Welcome to the
Effective Stakeholder Engagement
Briefing
26th February 2009
1
Agenda
8.00am
8.30am
8.35am
8.50am
8.55am
9.10am
9.15am
9.30am
9.35am
10.00am
Arrival & Registration
Welcome address : Anthony Hyde
British American Tobacco : Verity Lawson - Stakeholder
Engagement as it relates to Sustainability Reporting
Q&A
England Marketing : Fiona Tarpey & Jan England - Stakeholder
Engagement - why bother and how to do it
Q&A
Bureau Veritas : Murray Sayce - Stakeholders & Assurance
Q&A
Summary and close : Anthony Hyde
Departure
2
British American Tobacco
Verity Lawson
Stakeholder Engagement as it relates
to Sustainability Reporting
3
Stakeholder
Engagement at
British American
Tobacco
Verity Lawson
Sustainability Reporting Manager
British American Tobacco
at a glance
World’s most international tobacco
group
 business in 180 countries, over 300
brands
 global market share approx.17%
 only international tobacco group
with a significant interest in tobacco
leaf growing
 over 53,000 employees
2007 financial performance
 £ 26bn gross turnover
 £ 2.9bn profit from operations
 £ 17bn tax contribution
WHY Does BAT carry out Dialogue?
Engagement is linked to
our Strategy
 “ To achieve leadership of the
tobacco industry through
strategies focused on growth,
productivity and responsibility ”.
Responsibility is fundamental
to our strategy for building long
term shareholder value
We cannot be responsible
unless we listen and act on the
concerns of our stakeholders.
Group Strategy
Engagement – HOW we do it
Identifying our stakeholders
• Persons or organisations who are impacted by our actions
• Persons or organisations who’s actions can impact us.
• The bigger the potential impact, the more important the
stakeholder.
Some of BAT’s key stakeholders are:
Employees
Investors
Anti-tobacco
lobby
Governments
Farmers
Suppliers
Retailers
Scientists
…but we often have different global and local stakeholders
Engagement – HOW we do it
 Engaging stakeholders is often a challenge for a
tobacco company
Rigorous approach
 External expert guidance
 Stakeholder and issues mapping
 Independently facilitated dialogue
 AA1000 Series
 GRI Guidelines
 Independent assurance
Engagement – HOW we do it
Engagement requires a fundamental shift
in the way we conduct our business
Traditional
Decide
Deliver
Defend
Social Reporting
Listen
Decide
Deliver
The impact of dialogue on BAT
CSI GUIDELINES
Youth Smoking
Prevention
Snus launch May 2005
Social Responsibility in
Tobacco Production
Social reporting & dialogue allowed us to…

Engage constructively with our stakeholders

Understand their expectations in depth

Ensure these expectations are given due consideration in
our decision making

Demonstrate with actions that we are responsive to
stakeholders’ concerns and thereby gain their trust

Provide a powerful incentive for stakeholders to support
BAT initiatives

Gain recognition that we are a responsible tobacco
company
So why did we need to change?
We made good progress, but:
 Plc reporting risked lagging behind best practice
 Reporting on process not performance
 Comprehensive approach to issues coverage no longer meets
stakeholder needs
 Social reporting adding limited value to the business group-wide
2007-2008
Used stakeholder dialogue to redefine our
reporting & issues…
Defining materiality
 Stage one: Mapping dialogue issues
 level of interest to stakeholders and;
 current or potential impact on company
 Stage two: Internal consultation
 Management board
 Function’ champions’
 Stage three: External consultation
 CSR experts
 Issue experts
 Stakeholder dialogue to review our conclusions
 Have we included the right issues?
 Is there anything missing?
 Feedback on the targets and plans
HIGH
MEDIUM
LOW
Level of
interest to
stakeholders
Low impact,
high concern
issues
Medium impact,
high concern
issues
High impact,
high concern
issues
Low impact,
medium concern
issues
Medium impact,
medium concern
issues
High impact,
medium concern
issues
Low impact,
low concern
issues
Medium impact,
low concern
issues
High impact,
low concern
issues
LOW
MEDIUM
Current or potential
impact on Company
HIGH
BAT’s Sustainability Agenda
Harm reduction
 We will strive to bring commercially viable, consumer acceptable
reduced-risk products to market
Marketplace
 We will take a lead in upholding high standards of corporate conduct in
our marketplace
Supply chain
 We will work for positive social, environmental and economic impacts in
our supply chain
Environment
 We will actively address the impacts of our business on the natural
environment
People & culture
 We will work to ensure we have the right people in the right environment
to deliver our vision
Stakeholder dialogue
 Dialogue has provided a huge amount of benefit to the
business




New ideas
Opening doors
Helping us listen and learn
Highly valued across the Group
…but it wasn’t perfect
 Stakeholder fatigue
 Dialogue for reporting’s sake
 Asking the same questions and getting the same answers
Stakeholder dialogue
 Dialogue is our unique selling point!
 Independent facilitation
 Fully assured
 Demonstrating responsiveness
 What we need to do differently




Based on business need, not reporting need
Balance stakeholder expectations with business impact
No more ‘shopping lists’ of expectations
Use to guide reporting and inform activity, not dictate it
Objectives for dialogue…
 Creating a vision
 Gather expectations
 Still valid if an issue hasn’t been the subject of dialogue in the past
 How to achieve the vision?
 Develop targets and measures of success
 Get stakeholder feedback on a new approach
 Review strategies and activities
 To get advice and opinion in areas where we aren’t the experts
 ‘Sense check’
 Are we still heading in the right direction?
2007-2008 Dialogue Topics
2007
 Marketplace
 Supply chain
 People & culture
 CSR/Sustainability
2008
 Human rights
 Environment
 Illicit trade of tobacco products
 CSR/Sustainability
England Marketing
Fiona Tarpey & Jan England
Stakeholder Engagement
why bother and how to do it
21
Stakeholder Engagement – Why bother? And how to do it.
26th February 2009
Who we are
Fiona Tarpey – Operations Director
Jan England – Managing Director
Independent Market Research Agency
Established in 1994
Based in Cambridgeshire
Extensive experience in agriculture,
environment and leisure sectors
Team of 11 very experienced researchers
MRS Company Partner
Investors in People
www.englandmarketing.co.uk
Why we can talk to you
»
»
»
15 years of experience in helping many companies undertake stakeholder research
Knowledgeable and experienced team who share their learning and understand CSR
Use tried and tested market research techniques to achieve effective results
www.englandmarketing.co.uk
Stakeholder Engagement
» What is it?
»
A flamboyant term to describe talking to, listening to, meeting with and reporting
back to stakeholders
» Who are stakeholders?
»
Stakeholders are those who have an interest in what you as a company are doing typically they are customers, employees, investors and neighbours
www.englandmarketing.co.uk
Why engage with Stakeholders?
»
To understand the perceptions of your company
»
To confirm how well you are regarded
»
Gain feedback on how you are performing
»
Benchmark performance year on year
»
To build trust – especially in the current economic climate!
»
To give value and meaning to your CSR activity
»
To give you a better understanding of the future
»
To elevate your organisation above the competition to ensure long term
sustainability of your activities
www.englandmarketing.co.uk
Why engage with stakeholders?
www.englandmarketing.co.uk
The process
1. Stakeholder mapping
2. Define a materiality index
3. Create a matrix
4. Undertake the engagement process
5. Analyse the results
6. Report back
7. Create a benchmark for future years
www.englandmarketing.co.uk
Stakeholder Mapping
Employees
Investors
Customers
Suppliers
Media
NGOs
Academics
Government
www.englandmarketing.co.uk
Stakeholder Mapping
» What is their relative importance?
» How important are they to you?
» How important are your activities to them?
»
Devise a scale……..
1
Low
www.englandmarketing.co.uk
5
Medium
10
High
Stakeholders
» Consider your approach.........
» What do you ask them?
» Do you ask their opinions ahead of developing your strategy or
after?
» Do you use their opinions to help inform your strategy?
www.englandmarketing.co.uk
Materiality – what are the issues?
Climate Change
Food Security
Water Supply
CO2
Flooding
Giving
Biodiversity
Poverty
www.englandmarketing.co.uk
Materiality Index
» What is their relative importance?
» Devise a scale……..
1
Low
www.englandmarketing.co.uk
5
10
medium
high
Ranking by Importance
» Use a matrix to score importance of stakeholder group and
importance of material issues
» Highest score suggests the areas on which to focus
www.englandmarketing.co.uk
Matrix of Importance
Current
Issue
Stakeholder Group
Customers
Employees
Climate
Change
Water
Supply
CO2
Food
Security
Flooding
Biodiversity
Poverty
Giving
www.englandmarketing.co.uk
Suppliers
Investors
Government
NGOs
Media
Academics
Matrix of Importance
Current
Issue
Stakeholder Group
Customers
Employees
Suppliers
Climate
Change
18
18
16
18
19
15
15
15
Water
Supply
14
7
8
12
12
4
6
7
CO2
20
18
16
18
19
16
16
16
Food
Security
2
4
2
8
2
3
2
2
Flooding
4
8
6
4
3
8
6
2
Biodiversity
10
9
8
6
4
4
8
10
Poverty
16
9
8
7
15
4
2
4
Giving
10
16
5
6
8
8
6
5
www.englandmarketing.co.uk
Investors
Government
NGOs
Media
Academics
How to talk to Stakeholders
Use conventional market research techniques
Methodology based on characteristics of stakeholder group
»
»
»
»
»
Face-to-face interviews
Telephone interviews
Online/postal/touch screen surveys
Focus groups and workshops
Stakeholder panels
Results
» Analysed using market research software
» Can be linked to a stakeholder management system
» Conventional statistical analysis combined with qualitative analysis
www.englandmarketing.co.uk
Who should do the stakeholder
engagement?
INTERNAL TEAM
VS
• Knowledge of the company
• Knowledge of the issues
• Knowledge of the
stakeholders
• Could be biased
• Lack interviewing skills
• Lack experience of analysis
of qualitative data
www.englandmarketing.co.uk
EXTERNAL RESEARCH
TEAM
• Skills in questionnaire design
• Independent and unbiased
• Respondents open and honest
with third party
•Trained interviewers
•Familiarity with capture and
analysis of data
•Understanding of CSR issues
•Can benchmark against other
organisations
•Less knowledge of the
company
Why bother?
In summary……….
» Clearer picture of who your stakeholders are
» How important they are and why
» Focus for developing your strategy
www.englandmarketing.co.uk
Bureau Veritas
Murray Sayce
Stakeholders & Assurance
40
26th February 2009
Stakeholders & Assurance
London
CR reporting – stakeholder engagement
• Getting involved in stakeholder engagement can
appear as tricky as hooking up with someone who
has just been through a messy divorce.
• The … baggage that is carried in those two words
is … enough to persuade most sustainability
managers to take up a monasticEngagement
life.
is a pretentious catchall phrase
that covers:
“talking with”,
“meeting with”,
“listening to”, and
“informing”
… wrapped up in the notion of transparency
42
CR reporting - best practice in assurance
► Challenge CR strategy and performance


Governance and risk
Doing the ‘right things’ and in the right way
► Focus on understanding / response to material issues


Sector specific issues and ‘Hot topics’
Confidence in robustness of systems and data
► Greater reassurance to stakeholders on management of priority
issues and enhanced credibility

How stakeholder engagement/feedback is used

Stakeholder panels/stakeholder perspectives
► Value protection to value creation


From business and CR perspective
Assurance process to promote performance improvement
► Strategic / forward looking


Overview of CR strategy and reporting
Identification of future vision and challenges
43
CR reporting – stakeholder engagement
► Key to building trust and external credibility
► Stakeholders increasingly included in identifying issues
► Identifying and prioritising stakeholders + transparency over who is engaged
Of the G250
of which 65%
‘better
understand
s/holder
expectations’
70
60
40
%
30
20
10
s/holder
feedback IN
reporting
s/holder
feedback for
reporting
s/holder
feedback
informs
strategy
identify
s/holders
0
structured
s/holder
engagement
%
50
Stage further..:
44
CR reporting – stakeholder engagement
• a principles-based, open source framework for quality
stakeholder engagement
• a robust basis for designing, implementing, evaluating
and assuring the quality of stakeholder engagement
Stage further..:
45
External Review Committees & Expert Panels
….review, evaluate, scrutinise and recommend
• 3rd successive year to assess Sustainability Report and process
• express views as individuals, not on behalf of respective organisations
• 3 main questions:
• has the company selected the most important topics ?
• how well has report dealt with these topics / responded to stakeholders ?
• did Shell give sufficient information and access to do this ?
• to encourage innovation and leadership on sustainable development & CR :
• advising on key areas of strategy and performance
(objectives, targets, performance, policy, stakeholder relationships & governance)
• independent scrutiny of BT’s understanding of critical societal issues; and
• advising on new or significantly altered report content.
Stage further..:
46
assurance – stakeholder inclusion
An approach used for assurance of GSK, 2007/8 – Access to Medicines
• Interviews with external stakeholders to evaluate Materiality and Responsiveness
• Has material information (around subject matter) been included ?
• Does the information help with informed opinions and decisions ?
• Is the Company responding to issues / concerns & adequately communicating this ?
• Is information clear, understandable, timely and accessible ?
• Stakeholder selection based on:
• Nature, activities & objectives of stakeholder (PPP, investor, NGO, research…)
• Area of concern (R&D, preferential pricing, voluntary licensing…)
• openness to collaboration / practicality of engagement.
• Standing and credibility
Preference also given to
groups/ bodies quoted in the
Report, to include in the
process elements of text
verification.
47
assurance – stakeholder inclusion
• Private-Public Partnerships
• Responsible investors
• Governmental Organisations
• Non Governmental Organisations
And other groups were approached:
• Research bodies
• Industry groups and associations
• Patients’ and consumers’ groups /
associations
• Others
48
GSK Case study – “what they said…”
•
‘GSK a leading organisation on vaccines…’
•
‘PPPs can be very positive if set up well…’
•
‘GSK understands relevance of business model in LDCs’
•
‘compares favourably to peers…’
•
‘[GSK] is at the frontline of R&D for DDW…’
•
‘positive response to tiered vaccine model…’
•
‘Tearing Down the Barriers is good approach…like idea of dual
branding…’
•
‘[GSK] keeps us well informed…’
•
‘There is no global access policy or strategy obviously in place’
•
‘Would like to see KPIs on % invested in R&D on DDW’
•
‘What is [GSK’s] real contribution to PPPs?’
•
‘Cheapest prices still may be very high’
•
‘Need to negotiate a model where …increased transparency
over price’
•
‘Need innovative approach to IP. Is tighter IP always
necessary?’
•
‘Need increased transparency on lobbying’
•
‘Feel aggressively marketed to as a buyer of product’
49
assurance – outcomes
Issues to manage together
Statement
Opinion: Feedback from indicates that GSK is performing well in
relation to vaccines; differential pricing; PPPs….
illustrates a partnership approach to healthcare and…
Provides information on direct impacts
Main benefits include:
• increased visibility amongst important and sometimes ‘difficult’ audiences
• enhanced and ‘unfiltered’ evaluation against AA1000 Principles
• direct sampling of external perceptions / feedback on subject specific CR activities
• through corroboration can accelerate the verification of factual information
• helps to form assurance conclusions AND to inform future reporting approach / content
• more robust forum to discuss issues of concern independently / anonymously
• enhanced process credibility, transparency and reputation
recognition
50
assurance – learnings
Issues to manage together
• Willing participation and positive feedback
• Importance of cross-representation
• Independence of the process enables greater inclusivity
• Confidentiality and the offer of unanimity to gain buy-in
• Can build relationships with key s/holder groups
• Demonstrate commitment and alignment with the AA1000AS
• Need for ongoing communication to maintain levels of trust
• Planning time / adequate information to optimise interview process
Other considerations
• Can be done a scale to suit the assurance engagement
• Consider informal /confidential feedback process to reporting organisation
51
52
Thank you for attending
Have a safe journey
53