Corporate Social Responsibility: What Works

Transcription

1 Corporate Social Responsibility: What Works Rendezvous Outdoor Industry Association October,

2 Today s Business Environment Global marketplace More complex supply chains that hide risks Different local standards with variable enforcement Price pressures Increased attention and communication through campaigns and media attention Consumer interest in green and sustainable products 2

3 What is CSR? Definition Achieving commercial success in ways that honor ethical values and benefit people, communities and the natural environment -Business for Social Responsibility 3

4 What is CSR? Contemporary Issues Access and equity Biotechnology Climate change Community economic development Corporate governance Diversity/equal opportunity Environmental stewardship Executive compensation Global ethics (bribery, conflicts of interest) Human rights/labor rights Marketplace integrity Privacy Public policy engagements Social & environmental transparency Stakeholder engagement 4

5 What is CSR? Key features CSR is about managing a company s social & environmental impacts in a way that meets or exceeds legal standards CSR is a comprehensive set of policies, practices and programs integrated into business operations, supply chains, and decision-making processes throughout the company -- wherever the company does business CSR includes responsibility for current and past actions as well as future impacts. 5

6 Evolution of CSR CSR 10 Years Ago Focused on risk avoidance Primary goal was license to operate Stakeholders were shareholders Voluntary practice for companies Charitable contributions highlighted Limited number of companies involved 6

7 Evolution of CSR CSR 10 Years Ago Activist campaigns helped shape a generation of young people s attitudes towards highly visible, large brands and retailers Consumer awareness heightened Companies adopted Codes of Conduct Go it alone strategy for companies responding to issues 7

8 Evolution of CSR CSR Today Considered a core business principle for many companies Includes social and environmental impact of core business operations and products Relies on calculation of Return on Investment Operates in environment of complex global standards, laws and initiatives Relies on a wide array of stakeholders 8

9 How Can CSR Drive Business Success? A meta-study of 80 studies finds 53% have a positive relationship between CSR and financial performance, 5% negative. -- Margolis and Walsh, 2001 A meta-study of 52 studies finds that CSR and financial performance are positively correlated and mutually reinforcing. -- Orlitzky et al,

10 How Can CSR Drive Business Success? Improved financial performance Better management of operational inputs Employee recruitment and retention Customer attraction and retention Enhanced reputation Increased productivity and quality Reduced regulatory oversight 10

11 What s Working Common Themes Company Level Increasing recognition of responsibility for supply chain Acknowledgement that conditions are improving in some areas Increased collaboration More than 350 companies have supplier codes Internal social compliance departments Increasing resources devoted to auditing, training, tracking conditions in factories Supplier Level Improved communication and partnership with suppliers Code implementation 11

12 Remaining Challenges Company Level External Culture of compliance created by topdown approach without adequate buy-in at supplier/factory level Code compliance inadequately integrated into purchasing decisions Transparency efforts not meeting stakeholders needs Many industries still without policies On-going poor conditions in many locations Lack of enforcement by local governments Some limits to collaboration 12

13 Beyond Monitoring Model Building a Public Policy Framework Sustainable Supply Chain Practices 13 Supplier Worker Empowerment Ownership and Accountability Courtesy of BSR Internal Alignment of Social and Commercial Objectives of Buyers

14 CSR & Outdoor Industry Recent Research Outdoor executives believe they should do more to integrate sustainability into business practices 1 Companies keenly interested in cross-brand collaboration 87% of outdoor industry consumers are seriously concerned about the environment Consumers believe that when economic growth and environmental protection are in conflict, the environment should come first. 1. Bainbridge Graduate Institute (BGI) study of the outdoor industry, December

15 CSR & Outdoor Industry Recent Research Consumers that ranked companies as having a high level of commitment to corporate social responsibility could not name one specific example 1 of these commitments. Conclusions: the industry benefits from a halo effect with consumers a gap exists between what consumers think the outdoor industry is doing and what the outdoor industry perceives it is doing. 1. Study conducted by REI 15

16 What is Collaboration? Voluntary participation in non-competitive activities by competitors Collaborative activities include: setting standards sharing information education and training creation of measurement tools engaging stakeholders harmonization of sector wide activities so that all buyers and all suppliers in an industry are playing by the same set of rules 16

17 Benefits to Collaboration Cost efficiencies are possible Collective leverage is more powerful than individual company efforts Reduction of duplicative efforts, which can be overbearing for suppliers Increased effectiveness of compliance efforts with collective energy and knowledge Avoids free rider problem Reputation of industry impacted by every company 17

18 Potential Risks to Collaboration More time-intensive than individual company efforts in the beginning Cannot absolve the industry and its members of the systemic challenges that plague labor rights in a supply chain Danger of collusion, without proper legal protections - no collective action with the intention of raising or lowering the price of goods for consumer Collaboration cannot protect an industry from the occasional bad press day 18

19 Industry Collaborations American Footwear and Apparel Association (AAFA) Automotive Industry Action Group Chocolate Manufacturers Association Electronics Industry Code of Conduct Fair Labor Association Leather Working Group International Council of Toy Industries Pharmaceutical Supply Chain Initiative Sustainable Agricultural Initiative Worldwide Responsible Apparel Production 19

20 Collaborative Initiatives Education and Training Sharing of Best Practices Public Reporting Joint Code of Conduct Measurement Tools or Guidelines Advocacy Convening Stakeholders AAFA X X X X Auto X Chocolate X X X X Electronics X X X X X FLA X X X X X Leather X Toys X X X Pharma X OIA (current) X X OIA (future) 20

21 What is OIA Doing on CSR? Fair Labor and ECO Working Groups: Highly motivated, member-driven initiatives Participation from over 100 OIA member companies In existence for twoplus years Each WG has identified a vision, mission and objectives that serve member companies, OIA and the industry at large. 21

22 What is OIA Doing on CSR? ECO Working Group: Seeking to develop environmental impact evaluation tools, programs, education and communication to stakeholders and consumers that will direct product life cycle and informed purchasing decisions. As a first major step, ECO WG has created a 3-year business plan to develop, test and make available to OIA members an ECO Index with the assistance of an expert convener. Index will be used by companies to progressively evaluate and proscribe an organization s ecological impact and behavior Recommended expert convener has been selected and is present at Rendezvous 22

23 What is OIA Doing on CSR? Fair Labor Working Group: Published a Toolkit in 2006 that defines workplace compliance benchmarks for factories and serves as a platform for shared learning. Plans for the Future: Expand factory Assessment & Improvement Tools (or Tool Kit), Education Initiatives, and Collaboration Initiatives Amongst OIA Members & Strategic Stakeholders 23

24 What Works: A Few Tips Decide what s important Create partnerships with supply chain - setting realistic expectations Share and collaborate Integrate with the business Engage in honest communications with stakeholders 24

25 The Cahn Group, LLC is a corporate responsibility consultancy dedicated to creating sound business practices that are consistent with societal needs and stakeholder expectations. For more information contact us by phone: by info@thecahngroup.com or visit our website: 25