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Corporate social responsibility

One View of the Best Green Investments

It’s the last weekend of the school holidays. After eight weeks, the circling sharks of my children close in for the kill. I give in to their pleading cherubic faces beaming up at me and say yes. Yes, we can go to a Theme Park.

Normally I hate the things:

  • lots of other people screaming for no reason – go mountain climbing if you want scarey exercise;
  • long queues waiting for something disappointing to happen – much like seeing the latest pulp Hollywood movie;
  • drinks sold at vastly inflated prices – you can get that at a shopping mall without having to pay the whopping entrance fee.

(I wonder, is my natural grumpiness showing yet?)

However this time I was pleasantly surprised. Yes, there were queues, screaming and overpriced drinks. But some of the rides were actually worth it, and I almost enjoyed the day out! [Read more…] about One View of the Best Green Investments

When CSR meets culture – India | CSR Around The World

India has been on the lips of just about every economist and businessman in recent years.  Its booming economy is growing at over 10 percent a year and the country is ranked among the biggest, fastest growers by the IMF.

You’d think there’d be little room amongst all this capital-intensive activity for CSR, but you’d be wrong.

The Indian government has arguably tried to be a trailblazer in introducing CSR into its governance structures.  In 2009 a new Companies Bill proposed that every company with either a net value of Rs 5 billion (£66 m), a turnover of Rs 10 billion (£13.2 million) or a net annual profit of Rs 50 million (£ 660,000) be required to spend at least 2 percent of its profits from the preceding three years on CSR projects (as defined by the company itself).

Perhaps unsurprisingly the move was deeply unpopular and earlier this year the government backed down from making the proposal mandatory and has has opted for non-regulatory guidelines instead.

However the intention is clear so to try and understand a little more what was going on India I turned to Akhila Vijayaraghavan, founding director of the international CSR consultancy The Green Den.

[Read more…] about When CSR meets culture – India | CSR Around The World

XBRL: The Transparency Acronym

It’s time to challenge your stereotypes! Here’s what first springs to my mind when I think of these professions:

A Formula One racing driver: fireproof overalls, helmet tucked under one arm, cocky stance and arrogant smile on his face.

A high court lawyer: hand tailored suit, leather briefcase, slightly otherworldly air and nose in the air.

A corporate analyst: reserved, uncomfortable in the real world, an abacus on the desk, smart clothes but never truly smart in demeanour.

Hang on a minute… an abacus?? A slightly sharper look at the corporate analyst and a somewhat Pythagorean figure emerges, complete with wraparound white sheet and funny pointy beard.

This is because corporate analysts are, at the end of the day, brilliant mathematicians whose mental agility would flummox the rest of us humble human beings. They’re the gods of all number crunchers.

Hence, I suppose, the abacus: to help with the day-to-day shuffling around of figures in analysis of a company or product’s performance. But surely we’ve progressed beyond such oddities by now?
[Read more…] about XBRL: The Transparency Acronym

Techniques for enticing the green investor

How can you persuade the green investor to invest in your company, if your environmental credentials are looking rather weak?

Some industries, by their very nature, are going to do more harm to the environment than others. Companies working in consumer services rather than in basic materials are bound to find it easier to ‘go green’, and to target the green investor.
Bloggers Unite - Blog Action Day
But how picky should the green investor be?

Is it better for the green money to go to the company who is already performing well, and for whom the percentage improvement possible is relatively tiny, or to go to the company who has performed badly in the past, but who is making huge improvements?

Wouldn’t it better for us all, in the long run, to support those companies in the more harmful – but essential – sectors who are doing the most to improve?

Improving the performance of those companies who currently do the most damage to the environment, and rewarding those who manage to make the most improvement each year, will surely make a bigger difference, overall, than rewarding those whose industry has a relatively light footprint in the first place.

We need assessment techniques that show us not only how good/bad each company’s performance is on a number of different measures, but also how much that performance has changed over time. We need to see the trend for each company, and, ideally, to be able to compare this to the performance of other companies.

BP - environmental performanceSome companies make it easy to see how their performance in this area has changed over time, such as BP, who provide 5-year data for visitors to review. It would be great if we could see the same measures on other sites for comparison purposes.

How is CSR performance measured?

There are several major CSR indices, awards, and other methods of assessing a company’s CSR performance, including:

All these are wonderful tools and techniques for reporting and rewarding companies who work hard at CSR. Many companies are signed up to one or more, and some have won awards.

If your company hasn’t considered any of the above – why not think about it now? There are resources available to help on each of the sites above.

However, some companies are excluded by their very nature from some of the above. The FTSE4Good Index, for instance, excludes tobacco companies, weapons companies, and those working in the nuclear industry.

What can be done to support these companies in their efforts to improve?

What can be done to encourage those companies who have no interest in it to improve their performances in CSR?

What are the benefits in CSR – and in green investment?

There are definite benefits to engaging in CSR activities, and these have been outlined many times (see CSR Network for a summary of the argument for CSR), including:

  • reduced cost
  • improved productivity and quality
  • increased sales
  • increased profits
  • enhanced reputation
  • improved employee recruitment and retention.

These are the arguments that must be used to persuade companies that it is in their own interests to work on CSR.

Once that’s done, though, how can green-inclined investors be persuaded to invest in companies that are currently not-very-green?

I suggest that the answer is explaining:

  1. that engaging in CSR activity results in enhanced financial performance for the company
  2. that improvements in CSR in currently poorly performing companies (in CSR terms) could achieve big results environmentally
  3. that investing in a company with a long way to go in CSR terms but which wishes to improve will therefore achieve big results environmentally (thus benefiting the world) – and, probably, financially as well (thus benefiting the investor).

Crucially, of course, the company must be persuaded into a CSR programme before this will work – but once it has agreed, getting the green investors on board will surely add momentum.

This post is part of Blog Action Day, in which bloggers around the world are discussing environmental issues.

Nestle Responds to Child Labor Violations

Who made that Kit Kat bar you’re eating? There is a good chance that a child worked on a cocoa farm in the Ivory Coast that provided the cocoa supply used to make your Kit Kat bar. Those are the findings from the Fair Labor Association (FLA), which conducted an audit (per Nestle’s request) of the Nestle cocoa supply chain.

The FLA study reported that 80% of Nestle’s cocoa comes from channels that are “opaque” in terms of the transparency of their labor processes and practices. In a 2008 government survey in the Ivory Coast, it was found that 89% of the country’s children were involved in cocoa production in some way. According to Bloomberg, Nestle purchases 10% of the world’s cocoa supply, and more than one-third of that comes from the Ivory Coast.

Nestle is the first food company to join the FLA, and the company claims to be taking the numerous child labor violations discovered in the report seriously. The company reports that it will pursue each of the 11 recommendations that the FLA made in the report, including increased monitoring of cocoa farms, building and improving schools, and more. The infographic below provides some of the report statistics as well as the “Nestle Plan” projections.

Click the image below to view the infographic at full size.

nestle fair labor association child labor infographic

Nestle’s zero tolerance for child labor commitment is an important one that will take years to roll out. However, demonstrating its corporate responsibility is a positive branding story that might help Nestle navigate negative publicity related to child labor more successfully in the short- and long-term.

What do you think? Leave a comment and share your thoughts.

Responsible Business Summit: 15 Thoughts

fifteen
Earlier this week I was lucky enough to attend the 12th Annual Responsible Business Summit in London which was superbly hosted by Ethical Corporation. Having predominantly experienced investor relations conferences, I was full of enthusiasm for the wealth of new information and ideas about to assault my senses, and two full days later, I am pleased to say that it was an incredibly interesting and perhaps I could even say, an inspiring event.

A real effort was made by the organisers to keep the sessions interactive and to use technology to engage the audience. We voted via Twitter and SMS on the best presentations from companies on subjects such as “Frontline supply chain engagement to enable ethical sourcing”, “New models for investment using social innovation” and the final session, “Stakeholder Engagement X Factor”.

I attended eight sessions over the two days and met a number of people from large plc’s to small suppliers from the UK and much further afield. The most memorable moments were when those presenting spoke with genuine passion for their subject, of particular note was when the President of the Norwegian Red Cross spoke about the importance of trust for their organisation during his recent visit to Damascus. Only with complete trust from both the rebels and the regime could they have full access to treat those who needed it the most.

The Chief Executives of both BUPA and O2 spoke about trust and what it meant to their companies. The general theme was a focus on transparency, using technology for more open communication, and employee empowerment. In addition, it was accepted that mistakes will always happen and whilst efforts will always be made to minimise those, it was actually a zero tolerance towards not learning from failure rather than failure itself.

This is a very interesting concept and something that we have been speaking about for the last few months internally. Being open about your challenges as a business is absolutely the right approach, and as Sven Mollekleiv of the DNV Group said, “no customer has complained about telling the truth, this creates trust”.

So, what did I learn that you might find useful? In no particular order of importance, here are fifteen quotes/ideas (as accurate as my note-taking would allow) and tit-bits of feedback that you might find interesting:

  1. The roles of NGO’s and big business in effecting change from an environmental and societal position is paramount, but collaborations between them needs to be carefully considered to ensure transparency and clarity around objectives.
  2. Corporations need to work hard with their supply chain, especially in emerging markets to ensure that proper standards are being followed, and that they should make long term commitments to their suppliers so that where change is necessary, that price increases can be accommodated (the Bangladesh factory collapse was referenced here).
  3. Businesses that have moved from the “Command and Control” model to the “Participate and Persuade” world have enjoyed far greater financial success.
  4. Societal contribution is potentially of greater importance to businesses than charitable, supply chain or energy reduction policies.
  5. For businesses to rebuild trust they must identify stakeholders, create adequate listening posts and create strategies for engagement based on the data available
  6. Shareholder activism and proxy voting is putting new issues on the table as investors start to drive agendas.
  7. Analysts are starting to ask questions about resource scarcity, water usage, production processes etc. as they start to understand the importance of strategies to adequately deal with these challenges.
  8. Investment firm Calvert are releasing an app for individuals to track their water usage in order to raise awareness so that they force companies to disclose the same
  9. You can monitor which companies are best at innovation with responsible business practices as it is integral to their strategy, reporting, results announcements, independent reporting etc…
  10. Companies cannot break off manufacturing from the brand, and so their reputation is dependent upon their process
  11. The focus on the supply chain by corporations will become more important as the impact that can be made both financially and from a societal and environmental point of view by making improvements through responsible practice and collaboration is fully understood.
  12. Supply chain audits and reporting will become commonplace and incorporated into reporting cycles in the next two to three years.
  13. There is no silver bullet when it comes to crisis communications, but effective scenario planning is absolutely critical in understanding roles and responsibilities during such events.
  14. Large multinationals have to be careful to align their loyalty to national interests rather than political interests in order to retain neutrality and customer loyalty during government changes.
  15. That many companies will start to publish their CR Report online—and only online. The digital revolution is not quite as transformational as responsible business practice, but it can certainly save a tree or two.