Why CR? From data to decision making Lecture 3: Cranfield University, 16 March 2009
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Why CR? From data to decision making Lecture 3: Cranfield University, 16th March 2009 David Logan Structure of presentation 1. The importance of core values 2. The emergence of global values 3. Values and stakeholders 4. Measuring and managing CSR performance 5. The importance of benchmarking 1 1. The importance of core values • Companies are corporate citizens of our society • They have rights and responsibilities as private citizens do • All have - economic and social power - environmental impacts - choices about how they behave • CR is about how these choices are exercised • Multinationals have immense scale • Core values help bind them together • Trust is core to brands and trust is based on the experience of values in action 2 1. The importance of core values • Values bind an organisation together • They inform policies and practice • Practice can be measured and performance can be understood often in numerical form • The debate about values within a company needs to be based on facts • This lecture is about measuring responsible performance 3 1. The importance of core values 4 1. The importance of core values Values into Action Corporate Mission Values Statement Code of Business Principles Policies e.g. environment, supplier code, diversity statement Business performance 1. Corporate functions e.g. HR, marketing 2. Operating units 5 1. The importance of core values Unilever’s procurement goals “Close the gap to world class in supply chain within three years – this is the only strategic thrust in Unilever’s Path to growth strategy with a deadline. It also has one of the toughest targets: savings of €3bn by 2004” Source: Unilever Magazine, Fourth Issue 2001 6 1. The importance of core values How is this goal to be achieved? 1. 2. 3. 4. Cut production costs? - Reduce wages and benefits? - Use slaves or prisoners? - Use children? Increase productivity? - Extend working hours? - Introduce corporal punishment? Get round ‘red tape’? - Increase ‘facilitating payments’ to customs? - Bribe health and safety inspectors? Move sourcing to China? 7 2. The emergence of ‘global’ values? PREAMBLE Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world, Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people, Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law, Whereas it is essential to promote the development of friendly relations between nations, Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom, Whereas Member States have pledged themselves to achieve, in co-operation with the United Nations, the promotion of universal respect for and observance of human rights and fundamental freedoms, Whereas a common understanding of these rights and freedoms is of the greatest importance for the full realization of this pledge, Now, Therefore THE GENERAL ASSEMBLY proclaims THIS UNIVERSAL DECLARATION OF HUMAN RIGHTS as a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction. 8 2. The emergence of global values 1. UN - ILO - Global Compact - Millennium Development Goals 2. Global Reporting Initiative on CSR 3. ISO on environment 4. International Chamber of Commerce on advertising 5. SA8000 However values are not law! 9 2. The emergence of global values Compliance with best international standards High C od e c o mp l ia n c e? High Low Finland UK USA Mexico China Algeria Myanmar N.Korea Country risk ranked by international standards 10 3. Values and stakeholders • Origins of stakeholder theory - Shareholders –v‐ stakeholders • What is a stakeholder - “some with a stake in the business and its actions” • Why are stakeholders important? - Key to company’s success - Company decision effect their lives - Key to the CSR debate - Management is largely organised around stakeholder groups • Review hand out 11 3. Values and stakeholders 12 4. Measuring and managing CSR performance • Measurement is critical to the development of the CSR/sustainability agenda • The universal language of business is numbers • Brings values, stakeholders and measurement together • Management has to balance responsibilities to different stakeholder groups - Consumers –v‐ local employees - Shareholders –v‐ future investment • Code of principles gives commitments to behaviour towards different stakeholder groups and their concerns • Decisions about performance and good practice needs to be based on fact 13 4. Measuring and managing CSR performance Employee Health & Safety Unilever principle Employee concerns Performance measures Benchmarks Internal “Unilever is committed to safe and healthy working conditions for its employees worldwide” “How well is Health & Safety managed?” • Fatal accidents “What preventative measures are in place?” • Absenteeism rate “Will I be trained properly?” • Lost time accident rates • % employees taking ill health retirement •Average for Unilever global External • Average for the industry • Best in class for the industry • Prosecutions for failures • Spend on training & equipment Employee perception data Survey of employee views of health and safety performance 14 4. Measuring and managing CSR performance Consumer value Unilever principle “Unilever is committed to providing products which consistently offer value in terms of price and quality” Consumer concerns “Price of products?” “Safety in usage?” Performance measures • Rate of price increases • % of category sales • Increase in sales Benchmarks Internal • Global average • Leading country performance External • Competitors products • Consumer price index • Product recalls • Safety prosecutions Consumer perception data Market surveys of perceptions – calls to care lines and focus groups results 15 4. Measuring and managing CSR performance Employee preventative healthcare Inputs Outputs Leverage Direct cost of nurses and management time Free public health ‐ vaccinations ‐ condoms ‐ education Employee benefit Reduced illness and medical costs Reduced loss of income Education about health Community impacts Greater personal control Healthier family life Company benefit Reduced absenteeism Reduced healthcare costs Better morale Business impacts Greater productivity 16 4. Measuring and managing CSR performance Community contributions Outputs Inputs From 2000 to 2005 Each well costs £1,660 374 wells built by the end of December 2006 Total cost of scheme to date = £620,840 Leverage Community benefits Cadburys 7480 people have benefited directly Schweppes holds from this scheme. fundraising events to Each well saves 165 hours per day support the wells which people can use to work or learn Reduction in water‐borne diseases Community impacts Cadbury Schweppes and Water Aid To improve the quality of life of cocoa farmers by building water wells across Ghana in conjunction with the farmer’s co‐operative, Kuapa Kokoo. Assuming that 50% of the 6380 people helped by the project would go to work, a contribution of £819,060 pa would be made to the GNI of Ghana Gross benefit to Ghana per well is £2,190 pa For every £1 spent, there is a return of £1.32 (132%) pa Business benefits Improved PR and reputation for Cadbury Schweppes Strong ties forged between Cadbury and the areas in Ghana from which they collect their cocoa. Business impacts Improved relationships between Cadbury Schweppes and Ghana cocoa suppliers Improved corporate reputation Improved relationships and reduced infant mortality helps to secure the future of cocoa farming 17 5. The importance of benchmarking Danone: pay 18 5. The importance of benchmarking Trades union membership across Unilever companies 2001 Country % of Unilever employees in trades union membership National average of workforce in trades unions* Canada 36 37 Ghana 91 N/A Indonesia 77 3 HPC USA 14 14 The Netherlands 25 26 Turkey 61 N/A UK 42 33 Source: Unilever 2002 Social Review * ILO data 1995 19 5. The importance of benchmarking Starbucks: pricing and sourcing 20 5. The importance of benchmarking Shell: business ethics 21 5. The importance of benchmarking • Business performance is usually incremental improvement • Benchmarking is a key tool in promoting progress • Quality management techniques and benchmarking help drive CSR • Data is critical to decision making • Company data systems often fail the CSR/sustainability agenda 22 Give us a ring For further information please contact: David Logan Chairman and Co‐founder Corporate Citizenship 5th Floor, Holborn Gate 330 High Holborn London WC1V 7QG United Kingdom T: +44 (0)20 7816 1616 E: david.logan@corporate‐citizenship.com W: www.corporate‐citizenship.com
