Sustainability A Business Imperative By William R Blackburn
Sustainability --A Business Imperative By William R. Blackburn Advanced Topics in Corporate Environmental Management Bren School of Environmental Science & Mgmt University of California Santa Barbara, CA October 19, 2012 illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Our Discussion Today 1. Practical Meaning of Sustainability/ Social Responsibility (consensus from GRI, ISO, Conf Bd. Study) 2. Implementation; Integration of Sustainability into Business Operations (The Sustainability Handbook; ISO 26000 Std. ) 3. Sustainability/CSR Reporting (GRI G 4 Std. , ISO 26000 Std. ); Integrated Reporting illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
What is sustainability? (and how do you determine that? ) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Sustainability Obligations q. Going beyond Brundtland q. Implied expectations (GRI, CSR Reports) q. Express expectations of global stakeholders §Voluntary standards (ISO 26000, UNGC, Ethos Indicators, STARS, Star Community Index, industry standards, etc. ) § Mandatory integrated reporting standards (UK, S. Africa, France, Sweden, Denmark, et al. ) § 2008 Conference Board study illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Emerging Meaning of Sustainability from an Organizational View “The 2 Rs” Values-driven management based on--- R R q Respect: for people and other living things q Resources: the wise use of economic and natural resources —for the purpose of sustaining and promoting the long-term well-being of the organization and society (including the environment). illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Sustainable Products & Services q Improve the efficient use of natural and economic resources along the product life cycle q Provide greater respect and accommodation for the needs of people and other living things along the product life cycle illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Not Every “Green” Product is Successful… illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
What does it take to produce a successful sustainable product? Under what circumstances can you charge more? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
7 Lessons on Sustainable Products & Services 1. Customers will pay more for added safety of food and hygiene- and health-related products, and for a more natural living environment; some will pay more for lower life-cycle costs. 2. Products and services for the poor must break barriers on cost/pricing either through low volume per unit, use sharing, or low-cost operations. 3. Government mandate can create markets for green products and services. illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
7 Lessons on Sustainable Products & Services 4. A small percentage of customers will pay more for a green product or service than a comparable nongreen product purely for ethical reasons. 5. Some customers will avoid products with a highly publicized social or environmental stigma as well as products from companies with such a stigma. illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
7 Lessons on Sustainable Products & Services 6. Some commercial customers will pay more for green products if they can gain a clear reputational advantage with their own customers or other important stakeholders. 7. With those exceptions, a product’s social and environmental advantages and cause-based marketing are differentiating factors, not primary factors, to most consumers. illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
One Key To Success: Knowing Market Segments q. Dedicated Greens/ “Lifestyles of Health & Sustainability” (LOHAS) -- 8 -20% q. Sympathetic, Pragmatic, Health & Wellness Greens – 25 -35% q. Overwhelmed/ Procrastinators – 15 -25% q. Unconcerned/ Other Priorities – 15 -35% Survey Sources: -Roper -National Marketing Institute -Hartman Group -Landor Associates illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
What topics, obligations does Sustainability entail? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Growing Global Multi-stakeholder Consensus on SR/Sustainability Scope ISO 26000 SR Core Subjects GRI Sustainability Indicator Categories/Aspects Organizational Governance Human Rights Labour Practices Labor Practices & Decent Work The Environment Society: Corruption, Public Policy, Anticompetitive Behavior, etc. Product Responsibility Society: Community Economic: Indirect Economic Impacts Economic: Economic Performance, Market Performance, etc. Fair Operating Practices Consumer Issues Community Involvement & Development *Based on the GRI reporting guidelines and ISO 26000 SR standard illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Conference Board Study Participants illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
A Corporate Commitment to Sustainability (A Sample Sustainability Policy) It is within the best interests of our company and society as a whole that our company move along the path to sustainability. To that end, we will strive to achieve the following vision of performance: 1. Economic success: the wise use of financial resources a. Company Economic Prosperity Our business is positioned to survive and prosper economically. b. Community Economic Prosperity We are helping our community survive and prosper economically.
2. Social responsibility: respect for people a. Respect for Employees We treat our employees in a respectful, fair, non-exploitative way, especially with regard to compensation and benefits; promotion; training; open, constructive dialogue with management; involvement in decision-making; working conditions that are safe, healthy and non-coercive; rights of association, collective bargaining and privacy; employment-termination practices; and work-life balance. b. Diversity, Fair Hiring Practices We promote diversity and use employment practices that are fair, responsible, non -discriminatory, and non-exploitative for our employees, board members, and suppliers. c. Responsible Governance We manage our risks properly, use our economic power responsibly and operate our business in a way that is ethical and legal. d. Respect for Stakeholders We are transparent, respectful and fair to local populations, investors, suppliers and other stakeholders outside our organization who may be affected by our operations. We work collaboratively with our communities, governments and supply chain to enhance the well-being of others. e. Fair Dealing With Customers We are honest and fair with our customers, competing fairly for their business, anticipating their needs, respecting their privacy, and providing them safe and effective products and services under the conditions we promise.
3. Environmental responsibility: respect for life; the wise management and use of natural resources a. Resource Conservation We conserve our use of natural resources to the extent practicable. b. Waste Prevention and Management We reduce to the extent practicable the volume and degree of hazard of the wastes we generate from our operations, and handle them in a safe, legal and responsible way to minimize their environmental effects. c. Environmental Risk Control and Restoration We minimize the risk of spills and other potentially harmful environmental incidents, restore the environment where damaged by us, and enhance it to better support biodiversity. d. Supply Chain Impacts We work with others in our supply chain to help ensure environmental impacts and risks associated with our products and services are reduced and properly controlled. e. Collaboration With Communities We collaborate with our communities to protect and improve the environment.
Examples of Economic Topics Brand strength Liabilities Community donations Capital expenditures Market share Local purchasing Cash flow Sales Taxes Credit rating Profits Tax subsidies Dividends Retained earnings Debt and interest R&D investment Income Return on investment
Examples of Social Topics Access to healthcare by the poor Anti-sexual harassment policies Antitrust practices Bioterrorism Board diversity Bribery and corruption Charitable donations Child labor Community outreach Consumer privacy Corporate governance Consumer privacy Disciplinary practices Emergency preparedness Employee assistance programs Employee diversity Employee layoff policies Employee privacy Employee relations Employee shared values Employee training & development Employee turnover Employee wellness programs Employee work-life balance Employment Ethics Fair advertising and labeling Flexible work options Food product nutrition Forced labor Helping the disadvantaged Human rights (security policies, etc. ) Impacts on local culture Indigenous rights Indoor air pollution Industrial hygiene Legal compliance on social topics Non-discrimination policies Occupational health Political contributions Producer responsibility Product labeling Product quality Product safety Product usefulness Securities regulation Supplier diversity Support for community services Transparent public reporting Union relations Worker violence Workplace safety
Examples of Environmental Topics Air pollution Animal rights Biodiversity Chemical spills Compliance with environmental laws & permits Customer disposal of products Endangered species Energy conservation Environmentally sensitive design Greenhouse gases Natural habitat restoration Natural resource usage Ozone-depleting substances Packaging reduction Pollution prevention Precautionary Principle Product energy use Product take-back Recycling Renewable energy & materials Soil contamination Soil erosion/depletion Spill prevention Waste disposal Water conservation Water pollution Wetlands protection Wildlife conservation
Some Observations About Sustainability § Sustainability is not about one thing. § The business case for sustainability is really the business case for a process that looks at sustainability trends and issues and prioritizes among the opportunities and threats to an organization to select those for action that contribute the most value. illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Common Organizational Threats and Opportunities? Threats Opportunities
Common Organizational Threats and Opportunities Threats Opportunities -Legal -Financial -Reputational -Competitive -Operational -Productivity, cost -Employee relations -Reputation, brand -License to operate, community appeal -Sales, new markets, customer appeal -Innovation, new products and services
Sample SWOT Analysis for Sustainability Issue: Water Issue Depletion of Fresh Water Resources Threat 1. Water shortage could jeopardize operations 2. Some competitors have long-term water rights Opportunity 1. Water conservation projects can save money, help secure supply 2. More on-site water treatment and reuse are possible 3. May be able to secure longterm water rights in some locations Strength Weakness Possible Objectives 1. Some water conservation projects underway 1. No long-term water rights secured in some growth regions 2. Internal engineering expertise 2. Some communities serving our factories have poor water supply infrastructure 1. Investigate water risks on site-by-site basis and develop actions to address them 2. Consider more aggressive water treatment, reuse and conservation programs using internal engineers 3. Explore securing longterm water supplies in high risk areas while respecting community needs
Sustainability Trends Conditions § Growth in Global Business Competition § Speed of Communications/ Digital Divide § Widening Prosperity Gap (Health, Income, Services) § Population Growth § Serious Disease § Mental Health Problems § Increased Immigration; Lower Fertility in Industrialized Nations § Hunger and Malnutrition § Child and Forced Labor § Education Needs for the Disenfranchised § Urbanization Responses § Over-consumption of Resources § Obesity; Poor Food Nutrition § Fossil Fuel Depletion § Climate Change § Deforestation § Threats to Biodiversity § Fresh Water Depletion/ Water Contamination § Wetlands Destruction § Fish Depletion § Coral Reef Destruction § Spread of Hazardous Pollutants § Declining Soil Quality § Ozone Depletion § Declining Corporate Credibility § Opposition to Globalization § Extended Producer Responsibility § Green Products § Green Marketing/Labeling § Green Product Certification § Rise in Socially Responsible Investing § Investor Concerns about Corporate Governance § Increased Demands for Transparency/ Public Reporting § Growing Power of NGOs/CSOs § Increasing Global Terrorism
How Fast Does The World Add Enough Additional People to Populate Another U. S. ? Years: illiam lackburn onsulting, Ltd. a. 1 b. 5 c. 10 d. 25 e. 110 © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
How Fast Does The World Add Enough Additional People to Populate Another U. S. ? Years: illiam lackburn onsulting, Ltd. a. 1 b. 5 c. 10 d. 25 e. 110 © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
US Consumption and Waste!! q 5% of the population q ? % of the resources and wastes illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
US Consumption and Waste!! q 5% of the population q 25 -30% of the resources and wastes q. Need 5 -6 worlds at current production if everyone consumed at US rates! Source: Worldwatch Institute, 2003, 2004; US Geological Survey, 1998 illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Decreasing Natural Resources Consequence ? Increasing Population and Consumption 1900 2050 2100
Decreasing Natural Resources Resource Shortages Social Unrest Increasing Population and Consumption 1900 2050 2100
What can we do to prevent the Big Squeeze? illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Factors Contributing to the Big Squeeze Use: 1. Resource consumption person 2. Number of consumers Destruction: 3. Rate of waste of resources (inefficiency) 4. Rate of destruction of resources 5. Rate of contamination of resources Supply: 6. Rate of production/replenishment of resources 7. Rate of reuse/recycling of resources 8. Rate of introducing resource substitutes illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
What are the big global social issues? illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Issues Addressed by the 2015 UN Millennium Development Goals 1. Extreme poverty and hunger 2. Universal primary education 3. Gender equality 4. Child mortality 5. Maternal mortality and health 6. HIV/AIDS, malaria and other diseases 7. Environmental progress 8. Global partnerships to help developing nations illiam lackburn onsulting, Ltd. © 2010 William. Blackburn. Consulting, Ltd. © 2012 WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
BREAK! Next up: Implementation illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Implementation/ Integration How do you implement a sustainability program in an organization? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Sustainability Handbook— The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility (See www. wblackburnconsulting. com ) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Drivers? The Efficient Enablers The Pathway The Evaluators
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers? The Pathway The Evaluators
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers §Organizational structure §Deployment and integration The Pathway The Evaluators
Deployment, Integration, Alignment & Accountability q Deployment = Roll-out What does this entail? illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Deployment, Integration, Alignment & Accountability q Deployment • Developing and testing rollout tools (including trainers) • Field implementation q Integration — building the new into the familiar illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
How do you integrate Sustainability into operations? What tools? illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Why the increased focus on sustainability in supply chains? q Public perception of big company responsibility for supply chain q NGO focus and reach, global e-communications WH Y? q Consumer sensitivity to ethical behavior of producers q Extent of financial, environmental and social impact (risk) q Product labeling on environmental/social impacts q Legal compliance (e. g. , EU Ro. HS, WEEE, Packaging Directive, REACH; MSDS, CFC rules) q Supply chain efficiency ($); lean and green q Sustainability as a company strategy; search for sustainable products illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
What sustainability topics should you address with your suppliers? illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Sustainability Obligations and Issues for Action—Common Topics* q Governance (oversight structures and systems for legal and ethical compliance and risk control on below topics for organization and its supply chain) q Human Rights (civil rights, nondiscrimination, etc. ) q Labor Practices (wages, working conditions, etc. ) q Environmental Issues (pollution, energy and resource conservation, biodiversity, etc. ) q Fair Operating Practices (anti-corruption, fair competition, etc. ) q Consumer/customer Issues (fair marketing, consumer safety, product compliance, etc. ) q Community Involvement & Development q Economic Viability of the Organization *Based on the GRI reporting guidelines and ISO 26000 SR standard illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Tyco Supplier Social Responsibility Principles q Environment, health & safety q Diversity q Human rights, labor practices q Ethics, conflicts of interest, noncorruption q Financial responsibility, recordkeeping q Legal compliance illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Home Depot Supplier Social & Environmental Responsibility Program q Access to audit q Age requirements q Forced labor q Wages and working conditions q Discrimination q Emergency planning q Environment, health and safety q Freedom of expression and association q Fraud prevention illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Duke Supplier Code of Conduct q Environment, health & safety stewardship q Ethics q Diversity q Transparency; involvement of, respect for individual q High performance q Win-win relationships q Initiative, leadership q Legal compliance illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Wal-Mart Supplier Sustainability Assessment Questionnaire q Energy & climate q Waste & water q Safety, labor and human rights compliance q Community development investment in source locations q Sub-supplier oversight: § Locations, traceability § Guidelines on environmental compliance, labor practices, product safety § Pre-evaluation of production quality & capacity illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
How do you address these topics with your suppliers? illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Sustainability Supply Chain Program --Basic Elements 1. Oversight structure 2. Expectations of suppliers (requirements, code, guidelines) (TCB: 8 of 11) 3. Evaluation process a. Questionnaire (Baxter, Bristol Myers, HP) b. Self assessment (Dow Corning, Penney’s, Wal-Mart) c. Third party audit/certification (vs standards) (Many) 4. Tracking and reporting (internal, external) a. b. c. d. illiam lackburn onsulting, Ltd. Traceability (Wal-Mart) Metrics and goals (Wal-Mart, Marks & Spencer) Supplier audit/survey items and close-out (HP) Supplier index (Nike) © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Sustainability Supply Chain Program --Basic Elements 5. Training and engagement (internal staff and suppliers) a. Website, guidance book b. Online, on-site training c. Conference (Baxter, Penney’s) d. Newsletter (Marks & Spencer) e. Networks (Wal-Mart) f. Model supplier facilities (Marks & Spencer) 6. Management system for suppliers (Adidas, HP, IBM) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Sustainability Supply Chain Program Elements 5. Awards, motivators (Penney’s) 6. Collaboration programs a. Customer-supplier (Coke, Aveda) b. Government (EPA Green Supplier Network) c. Peer companies illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Supplier Program Collaboration q Ethical Trading Initiative (companies, unions, NGOs) q AIM Progress (consumer goods sector, esp. N. Am, EU) q Apparel, Mills & Sundries Working Group q Beyond Monitoring Working Group (misc. industries) q Business Social Compliance Initiative (retail, brand, importing, trading sectors) q Electronic Industry Citizenship Coalition q Global e-Sustainability Initiative (IT and communications sectors) q Global Social Compliance Programme (esp. , retail, clothing, food sectors) q The Sustainability Consortium: Measuring and communicating sustainability impacts of consumer goods (Wal-Mart, HP, J&J, P&G, Dell, General Mills, NGOs, academics, et al. ) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Deployment, Integration, Alignment & Accountability q Deployment • Developing and testing rollout tools • Field implementation q Integration — building the new into the familiar q Alignment? ? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Deployment, Integration, Alignment & Accountability q Deployment • Developing and testing rollout tools • Field implementation q Integration — building the new into the familiar q Alignment —balancing organization-wide consistency with cultural accommodation illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Deployment, Integration, Alignment & Accountability q Deployment • Developing and testing rollout tools • Field implementation q Integration — building the new into the familiar q Alignment —balancing organization-wide consistency with cultural accommodation q Accountability? ? illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Deployment, Integration, Alignment & Accountability q Deployment • Developing and testing rollout tools • Field implementation q Integration — building the new into the familiar q Alignment —balancing organization-wide consistency with cultural accommodation q Accountability —connecting execution with personal objectives (with consequences) illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability illiam §Accountability/reward lackburn mechanisms onsulting, Ltd. The Efficient Enablers The Pathway? The Evaluators §Organizational structure §Deployment and integration © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers §Organizational structure §Deployment and integration The Pathway §Vision and policy §Operating (mgmt) system standards §Strategic planning for aligned priorities The Evaluators
Continual Improvement Cycle (Operating or Management System) (For sustainable quantum leap in performance) Collect Data to Measure Performance Implement Plan Identify Strengths and Gaps Plan Priorities for Addressing Gaps Report Data Solicit Stakeholder Feedback
Combined Management Systems (from Conf. Bd. Study) q EHS: ISO 14001 (Ab, H, FP) + OHSAS 18001 • Mandatory certifications by Al, Bx q EHS and quality (P, CC) q EHS and security (DC) q EHS and product responsibility (BMS) illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers §Organizational structure §Deployment and integration The Pathway §Vision and policy §Operating (mgmt) system standards §Strategic planning for aligned priorities The Evaluators
Companywide Balanced Scorecard Employee Objectives Build the best global team in our industry Financial (Investor/Lender) Objectives Deliver significant shareholder return Share talent and learning across the company to improve business results Achieve profitable, sustainable, and capital-efficient growth targets in sales, earnings per share, cash flow and margins Consistently evaluate and meet agreed customer and productquality requirements Establish the company as a community leader Ensure frequent, open two-way feedback and communication Invest targeted funds in R& D and capital projects to drive long-term sustainable growth while balancing short-term commitments Continually identify unmet needs of current and future customers Facilitate the participation of employees in their communities Attract, develop and retain the best talent to achieve current and future results Deliver superior shareholder returns that exceed the average for our industry Develop and launch innovative products and services to meet customer, product-quality and financial needs Reduce waste and achieve targeted improved efficiencies in energy, packaging and water use Create an environment that motivates, develops and rewards individuals for living the company’s shared values and achieving results Improve cost efficiency by achieving targets for days sales outstanding, inventory turns, and costs of supplies and travel Ensure safety in the workplace Supply Chain (Customer/Supplier) Objectives Create sustainable win-win customer relationships Citizenship (Community/ Government) Objectives Improve lives in local global communities Increase global access to our products so as to improve the quality of lives Increase the number of foundation grants to new organizations, especially those in new locations © 2012 William Blackburn Consulting, Ltd.
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers §Organizational structure §Deployment and integration The Pathway §Vision and policy §Operating (mgmt) system standards §Strategic planning for aligned priorities The Evaluators?
The Drivers §A champion/leader; visible top management support §Approach for selling the organization on sustainability §Accountability/reward mechanisms The Efficient Enablers §Organizational structure §Deployment and integration The Pathway §Vision and policy §Operating system standards The Evaluators §Indicators and goals §Measuring and reporting progress §Stakeholder §Strategic planning engagement and for aligned priorities feedback
No. of Companies with Goals on Subject Per Conf Bd. Study (total=11) Source: W. Blackburn, Frameworks for Integrating Citizenship and Sustainability…, Report 1446, (2009), available at www. conference-board. org
ISO 26000 Scope q What it was supposed to be § International “guidance standard” providing practical guidance-1. explaining and operationalizing social responsibility 2. engaging stakeholders 3. enhancing the credibility of SR reports and claims § Applicable to all types and sizes of organizations (? ? ) § Guidance emphasizing results and performance improvement q What it was NOT to be § A management systems (PDCA) standard (? ? ) § A specification standard for certification illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
ISO 26000 Content q Definitions q SR principles § Accountability § Transparency § Ethical Behavior § Respect for Stakeholder Interests § Respect for Rule of Law § Respect for International Norms of Behavior § Respect for Human Rights q Stakeholder Identification & Engagement illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Growing Global Multi-stakeholder Consensus on SR/Sustainability Scope ISO 26000 SR Core Subjects GRI Sustainability Indicator Categories/Aspects Organizational Governance Human Rights Labour Practices Labor Practices & Decent Work The Environment Society: Corruption, Public Policy, Anticompetitive Behavior, etc. Product Responsibility Society: Community Economic: Indirect Economic Impacts Economic: Economic Performance, Market Performance, etc. Fair Operating Practices Consumer Issues Community Involvement & Development *Based on the GRI reporting guidelines and ISO 26000 SR standard illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
ISO 26000 Content 1. Prioritization of subjects/issues for action, based on relevance and significance of impact to stakeholders and sustainable development 2. Responsibility extends across an organization’s “sphere of influence” illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
ISO 26000 Content: Implementing SR 3. General guidance for organizations in implementing SR (not a management system? ? ) § Vision, strategy development, objectives § Stakeholder identification and engagement § Monitoring and measurement § Integration into governance, systems, procedures § Reporting and communication 4. References, existing tools illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
BREAK! Next up: Public Sustainability Reporting illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Why report Sustainability plans and performance to the public? Why is it important to strengthen the credibility of such reports? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Top Strategies for Strengthening the Credibility of Reports 1. External verification 2. Being honest about mistakes and bad practices 3. External reporting standard (GRI) Source: Pleon Kohtes Klewes Global Stakeholder Survey--2005 illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Majority Use Global Reporting Initiative Sustainability Reporting Guidelines q Founded 1997 by CERES & UNEP q Global multi-stakeholder consensus q Model indicators/ metrics q Reporting process illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
GRI Background q Global Reporting Initiative Sustainability Reporting Guidelines = the international gold standard for public sustainability/CSR reporting— env. , social, econ. q ~2, 500 GRI reports (2011) ; ~2000 (2010) q 95% of top 250 global companies report on sustainability/CSR; 80% use GRI q Currently 3 rd edition (G 3 & G 3. 1); 4 th edition (G 4), May 2013 illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
GRI Reporting Framework Principles (content & qualit y) q Standard Disclosures (w/ protocols) + Sector Supplements National Annexes illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
GRI- ISO 26000 Linkage* (Content and Quality) ISO 26000 SR Information Characteristics Complete Accurate Balanced Timely Understandable Responsiveness Accessible GRI Reporting Principles (with Tests) Completeness, Materiality Accuracy, Reliability Balance Timeliness Clarity Stakeholder Inclusiveness Comparability Sustainability Context *Based on the GRI reporting guidelines and ISO 26000 SR standard illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Growing Global Multi-stakeholder Consensus on SR/Sustainability Scope ISO 26000 SR Core Subjects GRI Sustainability Indicator Categories/Aspects Organizational Governance Human Rights Labour Practices Labor Practices & Decent Work The Environment Society: Corruption, Public Policy, Anticompetitive Behavior, etc. Product Responsibility Society: Community Economic: Indirect Economic Impacts Economic: Economic Performance, Market Performance, etc. Fair Operating Practices Consumer Issues Community Involvement & Development *Based on the GRI reporting guidelines and ISO 26000 SR standard illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Examples of the 3 Classification Levels of Indicators (GRI Draft G 4) Example 1 Category (6) -Economic -Environment -Social (4) Environment Aspect (44) Water Indicator (95) -66 core -29 additional Example 2 Social: Labor Practices & Decent Work Occupational Health & Safety Injury, occ. disease, lost-day, and absenteeism rates, and no. Total water withdrawal by of fatalities, broken down by source total workforce, gender, region & contractors
Developments Influencing G 4 q GRI 2015 Goal: “Report or Explain”: All large and medium companies from OECD (developed) and large emerging countries (BRICS, etc. ) should publicly report their sustainability (soc. , env. , econ. ) performance or explain why not q Mandatory integrated (financial + sustainability/ESG) reporting (S. Africa, UK, France, Denmark, Sweden, et al. ) q Voluntary integrated reporting § Voluntary reporters (AEP, United Technologies, Southwest Air, et al. ); Over ¼ of top 250 global companies include sustainability/ESG info in financial report § International Integrated Reporting Comm. (IIRC) q “Carpet bombing” reporting (data overload) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
GRI Report Content q CEO statement (addresses GRI conformance plus “report or explain”) q Strategy & analysis q Organizational profile (including supply chain) q Governance, commitments, & stakeholder engagement q Disclosure on Management Approach (DMA) q Performance/impact indicators § Material core and additional indicators § Sector supplements (certain sectors) § National annexes (TBD) q GRI Index illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Report Content and Boundaries Step 1. Map Value Chain (entities and relationships where there may be significant sustainability impacts). E. g. , : Upstream Elements Downstream Elements Local Communities Suppliers Transportation Customers Company Recycling Facilities Transportation Et al. illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Report Content and Boundaries Step 2. Identify Relevant Topics and Their Boundaries § Identify value chain elements with sustainability issues that may (a) have important impacts or (b) influence the decisions of the organization’s stakeholders § At a minimum, consider all GRI Aspects in G 4 and applicable Sector Supplement illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Report Content and Boundaries Step 3. Prioritize Aspects (for “Materiality” and depth of disclosure) § “Material” issues= • Significant economic, social and environmental impacts, or • Substantively influence the assessments and decisions of stakeholders § More in-depth disclosure for Aspects with greatest impacts on organization or stakeholders § Need consistent, systematic, documented process illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Defining Report Content and Boundaries Step 4. “Validation” …to check the completeness of the Material Aspects to assure the report will provide a reasonable and balanced picture of the organization’s positive and negative performance illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Disclosures on Management Approach (DMAs) q Generic DMA and some category- and indicatorspecific DMAs q Generic DMA content for Material topics 1. “Topic” (aspect, multiple aspects or category) and why it’s Material 2. How impacts are managed § Policies, commitments, goals § Responsibilities, resources § Specific actions § Challenges and Dilemmas 3. Results from approach and related adjustments to it; How effectiveness of approach is monitored and evaluated illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
DMAs q Historically poor DMA reporting q Connection with Management Discussion & Analysis (MDA) for financial reports? ? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Why switch to integrated reporting? Challenges in doing so? illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Integrated Reporting q Sustainability/CSR + financial reporting helps integrate sustainability q International Integrated Reporting Committee (2010) § Founders: GRI + Prince of Wales Accounting for Sustainability Project § Global accounting organizations § Investor Network (25 institutional investors) § NGOs § 75 reporters (pilot reports Oct 2011 -Oct 2013) illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Integrated Reporting—IIRC q Framework and guidance on sustainability/CSR + financial reporting, but not “cut-and-paste” combined reporting (2012 Draft; Dec. 2013 Final) q Shows the organization’s stewardship and how it creates and sustains value (“ 5 Capitals”: financial, manufactured, human, intellectual, natural, and social) q Build on GRI, and on U. S. and international financial reporting standards [IFRS (IASB), GAAP (U. S. FASB), etc. ] illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
Segregated vs. Integrated Reporting under IIRC Segregated Integrated Thinking Segregated, isolated Integrated Stewardship Financial capital All forms of capital Focus Past, financial Past & future, connected, strategic Timeframe Short term Short, medium & long term Trust Narrow disclosure Greater transparency Adaptive Rule bound Responsive to individual circumstances Concise Long & complex Concise & material Technology -enabled Paper issued Technology enabled illiam lackburn onsulting, Ltd. © 2010 William Blackburn Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
The Sustainability Handbook— The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility (See www. wblackburnconsulting. com ) illiam lackburn onsulting, Ltd. © 2012 © 2010 William. Blackburn. Consulting, Ltd. WRB@WBlackburn. Consulting. com www. WBlackburn. Consulting. com
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