CORPORATE RESPONSIBILITY LEADERSHIP WORKSHOP Embedding CR in Your Operations & Management

1
CORPORATE RESPONSIBILITY LEADERSHIP
WORKSHOPEmbedding CR in Your Operations
Management

• UC Berkeley
• Center for Responsible Business
• Business for Social Responsibility
• July 8-9, 2008

2
Program Schedule

• Day One
• Overview of CR Global Trends
• CR Strategy Development Tool
• Case Tale of Two Strategic Approaches
• CR Metrics, Impact Value Chain

• Day Two
• Defining Your Stakeholders
• Communicating Branding Your CR
• Strategy Small Group Work
• Preparing for the Future

3
Overview of Corporate Responsibility Global
Trends
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management

• Professor Kellie A. McElhaney
• Haas School of Business

4
A Short Story in Three Parts

• The Power of Business
• The Challenges in the World
• A Solution in CSR

5
Part One is ShortIts About the Power of
Business.
6
Theres Been a Shift of Power Resources
7

• If you think its bad being exploited by global
  companiestry being ignored by one.
• - Jeffrey Sachs

8
Theres Been a Shift of TrustExpectations of
Companies to Operate in Societys Best Interests
v. Perceived Performance
Globescan, 2005
9
Private Sector Has Lost Trust

• Trust in global institutions to operate in
  societys best interests
• NGOs 2, Business ranks 11 (out of 12), only ahead
  of Parliament/Congress
• Armed Forces
• NGOs
• UN
• Religious Institutions
• WTO
• Government
• Press/ Media
• Trade unions/ Labor
• World Bank
• IMF
• GLOBAL COMPANIES
• Parliament/ Congress
• NGOs more trusted, high credibility

Environics International, 2006
10
Part Two is LongerIts About the Challenges our
World Faces
11

• Water
• 1.1 B lack access to clean drinking water
• 2.5 B lack access to proper sanitation
• 5 M die from water-related disease (10 times
  killed in wars)
• Climate Change
• 2006 hottest year on record
• Need 80 decrease by 2050 to prevent global
  catastrophe
• Climate change is the greatest market failure the
  world has ever seen.
• - Sir Nicholas Stern, Former Chief Economist,
  World Bank.
• Food
• Global food prices (grains oils) have risen 54
  in 2008
• In rich countries, we spend 10-20 of budget on
  food in poor countries, 60-80
• 15M children die of hunger
• For first time, levels of obesity approaching
  parity with levels of starvation
• Rich/ Poor Gap
• Half of the world lives on less than 2/day

12
The Third Part is a piece of a Solution
Corporate Social Responsibility (CSR)
13
CSR Goes Mainstream
14
CSR is Everywhere
15
Defining CSR

• Net Impact
• Using the power of business to improve the world.
• Business for Social Responsibility (BSR)
• Companies being able to be commercially
  successful in ways that demonstrate respect for
  ethical values, people, community, and the
  environment.
• A Corporate Strategy Definition (McElhaney,
  1998)
• A corporate strategy that is integrated with (1)
  core business objectives (2) core competencies
  to create financial and social/environmental
  returns, and is embedded in corporate culture and
  day-to-day business operations.

16
Strategic CSR

• CSR Strategy must fit two things
• Core business objectives
• Increase sales, penetrate new markets, engage
  employees, reduce operating expenses, improve
  reputation, protect brand, beat competitors
• Core competencies
• Technology, financial products services, making
  markets, natural food, automobiles and
  transportation systems, travel tourism.

17
Global Citizenship/ CSR/ Sustainability

• Employee Engagement
• Community Investment
• Philanthropy
• Government Public Relations

• Governance Ethics
• Environmental Footprint
• Supply Chain/ Sourcing
• Social/ Environmental Impact of Products
  Services

18
A Typical Corporate Strategy
Hewlett Packard, 2006
19
A Typical CSR Strategy
Supply Chain
Community investment
Cause marketing
Safe products
Environmental management
Human rights
Employee volunteerism
Fair employee treatment
Philanthropy
Product give-aways
Business ethics
Corporate governance
Social/ environmental reporting
Sponsorships
Workplace diversity
Non-Profit partnerships
20
A Lost Opportunity
to utilize CSR as a powerful integrated
business strategy, not an add on.
21
What People Think CSR Is

• Spending (a little bit of) the (whole lot of)
  money that you make.

22
What CSR Really Is

• How you make (the whole lot of) money that you
  spend.

23
CSR is not about how you spend the money you
make. Its about how you make the money you
spend.
24
The Triple Bottom Line
Triple Bottom Line
J. Elkington, SustainAbility
Social
Economic
Environmental
25
Internal External CSR
Transparency
Governance
Supply Chain
Mission, Vision, Values
Reporting
Compensation/ Benefits
Stakeholder Engagement
Environment
Ethics
Diversity
Human Rights
Socio-political Issues
Health Wellness
Community Engagement Investment
Accountability
Downsizing Layoffs
Privacy
Work Life Balance
Philanthropy
Marketplace
Job Satisfaction
26
Stages of CSR
Sweet Spot
27
The Baby Parable Four Approaches
28
It is Linked with Basic Human Needs
29
CSR Maturity
Philanthropic
Transactional
Integrative
Growth stage
30
A CSR Landscape
31
A Company Who Gets It Whirlpool
32
Whirlpool Habitat for Humanity

• 25M commitment in 1999
• Given 34M, plus 73,000 refrigerators, ranges,
  household items to 36,000 homes
• Pledged to give appliances to every house built
  through 2011
• Launched Building Blocks initiative in 2006,
  sending over 1000 employees more volunteers to
  neighborhood for 1 week to build an entire block
• From onset, was philanthropy in 2004, became
  brand message
• We make very large, very heavy metal machines,
  often with big motors. This puts a human face on
  what could be a very cold metal category.
• Sponsored 2006 Reba McEntire Habitat for Humanity
  
• Tour

33
Its an Integrated Strategy
34
With Business Implications
35
Brand, Employees Consumers
Brand Who says social responsibility is a big
influence in their impressions of companies?
Product Purchase Who considers corporate
citizenship when buying a companys product?
49
79
Product Boycotts How many people would boycott a
product if they learned about negative
citizenship practices?
Employee Recruitment Who considers social
commitment when choosing an employer?
76
77
36
CSR The Million Dollar Employee
37
The Role of CSR in Business

• Inspires/ attracts employees
• Enhances/ redefines the brand
• Enhances value proposition
• Fosters distinctiveness
• Tells a story
• Opens access to new markets
• Increases license to operate
• Improves efficiencies
• Increases trust and loyalty

38
CSR Leaders May No Longer Finish Last

• Economist Intelligence Unit global study, Doing
  Good Business Sustainability Challenge 2007
• Sponsored by B of A, Orange, Kearney, SAP
• Companies who rated selves highly on CSR saw 16
  increase in profits, price growth of 45,
  compared to poorly-rated at 7 / 12
• May not be causal or proved, but executives
  believe it is
• Asked to name highest priority over next five
  years, 61 cited communicating their practices
  to all stakeholders

39
CSR Frameworks Part 1 ContextWhat is
CSR?What is the role of business?
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management
CEO Aron Cramer, BSR
40
What is CSR?

• CSR is
• Being energy efficient
• Publishing a sustainability report
• Greening the supply chain
• Healthy working conditions
• Producing a human rights policy
• Signature philanthropic program
• Having a social mission statement
• Partnering with nonprofits
• Dialogue with stakeholders
• Enforcing a code of conduct

but whats behind all these activities?
41
CSR is aligning business with the worlds needs
Business has the potential to promote the
wellbeing of the world through problem solving
and wealth distribution.
A just and sustainable world is indicated by the
wellbeing of
Business

• Business can contribute to society by
• Developing solutions
• Innovating
• Creating financial wealth
• Allocating resources

42
The Emerging Business Case

• The world is increasing in complexity and
  understanding social and environmental issues is
  required for making informed business decisions.

Technology
Public Policy
Natural Resources
Making sense of complexity finding opportunities
Globalization
Business Success
Population
Markets
Supply Chain Operations
Climate Change
Communities
Cultural Values
Energy
War
Religion
43
CSR can mean meeting essential global challenges
through value creation
Corporate leadership is not just about reducing
risk but using business and markets to deliver
social and environmental solutions.
CSR (Value Creation) Market solutions for
social/environmental needs
Philanthropy Civil Activism Non-market
solutions for social/environmental needs
Social Environmental Value
Financial Only Financial gains with little or no
societal value
No Value Failure to provide any value
Market Value
44
Evolving Definitions of CSR
Value Creation
Now
Integration
2000s
Innovation
1990s
Reaction
1980s
45
CSR Frameworks Part 2 Strategy Development
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management
46
Approach
Visioning
Assessment
Assessment Where are we now? Visioning Where
do we want to be? Strategy How do we get
there? Implementation Lets get
there. Testing Will it work?
47
1. Assessment Where are we now?
Visioning
Assessment

• Assessment Components
• Business Strategy where is the business going
  over the next ten years?
• Internal Assessment What are our existing
  policies and practices?
• Current Approach How do we manage CSR today?
• Value Chain What are the various touch points of
  our business? What opportunities and risks do
  they create?
• Reputation How do important audiences internal
  and external view our company/industry?

48
2. Visioning Where do we want to be?
Visioning
Assessment

• Visioning Components
• Leadership Profile What is our companys
  aspiration?
• Materiality Analysis What are our most material
  issues?
• Prioritizing Where do we want to make a mark?
  What is secondary?
• Internal Support Will this vision get traction
  throughout the company?
• External Credibility Will this strategy be
  credible with key stakeholders?

49
3. Strategy How do we get there?
Visioning
Assessment

• Strategy Components
• Framing Questions Will this aid our business,
  foster innovation, and mitigate risk?
• Value Chain Can we integrate this strategy
  throughout the supply chain?
• Change Management What changes will be needed to
  make the strategy effective?
• Systems Thinking What levers must be influenced
  to make the strategy work?
• Relationships What relationships do we need to
  execute this strategy?
• Communication Can we communicate this strategy
  effectively?

50
4. Implementation Lets get there.
Visioning
Assessment

• Implementation Components
• Communication Strategy must be conveyed clearly
  and effectively.
• Policy Development Develop policies needed to
  implement strategy.
• Integration Core business plays a role.
• Targets Metrics (impacts, not only activities)
  and accountability introduced.
• Collaboration Look for opportunities with
  industry and other partners.
• Reporting Communicate our impacts to internal
  external stakeholders.

51
5. Testing Make it credible and resilient.
Visioning
Assessment

• Testing Components
• Stakeholder Dialogue Is the strategy credible to
  key opinion formers?
• Forecasting What are the unknown unknowns?
• Refresh the Strategy Assume that adjustments to
  strategy will be needed.

52
CSR Frameworks Part 3 Strategy Exercise
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management
53
Exercise One Rescue Our Reputation!

• Your consumer products company has been hit by a
  series of labor and quality scandals that has
  placed it in the bottom fifth of the annual
  Consume-A-Lot reputation rankings.
• Your CEO asks you, as the head of Public Affairs,
  to work with the head of CSR develop a three-step
  program to raise the companys rankings to the
  50th percentile in two years, and top quartile in
  three.
• You have not really worked with the head of CSR
  before, and have always wondered whether his
  boss, the General Counsel, really embraces
  corporate responsibility.
• What process will you use, and what will you
  recommend to the CEO?

54
Exercise Two Open New Markets!

• Your food retailing company is taking advantage
  of market liberalization in India, and aims to be
  the 1 foreign retailer within five years.
• As head of strategy, you have never really
  thought about CSR, but know that the India plan
  can make or break your career.
• You want to make sure that your stores are viewed
  favorably in a notoriously difficult market.
• You want to develop a five year strategy that
  establishes your company as a leading corporate
  citizen in India.
• How will you develop a strategy, and what will it
  be?

55
Exercise Three Innovate!

• Your new CEO has set innovation for society as
  the 1 objective for the company under her
  leadership.
• As the Vice President, Sustainability, for your
  consumer electronics company, you have been
  tasked with developing new product offerings.
• You have been asked to focus in particular on
  emerging markets with low to middle incomes, with
  the goal of increasing sales volume and
  generating economic opportunity for underserved
  communities.
• What process will you use, and what will the main
  points of your strategy be?

56
Exercise Four Overcome the Skeptics!

• You are the head of CSR at a pharmaceutical
  company headed by a CEO who has made numerous
  cynical comments about greenies and CSR as
  nothing but the flavor of the month.
• At the same time, the Board has recently
  established a committee focusing on CSR, and with
  the three most powerful independent directors to
  the Committee.
• You have been asked to report to the Committee,
  with the CEO not present, on the three greatest
  risks and opportunities facing the company
  concerning sustainability.
• How will you develop your report, and make sure
  that it has real impact on the companys
  thinking? How will you manage the CEOs
  skepticism?

57
CSR Frameworks Part 4 Integration
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management
58
CSR Integration FrameworkHow do we integrate CSR
into the company?
Purpose Vision
Core Business Material Issues
Stakeholder Relations
Transparent Communication
Business Processes
Industry Collaboration
Performance Evaluation
Implementation Tools
59
Internal External AlignmentIf CSR is aligning
business with the worlds needs, how do we ensure
alignment throughout the process?
Purpose Vision
Core Business Material Issues
Internal External Alignment
Stakeholder Relations
Transparent Communication
Business Processes
Industry Collaboration
Performance Evaluation
Implementation Tools
60
Purpose VisionWhat impact do we want our
business to have on society?
BSR Services Visioning Strategy
Development Forecasting Trends RD

• Purpose Vision

• Vision establishes a direction that can then
  enable
• Prioritization of issues and opportunities
• Allocation of resources
• Communication internally and externally
• Development of performance measurement
• Leadership
• Avoidance of risk is not a road map it is
  neither anticipatory nor is it a destination

How do we get there?
Where are we today?
What is our vision for tomorrow?
61
Core Business Material IssuesWhat is the
business case for CSR at our company and what
issues should we focus on?
BSR Services CSR Assessment RD Materiality
Analysis Stakeholder Engagement Strategy
Development Convenings
Core Business Material Issues

• An effective CSR strategy requires integration
  into the core business and understanding the
  following
• Business Model products, services, core
  competencies
• Business Context trends, relationship between
  business and external factors
• Material Issues areas with high impact on both
  business and society

Issues Impacting Society
Issues Relevant to Business
Material Issues
62
Business ProcessesHow do we ensure that our
everyday business processes are aligned with the
vision?
BSR Services CSR Assessment Strategy
Development Supply Chain Strategy
Business Processes

• Effective execution throughout your business
  processes can be enabled by integrating CSR into
• Policies
• Procedures
• Staff
• Performance measures

Strategy
Marketing
Sales
Production
Management
Sourcing
Design
Human Resources
63
Internal External AlignmentHow do we align our
actions internally and externally to achieve our
vision?
BSR Services Stakeholder
Engagement Working Groups Convenings
Internal External Alignment
Aligning efforts internally and externally is
critical to effectively executing a CSR strategy.
Employees
Investors

• Within the company
• Along the supply chain
• Within the industry
• With external stakeholders
• With the ecosystem

Suppliers
Buyers Consumers
Competitors
Partners
Government
Civil Society
Air/Water/Land
Species
64
Implementation ToolsWhat practices will enable
us to implement our CSR strategy?

Implementation Tools
Implementation of the strategy depends on the
following key practices

• Stakeholder Engagement
• Industry Collaboration
• Performance Evaluation
• Transparent Communications

65
Stakeholder EngagementWhat are external groups
perspectives on the issues?
BSR Services Engagement Design
Facilitation Stakeholder Engagement Internal
Process Development Stakeholder Engagement
Strategy
Stakeholder Engagement

• What Engaging with external groups in a two-way
  dialogue on key issues
• Why To better understand and align business
  actions stakeholder interests
• Business Benefits
• Gather information for decision-making
• Secure trust and credibility
• Anticipate and manage conflicts trends
• Assess performance and progress
• Develop collaborative solutions
• Gain access to capital markets

66
Industry CollaborationHow can we collaborate
with our industry to increase our impact?
BSR Services Working Groups Convenings Supply
Chain Strategy
Industry Collaboration

• What Collaborating with other companies in the
  same industry on key initiatives
• Why To increase impact of efforts, and in some
  cases share and thereby reduce costs and other
  barriers to improvement
• Business Benefits
• Shared resources
• Greater influence as a collective
• Exchange of knowledge best practices
• Consistent message expectations across the
  industry
• Level playing field

67
Performance EvaluationHow do we measure progress
and ensure accountability?
BSR Services Metrics Development Accountabili
ty Systems Information System Strategy
Performance Evaluation

• What Developing metrics to assess progress in
  key performance areas and having incentive
  structures in place to ensure accountability
• Why To understand how well desired objectives
  are being met
• Business Benefits
• Better understanding of ROI
• Measure progress
• Gather information for reporting
• Inform strategic planning

68
Transparent CommunicationsHow do we communicate
our actions accurately, for to benefit of
ourselves and our stakeholders?
BSR Services Reporting Metrics
Development CSR Strategy
Transparent Communications

• What Communicating actions and performance
  openly to stakeholders
• Why Discussing issues publicly demonstrates a
  companys CSR commitment and creates
  accountability.
• Business Benefits
• Clear, consistent communications to the public
• Enhanced credibility with stakeholders the
  public.
• Companies can take clear positions on issues that
  matter to them
• Engage and shape public discourse

69
In Closing Characteristics of A Successful
Sustainability Strategy

• Strengthens business competitiveness
• Aligned with basic business strategy
• Supported top to bottom
• Globally coherent
• Credible externally
• Resilient in the face of change

70
Company Case Studies

• A Tale of Two Strategic Approaches
• GE HP
• Director Stacey Smith, BSR
• Kellie McElhaney

71
GEs Strategic Approach
72
Background and Drivers

• Increasing investor inquiries
• Investor Relations exploring SRI and DJSI
  requirements
• Begin to form a new definition of best-in-class
  company
• Well-managed
• Well-governed
• Corporate Citizenship
• Need to build Corporate Citizenship piece
• Important commercial drivers in development
• Ecoimagination
• Emerging markets
• Decision to create a report to address growing
  stakeholder inquiries

73
First Activities

• Starting point was a citizenship report
• Engaged external support to guide them
• Created SWOT on CR performance delivered to
  Board
• Conducted high level materiality analysis
• Most data collection was in place (EHS, HR,
  etc.) other data not available
• First report developed and published in 2005
• Engaged stakeholders to receive feedback

74
Launch of Commercial Actions

• Ecomagination a research priority the cut
  across all business units signaling a joined up
  collaborative approach
• Company to Country product development driven
  by questions what are the social infrastructure
  needs of the country

75
Results from First Report

• Identified key areas of weakness and began
  integration into GE system
• Public Responsibilities Committee redirected
  focus and inquiry from philanthropy to core
  citizenship agenda as determined by materiality
  analysis
• Developed Human Rights policy followed by
  worldwide roll out in subsequent years
• Put in place processes for water and waste data
  collection two years to collect baseline and
  then set targets
• Began conducting business unit materiality
  analyses

76
Structure

• Culture is top down and driven by one philosophy
• Conductors of the orchestra collect and review
  business unit goals and deliverables and identify
  opportunities with support of external advisors
  then work with business unit to push performance
• No central structure established instead
  virtual work group across company comes together
  once a year to work on report some strategy is
  developed at that time
• Business units tasked with strategy and
  implementation based on materiality analysis

77
HPs Strategic Approach
78
Business Drivers
79
Working together across HP

• GC strategy workshop
• Cross-functional company team
• defined an integrated GC strategy for FY07
• assessed GC relevance and prioritization
• determined gaps, opportunities and mapped to
  company strategy
• identified top three GC priorities
• developed strategies and goals
• gained commitment from BUs and Functions to
  integrate strategies and goals into business
  plans

80
Current GC investments
and to continue work in critical areas such as
employees, education privacy and compliance.
It was agreed that HP should drive for more
investment in the framework categories brand
and differentiation.
81
Recommended GC priorities

• Energy
• Improving energy efficiency and innovation in our
  operations and products.
• Product take back and recycling
• Reducing product environmental impacts through
  leading-edge reuse and recycling solutions.
• Responsible supply chain
• Raising standards in HPs global supply chain and
  ensuring responsible manufacturing for all
  products.

82
Proposed GC Goals
83
Additional Points Discussed
84
Next steps

• Gain agreement on GC priorities from
  cross-company strategy team
• Review proposed goals with internal
  stakeholders (in progress)
• Executive Council Members
• Global Marketing Council
• Supply Chain Board
• Others
• Present recommendations to EC
• Integrate GC strategies into business plans
• Publicly announce new GC priorities goals

85
Global Citizenship at HP
86
Corporate Responsibility (Sustainability)
Metrics, Impact the Value Chain
Corporate Responsibility Leadership Workshop
Embedding CR in Your Operations Management

• Tony Kingsbury
• Executive-on-Loan
• Sustainable Products Solutions Program
• UC Berkeley

87
Desired Outcomes

• Deeper understanding of CSR / Sustainability
  Metrics
• Understand the Value of measuring CSR /
  Sustainability Metrics
• Understand the need to be transparent and look
  across your value chain
• Learn how to identify and apply the key metrics
  for your company / organization

88
Topics

• Measuring Corporate Responsibility /
  Sustainability
• SustainabilityWhy is This Important?
• Three Ps Approach
• ? Planet ? People ? Profit / Prosperity
• Whats Important for Your Organization?
• In-class examples
• Discussion of your key metrics (break-out?)
• Wrapup discussion from break-outs
• Conclusion

89
Sustainability what is it?

• Webster Definition method of harvesting or
  using a resource so that the resource is not
  depleted or permanently damaged
• World Commission on Environment and Development
  development that meets the needs of the present
  without compromising the ability of future
  generations to meet their own needs.
• The word sustainability has been thrown around
  a lot. What it means to us is not seeing things
  piecemeal, not stressing business issues in one
  place and responsibility in another. To us,
  sustainability means running our business while
  being conscious of, and addressing its impacts,
  and addressing them everywhere. Nike

90
Sustainability what is it?

• However you define sustainability, you need to
  realize that sustainability is a journey, not an
  endpoint

91
Measuring Sustainability Why is This Important?

• "You only manage what you measure"
• How many of you know what mpg your car
  gets?...what it costs to fill-up your gas tank?
• How many gallons of water is used when you flush
  your toilet?... Or take a shower?
• How much does your organization pay to dispose or
  recycle your waste?
• Do your suppliers pay their employees a living
  wage?... Do they offer health benefits?

When we Measure we know what how to improve!
92
Example

• In 1995 Dow set a goal of improving its energy
  efficiency by 20 in 10 years.
• Starts with knowing how much energy was used
• Tracked progress
• Tracked spent on improvements
• Tracked energy saved from improvements
• Results
• 22 Improvement (9 trillion btus saved)
• 1 Billion spent on improvements
• 5 Billion saved from improvements.. and counting

2005 goals seek another 25 improvement by 2015!
Source http//www.dow.com/commitments/goals/effor
tstodate.htm
93
Example

• Improving working conditions in contract garment
  factories remains a key part of our overall
  social responsibility strategy. 
• Our approach, which involves factory monitoring,
  training, other capacity-building programs and
  engaging with stakeholders, gives us first-hand
  insight into factory conditions, and helps us
  measure progress against our standards. In 2006
  we
• Continued to employ a team of more than 90 people
  around the world dedicated to improving the lives
  of garment workers.
• Evaluated 425 new garment factories and rejected
  18 percent for failing to comply with our Code of
  Vendor Conduct.
• Conducted 4,316 inspections in 2,053 garment
  factories around the world, covering 99.4 percent
  of garment factories approved for the entire
  fiscal year.
• Revoked our approval of 23 factories for
  compliance reasons, approximately 1.1 percent of
  our base.

94
Measuring Sustainability...Why is This Important?

• Trend in transparency throughout the value chain

95
Measuring Sustainability...Why is This Important?

• Trend in transparency throughout the value chain
• How many of you know your organizations carbon
  footprint?

96
Measuring Sustainability...Why is This Important?

• carbon footprint - example of whats coming

97
Measuring Sustainability...Why is This Important?

• How many of you have heard of Wal-Marts
  Sustainability Initiative?

We soon realized (sustainability) was something
we could be proactive about, a business strategy.
It's not an easy path, but we now see it as the
greatest opportunity we have to create value for
our customers, cut costs, increase morale, grow
responsibly, and do the right thing for the
planet. Lee Scott, Wal-Mart CEO
98
Wal-Mart is beginning to ask its suppliers for
Carbon Footprint data

• Are you ready to supply carbon data to your
  customers and stakeholders?
• What is the Opportunity?
• Reduction savings
• Carbon/CO2 is a green house gas climate change
  reduction
• Ability to differentiate from competitors
• Lower cost, employee moral, hiring, reputation
  gains, ability to quickly supply data, etc.

99
Measuring Sustainability

• Planet (Environment)
• People (Social)
• Profit / Prosperity (Financial)

100
Measuring Sustainability

• Planet (Environment)
• What are common environmental measures?
• Whats important for your organization?

101
Common Planet (Environment) Metrics

• Energy use (direct indirect)
• Emissions (direct indirect)
• water - air - land
• Climate Change potential from your operations
• Recycling Use of Recycled Materials
• Fresh Water Use
• Material Intensity products, packaging, etc.
• Hazardous substances in your value chain
• Biodiversity land use and activities that
  effect.
• etc.

102
Common Planet (Environment) Metrics

• Environmental
• Materials used by weight or volume.
• Percentage of materials used that are recycled
  input materials.
• Direct energy consumption by primary energy
  source.
• Indirect energy consumption by primary source.
• Total water withdrawal by source.Water sources
  significantly affected by withdrawal of water.
• Percentage and total volume of water recycled and
  reused.
• Location and size of land owned, leased, managed
  in, or adjacent to, protected areas and areas of
  high biodiversity value outside protected areas.
• Description of significant impacts of activities,
  products, and services on biodiversity in
  protected areas and areas of high biodiversity
  value outside protected areas.
• Total direct and indirect greenhouse gas
  emissions by weight.
• Other relevant indirect greenhouse gas emissions
  by weight.
• Initiatives to reduce greenhouse gas emissions
  and reductions achieved.
• Emissions of ozone-depleting substances by
  weight.
• NOx, SOx, and other significant air emissions by
  type and weight.
• Total water discharge by quality and destination.
• Total weight of waste by type and disposal
  method.
• Total number and volume of significant spills
• Initiatives to mitigate environmental impacts of
  products and services, and extent of impact
  mitigation.
• Percentage of products sold and their packaging
  materials that are reclaimed by category.

Extracted from the Global Reporting Initiative
103
Common Planet (Environment) Metrics

• Product Responsibility
• Life cycle stages in which health and safety
  impacts of products and services are assessed for
  improvement, and percentage of significant
  products and services categories subject to such
  procedures
• Type of product and service information required
  by procedures, and percentage of significant
  products and services subject to such information
  requirements.
• Programs for adherence to laws, standards, and
  voluntary codes related to marketing
  communications, including advertising, promotion,
  and sponsorship.
• Total number of substantiated complaints
  regarding breaches of customer privacy and losses
  of customer data.
• Monetary value of significant fines for
  non-compliance with laws and regulations
  concerning the provision and use of products and
  services.

Extracted from the Global Reporting Initiative
104
Measuring Sustainability

• People / Society
• What are common societal measurements?
• What is important for your organization?

105
Common People (Social) Metrics

• Labor Practices (around the world throughout
  your value chain)
• Women Minorities hiring and treatment
• Ratio of salary of men to women by employee
  category
• Corruption Policies Practices
• Human Rights Policies, Procurement, Suppliers
• Community Engagement Practices
• Donations, Volunteerism, etc.
• Turnover by age group, gender region
• Rates of injury, lost days, absenteeism, etc.
• etc.

106
Measuring Social / People Impact

• Social Society
• Nature, scope, and effectiveness of any programs
  and practices that assess and manage the impacts
  of operations on communities, including entering,
  operating, and exiting.
• Percentage and total number of business units
  analyzed for risks related to corruption.
• Percentage of employees trained in organization's
  anti-corruption policies and procedures.
• Actions taken in response to incidents of
  corruption.
• Public policy positions and participation in
  public policy development and lobbying.
• Total value of financial and in-kind
  contributions to political parties, politicians,
  and related institutions by country.
• Total number of legal actions for
  anti-competitive behavior, anti-trust, and
  monopoly practices and their outcomes.
• Monetary value of significant fines and total
  number of non-monetary sanctions for
  non-compliance with laws and regulations. 5

Extracted from the Global Reporting Initiative
107
Measuring Social / People Impact

• Social Human Rights
•  
• and total number of significant investment
  agreements that include human rights clauses or
  that have undergone human rights screening.
• of significant suppliers and contractors that
  have undergone screening on human rights and
  actions taken.
• Total hours of employee training on policies and
  procedures concerning aspects of human rights
  that are relevant to operations, including the
  percentage of employees trained.
• Total number of incidents of discrimination and
  actions taken.
• Operations identified in which the right to
  exercise freedom of association and collective
  bargaining may be at significant risk, and
  actions taken to support these rights.
• Operations identified as having significant risk
  for incidents of child labor, and measures taken
  to contribute to the elimination of child labor.
• Operations identified as having significant risk
  for incidents of forced or compulsory labor, and
  measures to contribute to the elimination of
  forced or compulsory labor.
• Percentage of security personnel trained in the
  organization's policies or procedures concerning
  aspects of human rights that are relevant to
  operations.
• Total number of incidents of violations involving
  rights of indigenous people and actions taken.

Extracted from the Global Reporting Initiative
108
Measuring Social / People Impact

• Labor Practices Decent Work
• Total workforce by employment type, employment
  contract, and region.
• Total number and rate of employee turnover by age
  group, gender, and region.
• Percentage of employees covered by collective
  bargaining agreements.
• Minimum notice period(s) regarding significant
  operational changes, including whether it is
  specified in collective agreements.
• Rates of injury, occupational diseases, lost
  days, and absenteeism, and number of work-related
  fatalities by region.
• Education, training, counseling, prevention, and
  risk-control programs in place to assist
  workforce members, their families, or community
  members regarding serious diseases.
• Average hours of training per year per employee
  by employee category.
• Programs for skills management and lifelong
  learning that support the continued employability
  of employees and assist them in managing career
  endings.
• Composition of governance bodies and breakdown of
  employees per category according to gender, age
  group, minority group membership, and other
  indicators of diversity.
• Ratio of basic salary of men to women by employee
  category.

Extracted from the Global Reporting Initiative
109
Measuring Sustainability

• Profit / Prosperity (Financial)
• What are key Financial Measurements
• What are the important metrics for your
  organization?

110
Common Profit (Financial) Metrics

• Income Profitability Growth
• Investments
• Purchasing Practices
• Joint Venture practices
• Debt to Equity Ratio
• Risks from operations and products
• Financial Assistance from Governments
• Patents, New Products, etc.

111
Measuring Financial Impact

• Financial
• Direct economic value generated and distributed,
  including revenues, operating costs, employee
  compensation, donations and other community
  investments, retained earnings, and payments to
  capital providers and governments.
• Financial implications and other risks and
  opportunities for the organization's activities
  due to climate change.
• Coverage of the organization's defined benefit
  plan obligations.
• Significant financial assistance received from
  government.
• Range of ratios of standard entry level wage
  compared to local minimum wage at significant
  locations of operation.
• Policy, practices, and proportion of spending on
  locally-based suppliers at significant locations
  of operation.
• Procedures for local hiring and proportion of
  senior management hired from the local community
  at significant locations of operation.
• Development and impact of infrastructure
  investments and services provided primarily for
  public benefit through commercial, in-kind, or
  pro bono engagement.
• Understanding and describing significant indirect
  economic impacts, including the extent of impacts.

Extracted from the Global Reporting Initiative
112
Measurement to Goals - SC Johnson Example
Source 2008 SCJ Public Report, Page 10
113
You Are Only As Green As Your Supply Chain
(Herman Miller) Years ago Herman Miller decided
to become an advocate for the environment, both
because we believed it was the right thing to do
and because we saw the potential for a clear
business benefit. Ever since, we've been refining
our processes to put our aspirations into
practice.Our Perfect Vision campaign, launched
in 2003, includes green goals such as no landfill
waste, no hazardous waste, no air or water
emissions from manufacturing, and the use of
100 green energy, all by the year 2020. These
are stringent targets our company cannot reach
without engaging over 200 materials and
components suppliers in the ongoing task of
greening our global supply chain.As we've
examined every aspect of our worldwide supply
chain, we've learned one key lesson A business,
and the products it sells, can only be
environmentally sustainable through a holistic
approach to design, raw materials, production
methods, packaging, shipping, recycling, and even
marketing--across the entire value chain. It's
far too large and complex a undertaking for any
organization to go it alone and be truly
effective. You know the saying, "It takes a
village to raise a child." Well, it takes an
entire supply chain to green a company. Here are
three things we recommend to companies working
with their suppliers on the long-term goal of
going green. 1. Design your products with
sustainability as a core principal. At Herman
Miller, we have a problem-solving, design-driven
culture, so we spend a lot of time thinking about
how to create our products. In 2001, when we were
creating our Mirra chair, we had been working
with architect Bill McDonough and chemist Michael
Braungart, both leading-edge environmentalist
thinkers, toward their vision of a
"cradle-to-cradle" design that embraces
sustainable materials in a closed-loop life
cycle. As a result, we eliminated the use of a
chemical called polyvinyl chloride in that chair.
Now, PVC has advantages, including the fact that
it is inexpensive and durable. However, PVC
releases toxins during manufacturing and when it
is burned. We decided not to use it and
implemented that decision with the help of our
suppliers. We embedded those cradle-to-cradle
principals in our product development process for
all new designs, beginning with Mirra.2. Refine
your goals and put them to paper. We aim to be
fully sustainable by 2020, but we're holding
ourselves accountable to interim goals along the
way. For example, by 2010, 50 of our sales will
come from products that conform to our own
rigorous Design for the Environment standards,
and we aim to reduce our environmental footprint
by 80. Achieving these goals requires paying
attention not only to materials, including their
chemical ingredients, but also to our sources of
energy, to our manufacturing processes, and to
our packaging. We don't want to reduce our impact
in one area while ignoring it in another. Nor do
we want to move our environmental impact upstream
into our supply chain.3. Embrace transparency
and meaningful metrics. Our company, our
customers, and our industry in general are moving
inexorably toward more transparent reporting when
it comes to the environment. And, like any other
management issue, what gets measured gets
managed. When it comes to our supply chain,
several measures apply. We award points through
our Supplier Quantification Process for formal
environmental programs and active waste-reduction
programs. We rate our suppliers according to how
effectively they are working to help us reach our
goals--from researching alternative materials to
incorporating our measurable targets into their
flow charts. And this is the crux of the issue
We're not only looking at our suppliers, but at
our suppliers' suppliers.We have 12 years and a
long way to go before reaching our self-imposed
deadline for our Perfect Vision mission. By
looking--and forcing change--outside our company
as well as inside, we believe we can achieve this
goal. By following the three steps above, we
believe other companies can reach their green
goals as well.
Author Brian Walker, CEO of Herman Miller
Source www.hbrgreen.org/2008/02/you_are_only_as_
green_as_your.html
114
Herman Miller You Are Only As Green As Your
Supply Chain

• Key Points
• Know your Value-chain
• Establish Meaningful Goals (and share them)
• Be Prepared for a Transparent World
• The right METRICS are the root to all three of
  these points

115
Break-out groups

• Discuss the key metrics for your organization as
  a group
• Come back in 20 minutes prepared to present your
  
• Key metrics?
• Why?
• How can you make sure they are implemented?

116
Break-out groups - Feedback

• Key metrics?
• Why?
• How can you make sure they are implemented?

117
Conclusion

• Measure your Organizations Sustainability
  Performance!
• Improvement begins with measurement
• Take into account the full value chain
• Determine what is important for your organization
  and set goals!
• Be transparent you cant avoid it!
• Reputational impact comes from being able to
  document your improvements
• Opportunities will flow from these activities!

118
Final Word.
"Not everything that can be counted counts, and
not everything that counts can be counted." --
Albert Einstein
119
Participants for Break-out

• Group A
• Banaynal - Palm
• Bell - Driscoll's
• Berman - Bio-Rad Laboratories
• Consler - Safeway, Inc.
• Cortsen NOEA
• Rudd- Altria Group, Inc.
• Group B
• Cousins - Safeway, Inc. 
• Degenna - Altria Group, Inc.
• DeMerritt- Frog's Leap Winery
• Hughes - ConocoPhillips
• Kelley - SunPower

• Group C
• McAlindon - Dow Coating Sol.
• McIntosh - Navigant Consulting
• Murdy - Fireman's Fund Insurance
• Rankin -The Forrester Group
• Renda - Safeway, Inc.
• Group D
• Rubinshteyn - UC Berkeley
• Shields - Altria Group, Inc.
• So - LG Electronics
• Steffen - Transformative Ldr Inst.
• van de Raadt -Waggener Edstrom Worldwide

120
Corporate Responsibility Leadership
WorkshopEmbedding CR in Your Operations
Management

• UC Berkeley
• July 8-9, 2008

121
Defining Your Stakeholders

• Stacey Smith, BSR

122
Stakeholder Value

• Stakeholders, both traditional and emerging, can
  play an important role in creating and
  maintaining business value.
• Stakeholders can supply key information
  regarding
• emerging trends and impacts
• program implementation advise and partnership
• critical feedback regarding perceptions,
  expectations and performance
• Not all stakeholders can provide this value and a
  company must take a strategic and disciplined
  approach to its stakeholder relations to ensure
  that this business tool delivers value.

123
Stakeholder Evolving Definitions

• Traditional stakeholders include
• Shareholders
• Employees
• Customers
• business partners
• Companies often have reliable and sophisticated
  methods for relating to these stakeholders and
  incorporating their perspectives into business
  planning and execution.

124
Stakeholder Evolving Definitions

• Emerging stakeholders include
• governments and multi-lateral institutions
• advocacy/special interest groups and
  non-governmental organizations
• socially responsible and other investors
• community representatives
• the environment
• future generations
• As these stakeholders continue to evolve their
  influence, knowledge and potential value to
  companies, companies need to evolve methods to
  leverage the potential of these relationships for
  real business value.

125
Why Do Stakeholders Matter?
126
Benefits of Engagement
Opportunity
Entrance to and expansion of markets
Strengthened license to operate
Trusting relationships
Informed/improved decision-making
Issues identification and management
Mitigation of risk, lower legal costs
Risk
(We engage) to find solutions to shared
challenges, everything from creating awareness
about a topic to improving company performance on
the environment and human rights, to finding
solutions to societal challenges. --Novo
Nordisk
127
Exercise 1

• Are external stakeholders important to your
  business success?
• What role(s) can they play?

128
A Strategic Approach
129
Iterative Questions
130
What Are The Issues?

• Financial ability to impact financial
  performance of company
• Reputation ability to impact company reputation
  and image
• Litigation ability to impact current/future
  litigation
• Regulation ability to impact current/future
  regulation

RISK
OPPORTUNITY
131
Who is a Stakeholder?
Those who are affected by or affect a companys
products or operations.
132
Mapping Your Stakeholders
Stakeholder 1
Stakeholder 3
Knowledge
Stakeholder 2
Stakeholder 4
Orientation
Influence
133
Stakeholder Relations
There is no best way to relate to traditional or
emerging stakeholders, instead there exists a
range of possible interactions that can serve the
companys business objectives. Companies can
benefit from taking a disciplined approached to
stakeholder relations that discriminates the type
of interaction best needed based on the situation
and the potential stakeholders. In a given
situation, different points along this continuum
might be most effective.
Ignore
Message
Consult
Collaborate
Monitor
Advocate
Engage
134
Stakeholder Relations Continuum
Ignore
Message
Consult
Collaborate
Monitor
Advocate
Engage
135
Dell Stakeholder Map
136
HP Stakeholder Engagement Grid
These interactions help us better understand our
markets and customers, develop effective
approaches to global citizenship issues, and
strengthen HPs reputation. --HP
137
When to Engage Stakeholders

• Engagement is substantive two-way interaction
  between a company and their stakeholders, focused
  on mutual learning and/or solutions.
• Engagement is most effective when
• There is curiosity or concern regarding the
  impact of a company action or product
• There is a need or desire to learn about issues
  or stakeholders
• All of the decisions related to a project or
  issue have not yet been made
• There is sufficient control or influence by the
  company regarding an issue

138
Types of Stakeholder Engagement

• Engagement may be used in different situations.
  It is often useful in following situations. Each
  situation requires a slightly different approach
  to ensure that the company can receive value.
• Crisis/Incident
• Community
• Trends Forecasting
• Business Planning

139
Exercise 2

• Identify, by name or organization, a single
  stakeholder that is currently important to your
  company.
• What is your company curious about that the
  stakeholder could help shed light on?
• Articulate how you would invite this stakeholder
  to a conversation to discuss this topic.

140
Nike

• Deep Dive on Issues
• Large, multi-stakeholder dialogue
• Three issue focus areas
• 40 business managers together with 40 external
  stakeholders
• Two days including polling, presentation by
  company and expert, small group work planning,
  commitments
• Laid groundwork for ongoing initiatives

141
Gap

• Stakeholder Mapping
• Determined focus area
• Thorough identification and research
• Cross-functional exercise to map stakeholders
• Development of plan for communication and
  engagement
• Ongoing resource to guide strategy and reference
  additional engagement activities

142
Wal-Mart

• System-wide Sustained Engagement
• Identification of key systems of impact
  (packaging, textiles, GHG, buildings, etc.)
• Conduct research and analysis
• Assemble representatives from all key aspects of
  the system (producers, suppliers, experts,
  associations, government agencies, etc.)
• Create facilitated, long term forum for dialogue,
  commitments and innovation

143
Discussion
144
Supplemental Slides
145
Stakeholder Engagement Cycle
146
Communicating Branding CSR

• Kellie McElhaney, Haas School of Business

147
McElhaneys Seven Principles of CSR Branding

• Know Thyself
• Get a Good Fit
• Be Consistent
• Simplify
• Work from the Inside Out
• Know Yours Customer
• Tell Your Story

148
Stories trump facts ten times out of ten.
149
CSR is a powerful predictor of brandif known
Social Responsibility
Emotional Appeal
1
3
Supports Good Causes Environmental
Responsibility Community Responsibility
Feel Good About Admire and Respect Trust
ReputationQuotientSM (RQ)
Products Services
Vision Leadership
6
2
Market Opportunities Excellent Leadership Clear
Vision for the Future
High Quality Innovative Value for Money Stands
Behind
4
5
Financial Performance
Workplace Environment
Outperforms Competitors Record of Profitability
Low Risk Investment Growth Prospects
Rewards Employees Fairly Good Place to Work Good
Employees
Source C. Fombrun, Reputation Institute, Harris
Interactive
150
and reputation matters.ask Nike.
151
There are Early Communicators
152
And Even They Have Enemies

• Requires banked goodwill in customers minds
  when these messages emerge.

153
There Are Ready CSR Segments

• Females (employees, consumers, investors)
• Millennials/Gen Yers Ages 8-24 (cause focus)
• LOHAS/ Ethical Consumers
• More educated