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promoting discussions on sustainability and corporate social responsibility across the african continent Vol1, issue 3, 2012 N 750 . 00 NGN $5 . 00 USD £3 .00 GBP

Sustainability: The ‘s’ of Business


Faqs

Integrated Reporting (IR)

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Cover Story

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Sustainability: The ‘S’ of Business

feature

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column

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The Social Dimension of Sustainability

Rethinking the Linkages Between csr and Foreign Direct Investments

event Effective CSR Reporting for Media Professionals

In Print The Responsible Business: Re-Imagining Sustainability & Success

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Publisher’s note of the activities they support, but how they should do it; what substantive standards they should apply; how they should implement them and how they would ensure compliance. Recently, the Nigerian banking sector recorded a major feat in its bid to incorporate responsible business practices and Sustainability considerations into the sector’s operations by issuing a joint statement of commitment by members of the Nigerian Bankers Committee to develop and launch a voluntary set of Nigerian sustainable banking principles. By this, they hope to integrate Sustainability in their business operations while also influencing public policy and developing an industry standard as a guide for responsible lending activities in Nigeria. Now, whether this is a real and firm commitment will be seen from how each of the banks, in their various corporate ‘households’, truly integrate these principles inhouse by moving from project finance to bank-wide policies. As someone noted, “I am hoping to see a robust, grassroots-driven framework as is obtainable in other ‘green’ economies. I am also hopeful that these banks would not limit their commitment to the level of monolithic corporations and the big money league without the everyday bank customer, feeling the impact of these sustainable principles”.

‘Sustainability’ is often positioned as equivalent to ‘long-lasting’ or ‘enduring’. This is understandable, but incomplete. We will argue that Sustainability is not the same as ‘long duration’ - an enduring or prolonged existence. A sustainable car is not the same as a car that exists for a very long time. A sustainable car is one that is neutral with respect to its energy consumption in addition to its production process and materials. Neutrality implies that its input is balanced by its output. For the business community, Sustainability should be more than mere window dressing. By adopting sustainable practices, companies can gain competitive edge, increase their market share and boost shareholder value. The business implications of Sustainability merit greater scrutiny. How will Sustainability change the competitive landscape and reshape the opportunities and threats that businesses face? Until recently, most major commercial and investment banks did not consider environmental and social concerns to be particularly relevant to their operations. Today, however, they and their key stakeholders agree that financiers bear significant responsibility for the environmental and social impacts of the operations they finance. Within the banking sector, addressing environmental and social issues is now considered criticalto the proper management of transaction, portfolio and reputational risks. The question is no longer whether commercial banks should address the Sustainable Development aspects 4

There is no doubt that there has been a significant shift in the way that companies – of all sizes,in all sectors and locations – view Corporate Responsibility. Leading organizations no longer view the challenges narrowly in terms of risk mitigation or brand enhancement. Instead, they see the complexities as providing opportunities for innovation as well as enhancing consumer, investor and wider public relationships which, in turn, contribute directly to the overall Sustainability of the business. Globally, Sustainability is rising up the agenda with governments, organizations and, notably, the media cum the wider public; paying attention. The linkage between CSR and Sustainable Development is no longer a question, but almost a fact. In further elevating this knowledge, our Thought Leadership platform – Sustainable Conversations brought together Thoughts Leaders, who included government officials, led by the Honourable Minister of National Planning, CEOs/Directors of leading organizations, and other top C-suite executives. Our discussions were focused on finding clear solutions and quick wins on “Fast-Tracking Sustainable Development in Nigeria”. This edition further highlights Sustainability in various forms and understandings. Hopefully, you will find it as engaging as always. Do keep in touch. Substainably yours,

Ini Onuk, Publisher


letters to the editor Star Letter

PUBLISHER Ini Onuk

I like the fact that you frame this as an ‘open, unending conversation’. The open format I believe will make it attractive for a range of interested parties to contribute to future editions and I see from the current edition that you appear to have re c e i ve d contributions that present both sides of the CSR divide: for and against. The only challenge I foresee with this is that some readers may want to see where your organisation itself stands. If you are a CSR promoting organisation, does it not contradict your aim to promote papers that don’t support it? But it may well show that you are an organisation that recognises the value of diversity and this is good both for the journal and for business! I think you have received a good number of well written papers both from practitioners and industry experts. I really like the fact that the key concepts were clarified earlier on, so as to make it easy for novice readers to follow the discussion. My only concern is with references. There needs to be some consistency on whether or not you are using references in the journal, and if so, what format? I say this because one paper has references while all the others do not. The ideal will be that the papers do not have references since this is not an academic journal. But you have to decide and clearly communicate that information to your future contributors so as to maintain consistency throughout the journal. Otherwise, I think the journal comes out as very professional, very well designed and laid out; providing a veritable platform to discuss CSR, philanthropy and, potentially, the development sector in Nigeria. Well done!” Dabesaki Mac-Ikemenjima, School of International Development, University of East Anglia, Norwich, United Kingdom

“A colleague recently passed along your CSR journal and I am quite impressed! I think you’ve done a great job of explaining exactly what it means to have Socially-Responsible businesses while also creating an entertaining and engaging journal. Kudos!” Anna Mira King, Alitheia Capital Limited/The Entrepreneurs’ Ecosystem, Lagos, Nigeria

copy EDITOR Amarachukwu Iwuala CONTRIBUTORS Elaine Cohen Mal Warwick Aman Singh Uwem E. Ite Julius Che Tita Ini Onuk research Amarachukwu Iwuala Lucky Igbomor DESIGN Diana Ubah - Unit 3 Designs PRE-PRESS ‘Gbemi Osinuga - Morpheus Multimedia administration Ife Aderoju Emeka Uwanna EDITORIAL CONSULTANCY A’Lime Media Limited Published BY:

ThistlePraxis Consulting Limited, 81B, Lafiaji Way,Dolphin Estate, Ikoyi, Lagos, Nigeria. www.thistlepraxisconsulting.com csrfiles@thistlepraxisconsulting.com info@thistlepraxisconsulting.com

“I am impressed by the content of the journal. I hope you continue with this standard. Congratulations are in order to the team and ThistlePraxis – and also for a well put-together conference. The choice of Mallen Baker is visionary as he is well respected and blunt. Congrats, again.”

DISCLAIMER: All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the publishers, except for the inclusion of brief quotations in a review.

Obinna Igwebuike, MBA Student, Bristol Business School

Copyright © 2011 by ThistlePraxis Consulting Limited.

Interested in contributing to CSR Files? Send letters to the Editor. Star letter will recieve a 1 year FREE subscripton of CSR Files TM

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EDITOR-IN-CHIEF Emilia Asim–Ita

Volume 1, Issue 3 January, 2012 Published in the Federal Republic of Nigeria. ............................................................................................................................................... Cover Image: www.istockphotos.com


editorial 2012: THE YEAR OF SUSTAINABLE DEVELOPMENT

In only a few months, we rolled out three (3) agenda-setting events: The Africa CEO Roundtable & Conference on Corporate Social Responsibility (AR-CSR™), a training on Effective CSR Reporting for Media Professionals (ECSRRMP) and our Thought Leadership Series on Sustainable Development, Sustainable Conversations™. No doubt, the second half of the year was very busy. Whilst we were busy with these, so many other things were happening around the world on Sustainable Development. The pace, at which many events occurred, made the AR-CSR™ planning team a little weary of publishing the conference theme. However, one element was consistent; the increasing creativity with Public–Private Synergy often called Public-Private Partnerships (PPPs) as a strategy for Corporate Social Investments and Responsibility. In line with these developments, across the world and especially in Africa; nothing is more apt as the theme of the 2012 AR-CSR™ than, ‘Sustainable Development: Expanding Economic Opportunities through Public-Private Synergy’. Registrations will begin by February, 2012 for the event scheduled to take place between June 27-29, 2012. I believe you will take advantage of the opportunity to engage business leaders, experts and practitioners in what promises to be a brilliant experience. I am grateful to those who have sent in reviews and do apologise for the ones we could not publish. Please send in more comments on your favourite article(s), issues you would want us to feature and those you do not agree with.

We intend to continue this interesting journey on a learning curve, especially at this time when there have arisen many strong voices and opinions on Sustainability and CSR in Africa

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011 was an interesting year for ThistlePraxis Consulting Limited.

This edition takes the learning curve a notch higher. What exactly is Sustainability? Aman Singh - who was recently appointed Editorial Director for CSRWire, one of the largest CSR/Sustainability resource portals – shares a few challenges and questions in a very blunt, yet simple manner in our cover story, ‘Sustainability: the ‘S’ of Business’. You would sure agree with Aman and the Editorial team that Sustainability means: Success, Survival, Strength, Strategy and Solution to any business enterprise in existence at this time. If Sustainability means something more to you, please send me an email and we will have your synonym published in the next edition. We feature a special report and an event – a competence development initiative for Media Professionals, ‘Effective CSR Reporting for Media Professionals’ and a Thought Leadership Series on Sustainable Development, Sustainable Conversations™ with the theme: ‘Fast-tracking Sustainable Development in Nigeria’ respectively. In addition, we are glad to present the new Integrated Reporting (IR) Initiative in our Frequently Asked Questions (FAQs) page.

Elaine Cohen graciously granted us permission to publish a very thorough review of the new Global Reporting Initiative (GRI) whilst Mal Warwick talks about how organisations can take ‘20 Simple Steps to Sustainability’ - as simple as it sounds. Dr. Uwem Ite, a passionate professional, examines the social dimension of Sustainability in his column; our Lead Consultant takes it home with a piece on the linkages between CSR and Foreign Direct Investments (FDIs). Verbatim, In Print and Glossary – our regular pages are here with even more interesting views and information while 9 Questions will return in the next edition. We intend to continue this interesting journey on a learning curve, especially at this time when there have arisen many strong voices and opinions on Sustainability and CSR in Africa. This platform remains open and ready to define and somewhat, redefine the concept and practice of CSR within the African business environment and beyond. Please, feel free to discuss enthusiastically and disagree when the need arises. I will be more than willing to publish your rebuttals as we will certainly not achieve an open, unending conversation without your opinion. Do send all comments, inquiries, requests and reviews to the Editorial team: csrfiles@thistlepraxisconsulting.com

or to me directly: emilia@thistlepraxisconsulting.com.

I hope you enjoy this edition.

Emilia

emilia@thistlepraxisconsulting. com

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OPINION

The New Global Reporting Initiative (GRI)

T

he guidelines, which cover the new GRI Technical Protocol, are a stepping stone to the big promise of G4 in 2013. They address just three specific aspects of the current G3 framework, relating to: community impacts, human rights and gender equality. One of the big advantages of being an Organizational Stakeholder of the GRI is the opportunity to attend free of charge webinars on diverse and interesting aspects of reporting. Sometimes, the webinars are Corporate Sustainability Officers; presenting their experience of the challenges, successes, best practices, etc. of reporting. Sometimes, it is the GRI expert staff, who provide news and updates. The new GRI Technical Protocol The Technical Protocol (TP) was created to provide guidance on how to define the content of a Sustainability report. This includes: deciding on the scope of a report, the range of topics covered, each topic’s relative reporting priority and level of coverage plus what to disclose in the report about the process defining its content. In defining content, “materiality” should be a prime consideration. The TP gives a detailed explanation of materiality: Material topics for

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a reporting organization should include those topics that have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and the society at large. Why is this important? Because: Sustainability impacts create both opportunities and risks for an organization. The ability of an organization to recognize opportunities and risks, and act effectively in relation to them, will determine whether the organization creates, preserves or erodes value. Each organization defines its own material issues, using feedback from stakeholders as well as internal and external scans of Sustainability impacts. Defining the reporting content is an “iterative” process, which can be shown in the following diagram: The TP is an advisory document and, supports reporters in providing responses. This assumes, of course, that a reporting company uses a process to define reporting content … and strangely, most do not. The TP should help companies move away from a “shopping-list” mentality to a “what’s material” mindset and guide reporting content accordingly. A defined approach should be used for prioritizing material issues

and this should be “systematic, documented and replicable; and used consistently from year to year. Changes to the assessment approach, and their implications, should be documented”. This should also help those providing assurance for Sustainability Reports. Note that the TP is a supporting document and does not directly influence the assessment of the report’s Application Level. The new 3.1 Guidelines As stated earlier, the 3.1 guidelines address community impacts, human rights and gender equality. Community impacts: This replaces the former SO1 performance indicator with three new ones, which refer to (1) the percentage of operations with implemented local community engagement, impact assessments and development programmes, (2) those with actual and potential negative impacts, whose effects can be significant on communities and (3) prevention and mitigation measures aimed at addressing these negative impacts. The assumption is that everyone is always delighted to report positive impacts. However, reporting negative impacts balances up the picture. Note that the GRI does not define


OPINION

performance indicators for community investments in the form of strategic philanthropy, donations, pro bono support or employee volunteering programmes. Actually, this is one of the most commonly found elements in Sustainability Reports, but the GRI does not consider this to be related to the core business model. Bastian Buck explained that these aspects are an “add-on” and therefore not an essential part of a Sustainability programme. I recently performed a benchmark study for a client on community investment reporting by 12 large companies in the hitech sector and it is notable that this is (a) always reported and (b) vastly inconsistent in the way it is reported. I disagree that this is not core to a company’s business model. Community investment is, I believe, quite a strategic element of Sustainability programmes, serving to help companies get closer to stakeholders, enhance reputation and most significantly, attract, retain, develop and engage employees. Even if the GRI does not consider this as material as the negative impacts, the fact is that every reporting company wants to report this. Why not make the GRI framework a little more accommodating by providing guidelines and indicators for reporting on these issues as well? Human Rights impacts: The updates in the Human Rights section of the GRI Guidelines are based on the work of John Ruggie,

the UN Special Representative on Business and Human Rights and his “Protect, Respect, Remedy” guidance. Several of the Framework Management Disclosures have been updated to reflect this new thinking on Human Rights and two new indicators (HR10 and HR 11) have been added, relating to (1) the percentage and total number of operations that have been subject to human rights reviews and/or impact assessments and (2) the number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms. The methodology for conducting human rights assessments is not prescribed, leaving companies to decide for themselves what a human rights assessment actually is and to what extent due diligence should be applied. Is a human rights assessment: sitting round a table at the headquarters, discussing potential issues or is it a third party verified audit of all human rights risks in all parts of the supply chain? Reporters will have to work this out for themselves, but I feel that the new 3.1 indicators could have been a little sharper in their requirement of minimal accepted good practice in defining and assessing human rights impacts for reporting purposes. Gender Equality: The focus here is on nondiscrimination against women and the advancement of women’s rights. There has been much work done in recent years, relating to women’s

rights, which are enshrined in internationally accepted basic human right documents and are internationally recognized as being fundamental to Sustainable Development. The 3.1 framework comprises several changes to Management Disclosures that include more specific reference to gender equality, an update of LA14 Performance Indicator (this has been updated to refer to salary/ remuneration ratios between men and women, rather than salary alone, recognizing that there can be major differences between the two), and a new Performance Indicator, LA15; which covers return to work and retention rates after parental leave by gender. What constitutes “return to work” and “retention rate” is left to companies to decide. However, much of the complexity here is precisely in the nature of these definitions: Does return to work mean return to the same or similar job with the same prospects for advancement? Does retention rate mean one month, three months, one year or more after returning to work? In response to LA15, there is the need to be aware of the small print nuances in gender equality accounting and to ascertain if meaningful measures are used as a basis for reporting. Elaine Cohen, Joint CEO of Beyond Business Limited, is the author of CSR for HR: A Necessary Partnership for Advancing Responsible Business Practices. This piece was first published on www.csrwire.com

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Feature

20 Simple Steps to Sustainability

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ait a minute. What does that headline say again? Have I just promised that your enterprise can attain Sustainability in 20 easy steps? You know better, right? You know, don’t you, that Sustainability is an aspiration, a path, not a truly achievable goal (at least not in today’s misbegotten economic system)? OK, now that we’ve gotten that out of the way, and you recognize that my headline was merely a sneaky way to attract your attention, allow me to list—yes, 20—simple steps you can take in your business or nonprofit organization that will help nudge you along the road to a sustainable future. Now, don’t get all red in the face if you start reading the list and you see you have to make it pretty far down before there’s anything about the environment. This list is adapted from my book, ValuesDriven Business: How to Change the World, Make Money, and Have Fun, coauthored with Ben Cohen. If you can’t understand why I don’t equate Sustainability with “being green”, I suggest you get your hands on a copy of the book.

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Source: www.bing.com

Mal Warwick

1. Start by rethinking the purpose of your business - and don’t tell me your purpose is to make widgets or make money. Widgets, money and other stuff (including just about all services) are the instruments through which we fulfill our purpose. So, sit down with your employees and representatives of other stakeholder groups such as customers, suppliers, community members and investors - for a day or two if necessary - and hammer out the vision and mission that articulate the underlying purpose of your business. Write up a list of your values, too - and I don’t mean “service, quality, and excellence” or other such corporate claptrap, but genuine human values that resonate deeply within you and your stakeholders. 2. Recognize that you’re not the only one in your enterprise, who is seeking meaning in your life. Your employees are, too (not to mention all your other stakeholders). Check out the hierarchy of human needs developed by psychologist, Abraham Maslow. If you’re not already aware of it, he’ll help you recognize that the people, who work for you will not be freed up to search for their own inner purpose and meaning (much less find it met through your business) unless they feel amply

recognized and appreciated for the contributions they make. In fact, if they don’t feel acknowledged for what they do on the job, they’re likely to look somewhere else for work, increasing your employee turnover and compounding the costs you bear for recruiting and training replacements. So, be sure to institute systematic ways to show your appreciation for your employees. Give them space to shine! 3. One of the most meaningful ways you can give your employees a sense that their contributions are valued and their voices heard is by involving them in decision-making. Take them into your confidence. If your workforce is big enough, and if you have a board of directors or a senior management team, invite the non-management employees to elect one or more representatives to the decision-making body. You’ll find this helps bring good ideas to the surface, improves communication between you and your employees, and raises the level of trust. 4. Maslow can also teach you, if you need to learn the lesson, that your employees can’t seek meaning in life unless their most fundamental need is satisfied: to survive - to feed, clothe


Feature

5. Consider profit-sharing as a way to boost morale, increase productivity, and foster a sense of ownership among your employees. Businesses that cut employees in on a share of the action through a meaningful profit-sharing programme almost invariably find that turnover drops and profits soar. “Gain-sharing,” a variation on the concept that ties employee bonuses to increased productivity, can have a similar effect. But, the more democratic the approach - the more that lower-level employees benefit, and the less of the profit that is funneled to senior management the more effective it is. Profit-sharing can be a win-win proposition. 6. Think about sharing the wealth created by your business. Whether you’re a sole owner, or a manager or investor with a commanding share of control, there is no better way to provide for your own financial security in the future than by turning your employees into partners through an Employee Stock Ownership Plan or similar means. Paradoxical? Only if you’re impossibly literal-minded. With

One of the most meaningful ways you can give your employees a sense that their contributions are valued and their voices heard is by involving them in decisionmaking.

your employees as fellow owners, you’ll quickly find they’re focused on profits as much as you are (and maybe even more so!). There’s nothing like cutting people in on the action to make them conscious about how their individual actions affect your bottom line. You’ll end up making more money. (I did.)

auditor. If you can’t afford to pay for a professional audit, find another company that’s taking aggressive steps to lighten its footprint on the environment, and trade favours: ask them to audit your company, and you audit theirs. Perform such audits periodically, so you can monitor your progress.

7. Commit your business to the health and wellness of its employees (not to mention your own!). Share the burden of healthcare costs with your employees; if feasible, underwrite it entirely. Promote healthy eating and healthy living by providing healthful snacks. Offer options to your employees for such health-promoting activities as membership (or discounts) for fitness clubs and free on-site, annual influenza shots.

10. Based on the findings of your environmental and energy audit, draft an environmental policy statement and environmental management system that will guide your company’s resource use in the future.

Source: www.bing.com

and house themselves and their families and to obtain care for when when they’re sick. In fact, employees for whom life is a continual struggle to make ends meet are likely to seek second or even third jobs. The stress that comes with overwork and worries about money lead to absenteeism, low productivity and low morale. Give them a break. Commit to paying a living wage, and watch your business thrive! After all, if your most precious capital is human capital and if you’re focused on return on investment, there’s hardly any way to attain a higher return than on what you invest in your people.

8. Build into your core business policies and practices a commitment to diversity and inclusion, taking necessary steps to recruit, train, and support employees that represent the full range of ethnic, gender, and racial diversity of your community. In a society, where eventually no single ethnic group will claim a majority, it’s essential that your enterprise be ready to serve all your stakeholders in a respectful and sensitive way. 9. Conduct an environmental and energy audit of your company’s operations, using a third party

11. Heed the 3 Rs and 1 C of contemporary recycling: reduce, reuse, recycle, and compost - and involve your customers, too. For example, if you sell products that require replacement, offer your customers an incentive to return the product and packaging to you for reuse when they purchase replacements. 12. When designing new products and considering the materials to be used in them, plan for the products’ full lifetime, including their manufacturing, transportation, use, and disposal. Ensure that your products are either reusable when reconditioned, returnable to you, or readily biodegradable if they can’t be recycled.

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Feature

Take a look around, and assess your suppliers, vendors and strategic partners. Do their labour standards, environmental standards, and levels of community involvement match your own?

14. Find at least one way that you can involve your employees in a high-profile effort to benefit the community or communities where you do business. Consider such possibilities as a philanthropic programme in which employees decide which of several local nonprofit organizations will receive company funds or a semi-annual or annual volunteer day, on which all employees will take part in cleaning up a beach, planting trees, or repairing or painting homes for the aged. Community benefit programmes are enormously popular with employees. They bolster morale, increase productivity, and foster long-term loyalty. 15. At least, once annually, hold an all-staff meeting (or a meeting in each work unit or facility) to discuss how the company can improve its performance on the non-financial aspects of your business - the social and environmental factors that go hand-in-hand with financial factors in a triple bottom line business. You may be amazed at how readily good ideas come to the surface ideas that may even lower costs or boost profits while enhancing your company’s ability to serve all its

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Source: www. istockphoto.com

13. Take a look around, and assess your suppliers, vendors and strategic partners. Do their labour standards, environmental standards, and levels of community involvement match your own? Are they the best partners you can find to help you run your business in synch with your values? Consider whether you should seek out new suppliers, including more congenial sources of capital, to enable your progress toward sustainability.

stakeholders. 16. Describe your vision, mission and values in a flyer or brochure, and in a post on your company’s website. Distribute it to all your stakeholders: customers, employees, suppliers, investors and key community leaders. When you broadcast the values that make your business special, you’ll probably be surprised at how much positive feedback you receive - feedback that may result in increased business and other valuable benefits. 17. Once or twice a year, involve your employees, customers or both in selecting a social or environmental issue of shared concern. Partner with a nonprofit organization that’s addressing the issue, and look for ways to benefit it - through cash contributions, matched employee gifts, free or discounted products, loaned professional talent, employee volunteer hours or promotional inserts in your packages, catalogs or invoices. If possible, you might also offer unused office space, office equipment, furniture or other inkind gifts. 18. Once a month, hold a staff meeting, where a leading local nonprofit organization may make a brief presentation to familiarize you and your employees with its work. Decide whether to allow them to make a pitch for volunteers, for money, for both or for neither. As you and your employees gain understanding of the work of the nonprofit sector in your community and as local nonprofits come to know you better, you will all come to have a heightened understanding of the challenges faced by your

local community. Your business’ reputation will grow, too. 19. Hold a staff meeting to discuss philanthropy with your employees. Discuss the roles that they, individually and collectively, as well as the company might play in a philanthropic programme. Seek advice from your local community foundation or, if there is none, from the Council on Foundations. 20. Become a spokesperson for the triple bottom line. Contact local news media to offer yourself or your colleagues for interviews by newspapers, on talk radio, or on local TV shows. Post podcasts or videos on your web site and elsewhere online that highlight the socially and environmentally responsible policies and practices of your company. Host a forum for local businesses to discuss the pros and cons of those policies or persuade the local Chamber of Commerce to do so. As your business becomes better known as a model for best practices, you will see your recruiting costs decline and you’ll find it easier to bring in new employees, who share your values and are committed to joining you in making the world a better place. You say you’re doing all those things? Really? Well, I want to meet you! Drop me a line at mal@malwarwick. com. Or write me even if you’re not that far along the way to sustainability. I’ll be happy to hear from you. Reprinted with Permission from 20 Simple Steps to Sustainability by Mal Warwick. Copyright © 2007 by Mal Warwick.


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faqs

Integrated Reporting (IR)

WHY DO WE NEED INTEGRATED REPORTING? The last few years have seen the worst financial crisis since the 1930’s – a crisis that was, in part, driven by individuals and organisations; focussing on shortterm profits and rewards irrespective of their long-term Sustainability. The crisis has demonstrated the need for capital market decision-making to reflect long-term considerations and has called into question the extent to which corporate reporting disclosures, as they exist today, highlight systematic risks to business sufficiently. Integrated Reporting will provide an important step for organisations, facing the challenges of the 21st century. Current reporting Current reporting standards such as the International Financial Reporting Standards (IFRS) or the US Generally Accepted Accounting Principles (US GAAP) require organisations to produce a fair and reasonable account of their businesses in audited financial reports. Often, these reports do not fully consider the social, environmental and long-term economic context within which the business operates. Some companies produce ‘Sustainability’ or ‘Environmental, Social and Governance’ (ESG) reports, which consider these factors. However, these reports do not necessarily connect the risks and opportunities with the business strategy and model. Integrated Reporting will help to

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bring together data that is relevant to the performance and impact of a company in a way that will create a more profound and comprehensive picture of the risks and opportunities a company faces, specifically in the context of the drive towards a more sustainable global economy. WHAT MAKES IR DIFFERENT? The key objective of Integrated Reporting is to demonstrate the linkages between an organization’s strategy, governance and financial performance with the social, environmental and economic context within which it operates. There are several standard-setting and regulatory bodies responsible for creating standards for financial reporting, as well as frameworks and guidelines for ESG reporting. However, there is no single body with the authority, legitimacy or expertise to bring together the different elements required for Integrated Reporting. The International Integrated Reporting Council (IIRC) brings together a powerful, international cross section of leaders from the corporate, investment, accounting, securities, regulatory and standard-setting sectors as well as civil society. The role of the IIRC is not to increase the reporting burden on organizations, rather to create an Integrated Reporting framework, which will enable companies to bring more coherence and focus to corporate reporting and dialogue with its stakeholders. ABOUT THE IIRC.. The Prince’s (Prince of Wales’) Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) make up the International Integrated Reporting Committee (IIRC). The IIRC has recently concluded a successful series of meetings in

Brazil in November, marking a new phase in the initiative to develop an internationally accepted Integrated Reporting Framework. Following these meetings, the Committee has become the International Integrated Reporting Council (IIRC). The world has never faced greater challenges: over-consumption of finite natural resources, climate change and the need to provide clean water, food and a better standard of living for a growing global population. Decisions taken in tackling these issues need to be based on clear and comprehensive information; but, as The Prince of Wales has said, we are at present “battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems”. HOW DOES IIRC WORK? The International Integrated Reporting Council, IIRC, is a powerful, international cross section of leaders from the corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors as well as civil society. The IIRC is chaired by Professor Mervyn King. Paul Druckman is the Chief Executive Officer. The IIRC is supported by a Working Group of some 25 individuals and three taskforces, which are made up in part from Working Group members and in part from external experts and advisers. The taskforces are:

The key objective of Integrated Reporting is to demonstrate the linkages between an organization’s strategy, governance and financial performance with the social, environmental and economic context within which it operates.

WHAT IS INTEGRATED REPORTING (IR)? Integrated Reporting demonstrates the linkages between an organization’s strategy, governance and financial performance in addition to the social, environmental and economic context within which it operates. By reinforcing these connections, Integrated Reporting can help businesses to take more sustainable decisions while enabling stakeholders understand how an organization is really performing.


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faqs • Content Development: to take forward work on the development of the Integrated Reporting framework and preparation of the business case for Integrated Reporting • Engagement & Communications: to raise awareness on the need for Integrated Reporting and to develop a consensus on the response required • Governance: to develop proposals for the current and future governance arrangements of the IIRC and Integrated Reporting Throughout the development of Integrated Reporting, we are seeking the views of a wide range of advisers, individuals and organisations, through submissions as part of a call for evidence, on-line and face-toface discussions and roundtables, events and conferences and public consultation. The IIRC also has ambassadors to reach out and stimulate international discussion around Integrated Reporting. The Secretariat is supported by The Prince’s Accounting for Sustainability Project (A4S), the Global Reporting Initiative and the International Federation of Accountants and receives additional assistance from a number of other organisations. We are grateful to Deloitte, Ernst and Young, Grant Thornton and PWC for the secondment of their staff to A4S and to the World Intellectual Capital Initiative, Climate Disclosure Standards Board, KPMG and Vodafone for the additional support they provide. Facilities for the secretariat and administrative staff are provided by The Prince’s Charities Foundation with the aid of financial support from the A4S Accounting Bodies Network. IIRC MISSION To create a globally accepted integrated reporting framework - this brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format. The aim is to help with the development of more comprehensive and comprehensible information about organisations, prospective as well as retrospective, to meet the needs of a more sustainable, global economy. The principal role of the IIRC is to: • reach a consensus among

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governments, listing authorities, business, e.g. investors, accounting bodies and standard setters for the best way to tackle the challenges of Integrated Reporting • identify priority areas, where additional work is needed and provide a plan for development • develop an overarching Integrated Reporting framework, which sets out the scope and key components of Integrated Reporting • consider whether standards in this area should be voluntary or mandatory • promote the adoption of Integrated Reporting by relevant regulators and report preparers HOW DOES THIS RUN? The Integrated Reporting Pilot Programme offers a select group of companies the opportunity to demonstrate global leadership in this emerging field of corporate reporting. The Pilot Programme underpins the development of the Integrated Reporting Framework in 2011 and onwards. Through the Pilot Programme, the principles and practicalities of Integrated Reporting will be tried and tested, to support the creation of a new global standard in Integrated Reporting. Already, over 40 companies from around the globe have been invited to join the Programme over the past few weeks and companies from various sectors are already securing their participation, including Microsoft Corporation (Software and Computer Services), HSBC (Banks) and Gold Fields (Mining). If you are interested in joining the Programme in the Pilot Cycle and haven’t yet sent in your expression form, you can apply through the IIRC Pilot Programme Expression of Interest form or by contacting the IIRC Secretariat for details. The Programme consists of three phases: Dry run – an initial phase that asks companies to do a walkthrough of IIRC’s Framework and to identify the opportunities and challenges of implementation, informing the Pilot kick-off conference and Discussion Paper consultation.

The Dry Run is currently underway. Pilot Cycle 1 – the first round of piloting, based on the Discussion Paper and draft Integrated Reporting Framework for reporting cycles ending between October, 2011 and September, 2012. The Pilot Cycle will kick off on 17 and 18 October, 2011 in Rotterdam, the Netherlands with a meeting of all Programme participants. Pilot Cycle 2 – the second round of piloting, which will build on experiences from the first year. For more details please find a full printable briefing on the Pilot Programme for companies and investors here. For further information, please contact Joris Wiemer, joris@theiirc.org. MILESTONES SO FAR… The key milestones for Integrated Reporting in 2011 are the publication of an Integrated Reporting Discussion Paper for public consultation in mid 2011 and the launch of a Pilot Programme for Integrated Reporting in October, 2011. Other IIRC activities working towards the development of Integrated Reporting in 2011 are: • Regional roundtables and events on Integrated Reporting • Initial company and investor ‘dry run’ testing for the Pilot Programme • Proposals for Integrated Reporting put forward at the time of the G20 Finance Ministers meetings in October, 2011 From 2012 onwards, companies and investors will complete the full Pilot Programme for Integrated Reporting and the IIRC will continue to work towards the development and adoption of the Integrated Reporting framework. The IIRC will also review and develop its governance structure to support the development and adoption phase of Integrated Reporting.

For more information, log on to: http://www.iirc.org.


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Source: www.principal-hayley.com

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cover story

Sustainability: The 'S' of Business

I

Aman Singh like to start every workshop or seminar I facilitate with a question: How do you define Corporate Social Responsibility and/or Sustainability? The answers almost always differ, depending on the respondent’s industry, level in the corporate hierarchy or professional standing. 19


Source: www.sustainabilityninja.com

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Yet, not once has someone replied in the first person, i.e. a personal definition of CSR or Sustainability.

entirety of Sustainability, what we see today is a diverse spectrum of Sustainability.

integrating concepts of ethics, trust and reputation with business performance.

Is that because we tend to think of “Sustainability” as a business term or that we don’t equate the term with personal values? To answer this question, we must dig deeper into the origins of the term and understand its evolution.

The Evolution of Sustainability

With the new millennium came new vocabulary, i.e. Sustainability.

The most popular and easily understood definition of Sustainability is the one coined by the Brundtland Commission:

In the past four decades, Sustainability has transformed several times both as a concept and in practice. Joe Sibilia, CEO of CSRwire - a revered news source for CSR and Sustainability news, trends and debates - and the author of Street Smart Sustainability put it succinctly. From Activism…

“Forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs.” However, what this definition implies for businesses has been a process of discovery, angst and conflict for the past few decades: between activists and regulators, between industry decision makers and society, between a short-term result-oriented financial market and social entrepreneurs. Since no one regulatory body is focused on identifying and, more importantly, holding our hands to the fire on the

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According to Sibilia, the current form of Sustainability grew from activism in the 1960’s and 1970’s.

Strategic Sustainability, not Good PR Now, Sustainability became much more than a Public Relations campaign – although many continue to look at the two interchangeably. The term “triple bottom line” started making the rounds. Sustainability, for the first time, became associated with strategy, longer-term results and resource conservation while also dragging with it the decadeold interpretation of reputation, risk management and philanthropy.

To Risk Management… In the 1980’s, this graduated to philanthropy and eventually, globalized risk management.

…And Cause Marketing Then came cause marketing and citizenship. This phase saw the rise of cause-related campaigns;

With me so far? If so, you should take a moment and congratulate yourself because you just made more progress than millions in the corporate sector. Smart Companies, Solutions

Sustainable

Just in the past decade, the concept of Sustainability changed


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One argument is that these companies somehow saw the light: the glow of a business case for protecting the very environment they operate in. Ecomagination resulted in over 70 new products for GE in the programme’s first three years and an estimated annual revenue of $25 million.

Sustainability, for the first time, became associated with strategy, longer-term results and resource conservation while also dragging with it the decade-old interpretation of reputation, risk management and philanthropy.

Performance with Purpose had a direct impact on employee engagement and productivity for Pepsi Co. In fact, in a recent interview, Chief Personnel Officer, Cynthia Trudell, told me: “I’ve never seen anything stick as fast as this did across the company. And it really helped us through the tough times, especially the recent economic recession. It has helped everyone remember that they serve a bigger mission and be able to think of the future in a positive way.”

And Now for the Reality Check But, no way is the grass as green as it should be. Many of our world’s largest corporate players continue to hide behind ignorance instead of understanding how Sustainability can directly – and positively – affect their businesses. Here is what it comes down to: your products/services are good only as long as they have a market. Or as CEO of REI, Sally Jewell, recently put it, “There is no margin without a market and no mission without a margin’’. What comes next is responsibility, which is closely followed by accountability.

Once you have a market of consumers, it becomes your responsibility by default to ensure that they are educated (you need their purchasing power), informed (you want to make sure you have the competitive edge while ensuring your product is resonating in the market), and engaged because engagement drives innovation, brand loyalty and ultimately, a business’ Sustainability. There are, of course, the skeptics of this world, who believe that Sustainability (or Corporate Social Responsibility as many others prefer) is not, in fact, a strategic addon, but a vital element of conducting business. Anwar Hashmi, a senior manager of Ethics with Tata Steel, recently told me that he does not understand why so many American businesses are bent on identifying and pursuing the “business case of Sustainability”. “Corporate Responsibility – or Sustainability – is our obligation to the society and the environment. It’s our social license to operate. It’s that simple,” he said. However, for most executives, Sustainability is not that simple.

Source: www. istockphoto.com

its meaning several times because perspective changes everything. From pursuing Sustainability as a green - always an add-on programme, slowly the focus shifted to integration, product innovation, even governance. General Electric, GE, introduced ecomagination and Pepsi Co launched Performance with Purpose. IBM announced SmartPlanet and DuPont announced the corporate sector’s first Chief Sustainability Officer.

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Corporate

At the February launch of the Global Reporting Initiative (GRI) in North America, for example, the audience – consisting of senior CSR and Sustainability executives – was asked to lay down their biggest challenge with defining, implementing and embedding Sustainability into business strategy. What emerged were what I call the 11 challenges for Corporate Sustainability: 1. Doubt: What if our consumers aren’t satisfied? Or our performance is not up to par with others in the industry? Worse, however, is when you start questioning whether it is worth it. With multiple stakeholders, several connecting pressure points and the constant urge to maintain your competitive edge; will Sustainability become a boon or a burden? 2. Liabilities: Do we really need another cost centre during an international economic recession? Common perception, of course, is that Sustainability costs money and is an add-on initiative that companies tend to view cynically. It is only when you conduct a deep dive into how simple low hanging fruit initiatives can, in fact, help save money for the business that mindsets begin to shift. 3. Denial: Denial- that there are resources that need to be conserved. Denial that your business is harming the environment or the society it operates in. Denial that stakeholders are becoming much more

Unless Sustainability isn’t truly embedded in your way of conducting business; in the form of tangible objectives, review points and incentives to conserve, preserve and eliminate; resources will always feel like an extra, a liability.

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demanding than ever. Sustenance, unfortunately, is not for the fainthearted. Denial must be the first chip off your shoulder in understanding and, more importantly, contextualizing Sustainability. 4. Resources: In the lean times that we live, not a lot of new strategic initiatives manage to grab a cut of the annual budget. Unless Sustainability isn’t truly embedded in your way of conducting business; in the form of tangible objectives, review points and incentives to conserve, preserve and eliminate; resources will always feel like an extra, a liability. 5. Casualty: The unpredictability of the future is always a precarious ground for businesses. Sustainability is at a similar crossroads today between inaction and ignorance because of the perceived casualty of precious business dollars. Why conserve resources when the market projects them as renewable – and easily replaceable? 6. Lack of Global Standards: The Global Reporting Initiative is a lone authority in the sector of Sustainability reporting, currently. While there are organizations like Ceres and the International Integrated Reporting Committee, specific guidelines for Sustainability initiatives remain chaotic and unorganized. 7. Benchmarking: We can sure analyze Sustainability reports side by side for equivalence and distinguishers. But, can we truly benchmark current – and past – initiatives? With no benchmarking available in the market, except for a whole array of rankings and ratings, it is only logical to avoid introducing a new way of doing things, let alone a whole new culture. 8. Lack of comparative credibility: I am often asked who the superstar in Sustainability is. My answer is always a blank face and then an explanation. Because there are good examples of initiatives (Patagonia’s upcycling and reuse, Timberland, IBM, Intel, SAP) and ideologies (Marks & Spencer’s Plan A, Nike, EMC), but no perfect examples out there.

But no way is the grass as green as it should be. Many of our world’s largest corporate players continue to hide behind ignorance instead of understanding how Sustainability can directly – and positively – affect their businesses.

11 Challenges Sustainability

9. Uncertainty: Uncertainty and business management executives can never see eye to eye on Sustainability. For most decision makers, results follow goals and implementation and not the other way round. Perhaps, it is time you checked out the Return On Investment (ROI) on Sustainability. If you think with an acute understanding of your business operations, strategy, product line(s) and ultimate mission, uncertainty becomes a thing of the past. Or you can just use Sustainability’s own definition, which emphasizes longterm existence. 10. Fear of the unknown: What if? 11. Fear of the known: What if? One core theme that underlines all these challenges: we have something to hide - and an understanding that business has unarguable impact on its employees, consumers, community as well as the environment. And that it’s time we tackled this, together. Ready for your own Sustainability plan? A few questions that might help you along the way: 1. Why do you want to set a Sustainability strategy? If you’re thinking peer pressure, you might as well forget about it. Sustainability, unfortunately, isn’t a one-way street. It brings with it multiple responsibilities, immense pressure, requires brute force to stay focused and teaches accountability almost like nothing else. 2. Do you identify with any of the fears listed above? If you do,


Source: www. geoffsnyder.com

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3. Does your personal definition of Sustainability align with your business’ quarterly goals or the five-year plan (for profits as well as a viable supply chain)? Perspective, after all, changes everything. The key is realizing the viability of having a mindset that encourages Sustainability and thrives on inclusive growth. The definitions, data and opinions on Sustainability will continue to differ for a long time to come. For any business to be successful in the long run (who remembers one-shot enterprises except the entrepreneurs themselves?), Sustainability must

The definitions, data and opinions on Sustainability will continue to differ for a long time to come. For any business to be successful in the long run (who remembers oneshot enterprises except the entrepreneurs themselves?), Sustainability must be an integral part of the corporate puzzle.

tackle them. There aren’t a lot of management books that can teach you the survival of the fittest quite like the hard road of doing it yourself.

be an integral part of the corporate puzzle. It is not an add-on, not an initiative, not a suggested target but a means to the goal: a market, where we truly sustain each other by offering products and services that are symbiotic and inclusive of our planet and societal needs. Aman Singh is the founder of Singh Solutions, helping startups and businesses tease apart their Social Responsibility strategy, sustainable business practices, employee engagement and communications. She is also an experienced journalist, a contributory writer for Forbes and CSRwire and authors a well-read blog on CSR communications and strategy, In Good Company: Singh on CSR. She is an active mentor with students, who want to pursue a career in CSR and Sustainability. Singh is an IEMA-certified CSR Practitioner and trained in GRI reporting and UNGC guidelines. Singh was recently appointed the editorial director of CSR wire Connect with Aman @AmanSinghCSR or leave a comment. Get involved, become engaged and look for inspiration.

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verbatim

what does sustainability mean to you? Lester R. Brown, Founder and President, Worldwatch Institute

Robert Gilman, Director, Context Institute

Dr. Karl Henrik-Robert; MD/Founder The Natural Step, Sweden

“A sustainable society is one, which satisfies its needs without diminishing the prospects of future generations.”

‘Sustainability is equity over time.’ “As a value, it refers to giving equal weight in your decisions to the future as well as the present. You might think of it as extending the Golden Rule through time, so that you do unto future generations as you would have them do unto you.”

“A transition to Sustainability involves moving from linear to cyclical processes and technologies. The only processes we can rely on indefinitely are cyclical; all linear processes must eventually come to an end.”

Jerry Sturmer, Santa Barbara South Coast Community Indicators

Keith Weed, Chief Marketing Officer, Unilever

Friends of the Earth, Scotland

“Sustainability is meeting the needs of all humans; being able to do so on a finite planet for generations to come while ensuring some degree of openness and flexibility to adapt to changing circumstances.”

“Sustainability is something we do from day to day. Employees, who are engaged, perform better – they need to be engaged in something and believe in something.”

“Sustainability encompasses the simple principle of taking from the earth only what it can provide indefinitely, thus leaving future generations no less than we have access to ourselves.”

Sustainable Seattle

Jonathan Porritt, Forum for the Future

California Student Sustainability Coalition

“Sustainability is the “longterm, cultural, economic and environmental health and vitality” with emphasis on long-term, “together with the importance of linking our social, financial and environmental well-being.”

“Sustainable Development is a process, which enables all people to realize their potential and improve their quality of life in ways that protect and enhance the earth’s life-support systems.”

“Continuous improvement of life quality that protects and balances the ecological, social and economic environments.”

(http://sustainableseattle.org/)

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(http://www.foe-scotland.org.uk/)


Feature

THE SOCIAL DIMENSION OF SUSTAINABILITY Uwem E. Ite

T

of ‘Development’. The report, often referred to as ‘the Brundtland report’, defined Sustainable Development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Although this definition has become highly influential, the emphasis of the Brundtland Commission was not on ‘Sustainability’, but ‘Sustainable Development’. Yet there is no universal agreement on the precise definition of Sustainability. It is now clear that a desire for Sustainability, inherently, implies a concern for both the present and the future. Therefore, in its true form, Sustainability requires striking a good balance between the

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he concept of Sustainability has been widely used by business organisations, government agencies, Non-Governmental Organisations and civil societies. Its origins can be traced to the environmental movement, which emerged in the late nineteenth and early twentieth centuries. At that time, the term was widely used to draw global attention to the environmental damage, arising from certain kinds of human activities; which contributed to economic growth and development. In the process, most aspects of economic growth were, therefore, regarded as ‘unsustainable’ principally because the natural environment was being degraded on a large scale to achieve economic growth and development.

However, when the World Commission on Environment and Development (WCED) published its report, Our Common Future, in 1987, it provided a political platform for international debate and thinking on the ‘Sustainability’

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economic, environmental and social aspects of development. In other words, Sustainability is a threedimensional concept. This marks a significant departure and very clear shift from the original twoway perspective, which focused

solely on the seemingly ‘symbiotic’ relationship between the economy and the environment. As such, it is now very common to find the three aspects of Sustainability (economic, environmental and social) being represented as concentric or overlapping circles. To enhance the translation of the theoretical concept into practical use, Social Sustainability has been seen as the social preconditions for Sustainable Development or the need to sustain specific structures and customs in communities and societies. Based on this perspective, the traditional way of operationalizing Social Sustainability included the issues associated with basic needs like housing, education and skills, equity, employment, human rights, poverty, social justice. However, the emerging themes and domains of Social Sustainability now include issues related to demographic change; empowerment, participation and access; identity, sense of place and culture; health and safety; social mixing and cohesion; social capital; well-being, happiness and quality of life. It is important to note here that among the ‘three dimensions’ of Sustainability (i.e. environmental, economic and social), Social Sustainability has been the least theoretically developed, the least studied and the most overlooked. However, the relative lack of early and full understanding of the social dimension of Sustainability provided an opportunity for several social and political theorists to contribute to defining and refining the concept; thus creating confusion in the process. For example, it is now common to find the term social capital being used interchangeably


Feature

The tenets and ramifications of CSR have been widely articulated by global business leaders, groups and organizations. So, there is strong advocacy that business organizations take the lead in poverty alleviation, especially in developing countries.

These include: • Equity and human rights (e.g. poverty studies and unequal development), • Capital stock (e.g. social capital, environmental capacity), • Institutional theory and governance (e.g. participation and stakeholder analysis), • Business and corporate studies (e.g. triple bottom line, Corporate Social Responsibility), • Behavioural Sciences (e.g. well-being, health and the happiness perspective) There is no doubt that the themes and approaches highlighted above have provided the conceptual framework and foundation, which many organisations have used to develop and implement their Corporate Social Responsibility (CSR) projects and programmes. Clearly, the current ideas and thoughts on CSR are derived from the principles of Social Sustainability as evident in the themes and approaches outlined above. For example, poverty reduction is one of the major objectives of national governments, international organizations, Non-

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with Social Sustainability. Furthermore, it is also common to see ‘levels’ or ‘types’ or ‘stocks’ of social capital being used as an ‘indicator’ of Social Sustainability. From a purely research perspective, several approaches to Social Sustainability have now emerged.

Governmental Organizations and local communities. However, until recently, there had been limited business involvement in the debate due to the lack of clarity, regarding the role of business and the absence of detailed and explicit exploration of the links between poverty and business at the level of the individual firm or of the role that individual businesses can play in poverty reduction. The good news is that the business community have increasingly used the concept of CSR to establish a framework for broader private sector involvement in poverty alleviation. The tenets and ramifications of CSR have been widely articulated by global business leaders, groups and organizations. So, there is strong advocacy that business organizations take the lead in poverty alleviation, especially in developing countries. Similarly, it is now gradually accepted that multinational corporations can have positive impacts in developing countries through their CSR initiatives, which focus on many Social Sustainability issues, including the promotion of labour, human rights and cooperation with civil society. However, although there is powerful potential for CSR to make positive contributions in addressing the needs of disadvantaged communities, there are ways in which CSR could, whether by mistake or design, damage the same

communities politically, socially and economically. Therefore, there is need to explore the full ramifications of Social Sustainability whilst developing CSR strategies. In conclusion, it is clear from the preceding sections that a desire for Sustainability, inherently, implies a concern for both the present and the future. In order to fully capture Social Sustainability issues in CSR strategies, it is imperative that organisations use a range of approaches and methodologies for data collection and proper analysis prior to developing their CSR strategies. The approaches and methodologies include: Social Impact Assessments (SIA), stakeholder identification and engagement as well as Strategic Environmental Assessment (SEA); incorporating social issues.

Dr Uwem E. Ite is currently the Team Leader: Audit Compliance, Monitoring and Evaluation within the Sustainable Development and Community Relations Department of the Shell Petroleum Development Company of Nigeria Limited. The perspectives presented in this article are personal and does not in any way reflect the views of his employers. His previous publications on CSR and Sustainability can be found in various international journals including: Corporate Social Responsibility and Environmental Management; Sustainable Development; CSR Files; Journal of International Development and Review of African Political Economy. He can be reached through 08024299915 and uwem.ite@gmail.com.

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opinion

www.brandproblog.com

Four Sustainability Trends to Watch In 2012 Jones Lang LaSalle implementing similar requirements.

In 2012, major trends shaping the Sustainable Development movement include:

Transparency is also on the rise at the city level. CDP invited 58 cities worldwide to report Sustainabilityrelated data for the first time in 2011 and 42 responded, with 38 of them making their responses public. This year, CDP Cities is expanding its request to 150 cities and continues to see a high response rate, as well as extraordinary awareness and commitment on climate change issues by city leaders. These leaders recognize that managing energy, water and waste not only helps attract residents and business growth but also enhances quality of life in a variety of ways.

Transparency – Buildings, companies and cities are measuring and disclosing energy usage, carbon emissions and other information relating to Sustainability. Commercial building owners don’t always have a choice: Five major U.S. cities and two states have enacted energy performance measurement and disclosure policies to date, and nine more cities and states have bills under considerations, to help tenants and investors make better informed decisions. Buildings in Europe are required to display energy performance certificates and Australia is

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Corporations don’t require legal mandates to encourage disclosure. In 2011, more than 3,000 companies, including 404 Global 500 firms, voluntarily reported their carbon emissions, water management and climate change policies to Carbon Disclosure Project. In 2011, perhaps swayed by CDP’s 551 investor members; who use the information in deciding where to place more than $71 trillion in investment capital.

Global Consistency – Deeper Sustainability reporting by cities and

Transparency is also on the rise at the city level. CDP invited 58 cities worldwide to report Su stain abilit y-relate d data for the first time in 2011 and 42 responded, with 38 of them making their responses public ... Consistent measurement is important to corporations as they focus on Sustainability not only in their own operations but, increasingly, throughout their supply chain as well.own operations but, increasingly, throughout their supply chain as well.

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he road to Sustainability has been plagued with roadblocks, including an unprecedented global financial crisis and attempts by entrenched business and political interests to deny climate science. Perhaps the greatest obstacle has been the lack of consistent and comparable standards for defining and measuring Sustainability. Although these issues have yet to be fully resolved, many well-coordinated initiatives in recent years have pointed the way forward for companies and cities…


opinion

multi-national corporations has intensified the need for consistent ways to measure the effectiveness of energy, water and other Sustainability strategies on a worldwide basis. Given the wide regional variation in environmental priorities around the world, the end goal may not be a single global standard, but a way to translate local government and business practices into a common global vocabulary for measuring effectiveness and recognizing achievement. LEED, the building Sustainability rating system, which originated in the U.S., is now frequently pursued in many countries with their own systems, as owners seek to attract international tenants. ENERGY STAR, the U.S. EPA energy benchmarking standard, will soon be able to provide accurate ratings across North America, thanks to a new cooperative agreement with Canada. And in 2011, the International Organization for Standardization released the ISO 50001 standard for energy management systems, which includes specifications for measurement, documentation and reporting on energy consumption. Consistent measurement is important to corporations as they focus on Sustainability not only in their own operations but, increasingly, throughout their supply chain as well. And while CDP Cities is not attempting to rank the Sustainability of cities, it is developing a globally cohesive framework for understanding the effectiveness of Sustainability strategies pursued by different cities. Public/Private Collaboration – 2011 stood out as a year when government

A clear example is the December announcement of a $4 billion energy retrofit commitment by the U.S. Federal Government and 60 CEOs, mayors, university presidents and labour leaders. Called the Better Buildings Challenge, the eight-year initiative includes $2 billion in energy upgrades of federal buildings and another $2 billion of private capital to improve energy by 20 percent in buildings totaling 1.5 billion square feet. (Jones Lang LaSalle joined the Challenge with a commitment to work with owners on improvements at buildings totaling 98 million square feet.) The Better Buildings Challenge illustrates the alignment between business and government goals in seeking energy and carbon reduction. Achieving those goals also requires cooperation; for example, groups ranging from the World Economic Forum to Greenprint Foundation have called for changes to loan underwriting guidelines set by governmental bodies to facilitate financing of energy retrofits. More directly, U.S. states have found they can increase renewable energy installations at buildings by offering incentives that would make solar power cost-effective for owners within a relatively short period. As a firm that serves government and business entities, Jones Lang LaSalle sees tremendous untapped synergy between the two groups in achieving energy and Sustainability goals, particularly in the area of Public-Private Partnerships. As just one of many examples, airports and other government entities often have surplus land that is unsuitable for commercial property development, but could be leased to private companies for development as large solar energy installations. Focus on Solar Energy – Speaking of solar power, 2011 was a breakthrough year for new installations in the U.S., and continued growth is seen for

www.edupics.com

Achieving those goals also requires cooperation; for example, groups ranging from the World Economic Forum to Greenprint Foundation have called for changes to loan underwriting guidelines set by governmental bodies to facilitate financing of energy retrofits.

and business organizations explored their shared green goals and realized that Public-Private Partnerships and collaborative initiatives are often the best way to overcome obstacles to Sustainability. Some of these joint efforts will start to bear fruit in 2012.

2012, albeit at a slower pace. More than 1 gigawatt of photovoltaic solar energy capacity was installed across the U.S. in the first three quarters of 2011, according to the Solar Energy Industries Association (SEIA). By comparison, 887 megawatts came online in all of 2010, which represented a doubling of the total installed base at the time.

Solar energy installations at commercial properties drove much of the market growth in 2011, but the pace of new installations dropped significantly in the third quarter, SEIA reported. The big story going into 2012 is the unprecedented rise in utility-based installations, which jumped by 325 percent from the second to the third quarter. The strength of the solar market in 2012 and beyond will be affected by several variables, including basic supply and demand Economics, technological improvements, and the amount/type of available incentives. It is clear, however, that interest in solar energy continues to grow as payback periods grow shorter and fossil fuel costs continue to rise. 2012: Taking Sustainability to the Next Level The common theme to all these trends is of an industry poised to break through to the next level. The industry has moved swiftly through initial phases of understanding the basic costs and benefits, implementing low-cost initiatives, exploring more sophisticated strategies and navigating around roadblocks. Today, it is easier to see the opportunity for dynamic progress by cities, property owners and corporate tenants that have laid the groundwork for growth and success.

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Glossary

p

Plug-in Hybrid Also known as Plug-in Hybrid Electric Vehicles (PHEVs). Plug-in hybrids are similar in design to conventional Hybrids except that their battery can be recharged from an external power source such as electric vehicle charging points. As a result, they can travel significant distances, typically 40 miles, using just their electric motor before their internal combustion engine kicks in. They are being widely touted as a means of cutting carbon emissions and urban air pollution, while improving vehicle fuel efficiency to a level where cars can travel upwards of 250 miles on a single tank of fuel.

r

R&D Research and Development, Reducing Emissions from Deforestation and Forest Degradation (REDD). The Reducing Emissions from Deforestation and Forest Degradation (REDD) is a proposed UN scheme designed to provide developing countries with financial incentives to reduce the level of greenhouse gas emissions produced through deforestation and forest degradation. Renewable Energy Renewable energy refers to energy that is generated from an entirely renewable source. The main examples of renewable energy include hydro-electric power, solar, wind, biomass, geothermal, wave and tidal energy.

s

Smart Grid Smart grid is an umbrella term used to describe new energy grid technologies that provide utilities, grid operators, and energy consumers with real time information on energy use and the ability to automatically manage energy supply and demand. Smart Meters Smart Meter is a catch all term for energy meters that display energy use in real time, although it can also refer to energy meters that enable two-way communication between utilities and end users. Super Grid Super Grid is a term referring to continent-wide energy grids designed to link far flung renewable energy sources with population centres.

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Project Better Place Project Better Place is a high profile electric vehicle firm that is proposing an innovative recharging model for electric cars, which would see motorists simply swap empty batteries for fully charged versions at roadside refuelling stations.

Renewable Energy Association (REA) The Renewable Energy Association is a UK trade association for the renewable energy industry, covering all forms of renewable electricity, heat and fuel. Roundtable for Sustainable Palm Oil (RSPO) The Roundtable for Sustainable Palm Oil (RSPO) is a group of palm oil firms, including producers, traders and retailers that were formed to set global standards for environmentally sustainable palm oil.

Sustainable development Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.


Glossary

t v

TEEB study TEEB stands for The Economics of Ecosystems and Biodiversity. It is a high-profile three-year study exploring the economic value of nature, backed by the United Nations and funded by the European Union, Germany, the UK, Netherlands, Norway and Sweden.

Through a series of reports, drawing on expertise from around the world; TEEB aims to reveal the economic value of nature to help governments, communities and business better manage their impacts on the environment.

emissions and congestion, has seen 20,000 bicycles deployed at 750 distribution stations throughout the city. Value chain Generation, transmission, distribution and sale of electricity and heat.

Velib The Velib is a public bicycle rental programme originally launched in 2007 in Paris, France. The scheme, which has since attracted interest from other cities around the world looking to cut carbon

w

Video Conferencing Video conferencing refers to all online video communication tools that aim to replicate the experience of face-to-face meetings while removing the need to travel.

Waxman-Markey Bill Officially known as the American Clean Energy and Security Act 2009, the Waxman-Markey Climate Bill represented an early attempt to pass wide-ranging US climate change legislation.

Waste Electrical and Electronic (WEEE) Directive

Web Conferencing Web conferencing is an umbrella term for online meetings that allow individuals to communicate and share documents over the web, reducing the need for face-to-face meetings.

The Waste Electrical and Electronic Equipment Directive (WEEE Directive) came into force in January 2007 and aims to make firms that manufacture and supply electrical and electronic equipment legally responsible for its safe disposal.

Source: 1. www.gotrenewables.com 2. www.thesungate.com 3. www.lovetomorrowtoday.com 4. www.dft.gov.uk 5. www.webconferencingreviews.com 6. www.businessgreen.com 7. www.epaw.co.uk

8. 9. 10. 11. 12. 13.

www.vattenfall.com www.mhcinternational.com en.wikipedia.org en.wikipedia.org Zadek, Simon: The Civil Corporation Cadbury, Adrian (Sir): in Global Corporate Governance Forum, (World Bank, 2000) 14. Price Waterhouse Coopers

15. Oxford Dictionary 16. Rosthorn, John: Business Ethics Auditing – More Than a Stakeholder’s Try (Journal of Business Ethics 00: 1-11, 2000, Kluwer Academic Publishers, Netherlands). 17. en.wikipedia.org/wiki/Value_chain

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column

Rethinking the Linkages Between csr and Foreign Direct Investments Ini Onuk

I

just got back from the 17th edition of the Nigeria Economic Summit (my first actually) and the theme for this year was: Global Partnerships for Foreign Direct Investments. As I sat in the threeday event, my mind kept working on the linkages that exist between Corporate Social Responsibility (CSR) and Foreign Direct Investments (FDIs). So, I decided to go back to my research desk. As a development analyst and not an economist, I only look at the implications for Sustainable Development. As always, these are my musings – your thoughts and opinions are welcome. Increasingly, CSR has become a buzzword; possibly because it means different things to different people with the concept of CSR being vague, ambiguous, multidimensional and changing. To the business community, CSR is this annoying ‘thing’ that they have to do; FDIs on the other hand, are crucial to their survival, especially as Nigerian companies are also becoming MNCs and TNCs. There are two arguments at the heart of the current conventional wisdom about the role of Foreign Direct Investments, FDIs. The first is that FDIs provide value in developing economies via job creation and related income generation. Second, FDIs build local capacities that result in growing levels of know-how and innovation. However, the questions are: What is the evidence that FDIs - almost exclusively provided by businesses - actually promote sustained economic development in developing countries? Recently, the relationship between Foreign Direct Investments (FDIs) and Corporate Social Responsibility (CSR) has been made explicit by some authors (Frost & Ho, 2005; Goyal, 2006; Kolk & van Tulder, 2010; Lévy, 2007; Marchick & Slaughter, 2005), who claim that there is an evident connection

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between the rise of CSR and the rise of FDIs since the 1990’s. For instance, Goyal (2006) suggests that maybe CSR could be the result of the previous surge of FDIs as a business strategy to adapt to opportunities and challenges in their external environment. Ernst & Young’s analysis of Foreign Direct Investment projects shows that in the last decade, Africa has seen an increase in inward FDI from 338 new projects to the continent in 2003 to 633 in 2010 (an increase of 87%). Despite a drop in investment in the last couple of years, following a peak in 2008, Africa has remained an attractive investment destination throughout the global downturn and has managed to maintain its relative share of global investment flows as a result. Strong growth in new projects into Africa is expected from next year with FDI inflow forecast to reach US$150b by 2015. FDIs play a significant role in a country’s economic development. The capital formation, the transfer of technology and management skills, the sharing of information and ideas plus market access are all extremely valuable for all countries in general and for developing countries in particular. It is thus fundamental for a country to create favourable conditions in order to attract foreign investments. Multinationals could be seen as agents that can increase the host country’s competitiveness; their presence can result in technology transfers to domestic firms and also help in achieving a more efficient resource allocation. Moreover, it is argued that MNCs move forward the process of industrial development by creating spillovers to the rest of a country’s economy. In order to address the linkages, it is important to note that there are various theoretical frameworks behind FDIs and CSR. There are a

plethora of theories one can use to approach the different types of FDIs in the world and analyze the incentives of the corporations to make Foreign Direct Investments. Many different studies have been made to determine the characteristics and relations between host countries and its investors. CSR came to prevail due to the fact that there has been a change in the relationship between business and society during the last decade. The forces behind this development have been the globalization of trade, the increased influence of corporations, the decreased size and power of government due to increased private ownership structures, importance of stakeholder relationships and brand reputation. The stakeholder corporations and civil society organizations have changed from having a paternalistic philanthropic view towards the surrounding society to trying to figure out what the rights and responsibilities of corporations towards the society are . Corporations affect the society in many ways and as mentioned above, can have many positive effects for the host society through the means of capital inflow and spillover effects such as increased know-how and improved productivity. However, the corporation can also have negative effects on the host society, which is not always included into the costs they pay. This is because the costs are not always included into the traditional sense of costs. It can be argued that if external effects that corporations have on society can be internalized, a higher social welfare level can be reached. One can also argue that engagement in CSR can reduce the social welfare level, since there is a loss of consumer surplus when firms have less output at a higher cost and sell it at a higher


column price. Additionally, shareholders also receive reduced financial returns. Depending on which of these effects is the strongest, one determines whether or not the net social welfare effect of CSR activities is positive or negative. In industrialized countries, the external effects are often regulated, through taxes and laws, by the government to a greater extent than in developing countries. Owing to this lower level of regulation, it is likely that the Least Developed Country’s - LDC’s - social investments are below optimal level and thus CSR activities will have a net positive effect on aggregate social welfare level. As stated above, a corporation’s priority is to maximize profits. Therefore, it is interesting to discuss the relationship between Social Responsibility and economic performance. There are different opinions on this matter, which can be structured into three different viewpoints . The first viewpoint believes that there is a trade-off between Social Responsibilities and financial performance. Engaging in CSR will get in the way of profit maximization and it is therefore irresponsible of a corporation towards its shareholders to engage in CSR operations. The second viewpoint believes that the costs, occurring when the corporations embrace their Social Responsibilities, are marginal and are outweighed by benefits such as improved employee morale and productivity. The third viewpoint believes that CSR is important in itself and its costs are offset by a reduction of other costs. One of my quick conclusions is that CSR and the development effects linked to it depend on the actions and choices of any corporation. Analysts indicate that a partnership between the corporation and the host country is more favourable than a vertical relationship where the corporation invests with the pure incentive to benefit from the host country’s abundant factors of production (such as labour) and does not intend to create a longlasting business relationship. In order for vertical relationships to become more CSR friendly, CSR policies must become subject to more structured regulations, imposed and followed

up by some kind of international backing. Another angle is that the collection and presentation of statistical data of the development effects that CSR can bring with it should become more organized and should follow an international standard. In doing this, the effects of FDIs and CSR made by all sizes of businesses and in particular, the MNCs, can be easily contrasted and compared. This should work as

a means for stakeholders to compare different MNCs and their actions, thereby influencing them to take greater responsibility and somewhat incorporating them into a beneficial relationship with the host country there are investing in. It is also clear that both CSR and FDIs are expected to be endogenous because a higher level of FDIs can have an increase of responsible business practices, but a higher level of Social Responsibility within a country can increase its attractiveness for FDI inflows. It is believed that FDIs come with best practices, (but there are negatives too), not just in processes and technology; but also in community relations and practices of Sustainability (which speak to CSR). When local MNCs receive such FDIs, they often have to adopt these practices and the local community benefits, not just in increased productivity; more hiring, more taxes; but also in better relationships with the host community and the environment. A significant development is the World Bank’s “CSR Practice”, which advises governments of developing countries; on public policy roles and instruments they can usefully deploy to encourage Corporate Social Responsibility. This is predicated on

the hypothesis that “Governments are beginning to view CSR as a cost-effective means to enhance Sustainable Development strategies and as a component of their national competitive strategies to compete for FDI inflows and to position their exports, globally”. This assumes that consumers are increasingly concerned about the social and environmental impacts of the products that they buy and that

companies are therefore increasingly interested in investing in and sourcing from countries with good labour and environmental practices. It follows that some countries might seek to position themselves as locations for ‘responsible enterprise’, for example through encouraging and supporting domestic companies to meet voluntary standards and codes of conduct. No doubt, FDIs are essential for development and Sustainable Development at that. Certainly, it can play a key role in development, providing certain conditions are met as has been the case in the Newly Industrialised Countries (NICs) of Asia. But, there is also significant empirical evidence that FDIs complement, but do not substitute, local factors that are essential for development. The relationship between Foreign Direct Investments (FDIs) and CSR is shown in the figure above within the framework of my analysis. Goyal (2006) suggests that the linkage between FDIs and CSR has been long neglected, although it can have important consequences. For instance, CSR can serve as a signalling device, as well as the final equilibrium outcome for companies; entering the country.

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feature

Areas for Added CSR Commitment in sub-Saharan Africa

Source: www.betterbusiness.com

Julius Che Tita

Implications for Public Relations Practice The findings of the study revealed the low level of human and financial resources employed in the service of CSR. There was a clear absence of CSR in the organizational structure of most of the corporations. In addition, that lack of strategic implementation of CSR was evident may be as a result of the lack of human and financial resources. The absence of strategic implementation of CSR opens corporations up to economic risks because the corporation is more open to the activism of civil society organizations. At the moment, the environmental pressure present in the Cameroonian business community may be weak or nonexistent, but we are all too aware that this situation can change rapidly with unfortunate consequences for the corporations. There is always the lingering possibility that the latent power in civil society organizations and consumers can be mobilized at short notice to monitor and expose the irrelevance of the CSR activities of TNCs in Cameroon. With advances in communication technology, the

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threat may not be limited only to local activism.

for corporations, where these are nonexistent.

It is on the above grounds that there is a need for a more strategic approach to CSR by TNCs in Cameroon. At the moment, their participation in CSR is not strategic and may, at best, help them in building reputations; but they lose out on the possible competitive advantage they stand to gain (Porter & Kramer, 2002) in engaging in strategic CSR as well as the social capital they could amass and which could become handy if the tide changes. They must begin this by reacting to the acute shortage of not only CSR capacity, but even Public Relations staff in most TNCs. When asked about how the CSR performance of their corporations could be improved, most respondents identified the lack of competent Human Resources or the lack of time by staff, who had been hurriedly designated to handle occasional CSR activities to meaningfully contribute to it’s effective implementation. The financial implications notwithstanding, there are various management permutations that can be put in place and ameliorated as the need arises to immediately attend to CSR concerns, especially

Although a good number of the corporations had very scanty CSR programmes, evidence from the qualitative study showed that a few corporations that showed signs of CSR activity were overtly leaning on local CSR issues at the detriment of global CSR, maybe in an attempt to fulfill the egocentric intentions behind being seen to be giving back to the society. The ever-present threat

When asked about how the CSR performance of their corporations could be improved, most respondents identified the lack of competent Human Resources or the lack of time by staff, who had been hurriedly designated to handle occasional CSR activities to meaningfully contribute to it’s effective implementation.

(Continued from the last edition)


feature

The CSR pressures of globalization require that corporations must simultaneously attend to universal and local CSR issues... As regards human rights, the strong government with a poor human rights record frowns on corporations that may try to highlight human rights violations or even draw the attention of the public as to their rights

from international activism is not lost on this bias for local CSR issues alone. The CSR pressures of globalization require that corporations must simultaneously attend to universal and local CSR issues. The study shows that there is a need for corporations to show more evidence of universal CSR to the demands for integration and responsiveness. Granted, there are some justifiable reasons that make the effective implementation of global CSR a challenge. For instance, the unavailability of the necessary infrastructure and unpreparedness of the government. One of the respondents explained how he was required by rules and policies of the parent company to separate garbage into thrash, glass, and plastics but the municipal garbage disposal truck did not have the necessary collection equipment to separate the garbage. So, everything was lumped together in one container. As a result, the respondent was at a loss to explain to the staff why garbage had to be separated. As regards human rights, the strong government with a poor human rights record frowns on corporations that may try to highlight human rights violations or even draw the attention of the public as to their rights. Even in the face of these difficulties, TNCs have to fathom ways, in which they can overcome these difficulties so as to have a significant showing of global CSR initiatives. A significant observation is that two companies that had all their operations in Sub-Saharan Africa showed no interest in global CSR.

There was no mention of any globally-related CSR. TNCs domiciled in Africa must adhere to international expectations and also expect the same scrutiny that Western TNCs face by meeting up to their social responsibilities. It was also observed that a majority of African-based TNCs had very scanty CSR programmes. Conclusion The drive by corporations to cater for the local environment should be derived from either the strategic analysis of social issues, stakeholder demands or environmental pressure from the government, the civil society and/or political forces. The scanty CSR programmes observed during the study led the researcher to advance the concept of “token CSR” in relation to CSR activities by TNCs in Cameroon. The CSR activities for a majority of corporations bear unclear benefit for the corporations because they do not know and do not bother to enquire how their CSR involvement is beneficial to them or to the society. As a result, we can assume that the CSR activities are mounted only as a façade to show their engagement in the society and as such, justification for the term “token CSR”. As one participant rightfully put it, “people do CSR to tick the box because it happens to be en vogue”. Another participant confided that he had lost faith even in taking part in international CSR projects because he had personally noticed that most of the money was spent on logistics and facilitating the heavy bureaucracy that often, little was left for reliably advancing the identified project. The observations outlined above may not be generalized to include all the TNCs, operating in Sub-Saharan Africa. However, they are true for Cameroon and it is likely that these same gaps exist in some other countries in the region.

REFERENCES Akpan, W. (2006). Between Responsibility and Rhetoric: some consequences of CSR practice in Nigeria’s oil province. Development Southern Africa, 23(2). 223-240. Amaeshi, K. M.; Adi, B. C.; Ogbechie, C. & Amao, O. O. (2006). Corporate Social Responsibility in Nigeria: Western mimicry or indigenous practices? Research Paper Series, No. 39, International Centre for Corporate Social Responsibility. Baskin, J. (2006). Responsibility on Emerging Markets. The Journal of Corporate Citizenship, 24, 29-47. Basu, K. & Palazzo, G. (2008). Corporate Social Responsibility: A Process Model of Sense Making. The Academy of

Management Review, 33(1), 122-136. Blowfield, M. & J. G. Frynas (2005). Setting New Agendas: Critical Perspectives on Corporate Social Responsibility in the Developing World. International Affairs 81(3), 499–513. Bowen, S. A. (2005). Ethics of Public Relations. In R. L. Heath (Ed.), Encyclopedia of Public Relations (Vol. 1, pp. 294-297). Thousand Oaks, CA: Sage. Carroll, A. B. (1999). ‘Corporate Social Responsibility: Evolution of a definitional Construct’, Business and Society, vol. 38, no. 3, pp. 268-95. Clark, C. E. (2000). Differences between Public Relations and Corporate Social Responsibility: An analysis. Public Relations Review, 26(3), 363-380. Daniels, J.; D.; Radebaugh, L. H. & Sullivan, D. P. (2009). International Business: Environments and Operations. 12th edition. Upper Saddle River, NJ: Pearson Prentice Hall. Forje, J. W. (2006). Constructing a Developmental Nation: The Challenges of Science, Technology and Innovation in the Socioeconomic Transformation of Africa, Perspectives on Global Development and Technology, 5(4), 367-384. Fox, T. (2004). Corporate Social Responsibility and Development: In quest of an agenda. Development, 47(3), 29-36. Fox, T.; Ward, H. & Howard, B. (2002). Public Sector Roles in Strengthening Corporate Social Responsibility: A baseline study. Washington, D.C.: World Bank Group. Godfrey, P.C. & Hatch, N.W. (2007). Researching Corporate Social Responsibility, Journal of Business Ethics, 70,87-98. Kim, S. & Reber, B. H. (2008). Public Relations’ place in Corporate Social Responsibility: Practitioners define their role. Public Relations Review, 34(4), 337-342. Melkote, S. R. & Steeves, H. L. (2001). Communication for development in the third world: Theories and practice for empowerment (2nd Ed.). Thousand Oaks, CA: Sage Publications. Menand, L. (2001). The Metaphysical Club: A story of ideas in America. New York: Ferar, Straus & Giroux. Okoye, A. (2009). Theorising Corporate Social Responsibility as an Essentially Contested Concept: Is a Definition Necessary? Journal of Business Ethics, 89, 613-627. Oppenheim, J.; Bonini, S.; Bielak, D.; Kehm, K. & Lacy, P. (2007). Shaping the New Rules of Competition: UN Global Compact Participant Mirror. NY: McKinsey & Company. Scherer, A. G. & Palazzo, G. (2008). Globalization and Corporate Social Responsibility, In A. Crane, A. McWilliams, D. Matten, J. Moon & D. Siegel (eds.), The Oxford Handbook of Corporate Social Responsibility, (pp. 413431). Oxford: Oxford University Press. Porter, M. & Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 57-68. Starck, K. & Kruckeberg, D. (2003). Ethical obligations of Public Relations in an era of globalization, Journal of Communication Management 8(1), 29 – 40. Visser, W. (2008). Corporate Social Responsibility In Developing Countries, In A. Crane; A. McWilliams; D. Matten; J. Moon & D. Siegel (editors.), The Oxford Handbook of Corporate Social Responsibility, (pp. 473-479). Oxford: Oxford University Press. Wilcox, D.L.; Cameron, G.T.; Ault, P.H. & Agee, W.K. (2006). Public Relations: Strategies and Tactics (7th ed.). Boston: Allyn & Bacon.

(Concluded) Julius Che Tita, PhD

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special report

effective csr reporting for mediaAmarachukwu professionals Iwuala

I

n fulfilment of the commitment made at the Africa CEO Roundtable and Conference on Corporate Social Responsibility (AR-CSR) in June, 2011; ThistlePraxis Consulting Limited, Lagos, hosted a three-day residential training for select media professionals drawn from the print, electronic and online media organizations. The intensive training, which assumed the style of executive education programmes; took place at Protea Hotel, Oakwood Park, Lekki–Epe Expressway, Lagos with Dimeji Belo, Partner/Director, CESC Limited; Toni Kan, Managing Partner of Radi8, a PR/ Advertising company and Ini Onuk as facilitators.

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During the training tagged: Effective CSR/Sustainability Reporting in Africa, media practitioners were challenged to explore the opportunities inherent in social media for investigation of news stories on CSR. This charge was given by Ini Onuk, Lead Consultant/CEO of ThistlePraxis Consulting.Onuk, who noted that the objectivity of the mainstream media is in question, asserted that it is not the media, but the issue and asked journalists to device creative means of telling their stories. She tasked the participants on the imperatives of reading widely in order to stay abreast of developing stories and trends, remarking that it

is necessary to carry out studies and link reports before reporting or writing good feature stories that would get people thinking. Whilst expressing dismay over issues, which hinder proactive reportage such as: media bias, ‘editor’s choice of stories’, conspiracy of silence, broadcast/report delay, white washing and political correctness; Onuk challenged participants on the need to integrate balance, accuracy, timelines, clarity, boundary setting, reliability and human content if their reports will make impact. She maintained that there is still a


special report gap in the understanding of what CSR really is, averring that there is a link between CSR and development. According to her, it is erroneous to think that it is only the government that should be involved in social and economic development. She equally told participants that the training was hinged on the need to differentiate between philanthropy, CSR and Public Relations (PR). In his lecture: CSR and Sustainability, Mr. Belo emphasized the strategic role of the media in CSR, which include: identifying business goals and the purpose of the Social Responsibility Programmes; doing research to find out current business standards, using business cases; identifying the programme’s key stakeholders; understanding the visions/ missions of organisations and refining same where necessary. He also noted that the media should make it clear to organisations that if their CSR initiatives are not in line with their core competencies, they should engage credible NGOs/experts to execute such activities. In discussing CSR and What it can do for Your Business, Dimeji Belo enumerated the positive impacts of CSR, which are: improved reputation, better risk management, employee motivation, innovation and creativity. He declared the need for investments in human capital employee training and retraining; highlighting the importance of investing in environmentally responsible technologies and business practices as well as managing change and reconciling Sustainable Development with improved competitiveness. The point of convergence between PR and CSR, according to Toni Kan, lies in reporting; which is done in these four steps: definition, performance, measurement and improvement. In definition, an organisation states how its business is to be conducted and its responsibilities managed. Performance denotes outlining projects that are to be carried out and the performance indicators, which are to be noted, while measurement means taking inventory; the entity

holding itself to account and seeking metrics for determining and reporting performance, for example the GRI and the UN Global Compact. Through improvement, an organisation ensures that drawbacks identified in the project are corrected. He informed the participants of their roles in CSR compliance, which include: ensuring that organisations are held accountable by charting agendas for them; public education reporting events as they occur, showcasing a history of events and trending topics. Kan noted that the job of the media is jeopardized when showcasing precedes the actual work and when the information fed the media is wholly accepted without investigation. He reminded journalists to be armed with their cameras at all times, reiterating the need for integrity. Differentiating between CSR, Corporate Charity and Philanthropy, was a very interactive session facilitated by Ini Onuk, who said that whereas philanthropy is dependent on profit, CSR subsists whether there is profit or loss. Charity, she noted, is often used in connection with the money and goods given to the needy in society. According to her, if CSR is not solving a social problem, then, it is not CSR. She enthused, “CSR is not goodwill, corporate community involvement or strategic corporate philanthropy. It is not just giving. Rather, it is a genuine process, through which an organisation builds an enduring relationship between the corporate sector and the rest of the society, a feat that can only be achieved when a business adapts all of its practices in ways that meet or exceed the legal, ethical and economic requirements.� In other words, CSR takes the whole business model into consideration as organisations seek to act as a force for the good of society through CSR. She decried the contemporary practice in Nigeria and most parts of Africa, where CSR is a unit under the corporate communications departments of ogranizations, allowing elements of PR and branding to come into play.

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special report

In projecting the future of CSR, Onuk was confident in an increased investor clout, where the capital market will be central in establishing incentives that drive corporations towards CSR. She equally predicted the emergence of ethical (more powerful) consumers; a shift to stakeholder dialogue and the increasing sophistication of NGOs, who are more coordinated, challenged and divided; forming the climate of the industry. There would also be more watchdog/advocacy groups, working across sectors and internationally on global issues of concern. She also believes that standardized and differential CSR management systems would be established, leading to improvement and impact. On the first day, the participants who had listed some of their expectations from the training to include: an understanding of best practices in CSR, continentally and internationally since CSR is supposed to speak for itself rather than be advertised; the linkage between CSR and Sustainable Development; what effective CSR, empowerment and development are; were satisfied with the content of the course at the end of the day. Those, who equally wanted to know where to draw the line in presenting the CSR activities of organisations so that it does not sound like PR and how to differentiate between PR and core news, had all their questions, case studies and scenarios sufficiently treated. Others, who wanted to be sure of where the role of government ends and that of organisations begin; why organisations should be held accountable when the government is not doing much; priority setting in CSR projects; the role of the media in CSR; the role of community leaders; the linkage between Foreign Direct Investments and CSR on the one hand and CSR and foreign aid on the other plus the applicable legal/regulatory frameworks or whether CSR is voluntary, all exchanged ideas and argued passionately in the course of the training. Undoubtedly, the training exceeded expectations as attested to by the participants themselves through the assignments, recommended reading texts, videos and group tasks employed to inculcate effective CSR reporting. ThistlePraxis Consulting plans to conduct the training twice annually, beginning from 2012 and hopes to traverse the African continent with it. Perhaps, the essence of such capacity development initiatives is summarised in a United Nations Environmental Programme (UNEP) observation that: “The media sector – broadly defined – could become the dominant industry of the 21st century ... No other industry will so powerfully influence how people and politicians think about CSR and Sustainable Development priorities.” To download a copy of this report with more pictures, visit www.thistlepraxisconsulting.com

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events

sustainable 2011 conversations Amarachukwu Iwuala tm

T

histlePraxis Consulting Limited, Lagos, recently hosted a Thought Leadership Breakfast meeting at the Radisson Blu, Anchorage Hotel, Ozumba Mbadiwe Street, Victoria Island, Lagos, with the theme: Fast–Tracking Sustainable Development in Nigeria. Ini Onuk, Convener and Lead Consultant/CEO, ThistlePraxis Consulting noted that the idea behind Sustainable Conversations is Thought Leadership, which involves talking and taking action. It will be recalled that at the maiden edition of the Africa CEO Roundtable and Conference on Corporate Social Responsibility, AR-CSR™, Onuk had canvassed an African Alliance on Corporate Social Responsibility. In her presentation entitled: Building Effective Business Alliances across Borders, she had called for synergy that would boost the credibility and brand profile of organizations, strengthen their ties and offer them access to networks whilst providing assistance for capacity building and increased impact.

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In line with these, Onuk had also promised that ThistlePraxis Consulting would engage relevant stakeholders and represent an advocacy front for the African continent in order to form standards that organizations can aspire to. Consequently, Sustainable Conversations is one of the fora, which ThistlePraxis Consulting has employed in keeping this commitment. The lead discussant was Dr. Shamsudeen Usman, Nigeria’s Minister of National Planning and Vice Chairman of the National Planning Commission, who was represented by Dr. Dapo Oyewole, his Technical Adviser on non-profits and Internal Agency Liaison. Other discussants included: Ndidi Nwuneli, the pioneer Executive Director of FATE Foundation, Founder: LEAP Africa and co-founder of AACE Foods, an indigenous agro-processing company; Dr. Akudo Ikemba, Founder/CEO, Friends of the Global Fund, Africa; and Dr. D.K. Twerefou,

Senior Lecturer, Department Economics, University of Ghana.

of

In his opening remarks, Dr. Usman, emphasized that a mechanism that would ensure wealth distribution without compromising ecological protection is indispensable; declaring that it is always chaotic when population growth rate exceeds economic growth rate in any economy. He also stated that Nigeria’s population (which grows by 2.5% annually) is expected to hit two hundred and ten million by 2020 and therefore, the country is positioning herself to tap into the opportunities that lie in such a teeming population. Dr. Akudo Ikemba advocated Public– Private Partnerships in the health sector, which will significantly improve Nigeria’s abysmal Human Development Index. She decried Nigeria’s alarming maternal mortality rate, which stands at one death in every eight women during child birth in comparison with countries such as the United States, which stands at one in four thousand, eight hundred


events

deaths during child birth. She also expressed dismay over the current life expectancy in the country, 48 years in comparison with an African country like Mauritius, which boasts of 72 years. The dismal infant mortality statistics in the country (88 deaths in every 1,000 live births, mostly of preventable diseases), due to lack of basic support, in her opinion, was intolerable. Asserting that CSR is at the forefront of Nigeria and Africa’s development, Dr. Ikemba also stressed the fact that the Nigerian private sector underestimates its capacity to influence public policies. Dr. Daniel Kwabena Twerefou commenced his remarks with the definition of Sustainable Development by a Nobel Laureate, as inter and intra-generational equity. In other words, it denotes the capacity to meet the needs of the present generation without jeopardizing the capability of future generations to meet their own needs. Twerefou reiterated that

Sustainable Development means spending the interest accruing from resources and not the capital - even in the oil industry. Drawing from her vast experience in development and recent sojourn in entrepreneurship, Ndidi Nwuneli, remarked that the triple bottom line - people, planet and profit should be emphasized if Sustainable Development is to be achieved. Whilst re-iterating Dr. Twerefou’s opinion, she added that Agriculture should not be neglected because it employs about 70 percent of the Nigerian population, who spend about 50 to 60 percent of their incomes on food as against twenty to thirty percent that people spend on the same item in more developed economies. Nwuneli called on the government to remove import waivers on imported food so as to encourage local production. She equally berated the government for formulating contradictory policies instead of showing single–minded persistence in fighting corruption so

as not to hamper the development of the agricultural sector. Guests were invited to ask questions and make comments with emphasis on the solutions to fasttracking Sustainable Development in Nigeria. In response to some comments, the National Planning Minister declared the preparedness of the Jonathan administration to tackle the absence of long– term projections that has plagued Nigeria for so long; stating that the transformation agenda is aimed at a holistic rebirth of the country. He observed that lack of commitment; continuity and consistency in policy implementation have only resulted in the growth and development of the nation’s economy without a corresponding improvement in the overall welfare of Nigerians. In her contribution, Oyinkan Badejo–Okunsanya, Senior Special Assistant to Lagos State Governor, Mr Babatunde Fashola, on Justice Sector Reforms, revealed that there

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events is a disconnect between the public, private and not–for– profit sectors. She stated that rather than forming pressure groups to influence policies of government, the key players, sadly, only compete. Kunbi Wuraola, Executive Director, Junior Achievement, Nigeria; who spoke on behalf of Nonprofits, reminded the business leaders that NGOs exist primarily to execute projects within the CSR sphere in order to ease the job of the business entities, allowing for proper concentration on their core competencies. She underscored the importance of correcting the erroneous thinking in several quarters that NGOs are set up to attract only charitable hand-outs. A highlight of the event was the discourse of Nestle Nigeria’s collaboration with the International Institute of Tropical Agriculture, IITA, Ibadan; MATNA Foods, Akure; Nigeria Starch Mills, Uli, Anambra State (two large-scale cassava processing industries) and cassava farmers by Nestlé’s Executive Director, Marketing, Mrs. Iquo Ukoh. Under this scheme, small scale farmers in target communities are supported to increase production per unit area while effective markets are developed for the product. IITA develops clusters of farmers; supplying them with cassava varieties that are high yielding (i.e. high in starch content), disease resistant and commercially viable. In turn, the farmers provide a constant supply of tubers to the processing industries to enable them satisfy Nestlé’s demands. The large-scale processors are responsible for marketing the tubers produced by the farmers; thereby raising production at the grassroots. Through this project, the farmers are exposed to beneficial management practices. Ukoh noted that the cassava initiative is in tandem with Nestlé’s policy of procuring raw materials for its business from local

suppliers. The partnership, she espoused is aimed at the long-term and sustainable commercial production of highquality cassava starch in Nigeria with a view to increasing its commercial value. It is also expected to reduce poverty and generate employment among rural dwellers while ensuring food security in the long run. In his closing remarks, Dr. Usman called on stakeholders to partner with the Ministry in sensitising and mobilising the populace to accept the sustainable approaches inherent in the current administration’s transformation agenda, which seeks to further position Nigeria to achieve the vision 20:2020. Dr. Ikemba expressed happiness that businesses are becoming more responsible and accountable while NGOs are beginning to meet their targets; making meaningful impact in Nigeria since Sustainable Development entails having and funding a feasible agenda. The event was wrapped up by the Lead Consultant/CEO, Ini Onuk after about two hours of brilliant exchanges and intellectual discourse on Sustainable Development. Although the participants wanted to engage more, the meeting had to end in keeping with the promised duration of the event. However, many guests stayed back to conclude discussions and network over breakfast. The climax of the event was the presentation of plaques to the discussants. A white paper to be submitted to the Ministry of National Planning and ECOWAS ahead of the Regional Conference on Sustainable Development is underway.

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in print Title:

The Responsible Business:

Reimagining Sustainability & Success

Author:

Carol Sanford

Publisher:

John Wiley and Sons Ltd.

ISBN:

978-0-470-64868-1

Reviewer:

Elaine Cohen

W

hen Carol Sanford speaks, it is well worth listening. In her first book, The Responsible Business, Carol defines what a responsible business is (“a co-creative partner, ensuring the vitality and health of all the communities to which it belongs”) and what it is not (“a set of metrics to be tracked or behaviours to be modified”). Responsibility is “central to both the purpose and the prosperity of a business and must be pervasive in its practices”. Carol goes on to reinforce the concept of responsible business with case studies from her vast experience of consulting to Fortune 500 and other companies, with stories from Herban Feast, Kingsford Charcoal (now part of the Clorox Company), Colgate, Seventh Generation (in the Jeffrey Hollender heyday) and E.I. Du Pont, before summarizing the five recurring themes that turn companies into responsible businesses: Reality - connecting to the real lives of stakeholders; Systemic Effects - as the only measures of success; Systemic Wholes - to combat fragmentation and promote integration; Self-Direction the redesign of work to “evoke self-directed people, doing self-directed work that is selfevaluated within the context of a business strategy”, and Capability Development building critical thinking skills for internal and external stakeholders. The Responsible Business continues with multiple stories from companies that have applied the Pentad model and the successes they have achieved. Taking us through a tour of how the brain works in order to

46

unlock creativity and “conscious choice”, Carol builds her case competently and with the wisdom of a business veteran. In The Responsible Business, you can read about “urban acupuncture” and the turnaround of a Brazilian city, Curitiba; the way Google changed the game on bandwidth auctions; how Procter and Gamble applied their guiding principles in their plant in Lima plus how Seventh Generation and Whole Foods worked together in “co-creation” to provide freedom of choice for customers, etc. The Responsible Business is an intensive read with a worthy central message, substantiated by years of practical experience and deep insights. For anyone who has not yet subscribed to this approach, the Pentad model may be just what you need. This is an excerpt of the full review. The full review was first published on CSRwire.com on 19th April, 2011.


CSRFiles Edition 3  

Sustainability: The 'S' of Business

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