Corporate Social Responsibility and Sustainability Second Edition

Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant

CSR and sustainability “Sustainability is about living and working in ways that meet and integrate existing environmental, economic and social needs without compromising the well-being of future generations”. Related aspects are the Environmental Justice and contemporary international law dealing with Intergenerational Equity under environmental protection, human rights and economic development.

The key challenge for corporations in supporting sustainable development is to accept a new proactive role in shaping the future of the world by supporting and developing the social dimension of globalisation and taking a leading role in: ·

organizing responsible supply chains;

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investing in innovative health, energy and environmental products;

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establishing business models that will work in poorer countries;

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transferring knowledge and improving conditions and infrastructure in developing countries

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partnerships and dynamic coalitions to strengthen the world’s sustainability capacity

The outlined challenge represents a tall order and realistically only the very successful companies could take up the challenge to establish the required new sustainability bound business models that can be followed widely in the future.”

This quote is taken in the following website CSRQuest. If you look further down the website on sustainability there is a recognition that we are in a mess with business and sustainability. I am not surprised with such high expectations.

I choose this website and quote because it is a good summary of the difficulties that CSR “activists” and businesses have in finding common ground on the sustainability agenda.

As much as I would love businesses to deliver on the above, we cannot expect them to provide a new social and economical framework. The expectations are too high. It’s ridiculous. This has been a characteristic of most of CSR “activists”.

CSR consultants should harness the goodwill of businesses and try to help them develop their business model to come closer to meeting the political challenges of our time. This is where CSR specialists also have a responsibility in the “mess we are today”.

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Tuesday, November 10, 2009

Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant Some businesses might be able to deliver on a new proactive role as defined above because of the nature of their business. E-businesses can easily incorporate this new framework. The traditional businesses that deliver on these expectations are often the ones whose records are the worse. I bet the Total, Monsanto and the NestlĂŠ of these worlds have great CSR records even within those high standards. But for most businesses, it is asking too much that they will by themselves take the lead in what is essentially creating a new world economical order.

CSR specialists have to act responsibly and they need to be able to define realistic priorities and targets for businesses on sustainability. I am yet to find such a guideline. The broader agenda belongs to politics and governments.

Which scope for CSR? Do companies have the responsibility to deal with broad issues such as poverty alleviation, access to health care or justice? Does a well defined CSR policy have to integrate these entire concepts? Should they as a matter of coherence look at human development, global development and human rights? All these are part of the sustainability agenda.

All the above causes are worthwhile. As individuals and as groups, we should feel the responsibility to uphold these principles. Still, it remains difficult to motivate people around these causes. NGOs who fight for them, know well about supporter apathy and donor fatigue. As a former actor in the humanitarian field, I experienced firsthand the feeling of powerlessness when trying to remind governments, warring factions and even the United Nations representatives about sets of rights, responsibilities and duties.

It is difficult to trigger action from governments or people that should be more prone to supporting these causes. Why should companies fair any better?

The usual arguments are of course that companies are not necessarily asked to fare better, they are asked to contribute in the same way as other stakeholders are. Others argue that business is key to the running of this world; that companies have in some cases more power than governments to make a difference.

There is certainly a trend of thought to say that companies have a specific responsibility and they should be challenged more than government to take responsibility. Especially since there are various constituencies, employees or clients, which can be harnessed into pulling or pushing the sustainability agenda within these organizations. Companies would be more important than governments.

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Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant It can be argued that this perception of the power of businesses was mainly driven by a western neoliberal perception of the role of governments. Therefore it was overstating the leverage companies could have worldwide. The power for change that businesses could have was also an extrapolation of the eye-catching role of multinationals and of the financial markets. Todays’ financial crisis has tamed the lion a bit and given credibility back to politicians as a power for change.

Nevertheless, expectations were high for companies to make a difference. There was a rush into the “CSR potential for change”. It now includes so many different agendas, it is overarching and impossible for companies, but for the larger ones, to contribute.

It is not surprising most companies are behaving like individuals. They are experiencing a certain fatigue and they are going for simple and obvious “CSR experiences”, in other words a bit of charity or philanthropy. I cannot blame them but they have missed the point.

It is urgent to redefine a number of key strategic priorities that companies can easily integrate as CSR policies, especially the many small, medium or large companies around the world. They represent the best potential for change.

Otherwise we will keep missing the point for companies to make a valid contribution to society.

How far should companies go in defining CSR strategies?

I have long argued that we should make CSR a more acceptable concept for companies to implement.

CSR specialists have failed to define a bottom line, a focused but yet strategic agenda, for companies to impact on sustainability in their business practices. From theory to action, what should be these focused objectives for companies with regard to sustainability?

Direct environmental impact Companies should start looking at their direct environmental impact. It is easy to do and reproduce as expertise is already widely available. It is a priority. What should it include?

There is enough expertise available at a reasonable cost for a company to look at its carbon footprint.

There are enough talks and awareness around the topic of carbon footprint. Managers can easily relate and support such an objective for their company and staff. Simple online carbon footprint calculators are available to motivate individual staff into looking into their personal contribution. With the support of management, a lot can be done to reduce the production of CO2. Eventually it can also be offset, although this is not a definite science.

When looking at the carbon footprint impact of their business, managers will be drawn into the next topic to consider: the better management of commodities use to produce, or to run, the company. I am 3

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Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant not talking here about buying green. I am talking about reducing waste and therefore purchase. Indeed, this is a cost saving exercise that managers should endorse easily. Paper, water, electricity, fuel or raw material - the better use of these commodities can have a real impact on the sustainability standards of a company, and its profit.

Recycling is a no-brainer when it comes to environmental impact. It is a logical continuation of the two above objectives. It should raise no eyebrows. Recycling is a well-accepted method to mitigate the environmental impact of households and managers should easily relate to that objective and implement it.

There are enough expertise and known methods for companies to also limit to a minimum other environmental pollutions outside of CO2. Rejecting all forms of environmental pollutants is equally important to the sustainability of our world. Companies have to look into if they want to implement a serious CSR and sustainability policy.

In conclusion, carbon footprint reduction, saving of resources, recycling and limiting environmental pollution are the four achievable goals that companies should have in looking at the direct impact of their activities on the environment within.

The supply chain Establishing a responsible supply chain is the second big strategic objective to deliver on CSR and sustainability. Here again we can be drawn into endless discussions about what it should include.

Essentially, a company that is trying to define a proper CSR policy should apply the same basic standards to its suppliers as it does to itself. There should be two key elements: The first is human resources, A company should make sure that its suppliers abide by the same standards as it does. We can hope that a business which is looking into defining a CSR policy will have reasonably good HR practices for its staff. It should not employ child labor for sure but it will in addition have competitive wages, a decent working environment and personal development schemes for employees, for example. I defend the idea that a robust CSR policy has to focus on best HR practices and standards anyway. This is the reason I put human resources as the first of two key elements of a responsible supply chain.

The second is direct environmental impact. Here again it’s all about having the same standards from clients to suppliers. The standards should be at minima the ones described above.

Preferably the supply should focus on renewable sources of course but often I think this is the next step in developing a responsible supply chain.

I am sure there is already enough room for pragmatic compromises with the two above proposals for a responsible supply chain.

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Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant This might read very simply to the CSR specialists.

We haven’t put enough efforts in proposing a bottom line for businesses. CSR and sustainability have been made such a complex and encompassing issue that most businesses have turned it around, back to charity and philanthropy. All the interesting stuff in CSR is gone.

This is why I feel that by defining two simple priorities when it comes to sustainability - the direct environmental impact and a responsible supply chain - is already a very good start.

Renewable sourcing Not every company is Google and can afford to put together a USD 4 trillion plan to save energy. Not every company has the capacity to look into it fossil fuel consumption or the CO2 emission level of the electricity it purchase. This series of posts is meant to help the vast majority of businesses rather than the big corporate companies. Some markets do not have the tools easily available to define a renewable sourcing policy for companies. Even if the owners or managers are concern about the impact of their business on sustainability, they might not be able to manage such a change.

In a previous post, I have voluntarily played down the importance of renewable resources in procurement to help frame a strategy that is accessible to most managers in most businesses. But how should most companies approach this crucial issue?

It is a complex subject to address in a CSR strategy although there are some obvious areas which have been already explored. The ethical management of forests and wood production is for example well documented and it is an industry that has reached its maturity. Energy production from renewable sources is also a fairly obvious area of investment for a CSR strategy. But once you dig into this topic of ethical renewable sourcing, things get complicated. It’s about renewable sources but it can also be about the overall impact on the biomass or geo-engineering.

Look at the initial enthusiasm that was deployed around the production of bio-fuels. Whether in Malaysia or Brazil, this potential of production of renewable energy raises more environmental questions than answers. A major issue is the impact on world food production and access to food for the poorest.

Sourcing from renewable, and ethical, production is not easy to do. It is still work in progress. Should companies want to go all-renewable, they might struggle to find the supply capacity at a price close enough to actual production methods. There is a whole paradigm shift to do here. It is normal that the biggest such as Google should set the pace. But smaller businesses can also make a difference.

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Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant The first step should be working to improve the end-of-life disposal of their own products. That is a very good start for a company that wants to make a difference.

In term of sourcing of renewable supplies, the bottom line is to set a year as a benchmark and try to improve on it year after year. The same principle can apply on carbon emission.

How much improvement should a company aim for? I don’t think there is an answer. Each company has to judge its own capacity to integrate such changes in their culture, supply chain and costs. The bottom line is the recognition that it will have to be done and the earlier a company tackles this issue of renewable sourcing, the more competitive advantages it will have in the long term.

Here are a few examples of target, based on CO2 reduction as it is where there are the most advanced debates: On the very low end of the spectrum, the International Civil Aviation Organization group tackling aviation’s greenhouse gas emission recommend a 2% annual improvement in fuel efficiency for planes.

The UK is on track to meet its Kyoto commitment to reduce emissions of six different greenhouse gases by an average of 12.5% compared with 1990 levels over the years 2008 to 2012. This however falls short of the claim of green activists that it should have fallen by 20% in 2010 to have a real impact on climate change. Germany is talking about a cut of 40% by 2020. Western economies want to reduce their carbon production of about 80% by 2050.

So much for targets. But it is a clear trend supported by the most powerful economies.

I guess if the management of a company has a target of around 10% improvement on renewable supplies from a certain year on a certain level of production or activity, it is a cost that they can probably absorb and a sourcing they can probably manage. This percentage should enable them to integrate any production or activity growth too as renewable sourcing becomes part of the company culture. Is this too ambitious? Or not enough?

This is a compilation of articles that can be found on my blog http://woodseer.wordpress.com/ It is an attempt to dialogue about the scope of CSR and Sustainability for companies that do not have the resources to invest large amounts of money to define their CSR policies but want to get real about CSR. It is an attempt to cut through the (over-) complexity of CSR for the busy but committed managers.

CSR can only truly come to life in a company if it is led by people who truly believe in it, not just for commercial reasons, but also because they care about these issues outside of work. It needs to be the responsibility of people who care about environmental and social issues due to their personal values 6

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Woodseer Management Consulting www.woodseer.com Jean-Michel Piedagnel - Principal consultant and interests. It needs leadership that delivers constant and consistent messaging within a company, but must also be set in a clear commercial context, as there will be so many others in companies who are not interested.

CSR professionals have a social responsibility to provide the environment and the tools for those managers to take leadership.

You are very welcome to contribute to the discussion on my blog. http://woodseer.wordpress.com/

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