SCN 37-504
SOCIALLY RESPONSIBLE CORPORATE MANAGEMENT STRATEGIES: THE ERICSSON CASE by Michael Treschow
Working paper, February 17, 2010. Reproduced by The European House-Ambrosetti for the Forum “Developing the Regions of Africa and Europe”, Taormina, October 7 and 8, 2010.
Michael Treschow – 17 febbraio 2010 Socially Responsible Corporate Management Strategies: the Ericsson case After 40 years of international service you start to understand what is the most important part of what you have been doing and about your personal carrier experience. Corporate social responsibility and sustainability are essential topics. That is why I would like to share with you my own experience in Unilever and in Ericsson and how we cope with this important issue and how we complete our goals. It’s very important to understand that it’s not a welfare or a philanthropy exercise but it’s about business and business values; and it’s important to understand why do you do certain things and to figure out to make sure that you are doing every day better business. The social and environmental impacts which we have on the world around us come largely from our brands. We are increasingly embedding sustainability thinking into the day-to-day activities of our brand management and R&D teams. This is done this through a simple tool called Brand Imprint. This provides our brand teams with a 360º scan of the social, economic and environmental impact that their brand has on the world There is one important aspects to analyze and it’s brand management. The good brand management is when, hearing for example about Toyota who are having a big problem with their brand, you make sure that you are taking care and doing good business and acting in the most professional way vs. stake holders customers and consumers. Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfill responsibilities to the societies and communities in which operates. How do you strengthen your brand? With the rise of the Web, branding is more important than ever. Since information can be provided quickly and immediately to any location, traditional advantages of size and location lose importance. The marketplace has changed. Our audiences will talk about us, whether we like it or not, through internet, facebook or social media. If negative rumours are out and if you have messed it up, this will spread in 24 hours and this will bring disorder. A wellestablished brand can help your organization carve out a unique position for itself in the public mindset, preventing negative images. There is no way to escape in the cyber space when it comes to brand management it crucial or critical it can be ruined in seconds or days. Of course we all want to contribute to the society that every day gives us lots of things probably children and grand children, people in general want to be proud of their company and the company has to perform remarkably. In order to figure out some references in 2009 and addition 50 to 90 million people went into poverty. Extreme hunger has increased from 16 to 17 %, 500 thousand girls die every year by giving birth. Developing world is our responsibility. It’s important to seek to engage with stakeholders to help us identify issues of concern, guide our reporting and provide feedback on specific areas of activity. Working in partnership is also a crucial part especially if you develop and deliver some of our major sustainability commitments. Partners bring expertise on specific questions as well as the networks to deliver practical initiatives on the ground.
Ericsson: • is present in 175 countries the vision is communication for all • Swedish based company • 85 thousand employees • 30 billion dollars in revenues doing ups and downs but the telecommunications industry business is rather a cyclical business Unilever: • Anglo-Dutch fast moving consumers company with a strong portfolio of trusted foods, home and personal care brands. • 13 of our brands achieve annual sales of € 1 billion or more. • Turnover -> € 40.523 (millions) operating profit € 7.167 • Our top 25 brands account for over 70% of sales. • 80 years on her back • 175 thousand people around the world use Unilever products • Half of the household in the world have our products • Every day 160 million product is pick by consumers • 400 million products: food personal care and household products In order to have good performance you need to have people on the ground and the knowledge competence in the company in order to add value to society, this is a matter long term commitment based on having your people there and doing something for society. We work all around the world especially in India and Africa. Unilever is strong in hygiene products (soaps) every 10 second a child dies of diarrhoea and a third is in India. This is actually a matter of hygiene and sanitation. Unilever has committed to teach kids to wash their hands. Preventable diseases, still pose a significant global health challenge. Every year over 3.5 million children die before the age of five because of diarrhoea. One billion people lack access to safe drinking water. Tooth decay and gum disease affect the majority of people in both developed and developing countries. Up to 90% of school children have cavities. Simple changes can prevent much of this. So helping people access the right products, such as soap and toothpaste, is an important first step. These are costs but it’s a good business, we need to share the knowledge and the competence to do this. How do you get them to have a full and good meal every day? We deliver 15 million school meals to 80,000 children in 2008 via our partnership with the United Nations. Even through World food programme, hundreds of children a year manage to eat every day. Health workers are supported with telecommunications. WFP was in Haiti. Education: Schools in Kenya have been connected to the Internet via the mobile network. In the first month of connectivity, more than 250 children previously lacking access to education were enrolled and the number of female students jumped from two to 50. In part, this is because students mostly nomadic families felt comfortable leaving their children at school knowing they could get in touch via a mobile phone.
Small business development how can you help the small communities to develop their business or to grow better crop and how to provide them with tea. Unilever has helped to build up farms, eliminate middle man that screwed the farmers, helped them to get fertilizers. Two villages one in Kenya and the other lake Victoria are in extreme poverty and isolated we are starting now to see positive reaction. In some villages we supported the presence of 50 thousand women entrepreneurs that serve hundred thousand villages, they are self employed and they take care of the logistic and Unilever just packs the food and this was a good investment and business for Unilever. Sustainability: Sustainability is about maximizing long-term social, environmental and economic value for us, our customers, shareholders and society. We added value through sustainable tea that after water it’s the most drunk liquid. Unilever is the biggest supplier of tea, 5 billion cups a day Unilever has the 12% world market. 50% of the tea was sourced from Rainforest Alliance Certified farms, making progress towards our target of buying all our tea from sustainable sources. All 22,000 products in our food and beverage portfolio are under regular review as part of our Nutrition Enhancement Programme. 43% are now in line with internationally accepted guidelines. Also Palm oil is a big ingredient in Unilever supply chain. Some performance highlights: Nutrition 22 000 Food and drink products were assessed via our Nutrition Programme. Hygiene & well-being. Hygiene 120m people reached through Lifebuoy's hygiene education programme in India. Greenhouse gases 39% Reduction in CO2 from energy by our factories since 1995 Water 63% Reduction in water use by our factories since 1995. Ericsson: helps on the energy saving sides if people can work from home this means to give the possibility to avoid the waste of energy. The potential of using renewable energy, and the network is now running on a wind and solar solution, which will result in a 80 percent reduction in energy. In this hot, arid region, sun and wind are the most reliable power supply. It’s not about philanthropy but investing in your own future -> doing well by doing good is a strong vision. Unilever spends 50million Euros a year on these kind of activity can we consider it a matter of spending or investing? It’s very difficult to answer I don’t think it’s too much not even too little. Philanthropy is for the owners it’s not for companies. For Haiti we sent 5 hundred thousand Euros on food, we sent special equipment this is a donation that we do in this tragic disasters and communication is very important. So corporate social responsibility is not charity it has to do with brand value and strength strategy a and it’s part of a complex strategy ethical but measurable.