CSR Reporting, Frameworks & Systems

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CSR Reporting, Frameworks Systems

• MBA 292C-1
• Professor McElhaney
• 1.31.07

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Tonights Agenda

• Key Learnings Review
• Current Events
• CSR Reporting
• CSR Frameworks Systems
• Anatomy of a 292 Project

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Key Learnings
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Current Events
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Current Events

• Tesco to Create 'Carbon Label' Showing Each
  Product's Carbon Footprint U.K. retailer Tesco
  plc has announced that it will place a 'carbon
  label' on each of its 70,000 products that will
  inform customers how much carbon dioxide was
  emitted in producing, transporting and packaging
  each product.
• According to the Financial Times, Tesco is
  investing 5 million pounds in academic research
  at the Environmental Change Institute at Oxford
  University to develop a method for creating the
  label. The Guardian reports that while the
  research is underway, products that arrive into
  the United Kingdom will feature an airplane
  label.
• Tesco has also pledged to lower store and
  distribution center emissions 50 percent by 2020
  as well as the amount of carbon dioxide produced
  by its distribution network for transporting
  goods by 50 percent over the next five years.

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Current Events

• Sam's Club to Offer First 'Carbon Balanced'
  Retail Product
• In a partnership with Karcher USA and TerraPass,
  Sam's Club -- a division of Wal-Mart Stores, Inc.
  -- has announced that it will sell what it calls
  the first retail product that is
  'carbon-balanced.' The product is a Karcher
  pressure washer and a small portion of its price
  will go to TerraPass to balance out two years
  worth of its carbon emissions.

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Current Events

• Super Bowl to Offset Electricity Emissions
• This year, the U.S. football Super Bowl XLI is
  offsetting carbon emissions from the electricity
  it uses at the game. It has a waste management
  program in place as well as programs to collect
  and donate leftover food and decorations from
  Dolphin Stadium in Miami. More...

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CSR Reporting
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CSR Reporting Trends

• 1997, five reports
• 2000, over 2000 reports
• 2002, 40 of top 250 global companies CSR report
• 2005, 64 of top 250 global companies CSR report
• 80 of top 100 UK companies report
• Countries moving towards requiring non-financial
  reporting England, France, Germany, Australia,
  South Africa

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Why Report? Stakeholders Want to Learn More
About Companies CR Activities
Source Globescan, 2005
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Does Reporting Work?Stakeholders Believe
Companies Communication of Their CR Performance
Source Globescan, 2005
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Stakeholders SurveyedPreferred format to read
report
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Stakeholders SurveyedCSR Reports Need Assurance
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Annual Reports v. CSR Reports

• Annual Reports
• Goal trust
• Standardized format
• Wholly quantitative
• Verification required
• Targeted externally
• Static view
• Mandatory
• Slightly dull

• CSR Reports
• Goal Trust
• Varied format
• More qualitative
• Verification optional
• Targeted both internally externally
• Static and forward view
• Voluntary
• Can be interesting, engaging, creative

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Reporting Opportunities Challenges

• Materiality
• Pick only relevant, critical issues (recycling
  for tech company, rather than casual Fridays
  participation rates)
• Carpet bombers still exist- BHP Billiton at 522
  pages (9.6Mb) for 2006
• Getting stakeholders to read them
• H M asks on website how s.h.s would like to
  receive reports Vodafone publishes 11
  mini-reports for its operating units and one
  internal report Weyerhauser produced a
  tabloid-sized 4-page mini-report
• Print v. Virtuality
• Greater flexibility in electronic communications,
  print executive summaries and offer PDF on web
  site
• Integrate to Finances
• Integration of accounting, disclosure, reporting
  communication Novo Nordisk integrates annual,
  environmental and social reports

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Reporting Opportunities Challenges

• Assurance
• Third party assurance desirable and leads to
  higher credibility, but demand outstripping
  supply
• Brand congruence
• CR communications must fit brand attributes if
  edgy fiercely competitive athletic wear company,
  do not want soft, warm, fuzzy CSR report
• Companies shifting to two-year reporting cycle
• Maintaining quarterly web reporting on goals/
  updates
• Engaging over the Web
• McDonalds, Vodafone actively engage on web using
  blogs, stakeholder dialogue tools
• Using reporting as one piece of overall CSR
  Communications strategy
• Necessary but insufficient alone

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1. Aspirational Standards
Reporting Tools

• Hundreds, including
• APEC Code
• Caux Principles
• Global Sullivan Principles
• UN Global Compact
• OECD Guidelines
• Principles for Global Corporate Responsibility
• Equator Principles
• Company-specific standards
• Hannover Principles
• Can be issue-specific
• Voluntary endorsement

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2. Performance Standards
Reporting Tools

• SA 8000 (Labor and human rights)
• Child labor Freedom of association
• Forced labor Working hours
• Health safety Remuneration
• Discrimination Management systems
• Discipline
• ISO 14000/ 14001 (environmental)
• ISO 26000 (social)
• Measurable, management system, verifiable
  audit-able

Reporting Tools
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3. Reporting Standards Global Reporting
Initiative
Reporting Tools

• Generally accepted framework for reporting an
  organizations economic, environmental, and
  social performance
• Convened by CERES, with UNEP in 1997, first used
  in 2001
• Multi-stakeholder developed
• Allows comparisons across sectors
• Designed to elevate CSR reporting to same level
  as financial reporting
• Sector-specific reporting standards to allow for
  comparability
• Partnership with ISO 26000

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Global Reporting Initiative G3
http//www.globalreporting.org/ReportingFramework/
G3Online/
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4. Assurance Standards

• Accounting firms (E Y, PwC, Deloitte)
• Specialist consultancies (SustainAbility,
  AccountAbility)
• NGOs
• AA 1000 (Simon Zadek, leads in Europe), TVZ
• Stakeholder Working Groups
• Faculty experts
• Capacity challenges demand outstripping supply

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Effective Reporting Goals

• What are specific goals?
• Enhance image
• Respond to attacks, protests
• Build bridges, learn, engage
• Organizing tool
• Inspire employees
• CEO says have to
• Rank in order of importance prioritize

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Effective Reporting Audiences

• Who are your audiences?
• External too broad
• NGOs
• Employees
• Executive management
• Rank them by importance
• Re-rank every reporting period

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Effective Reporting Tool

• Report used as a tool to
• Inspire employees
• Draw line in sand
• Means to change language, climate, even company
  culture
• Method to track progress over time
• Pre-cursor to develop CSR organization, vision,
  strategy

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Effective Reporting Credibility

• Take necessary steps to ensure or enhance
  credibility
• Use of language, issues, images
• Frank communication
• Use of outside assurances
• Getting internal constituencies onboard with
  external

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Effective Reporting Consistency

• Does report fit with overall brand/ marketing
  strategy?
• Does it fit with overall communications/ PR
  strategy?
• Is it unique to company (competitive advantage)?
• Are the themes, tones reflected in other company
  materials?

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Effective Reporting Design

• 10-second skim shows key ideas
• 90-second skim of front sections shows key ideas
• Headers, quotes, photo captions show action,
  engage
• Quotes show dramatic tension
• Effective story-telling
• Keep short sweet

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Effective Reporting Laugh Test

• What is scariest question facing company?
• What are harshest accusations critics could make?
• What is one-sentence dismissal that could be
  made? Is this addressed openly?
• Is the big picture hidden by details? (carpet
  bombs)

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..
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Embracing transparency Strengthening a brand

• Progressive seeks forthright and full disclosure
  in all our business reporting.
• Progressive is currently the only Fortune 500
  company to report results on a monthly basis.
• Progressive wants no secrets when it comes to
  how rates are determined.

Progressive Insurance, Annual Report
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• Among the stakeholder concerns expressed are
•  
• The fuel economy of SUVs is less than cars....
• SUVs can raise safety concerns for drivers and
  passengers in other vehicles....
• SUVs used for off-road recreation can damage
  nature.
•  
• SUVs contribute more than any other vehicles to
  the Companys bottom line.... Without SUV
  offerings, Ford likely would lose sales and
  profits.

Ford Motor Company
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We envision ourselves wearing our gear while
enjoying the benefits of nature or, better yet,
while fighting environmental sinners. But its a
fact that our synthetic-fiber clothes start as
petroleum, and the subsequent refining process
pollutes.
Everything we make pollutes the production of
every piece of clothing we make has a negative
impact on the environment. Period.
Patagonia
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Exxon Mobil
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1928 Columbian army killed an undetermined number
of employees and others during labor protests.
1961 Company ships provided support for failed
U.S. invasion of Cuba. Initiated sale of bananas
in Japan.
1975 Involvement of United Brands in Honduran
bribery scandal led to the enactment of the U.S.
Foreign Corrupt Practices Act. Company stock
plunged and Chairman and CEO Eli Black committed
suicide.
Chiquita
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(No Transcript)
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CR Reporting Types

• Truants
• Nothing beyond legal compliance
• Cosmetics
• Focus on style rather than substance
• Nerds
• Numbers crazy, data driven, lack big picture
  and/or materiality
• Virtuosos
• Have numbers, big picture performance to match
• Supersonics
• Mainstreamed it, integrated it with financials,
  and got beyond business case to develop new
  business models

Source Trust Us, SustainAbility, 2002
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v.

• Reporting Types?
• Strengths?
• Weaknesses?
• Specific recommendations?

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CSR Report Analysis Assignment

• Select report of your choice to analyze
• http//www.corporateregister.com/
• Can select project company, competitor, peer,
  where you want to work, etc.
• Three-page analysis focusing on
• What worked well in the report/ strengths?
• What did not work well in the report/ weaknesses?
• What are your specific recommendations for
  improving the report? How would you rewrite this
  report?
• Due February 14
• Detailed assignment posted on due date on Catalyst

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CSR Frameworks
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Changing the Game
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Changing the Game
The Landscape of the Business Case for CSR
Competitive Advantage Market Positioning
Employee Relations
Investor Relations
Improved Business Performance
Value Creation
Risk Mitigation
Reputation Insurance
Mitigate long term business risks
Build Stakeholder Trust
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• Shifting From Defensive to Offensive CSR

BP Beyond Petroleum Citigroup
Commits 100m to microfinance Gap
PRODUCT (RED)Interface
Mission ZeroStonyfield Farm Bid With Your
Lid Timberland Partnership with City
Year
Offensive CSR can distinguish a companys
reputation but cannot protect it defensive CSR
can protect a reputation but cannot distinguish
it. Both are necessary to succeed in todays
business climate.1- Mark Kramer John Kania,
Changing the Game
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Stages of CSR

• Defensive
• Company faced with pain, criticism, reacts
  defensively
• Compliance
• Cost of doing business, do just as much as need
  to
• Managerial
• Moves CSR to core business managers functions
• Strategic
• Realigns strategy to use CSR as competitive
  advantage
• Civil
• Need to involve all in sector, collective action

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Stages of CSR
Sweet Spot
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Implementing CSR

• Make business case (relevance)
• Engage stakeholders (internal external)
• Map potential vulnerabilities/ risks
• Develop CSR strategy
• Align with organizational culture/ change
• Monitor, measure, report
• Communicate to ALL stakeholder groups

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Designing a CSR Structure Big
Picture

• Build Senior Vision Support
• Examine Current CSR Systems Activities
• Design a CSR Structure
• Implement CSR Management Systems

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Designing a CSR Structure Nine Steps

• Understand Drivers (internal external)
• Identify Key CSR Issues
• Identify Evaluate Stakeholders
• Identify Current Functions Supporting CSR
• Analyze Current CSR Systems, Culture
• Design CSR Structure
• Develop Effective Staffing Plan
• Create Cross-Functional System
• Match Budget to Best Framework

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A CSR Continuum
Philanthropic
Transactional
Integrative
Growth stage
Adapted from The Collaboration Challenge, James
E. Austin
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CSR Landscape Plot Goal
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Build Stakeholder Trust
an early awareness of the concerns of NGOs and
stakeholders enables companies to join and shape
the debate before it turns against them or at
least to prepare themselves for turbulence
ahead. McKinsey Quarterly1
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Prioritizing CSR Actions Corporate Expectations
as Industry Reputation Drivers
2005
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Key Learnings Today?
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Consulting Projects
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The Projects the Teams

• AstraZeneca
• Cristin, Gabby
• Brown Forman
• Melissa, Joe
• Del Monte
• Daniel, Sarah
• Dow
• Nick, Roni, Steve
• Driscolls
• David, Yang-Yang

• eBay
• Jeff, Iris
• Fulcrum
• Michael P., Steven
• Grizzlies Academy
• Adrian, Michael T., Michael A.
• Grupo Nueva
• Lorin, Margo
• HP
• Pedro, Jason

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The Projects the Teams

• Intel
• Hans, Akif, Maria
• Levi Strauss
• Shirin, Brooke
• Lori Bonn Design
• Jennifer, Wiam
• OSH
• Emily, Matt

• Wells Fargo
• Theresa, Elizabeth S.
• William Sonoma Annabelle, Elizabeth L.

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The Components of the Project

• Initial Call/ Meeting
• Done (hopefully)
• Weekly Status Reports
• What we worked on this week
• What we will work on next week
• Specific needs/ issues/ requests
• Every Thursday by midnight, to start February 8
• Letter of Engagement
• States exact project scope, general work plan,
  milestones, deliverables, expectations
• Draft by Feb. 7, final signed copy by Feb. 12

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The Components of the Project

• Project Plan
• Project work plan for next 15 weeks, lists
  milestones, data sources and mining end dates,
  final presentation/ deliverables deliver date
• Due February 14
• Individual Team Meetings
• Week of March 21
• Preliminary Recommendations
• Commit to framing of recs backed by solid data
• Leave data-digging phase
• Due April 18

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The Components of the Project

• Final Presentations (in-class)
• April 25 May 2 (8 per evening)
• Liaison attends, so schedule and lock in now
• On-site presentation up to you the client
• Final Deliverable
• Extended deck citing resources, research
• Due May 14

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Evaluation of the Project

• Peer Evaluation
• Company Evaluation
• Milestones Check-List/ Process
• Final Deliverables