary burden.

 

I wish we didn’t need this legislation; that food producers would always have the health of their customers as a top priority, and that food safety records were always stellar.  Companies need to be safer about the shipping of food into the supply chain. Examples such as Peanut Corporation of America knowingly ship tainted food into the chain is the very reason we stand in this position today.

 

Recognizing PCA is an exception, not the rule, it seems to me that an infrastructure feeding every American every day needs exceptional oversight.  Even food that is unknowingly tainted and shipped is not acceptable. Concern should be focused on the little things, like mom’s sauce, not whether a child can be poisoned by a peanut butter & jelly sandwich.

 

The question remains: how to best balance the internal inspections and burdens on companies while giving the government the responsibility to keep our food supply safe.

 

This will be a debate that continues into the fall, and it will be interesting to see what Congress cooks up.