The state of Corporate Responsibility in Europe: 10 trends from the 2011 Responsible Business Summit
May 5, 2011 Leave a comment
Corporate Social Responsibility & Sustainability
Alberto Andreu, Chief Reputation Officer & Sustainability Manager with Telefonica, a global Telco MNC, expressed his views about the current Sustainability vs CSR debate in an article for VaultCSR. I know that many people believe that arguing over words is unnecessary and a waste of time, which I can agree with to a certain extent. But, still, using the right terminology is important as we are facing a problem of public perception. I believe that most of the CSR/sustainability leaders and practitioners actually share common values and the issue is not really to agree or disagree on values, strategy or practices but to make sure that a larger audience get the right message about the role that businesses play in building a sustainable future, for themselves, their employees and owners, and for society in general.
Even if it’s mainly a problem of perception, I agree with Alberto Andreu the concept of sustainability describes better the strategy of a company, and its initiatives, that support sustainable development (defined as development that meets the needs of present generations without compromising the ability of future generations to meet their own needs).
In most companies “CSR initiatives” do include actions that cover the 3 dimensions of sustainable development: economic, environmental and social, but the general public tends to see the third aspect only.
As I said, it’s probably a problem of perception, but for many stakeholders:
Sustainability = future/ CSR = present (or even past) actions.
Sustainability = strategy/ CSR = policy
Sustainability = risk & opportunity management / CSR = compliance
As said in a previous comment, some could argue that sustainability = green but, in my opinion, this perception is less problematic than the other (the one that relates CSR to charity) as companies have demonstrated that there’s a clear business case for sustainability initiatives related to the environment (energy consumption reduction, carbon footprint, water…).
Words matter because they can be an excuse for some companies to do nothing when we all know that they should act now.
The Commission on Road Safety, a Non-Standing Committee of the Spanish Congress of Deputies, has approved unanimously a motion urging the Government to include road safety as part of Corporate Social Responsibility, in an effort to involve companies in the prevention of work-related traffic accidents. The initiative calls for the Executive to make appropriate amendments in the Law on Prevention of Occupational Risks to include the assessment and the prevention of traffic accidents that occur as a result of work activity or commuting. According to the Committee’s recommendations, companies would have to report on their progresses on the prevention of work-related accidents and carry out studies and evaluations to identify – and fight – their causes. The Committee also calls for the registration of work-related traffic accidents, a better coordination between the private and public entities involved, and security improvements in work-related travel. Finally, it asks for the creation of a “quality label”, awarded by the competent institutions and agencies, which would support the company’s commitment in preventing accidents among their employees. As an incentive for the employer, the Committee recommends the creation of an annual prize that would reward best practices in the field of occupational health and the quality of the inclusion of road safety plans in the Corporate Social Responsibility strategy of the companies.
This news has been received with mixed feelings in Spain, both by companies and the CSR community alike. One of the reasons, as stated by Professor Antonio Argandoña in his blog , is that this type of initiatives is a distraction from the “really important” CSR topics and that an “award” won’t change anything. According to other comments, it is the role of the Government to deal with road safety. I don’t agree at all with those points of view. I do believe that road safety is a valid material issue for businesses, a clear area of concern for their internal and external stakeholders and has potentially a huge impact, economic, social and environmental on the companies themselves and the society in general. In Spain, businesses lose thousands of working hours each year due to medical leaves of absence related to road accidents, that also cost thousands of lives. Industry research shows that typically workplace injury costs are met 40% by the employee, 30% by the employer and 30% by the community as a whole. The human cost is high, the financial cost as well. Corporate reputation is also affected by employees driving behaviour. Did it ever happen to you to observe a dangerous driver in a company car, or truck, bearing the logo of their employer? What was your reaction? The impact on environment is high too, not only due to bad driving behaviours, generating huge amounts of CO2, but also because of accidents involving dangerous goods or substances.
In a recent post, CSR expert and author Elaine Cohen, writes that she believes that, in the next generation of GRI indicators, “G4″, “other issues that are not specifically covered in G3, should be considered, such as the issue of road safety and how companies manage employees who spend a lot of time on the road for work purposes, a significant source of fatalities and other accidents which endanger not only employees but the general public“. I couldn’t agree more. Many companies already include road safety in their CSR plans and strategy. Some of them because they are directly or indirectly, related to the transportation industry, or vehicle manufacturers such as Ashok Leyland. Others, because they realize that there’s an opportunity for them to improve their workers well-being while impacting positively other areas such as the environment and public safety. It is much better for an organisation to be promoting a good news safety story such as winning an award, than it is to have to react to and suppress the outcomes of a major incident. Those companies also realize that their initiatives directly impact their bottom line and that they can gain a competitive advantage by being ahead of more reactive organisations.
World Health Organisation data suggests that approximately 1.2 of the 5 million global injury deaths each year are road crashes. It’s clear that road safety is a major social issue. I believe that it is also a business issue. What do you think?
On my quest to the definition of Corporate Social Responsibility and Sustainability, I had lunch yesterday in Barcelona with Guy Bigwood, a Global CSR Professional dedicated to increasing the sustainability of the Meetings and Events Industry, Corporate Sustainability Director with MCI and current President of GMIC, the Green Meeting Industry Council. Guy was busy writing MCI’s 2010 CSR report and preparing GMIC next week conference where he will deliver a series of keynotes, so I really appreciate the time he spent with me discussing their 2009 Corporate Social Responsibility report, sustainability in the meeting industry and CSR in general.
MCI’s journey to sustainability started few years ago, with the company becoming in 2007 the first in its industry to join the United Nations Global Compact. MCI is a globally integrated association, communication and events management company with offices in 20 countries and about 900 employees worldwide. Its 2009 Corporate Social Report describe the initiatives led by Guy Bigwood and his team through 5 majors area: leadership in the industry, employee development and well-being, environmental impact reduction, customer focused initiatives and impact on local communities. What is clear in the report is the involvement of the company’s leadership in the sustainability strategy, something particularly interesting as this topic was quite new to the top management team, but also the leading position of MCI in its industry.Finally, the initiatives related to the environment are definitely a major aspect of MCI sustainability strategy. Something I found really great in the report was that it also mentions the key learning points and improvement areas. Guy confirmed for example that there’s a need for key metrics in future reports. Although the 2010 report, due to be released in April, will still be published as a separate report, integrated reporting remaining the ultimate goal, it will contain more KPIs and measurements of the impact of the company’s sustainability initiatives. The specific GRI guidelines for the event industry, which draft was published yesterday, will help. HR is also an area where specific indicators, such as employee satisfaction, talent retention, or employee turnover, could be useful too. Guy confirmed that the HR department is definitely supporting the group’s CSR initiatives, something essential as discussed in a previous blog post, with proven results in many of their regions. The MCI Dublin Office, for example, won in 2009 the Irish Independent Great Places to work award. My guess is that the great job done there has something to do with the local employees perception of their work environment. Measuring this through specific indicators, as well as sharing best practices, could help working on employee engagement in the other regions. Guy and I also share the idea that middle-management is a key element of a successful sustainability strategy as discussed in a previous post.
MCI defines CSR as “a business strategy which strives for financial viability, in harmony with the planet and its people“.
Guy and I discussed the current debate around the terminology and the efforts that CSR practitioners are undertaking to come up with a more consistent definition of those concepts. Regarding the debate, I share Alberto Andreu’s idea that the concept of CSR “is broken and that it’s urgent to fix it“. Alberto Andreu, who is Managing Director of Corporate Reputation and CSR at Telefónica and Professor of Organizational Behaviour at IE Business School, also considers that there’s a cultural bias that makes it difficult to get to a consistent definition of CSR on both sides of the Atlantic. I couldn’t agree more. In the US the legal perspective prevails and CSR initiatives are often reduced to the minimum compliance requirements, anything beyond that being “illegal or insincere”, or are only acceptable when they are synonym for philanthropy or charity, while Europe, which seems to be moving towards mandatory CSR reporting, has a broader perspective that involves the development of responsible business practices and a strong focus on the companies impact on their “ecosystem”.
Alberto Andreu writes that “the line of progress, is in the definition made by the Dow Jones Sustainability Index (DJSI): “Corporate Sustainability – it states – is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments”.
This definition is close to another one that I mentioned in a previous post: SAP’s definition for sustainability: “holistically manage economic, environmental and social risks and opportunities“. As you can see, it seems quite complicated to avoid “buzzwords” and this is exactly what anti-CSR advocates argue: CSR and sustainability are nothing but buzzwords. Note that their speech is usually not exempt of jargon.
Buzzword or not, what matters is execution. There’s a business case for sustainability, an urgent need for sustainable development, in a world with limited resources, and that requires more than words: strategic, powerful, comprehensive and measurable CSR initiatives.
This weekend, as reported by JustMeans, US President Obama’s sent a clear message to the Private Sector: CSR Is Your Obligation (and It’s Good for the Economy, Too), prompting Stephen M. Bainbridge, a Law professor at UCLA, to produce yet another “piece of evidence” in the case against CSR. According to the Author, President Obama, who preaches the “false religion of Corporate Social Responsibility“, is “wrong” because the “obligation of business is to sustainably maximize long-term profits for shareholder”. Like many CSR opponents his claim is that a company engaging in CSR actions can only have two motives: being illegal or being insincere.
Interestingly, on the other side of the bench, I came across the results of a study led by Alan Fustec, professor at the School of Economic and Social Development (ESDES) in Lyon, France, measuring the financial impact of the French Railways Company SNCF’s CSR social commitments and initiatives, more specifically the initiatives targeting the local community and the general public in the community.
“While these programs are often considered as a cost only, the study shows a net gain for the company and the community,” says Professor Fustec. “5 million euro for the company, and 6.4 million for the community,” adds Vincent Bouznad, from the Department for Sustainable Development at SNCF.
Five major initiatives, conducted in the past two years, have been studied: the use of social enterprises for maintenance works and services, the presence of social mediators in trains, school presentations to teach young people the consequences of their acts (pull the alarm unnecessarily, vandalism …), the fight against exclusion of homeless people and the responsible purchasing of goods and services.
“For each action, we measured the cost (grants to associations, wages, working hours that are spent by employees of the company …), the gain for SNCF (cost-benefit analysis, reduced vandalism, impact on train delays …) and the gain for the community (lower unemployment or subsidies, impact of train delays on passengers, savings in terms of days in prison, greater security. ..), “said Alan Fustec.
A big surprise came from those results: they clearly demonstrated that the initiatives had a positive financial impact both on the company and the society. Besides strengthening SNCF’s public service mission and role in promoting social cohesion, the study, according to Vincent Bouznad also had a positive impact on the operations of the company itself: it contributed to raise managers’ awareness and encouraged them to identify new ways of doing business, therefore creating a “virtuous circle”.
Professor Bainbridge, just like many anti-CSR advocates, tend to forget that there are companies out there that are being sincere in their commitments towards the local communities in which they operate. If a company like SNCF, independently of its legal status and country can achieve positive financial outcomes through its social initiatives why wouldn’t it be the case for US companies? And who says that those actions don’t contribute to “sustainably maximize long-term profits for shareholders” as well?
In a recent post on her blog, Alice Korngold, President & CEO at Korngold Consulting, wrote that “in 2010, CSR shot right up the corporate ladder and landed directly in the board room, with leadership and accountability at the top.” [ 1]
This trend was also spotted, earlier this year, by the authors of the UN Global Compact-Accenture CEO Study: “A New Era of Sustainability” . According to the study, the global economic downturn in 2010 did little to diminish corporate commitment to sustainability with 80 percent of the CEOs saying it had actually raised the importance of sustainability.
Prior to 2010, the role of employees, individually and organized in “green teams”, at eBay for example , was at the forefront of the sustainability scene.
This year, the focus has shift from employee’s engagement – still recognized as a key contributor though  – to the role and impact of company’s leadership and board room. Experts agree that corporate values consistent with sustainability as well as top management’s visible support and commitment are the foundation of any successful sustainability strategy. However, while CSR reached the top of the corporate ladder, little attention has been paid to the role of middle management .
In my opinion, middle management is critical, because, on one hand, if the sustainability message from the top doesn’t reach the employees, it’s most likely to be simply “greenwashing” and a PR exercise. On the other hand, if sustainability and CSR-related activities rely on a small group of motivated employees only, as a result of their personal values and beliefs, then the company is probably missing an opportunity and even the most dedicated employees might give up after a while due to a lack of local support from their direct management, no time or resources assigned to develop their activities, often considered as a waste of time, not directly productive or insufficiently related to business goals.
According to a study, conducted at a large multinational pharmaceuticals corporation in 2005 , supervisors behavior toward sustainability depended exclusively on their perceived level of sustainability commitment from top management. Their own beliefs and values, however, did not seem to be decisive drivers, as even managers with a low level of interest in environmental or social topics proved to be effective sustainability champions. This observation definitely emphasizes how important is the message sent by top management when pursuing a successful sustainability strategy. “Corporate values”, wrote the authors of the study, “have a strong influence on individual behavior in organizations, particularly on middle managers/supervisors whose role requires them to disseminate these values to employees throughout the organization”.
That’s the reason why the authors explained that: “somehow, the message and implications of sustainability heralded from the top need to reach every employee. Supervisors, as middle and low-level managers, provide the critical link between employees and top management… Supervisors who are in day-to-day contact with employees have direct influence on their work-related attitudes and behaviors.”
Based on my experience, gained in the implementation of sustainability strategies, both in large corporations or SMBs, here are some of the actions that middle management can take to “walk the talk” on sustainability and how those actions can help.
In the above mentioned study, the authors also wrote that “if top management espouses values of sustainability, it is imperative that supervisors internalize these values and behave in ways that encourage sustainability behaviors among their employees.” In my opinion that confirms that getting the right message through to middle management is important but that other actions might be necessary to help them “internalize” sustainability values. In other words, relying on “the perceived level of sustainability commitment from top management only”, as suggested in the study, might work in some companies but in many others it might not be enough.
How to get middle management on board?
Increased employee’s motivation, lower absenteeism and employee turnover. Those are some of the benefits that are usually observed in companies that have a clear sustainability strategy and effective CSR practices.
The bottom line? : Reduce costs, increase benefits.
As sustainability is “here to stay” and, in many countries, is a quite a new discipline, the experience acquired as a “sustainable manager” can also give a unique opportunity not only to contribute to the corporate strategy but also to influence it.
 “The Year in CSR: The Four Trends of 2010” http://www.fastcompany.com/1711587/the-year-in-csr-the-four-trends-of-2010
 “A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010″ http://www.unglobalcompact.org/docs/news_events/8.1/UNGC_Accenture_CEO_Study_2010.pdf
 “4 Steps to Go Green Like eBay – Starting With Employees” http://realizedworth.blogspot.com/2010/05/4-steps-to-go-green-like-ebay-starting.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+RealizingYourWorth+%28Realizing+Your+Worth%29&utm_content=Twitter
 For a detailed analysis of employee’s engagement refer to the reference book CSR for HR by Elaine Cohen http://aequology.wordpress.com/2010/12/12/book-review-csr-for-hr/
 In this blog post the company’s middle management team comprises of managers who head specific departments (such as accounting, marketing, production) or business units, or who serve as project managers in flat organizations. http://hbswk.hbs.edu/archive/5126.html (HBR) Middle Management Excellence
 http://www.nbs.net/gain-support-of-top-management-to-create-a-culture-of-sustainability/ Andersson, Lynne, Shivarajan, Sridevi & Blau, Gary. (2005). Enacting Ecological Sustainability in the MNC: A Test of an Adapted Value-Belief-Norm Framework. Journal of Business Ethics. 59, 295-305.
On December 17th, Pernod Ricard (Euronext: RI), a French company that produces distilled beverages and is a world leader in the Premium segment as well as a co-leader in Wines & Spirits, released its 2009/2010 annual report..through an iPad application!
Pernod Ricard is active in 70 countries, employs 18000 employees and its Net Sales amounted to € 7.081 m over the 2009/2010 period.
As far as I know, this initiative is one of the first in its category, together with the japanese company Daiwa House Industry’s 2010 report, also available as an iPad application
The Pernod Ricard app has definitely a nice design, with a series of beautiful pictures by the contemporary Argentinian photographer Marcos Lopez. Navigation is easy, both through the iPad specific interface, which offers a condensed version of the report, and as well as in the full pdf version available within the same application (the Book icon in the menu bar).
The report itself is divided in 4 main categories:
“BRAND Creators” that explains the marketing, innovation and brand acquisitions strategy of the group.
“A World of Creators” that describes the geographical growth strategy and specific actions of the Group in the 70 countries where it operates.
“Committed Creators” that includes the Group’s Social and Environmental Responsibility Commitments, which are well documented and detailed, presented through objective data and description of the actions taken to meet the commitments.
“Creators of Value” with a Financial Overview and specific information for shareholders.
Corporate Social Responsibility
The “Committed Creators” chapter is obviously the part that caught my attention the most. As a member of the UN Global Compact, Pernod Ricard is committed to supporting and advancing the principles of the United Nations Global Compact.
The section is articulated around 4 main areas: Human Resources, Environment, Responsible Drinking and Cultural & Social Solidarity Initiatives.
For each area, specific indicators and activities are described, such as the fact that 42% of outside recruits were women (+3% over 2008/2009), that 19000 copies of the brochure “Alcohol: I’m in control – Become an ambassador for responsible drinking” were distributed within the group in 2010, the 82% of solid waste recycled between 2008/2009 and 2009/2010, the water consumption savings in the countries were resources are limited, or the fact that 90% of the production sites calculated their carbon footprint. The exposure given to the photographer Marcos Lopez, to illustrate the Group’s new tagline “Créateurs de Convivialité”, as well as other cultural initiative, with the Centre Pompidou in Paris, for example, are also described in the report.
What I liked the most actually, was the interview of the “Créateurs de Convivialité”, employees and managers of the Group, sharing their vision, achievements and activities on the main topics of the report. This “human perspective” in the report, beautifully illustrated by the above mentioned photographer, gives a nice and personal touch to the report, with its elegant photo gallery of the employees interviewed in the report.
Finally, there’s a section with the short video made by Spike Jonze for the Absolute vodka brand.
In 2010, many companies have displayed creative ways to present their annual, Corporate social Responsibility or sustainability reports, through their corporate or specific, and sometimes interactive, websites, and it’s more than likely that this trend will go on in the coming years. The iPad offers a great interface for this type of initiatives, giving a very positive user experience. Pernod Ricard has done a great job, even though it leverages mostly the “visual” aspects of the media. Other capabilities like audio or the incorporation of social media features could add even more value to the experience. Allowing viewers to leave comments and suggestions, “like”, or “dislike” for that matter, a specific topic, share pictures or textual contents through e-mail or twitter would be nice options to make available for the next release.
Remember…: Drink – and Act – Responsibly!
The Pernod Ricard Annual Report App is available, free of charge, through iTunes: http://itunes.apple.com/us/app/rapport-annuel/id407331042?mt=8
Credits: Pernod Ricard Annual Report iPad Application
Photos: Marcos Lopez-Art Affaires