Corporate Social Responsibility as a Business

Society Business Corporate Social Responsibility as a Business Strategy Ekwunife Okoli Managing Director, Guinness Ghana Breweries Limited June 2nd 2011

SESSION OUTLINE 1. Today s World is a tough place, 2. Today s Business Organisations have a duty to help 3. Corporate Social Responsibility is part of business strategy 4. Evaluating corporate social responsibility 6. Benefits of Good CSR 7. Conclusion

If we reduced the world's population to a village of 100 people, it would look like this: 60 Asians, 14 Africans, 12 Europeans, 8 Latin Americans, 5 USA/Canada, and 1 South Pacific 51 male, 49 female 82 would be non-white; 18 white 67 would be non Christian; 33 would be Christian 80 would live in substandard housing 67 would be unable to read 50 would be malnourished and 1 dying of starvation 33 would be without access to a safe water supply 39 would lack access to improved sanitation 24 would not have any electricity (And of the 76 that do have electricity, most would only use it for light at night.) 7 people would have access to the Internet 1 would have a college education 1 would have HIV 2 would be near birth; 1 near death 5 would control 1 third of the village s wealth 33 would be receiving --and attempting to live on-- only 3% of the income of "the village" - Based on UNDP and CIA Factbook data 4

Over 70% of the world remain poor 5

By 2050, population growth is expected to rise significantly By 2050, 2.4 billion more people will share the planet than in 2010 Almost all growth will be from less developed markets The US is one exception, expected to grow 44% Part of the growth is due to life expectancy rising from higher standards of living, and progress in HIV prevention This may shift the health agenda even further to non communicable disease Note, however, in growing poor urban populations, life expectancy could decrease 6

and this will put additional stress on the environment and society Over 1 billion people do not have access to clean drinking water MAP OF WATER STRESSED SITES 7

Africa is rich in diversity and culture but has real development challenges World s 2nd largest continent 1 billion people Hugely diverse in culture: 45% population are Muslim, 40% Christians 1000 recognised languages spoken However, Africa remains the world s poorest and most under-developed continent 34 out of the bottom 42 ranked world nations are African Approx. 64% of employed Africans make less than $1.25 per day majority spent on food 2/3 people with HIV/Aids live in SSA, 60% are women 1 in 7 children under 5 years die Adding to these issues Climate change effects, water scarcity, food security, population growth, urbanisation, food security 8

Society Business Today, corporate organisations have many stake holders whose interests have to be taken into account Employees Shareholders Consumers and customers Suppliers Government Communities and society at large

Society Business Businesses are now required to consider and, indeed, intentionally to manage the wider social and environmental consequences of their actions, beyond the requirements of the legal and regulatory settings in which they operate. CSR is about how companies manage the business processes to produce an overall positive impact on society. CSR is about business giving back to society Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis". - Mallen Baker, CSR Consultant

Society Business Corporate social responsibility is a process by which corporate bodies customers conduct business whilst acting in the interest of the society. Treat employees, and suppliers fairly Ensures products are safe to society and educates customers Acts with the highest level of integrity and transparency Enriches the community Preserves nature Good shareholder returns

Society Business Ignorance Poverty CSR is even more critical in No infrastructure Africa No social security Laws are not enforced

We can create shared value for both Business and society Societal Needs & Stakeholder expectations Business interests Economic development Profit growth Food & water security Beating the competition Peace & security Great customer Health & wellbeing Shared relationships Education systems value! Cash optimization Infrastructure The best talent Biodiversity Winning culture and Environmental stability reputation 15

However, this strategy relies on our ability to integrate CSR into the business 1. Identify and support CSR projects that create shared value for Diageo and society New initiatives should support global and regional value creating priorities Stakeholder engagement is integral for validating potential societal impact 2. Our efforts should extend beyond our operations, including: Customer partnerships Consumer engagement Supplier management 3. Sustainability and Responsibility can not be the sole responsibility of Government all stakeholders of the society are accountable 16

In GGBL our CSR strategy aims to manage these material issues 17

CSR is embedded into our strategy Society Business PURPOSE VALUES Vision Celebrating life, every day, everywhere Proud of what we do Be the best Passionate about consumers Freedom to succeed Valuing each other The most celebrated business in Ghana STRATEGIC AREAS OF FOCUS Our People and Partners Our Brands and Innovation Our Communities and society 1. Responsible enjoyment of alcohol OUTCOMES 2. Consumers enjoy quality products within an equitable regulatory framework 3. Enriched economic and social life in the community 4. Caring for the environment, operating sustainably in the use of natural resources 5. Highest International standards of corporate governance 6. Investors gain superior value from Diageo

Society Business National Alcohol Policy 1. Responsible enjoyment of alcohol Employee alcohol policy Responsible Drinking Initiatives Drink drive Advertising Drink IQ

Society Business 2. Consumers enjoy quality products within an equitable regulatory framework Diageo Marketing Code Tax and duties Responsible Drinking Initiatives

Society Business 3. Enriched economic and social life in the community Responsible Drinking Water of life Sorghum farming

Society Business Effluent treatment 4. Caring for the Environment Usage of water

Society Business 5. Highest International standards of Corporate governance Code of Business Conduct 100% compliance (Sabarnes-Oxley act) Shared values

Society Business It is a responsibility, not a gift, to society In GGBL, CSR is not charity. It is a way of doing business, not a one-off It is in the long term interest of everyone, including the corporate body itself. It is crucial in Africa it will be a grave sin to act otherwise

Opportunities to build inclusive business exist all along the value chain Affordable products/ formats Local sourcing, non commercial farmers Outsource to SMEs, extend business frameworks Employ low income women / people Design Procurement Manufacturing Distribution 25

Target Budget Measure Water: Number of beneficiaries Usage rate Sorghum: Number of farming families Yield, Tonnes per hectre Environment: Water usage: Discharge, etc Social Impact: Revenue to Government Employment numbers, Local suppliers Various sponsorships Review

Target Budget Percentage of Profits or NSV Project cost basis Measure Review

Target Budget Measure project impact Measure Socio economic impact of entire business Best practice is to use independent org. Report performance publicly Review

Target Budget Measure Review Management accountable for performance Use report to make changes where required.

What are the benefits of Good CSR Reputation Doing the right thing Trust cust, Govt, consumers Public admiration and Goodwill Benefits Sustainable Environment Makes the world a better environment to do business.

There are four ways CSR could create value for GGBL Society Diageo REVENUE Increase volume Grow brands Launch new innovation Build great customer relationships INTANGIBLES Build great reputation and high stakeholder trust Drive high employee engagement Recruit and retain winning talent COST REDUCTION Reduce COGS Find other savings through efficiencies RISK AVERSION Mitigate regulatory, tax and social license risk 33

Companies with the most compelling programs link CSR directly to their purpose DIAGEO We meet everyday needs for nutrition and hygiene that help people look good, feel good and get more out of life. In line with this purpose, Unilever developed a ground breaking Sustainable Living Plan Celebrating Life Everyday This is the purpose of Diageo, and is so linked to Diageo s intent of enriching its comm- Unities. Avon s business model not only creates products for women, but its usually sold by the Avon lady Their CSR focuses on issues identified through surveying women around the world For example, they are the largest female microlender in the world 35