Corporate social responsibility:

1
Corporate social responsibility The sea change
in values and opportunities
PRINZ National Engage for Change
Conference Heritage Hotel, 4.15pm 24 May, 2007
2
Business Council principles

• Sustainability is what youd do if you knew you
  were going to live forever
• The Business Council believes
• Sustainable businesses are profitable
• Contribute to social progress and ecological
  balance, and
• Protect New Zealands quality of life

3
How we operate

• Identify long term sustainability issues of
  concern to business, the public and decision
  makers
• Produce research-based pragmatic solutions
  supported with multi-stakeholder buy-in and
  likely to be acceptable to parties in the
  Parliament
• Backed with evidence of the publics views of and
  support for policy solutions
• We deliver an MMP-smart policy development
  capacity for risk-averse decision makers
• (There is no reason a public agency cannot do
  this but the rules forbidding political polling
  by officials, for example, are dopey in the new
  multi-party decision making environment where
  building coalitions for policies is essential and
  routine. Rules preventing the release of
  briefings for incoming Ministers, at a time when
  governments are being formed, seem bizarre when
  they would have their greatest value)

4
How we operate

• MMP-smart policy development
• There is no reason a public agency cannot do this
  but the rules forbidding political polling by
  Government agencies, for example, are dopey in
  the new multi-party decision making environment
  where building coalitions for policies is both
  essential and routine.
• Rules preventing the release of briefings for
  incoming Ministers until after the time when
  governments are formed, seem bizarre when they
  would have their greatest value during the multi
  party discussions

5
How we operate

• You know what works
• Provide solutions, not problems
• Tell the truth, even when people dont want to
  hear it
• Address concerns from peoples everyday lives,
  not on some high-level theoretical basis
• Provide useful research which addresses the
  public policy issue
• AND deliver what your promise

6
Take 100 New Zealanders

• 5 think its only about the economy
• 5 say its only about the environment
• 20 say that life is too hard for me to think
  about anything other than today
• 70 say I want a better standard of living and to
  maintain my quality of life we should make
  decisions on whats best long term
• - UMR research for the Business Council

7
Starting where people are

• Business Council research shows there is
  widespread support for promoting sustainable
  development
• Potential macro themes for promoting
  sustainable development focus on
• Quality of life for you and your family
• Maintaining whats good about New Zealand for
  future generations
• New Zealanders believe businesses have a duty to
  be involved in initiatives like this
• Achieving a balance between protecting the
  environment and economic prosperity

8
The importance of trust

• Growing number of information sources more
  people are receiving more messages than every
  before in their lives and history
• Declining trust in traditional information
  sources, particularly newspapers and television
• People want to understand and act, and need
  solutions which are credible and authentic. Our
  role and your role in this environment is to
• Provide the useful solutions people are looking
  for
• In bridging the gap between how the public
  believe business should act, and the traditional
  view that business is simply there to make a
  dollar and obey the law, PR and policy advocacy
  has become more important than ever

9
Success involves shareholder AND community good

• Taking care of stakeholders AND the public good
  is becoming a management expectation
• Dec 05 McKinsey Quarterly Survey 4238 executives
  in 16 countries
• 16 believe in focusing effort for highest
  returns, 86 believe in generating highest
  returns but contributing to the general pubic
  good
• 46 believe room for considerable improvement in
  anticipating social pressure and 75 believe CEOs
  should lead this

10
NZ business thinking is in line with
international trends

• Which of the following best describes the role
  that businesses should play in society?

Note the McKinsey executive results was 86 for
investors AND public good
July 27- August 8, 2006
11
So how does business here rate?

• New Zealand businesses are generally very
  environmentally responsible

Are you doing the right thing? Only 36 agree,
39 disagree
July 27- August 8, 2006
12
New Zealanders values

• Businesses should be responsible for the
  environmental impacts of their products from
  cradle to grave (from manufacture, distribution
  and sale, through to use, reuse and disposal)?

79 agreement on the product stewardship role
business should play
July 27- August 8, 2006
13
New Zealanders values

• A companys environmental practices have a big
  influence on whether you buy their products or
  not

70 agree how you behave toward the environment
can have a big impact
July 27- August 8, 2006
14
New Zealanders values

• A companys treatment of its employees has a big
  influence on whether you buy their products or
  not

36 of your market can be influenced by good news
on employee treatment
July 27- August 8, 2006
15
Who is trusted on climate change

• Credibility rates nearly halve for traditional
  mainstream media (television, daily newspapers,
  radio)
• Internet a significant player
• 38 feel informed/ well informed
• 36 informed but want to know more
• 23 feel not well informed
• Significant media opportunity?

April 4 7, 2007
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The mega trend in business, community thinking
February 2007

• Almost 1 in 4 consumers buy from companies they
  see as unethical for
• Exploiting workers
• Not caring enough about the environment
• Producing harmful products
• Having too much power over government policy
• Mistreating animals
• Making products detrimental to children
• Using misleading advertising
• They stay with those companies because
• No apparent ethical alternative
• Not enough information about how the company
  operates
• Family/ children like their products
• Feel powerless to affect company behaviour

The majority of consumers need to have their
concerns addressed
17
Why the political focus has changed

• The politicians are now under pressure to deliver
  on quality of life issues
• Business Council UMR national omnibus polling
  (March 2006)
• 39 of people who have a party vote preference
  say they could change their mind
• 49 say they are more likely to vote for a party
  which places an emphasis on preserving the New
  Zealand quality of life
• 49 of students and 47 of professionals say they
  could change their minds on which party to vote
  for before the election. Clerks (44) and service
  workers (41) are not far behind.

18
Still, 10 highly likely to change
April 4 7 May 2007
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Sustainable practice business backs it too

• There is strong agreement among business decision
  makers with the Governments view that
  sustainability is required across the whole
  economy in order to help manage climate change
  and protect New Zealands trading position
• 90 agree, 56 of them strongly
• Only 7 disagree, 3 of those strongly.
• (Herald DigiPoll 15-21 February, 750 respondents
  71.4 approve of the Government making
  environmental sustainability its main theme)

December 2007. 190 business managers,
proprietors, self employed (weighted by party
political vote 2005)
20
The market in New Zealand
With Business Council and Shell Sustainability
Fund support, in 2005 Moxie Design Group
commissioned two sets of research (quantitative
and qualitative) to understand the New Zealand
equivalent of the Lifestyle of Heath and
Sustainability (LOHAS) market. LOHAS refers to
consumers interested in products covering a range
of market sectors and sub-sectors, including
Green building supplies, socially responsible
investing and green stocks, alternative
healthcare, organic clothing and food, personal
development media, yoga and other fitness
products, eco-tourism and more. This research
provided Moxie a unique insight into the size
(26) and differences of the New Zealand market.
Based on the these differences the New Zealand
group is now called - Solution Seekers.
21
The market in New Zealand
Second study February 2007
Market grows 6 since 2005 32 of
population Climate change is currently the
biggest driver in society with 83 of New
Zealanders aware of the problems the world
faces Want business and government to take
action, but loosing faith in their ability to
respond See few solutions they can buy, so..
22
The market in New Zealand
Second study February 2007

• They are harking back to the good old days
  where individuals were more self reliant.
• Were basically seeing the growth in traditional
  values as society become more disenfranchised and
  disillusioned by the repercussions of modern
  life.

23
The market in New Zealand
Where 55 of people strongly agree that they are
aware of the problems facing the planet. They
want to see action to reduce these problems. 45
want more Government spending on creating an
ecologically sustainable future. Big changes
coming from people who are tertiary educated or
earning in excess of 70,000 per annum.
CORPORATE BEHAVIOUR IN THE SPOTLIGHT 40 of
people are concerned about what corporations are
doing in the name of making a profit, a growth in
numbers by 11 over 2005. This is an overall
trend across most demographic categories. Again
the strongest growth comes from people who are
tertiary educated or earning in excess of 70,000
per annum. CHANGES IN SOCIAL SUPPORT There has
been significant areas of growth in understanding
and supporting others at the individual, local
level. 45 are placing a lot of value on helping
other people, bringing out their unique gifts and
experiencing and learning from other cultures and
ways of life. This has grown by over 15 in two
years, especially with younger and older people.
Counter to this is a slight decrease in the
voluntary work done for one or more charitable
causes. Only a slight fall in numbers to
23. GREYING OF GOVERNMENT POSITIONS People are
less concerned about the left and right divisions
of Government, with a fall in overall numbers of
6 over the two years to now sit at 17.
24
Sea change in values the massive emerging market
Moxie Research

• Environmental and ethical products and services
  form a multi-billion dollar market, making
  sustainability a serious business opportunity.
• A new conscientious market worth in excess of
  US550 billion annually has emerged as a growing
  first world trend. These are consumers that
  actively seek products and services that share
  their environmental and social values.
• This customer group is the future of business.
  Consumers are the dictators and they want
  solutions that are meaningful.
• This very real market opportunity will be a great
  enticement for business to actively engage in
  sustainability.
• - Moxie Design Group (members of the Business
  Council)

25
How to connect with more than half the market

• Demonstrating real leadership in solving social
  issues will connect with over half the
  population
• Over half the population (55) ranked social
  issues such as personal safety, health and
  wellbeing and education as the highest priority
  for the next five years.
• The Sustainability Priorities Monitor,
  commissioned by Nick Jones Associates Ltd,
  sheds new light on Kiwis views of
  sustainability.

26
The market opportunity

• The Sustainability Priorities Monitor
• Over half the population (55) rank social issues
  such as personal safety, health and wellbeing and
  education as the highest priority for the next
  five years.
• Only 24 percent believe environmental
  sustainability is an immediate priority with
  economic issues (20) and cultural issues (1)
  following
• 20-years on, environmental sustainability becomes
  top priority for Kiwis (43) with social issues
  dropping to 39.
• First and foremost we need to ensure we live in
  a secure and healthy society. There is a very
  real opportunity for New Zealand companies to
  take a lead through corporate social
  responsibility and sustainability programmes that
  drive the social and environmental changes New
  Zealanders are demanding. Nick Jones

27
Benefits of sustainable business practice
Business Council Members Annual Survey (August
2006 )
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Addressing barriers to take up

• Customers cant tell the difference between
  sustainability performers and non performers
• Businesses, particularly SMEs, dont see a
  commercial reward in being more sustainable
• Government and most businesses dont procure
  using sustainable criteria, like whole of life
  cost
• Our aim is to make sustainability, or future
  proofing, business as usual in New Zealand.
• The biggest challenge is moving sustainability
  from a discussion that occurs in developing a
  strategy, to being part of operational decision
  making

29
The next steps

• We seek sustainable branding, and sub brands
  (Green Tap, Investors in People, Enviro labels
  etc), so consumers can tell the difference
  between the companies that are becoming more
  sustainable
• Backed by a whole-of-government SD branded
  advertising campaign
• Government and local government procurement from
  certified sustainable practice suppliers (6
  billion goods market influence a year). An end to
  day-one price buying, delivering major savings
  longer term. The Prime Minister has announced
  Government agencies will be directed to procure
  sustainably.

30
Sustainable policies be ready

• Businesses need to
• Measure their emissions and cap them, or
• Pay a price on carbon
• Pay a levy on solid waste going to landfill (and
  take from a 90m a year innovation fund)
• Secure the sustainability of their supply chains
  so they can compete for
• Government contracts (6 billion a year)
• Win consumers hearts
• Help maintain the New Zealand quality of life
• Make substantial energy and other savings
• Remain competitive abroad, as the world goes
  greener and talks more of carbon neutral trading
  and some attempt restrictive trade practices
  based on sustainability concerns

31
Business has seen it before..

• In some ways these are not new issues for
  business
• Sugar produced by slave labour was controversial
  two centuries ago
• Today, the child obesity issue is unlikely to go
  away. You know many of the rules
• Make sure you engage on an issue before it
  becomes a crisis
• Make sure the argument remains evidence based
• Ensure your actions would appear reasonable to an
  interested bystander
• Dont do anything that would undermine the
  communitys trust and respect for your brand
• Remember the public wants to know businesses
  care for them, even when they are not selling
  them a product or service

32
Summary

• New Zealanders think doing the best thing for New
  Zealand long term is a no brainer, yet they just
  dont call it sustainability
• The American Democratic politician Top ONeill
  said that all politics is local. New Zealanders
  want to know what youre going to do in their
  community
• New Zealanders want to hear about solutions, not
  problems
• We want to hear things can be improved and we can
  take on the world
• New Zealanders expect businesses to do the right
  thing for the environment and in the social
  sphere

33
Summary

• Most consumers dont believe they should pay more
  for products that support their quality of life
• They will shift to products and services that
  cost the same but have preferred attributes
• In bouyant economic times for New Zealand, when
  most feel safe in their jobs, quality of life
  issues have risen in priority
• Businesses should be telling their credible
  stories about how they are contributing to both
  our economic success AND our quality of life
• Increasingly our sustainable promises will
  receive greater scrutiny and more will be
  expected
• Aspirations, like carbon neutrality, will need
  objective measurement and independent
  verification if business is to be believed

34
Summary

• Our polling indicates that business owners and
  managers attitudes are slightly more green than
  the population as a whole
• The challenge for New Zealand SMEs is how to
  credibly communicate that they are on the journey
  to sustainability and are walking the talk
• We have suggested to Government that a national
  umbrella brand for sustainability might help SMEs
  join the parade