Corporate Social Responsibility

Surveys and Trends

(more articles)

• Irish CSR Survey
• Australian CSR Survey
• Global CSR: 7 Country Survey
• Business Ethics Perceptions & Ethical Branding
• U.S. 100 Best Corporate Citizens 2007
• Global 100 Most Sustainable Corporations in the World
• Edelman 2007 Global Business Trust Survey
• Business and Society Highlights 2006
• South Africa: the Private Sector and Women's Access to Finance
• Tomorrow's Value: SustainAbility's 2006 Reporting Benchmark
• Human Rights Policies of the Fortune 500
• Dow Jones Sustainability Indexes 2006
• "Tomorrow's Global Company" Inquiry
• 100 Best Corporate Citizens
• Ceres Report on Climate Change
• Key Concerns of Top Executives (New McKinsey Report)
• CSR in Emerging Economies (Accountability's New Report)
• Global 100 Most Accountable Companies
  
  

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Irish CSR Survey

Corporate Social Responsibility is often perceived differently within various organizations and across different countries. This survey examines how many Irish businessmen understand CSR and how it should be implemented.

The contents of this report was undertaken and completed by Alan Tyrrell with the assistance of Accountancy Ireland, the official magazine of the Institute of Chartered Accountants Ireland (ICAI). Tyrrell is a Group Media Relations Manager for Hibernian Insurance. He can be contacted via e-mail at alan.tyrrell@hibernian.ie.The executive summary of this report, released in May 2007, is reproduced here with the permission of Mr. Tyrrell.

A survey of Irish companies on their approach to corporate social responsibility shows that almost 70 percent of respondents are already investing in CSR, with 40 percent spending more now than two years ago. However, the results also show that CSR is among the most vulnerable items when financial cutbacks are required, and respondents could show little evidence of a direct link between CSR and increased profitability.

The survey was undertaken to provide a benchmark on CSR attitudes and behaviors in Ireland and was focused on finance and accounting executives in Irish business. While the results are mainly positive, there are also some strong contradictions in attitudes toward CSR and its interplay with business practice, corporate strategy and profitability.

What is CSR in practice?

In order to develop a deeper understanding of how respondents define CSR, they were asked to distinguish between CSR and standard business practice for a series of items.

What CSR is:

• 92% of respondents stated that supporting charities is CSR
• 83% of respondents categorize activities to help solve social problems like crime and poverty as CSR
• 77% of respondents said that CSR means exceeding legal or regulatory obligations in areas of business operation such as health and safety and consumer rights. This result shows that most respondents have moved beyond a legal compliance model of business practice and toward full engagement with proactive standard setting.
• 66% stated that managing the supply chain to ensure that suppliers respect human rights is CSR
• 62% identified CSR as taking measures to ensure that products do not harm the environment
  
  

What CSR is not:

• 87% of respondents said protecting health and safety of employees is standard business practice
• Making website and sales literature customer friendly is seen as standard business practice by 79%, compared to 16% who see this as CSR action
• 70% see the provision of transparent product information as standard business practice
  
  

Interestingly 25% state that ensuring the company does not engage in bribery is CSR rather than standard business practice. Given that the sample was drawn predominantly from accountants it is equally interesting that 10% of respondents state that accurate management and reporting of company finances is an act of CSR as opposed to standard business practice. One wonders what businesses this minority operate in!

Communicating CSR

When asked about communicating CSR, 56 percent of respondents agreed that many companies do a great deal more for their communities than is talked about or known, and 40 percent of respondents stated they had received positive media coverage of their CSR actions in the past two years. Just 22 percent of respondents stated that they formally communicated CSR actions to investors.

Contradictory views

Apparent throughout the results were seemingly contradictory views on the interplay between CSR and business. For instance:

• While 78 percent agreed that businesses generally do not pay enough attention to their social responsibilities, 65 percent of respondents stated that CSR needs to be a priority.
• Eighty percent stated it was important for companies to expend resources to improve the communities in which they operate. However, 66 percent stated that many companies promote CSR but are not truly committed to it. When presented with a series of priorities to choose from, the largest group (36 percent) selected "balancing the demands of all stakeholders" as the most important priority for a business.
• Dealing with the links between profitability and CSR the results also showed some contradictions. For example, 56 percent agreed with the statement that ‘CSR makes a tangible contribution to profitability’. Yet only 12 percent said their company’s CSR actions in the two years prior to the survey had led to increased profitability.

 

Posted 6/28/07

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Australian Corporate Social Responsibility

Results of the 4th Annual Corporate Responsibility Index

The Corporate Responsibility Index has been developed by Business in the Community. It is an initiative of the St. James Ethics Centre and it has been supported by Ernst & Young. See the new Index.

"Corporations only flourish in flourishing communities. Australian businesses no longer ask if they should be responsible; only about how best to be so. The Corporate Responsibility Index is not a tool of measurement for measurement’s sake. First and foremost, it is a management tool – a roadmap for building sustainable prosperity."
Dr Simon Longstaff, Executive Director, St. james Ethics Centre.

May 14, 2007 -- Companies representing 1.25 million employees and a total turnover of AU$520 billion have voluntarily demonstrated their commitment to corporate responsibility by participating in the 4th Corporate Responsibility Index (CRI).

Results of the 4th CRI released show that 83% of participants now evaluate community, workplace, marketplace and environmental issues within their formal risk management processes.

The groundswell of public awareness on crisis issues of climate change and water shortage, and clear government support for voluntary initiatives has moved more companies to initiate corporate responsibility policies.

In 2006 the Parliament and Government of Australia conducted inquiries into corporate responsibility. Both the Parliamentary Joint Committee and the CAMAC reports advocated that the business community take the voluntary lead in responsible business practice, in lieu of a regulatory approach.

“Irrespective of who wins the Federal election, it is likely that community expectations of responsible business conduct will continue to sharpen and deepen” says Dr Simon Longstaff, Executive Director of St James Ethics Centre.

Companies want a framework to work from, the public expects transparency to inform its choice, and voluntary initiatives are on the rise.

CEO of Minter Ellison Lawyers Guy Templeton says “We adopted the Index as an internal management tool to guide the growth of our program – and to utilise a framework that would help us achieve best practice”.

The companies scoring 95% or above in 2006 were, Westpac, Toyota, BHP Billiton, Rio Tinto and ANZ. “In 2007 we will be engaging with these top performing CRI companies to look at what the next challenges on the journey toward sustainability might be” said Emily Albert, CRI Manager at St James Ethics Centre.

“The greater challenge remains engaging the large number of companies who are not yet voluntarily reporting or benchmarking their corporate responsibility practices” says Dr Longstaff “At our end, we have tried to make the CRI more attractive by allowing companies to complete modules, or engage in private bench-marking as a first step to full participation”.

In 2006 these new entry options resulted in 34 companies, comprising 11 new companies, voluntarily engaging in this rigorous assessment of the integration of corporate responsibility principles into core business practices.

“Each year the number of companies engaging in the Index has grown, with this the average score of companies continuing to participate also increases” says Emily Albert “Over the four years of the CRI in Australia the average score of the 16 companies participating each year has increased from 80.2% to 88.7%”.

“There is still work to be done” says Emily Albert “Some of the key challenges for companies remain in engaging stakeholders, setting and monitoring performance targets, and engaging their suppliers in sustainable practices”.

The CRI is the only voluntary benchmarking tool that assists business in setting the fundamental management frameworks for corporate responsibility. A critical element to ensure quality and consistency is that all submissions are validated by an independent, professional firm, Ernst & Young. Standing behind that report, St James Ethics Centre operates as trustee of the CRI overseeing the integrity of the process.

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CSR Around the World: A Seven Country Study

Study from the Society for Human Resource Management Shows Brazil Leads in Prevalence of CSR Practices

A new study from the Society for Human Resource Management, an international human resource management association, shows that while about four out of five HR professionals across the United States, Australia, India, China, Canada, Mexico and Brazil reported that their organizations participated in corporate social responsibility practices, less reported having either formal or informal policies. The study, which surveyed HR professional members from an international list of HR organizations, presents a global view of corporate social responsibility practices and the integration of corporate social responsibility in organizations’ business decisions. It reports on intraorganizational responsibility for creating and implementing corporate social responsibility strategies and analyses, current applications, and future trends.

Among the reports key findings:

CSR Practices
Brazil practitioners reported the highest rate of participation in CSR practices, while China reported the lowest. 

Formal CSR Policies
Australian, Indian, Mexican and Brazilian HR professionals were more likely than those from the United States to report that their organizations had formal corporate social responsibility policies.

“HR professionals from Brazil were least likely to report that their organizations had no corporate
social responsibility policies. Most organizations without corporate social responsibility policies did not intend to create them. The exception was Brazil, which was significantly more likely than the United States, Australia, China and Canada to plan to create corporate social responsibility policies: more than three-quarters of organizations in Brazil without corporate social responsibility policies intended to create them.”

Types of CSR Activities
The largest percentages of HR professionals from the United States, Australia, Canada, Mexico and Brazil reported that their organizations engaged in local charities while professionals from India and China tended to report donating money for natural disasters.

CSR Reporting
2/3 of all HR professionals surveyed reported that their organizations documents their CSR approaches through publications or newsletters. Over half reported that CSR was integrated into their organizations’ business strategy through inclusion in its goals or mission, while the least popular form of CSR reporting was through issuing separate reports.

Public Image
Most HR professionals picked public image as the organizational factor that could most be improved through CSR programs.

Obstacles to CSR

The largest percentages of all HR professionals surveyed identified cost as the main obstacle of corporate social responsibility programs, and the second largest percentages of HR professionals from the United States, India, China, Canada and Mexico reported unproven benefits as an obstacle to these programs. Of the HR professionals from organizations with existing corporate social responsibility programs, less than one-half reported that their organizations calculated return on investment for CSR programs.

According to the report, "HR professionals from the United States, Australia, India, China, Canada, Mexico and Brazil, HR departments were more likely to be primarily responsible for implementing their organizations’ corporate social responsibility strategies than for creating these strategies. This finding indicates that there is a transfer of accountability as corporate social responsibility moves from policy to practice within organizations, and that HR is more often called upon to engage employees in corporate social responsibility practices than to be at the table when corporate social responsibility policies are designed."

For the full report visit SHRM's website.

Posted 4/16/07

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As Pessimism Over Business Ethics Increases,
Ethical Branding Becomes More Important

According to a new survey by London-based market research group Gfk NOP, of 5,000 consumers surveyed in Germany, the US, the UK, France, and Spain almost half believe business ethics have deteriorated in the past five years and many see “ethical consumerism” as a means of holding companies accountable.

According to the survey, which was seen exclusively by the Financial Times (2/20/07):

Pessimism Over Business Ethics

• 64% of German consumers and 55% of US consumers believe business ethics have worsened in the past five years.
  
  
• UK shoppers are the "most aware, most critical and most likely to see national brands as standard-bearers" wheareas Spaniards are the most cynical about ethical branding.
  
  
• According to Chris Davis, who leads GfK NOP's brand strategy center of excellence, "The UK is the hothouse for what is coming. If a brand is going to do well in the ethical market, it should probably look at the UK."
  
  

Importance of Ethical Branding

• 43% of all respondents believe "ethical" claims on social issues -  such as treatment of employee and environmental practices - would make business’ more accountable to the public.
  
  
• About 1/3 of respondents would pay 5-10% more money for many ethical goods (the article notes however, that ethical brands currently control a very small market share)
  
  
• Several companies that have in the past been criticized for allegedly unsatisfactory CSR practices – such as Nike for its supplier practices and Nestle for its marketing in developing countries – were rated high in ethics in many of the countries. This suggests an the increasing importance on social branding for companies hoping to succeed as well as recover from scandals.
  
  

The Most Ethically Perceived Brands

UK	US	France	Germany	Spain
1. Co-op (including Co-op bank)	1. Coca Cola	1. Danone	1. Adidas	1. Nestlé
2. Body Shop	2. Kraft	2. Adidas	2. Nike	2. Body Shop
3. Marks Spencer	3. Procter Gamble	2. Nike	2. Puma	3. Coca Cola
4. Traidcraft	4. Johnson Johnson	4. Nestlé	4. BMW	4. Danone
5. Cafédirect	4. Kellogg’s	5. Renault	5. Demeter	5. Corte Inglés
5. Ecover	4. Nike	6. Peugeot	5. gepa	6. Adidas
7. Green Black	4. Sony	7. Philips	7. VW	6. Nike
7. Tesco	8. Ford	8. Carrefour	8. Sony	6. Sony
9. Oxfam	8. Toyota	8. Coca Cola	8. Trigema	9. L’Oreal
10. Sainsbury’s	10. LEVI	10. L’Oreal	10. Bio Produkte	10. Mercedes
11. Innocent	10. Starbucks	11. Malongo	10. Body Shop	11. Ben Jerry’s
12. Waitrose	12. Ben Jerry’s	12. Alter Eco	10. Hipp	11. Pascual
13. Clipper Tea	12. Dell	12. LU	10. Mercedes	13. Philips
14. Asda	14. Campbell’s	14. Auchan	10. Wrangler	14. BMW
15. Boots	15. Microsoft	14. Chanel	15. Knorr	14. Intermón Oxfam
15. Lush	15. Tide	14. Puma	15. Maggi	14. Nokia
		14. Sony	15. Microsoft	15. SEAT
			15. Opel
			15. Siemens

 

Posted 2/21/07

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CRO Magazine Releases U.S. ‘100 Best Corporate Citizens’ 2007

On February 15, 2007 the Corporate Responsibility Officer Magazine (formerly Business Ethics Magazine) released its eight annual list of U.S. ‘100 Best Corporate Citizens’ which aims to take a systematic approach to assessing the social and environmental characteristics of a good corporate citizen. The list is drawn from about 1,100 U.S. companies in the Russell 1000, S&P 500 and Domini 400 indices, and uses data collected by KLD Research & Analytics, an independent investment research firm in Boston. Firms are assessed according to eight categories: community, corporate governance, diversity, employee relations, environment, human rights, product and total return on investment (averaged over three years).  

According to the CRO, twenty-four new companies made the list this year including tech company Google, while Microsoft returned after an absence of several years. For the first time ever, computer company Hewlett Packard was missing from the list and the top ten reflecting last year’s “pretexting” scandal involving its board of Directors (see Corporate Reputation).

The CRO’s 2007 Top 10 Corporate Citizens:

1. GreenMountain Coffee Roasters Inc.
2. Advanced Micro Devices Inc.
3. NIKE Inc.
4. Motorola Inc.
5 Intel Corp.
6 International Business Machines Corp. (IBM)
7 Agilent Technologies Inc.
8 Timberland Co.
9. Starbucks Coffee Co.

For the full list click here.

Posted 2/16/07

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Global 100: Most Sustainable Corporations in the World

On January 24, 2007, this year's Global 100 Most Sustainable Corporations in the World (Global 100) was released at the World Economic Forum in Davos, Switzerland. Launched in 2005, the Global 100 is a project initiated by Corporate Knights Inc., a Canadian magazine that covers responsible business, with Innovest Strategic Value Advisors Inc. a research firm specializing in analyzing “non traditional” risk and value drivers.

According to the Global 100’s website, “The concept of sustainability is a contentious one, to say the least. Debates have been raging in various circles (e.g. academia, business, government, the UN, etc.) for a number of years over exactly how to define sustainability, and more importantly over what it should look like in practice. We do not have the pretence to know how to resolve this dispute, let alone be able to produce an authoritative blue-print for ‘sustainable behavior’. What we do know is that social, environmental and governance factors are increasingly relevant to financial performance, and that companies which show superior management of these issues are fast gaining an edge over their competitors – an edge which we believe will translate into outperformance in the long haul. The Global 100 companies are therefore sustainable in the sense that they have displayed a better ability than most of their industry peers to identify and effectively manage material environmental, social and governance factors impacting the opportunity and risk sides of their business.”

For the full list, which can be viewed alphabetically, by country, or by sector/industry, click here.

For information on the Global 100’s methodology click here.

Posted 1/29/07

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Edelman Trust Barometer 2007

Business More Trusted Than Media and Government Across the Globe

Edelman, a leading global public relations firm headquartered in New York, released its new  Edelman Trust Barometer on January 22, 2007. This involved a survey of  3,100 opinion leaders in 18 countries.  Edelman concluded that business is more credible than government or media in 13 of the 18 countries surveyed; more respondents in 16 of 18 countries felt that companies have more of a positive impact on society than a negative impact. In the U.S., 53% of respondents report trusting business, which marks an all-time high for the survey (from a low of 44% in 2002).

In the three largest economies of Western Europe, France, Germany, and the United Kingdom, trust in business stands at 34%, which is higher than trust in media and government at 25% and 22% respectively. In Latin America, represented in the survey by Brazil and Mexico, trust in business is at 68% while trust in media stands at 62% and government at 37%. Asian trust in business is 60%, while government and media are both at 55%. China, Japan, India, and South Korea represent the Asian nations in this year’s survey.

The 2007 Edelman Trust Barometer’s other key findings include:

·  Five years after Wall Street’s stock research scandals, trust in “stock or industry analyst reports” in the United States is 47%, up from 26% in 2003. In 12 countries, stock or industry research is either the most credible or second most credible source of information about a company.

·  In 11 of 18 countries, business magazines are the most or second most trusted source of information about a company.

·  In many countries, “conversations with friends and peers” is as trusted a source of information about a company as “articles in newspapers” or “television news coverage.” For example, within the nine European Union countries surveyed, 44% trust conversations with friends and peers while 33% trust articles in newspapers.

·  In every region (EU, Asia, North America, Latin America), respondents most often named “shares a common interest with you” as one of the top three characteristics that would increase their trust in a person sharing information about a company. In no region did religion, race, or nationality list among the top three attributes of a peer.

·  Non-governmental organizations (NGOs) have grown in stature dramatically in Asia. Trust in NGOs in China has increased from 31% in 2004 to 56% today; from 42% in 2005 to 55% in Japan; and from 39% to 46% in South Korea in the last 12 months.

·  At least 70% of respondents in North America (71%) and Asia (72%) state that global business plays a role that no other institution can in addressing major social and environmental challenges. Fifty-seven percent in the European Union and 63% in Latin America also believe this to be true.

·  Trailing only “providing quality products or services,” undertaking “socially responsible activities” is universally seen as the most important action an organization can to do to build trust. “Socially responsible activities” surpassed providing “a fair price for products or services,” “attentiveness to customers” and “good labor relations” in most markets.

·  For the third straight year, American brands operating in Europe continue to receive a trust discount. For example, McDonald’s is trusted by 60% of respondents in the United States and by only 26% across the United Kingdom, France, and Germany. However, American brands are trusted in the developing world, with McDonald’s trusted by 75% of Chinese respondents and 66% of Brazilian respondents.

·  The survey found that multinational brands receive significantly more trust in their home country. The United States gives top scores to UPS (83%). In France, the second-highest trust score is Danone (69%). In Japan, the highest score goes to Nissan (79%), and in India it is Tata (89%).

·  Technology is the most trusted sector in each region. The industry is trusted by 79% of Asians, 80% of Latin Americans, 72% of Europeans, and 75% of North Americans. The biotechnology and healthcare sectors also receive high trust marks globally.

·  Companies headquartered in Sweden and Canada are the most trusted globally; Brazilian, Mexican and Russian companies are the least trusted.

·  Traditional media sources such as newspapers, TV, and radio remain more credible than new media sources such as a company’s own Web site and blogs.

·  In all four regions surveyed (the European Union, North America, Asia, and Latin America), respondents reported higher trust in their own CEO than in CEOs generally. For example, within North America, 31% of respondents said they trusted their own CEO, compared to 22% who report trusting CEOs generally.

About the Trust Barometer Survey: The 2007 Edelman Trust Barometer is the firm’s eighth trust and credibility survey. The survey was produced by research firm StrategyOne. The survey was conducted by a 30-minute telephone survey conducted in October - November 2006. The survey population included respondents who are between the ages of 35 and 64; college educated; in the top 25% of household income nationally; report a significant interest and engagement in the media, economic, and policy affairs. The nations represented include United States (400 respondents), China (300), United Kingdom (150), Germany (150), France (150), Italy (150), Spain (150), the Netherlands (150), Sweden (150), Poland (150), Russia (150), Ireland (150), Mexico (150), Brazil (150), Canada (150), Japan (150), South Korea (150), and India (150).

(About Edelman: Edelman is the world’s largest independent public relations firm, with 2,500 employees in 46 offices worldwide.)


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Business and Society Highlights of 2006

As the field of Corporate Social Responsibility continues to grow and evolve in both theory and practice, keeping up with its development is a daunting task. Every year, Michael Kane, a senior advisor in the U.S. Environmental Protection Agency’s Office of Policy, Economics and Innovation and founder and managing editor of Resources for Promoting Global Business Principles and Best Practices, published by CSRwire, does just that. His Business and Society Highlights 2006 outlines some of the most important developments in the field of CSR over the past year, many of which EthicsWorld has reported on – from new organizations and initiatives to the latest research and publications.

The Highlights, which can be accessed below, are presented in list format and divided into the following sections:

New National and Regional Business Policy Organizations
International Business Policy Organizations
National Business Organizations
Human Rights and Labor Organizations
Environmental Organizations
National Government Programs and Initiatives
International Organizations
Investment Organizations
New Partnerships
Accountability and Monitoring
Public Policy Organizations
Academia
Trends and Surveys
New Publications, Broadcast Media and Film
Books
Leaders’ Remarks
Recruiting Leaders
Innovative Policy Reports and Research
Tax policy
Special CSR-Related Publications
Books-in-Progress


To View and Download “Business and Society Highlights 2006”


From 1973 to 1981 Michael Kane served in various staff capacities at the White House Council on Environmental Quality. Since 1982 he has served as a senior advisor in the U.S. Environmental Protection Agency’s Office of Policy, Economics and Innovation. In 1992 Mr. Kane served as the Department of State’s senior advisor for the United Nations Conference on Environment and Development, and also served as senior advisor for the U.S. Delegation to the Rio Summit in June 1992.          

Mr. Kane is the author of Promoting Political Rights to Protect the Environment; Yale Journal of International Law; 1993.  He is the founder and managing editor of Resources for Promoting Global Business Principles and Best Practices, published online since 2003 by CSRwire at csrwire.com/directory.           



Posted 1/3/07

          

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South Africa: Women, Access to Finance, and the Role of the Private Sector

Women entrepreneurs face diverse forms of discrimination in South Africa when seeking finance for their ventures, according to a new report by the International Finance Corporation (IFC). The report highlights the forms of discrimination and provides a set of key policy recommendations.

The issues discussed in this report raise questions that reach beyond the specifics of the South African situation. Governments elected in many post-conflict societies pledge to create laws to fairly and peacefully re-distribute wealth and opportunity to previously oppressed segments of the population. In the case of South Africa, some of this legislation came in the form of the “Black Economic Empowerment Program,” (BEE), which included measures such as employment equity, skills development, and access to finance. But, the BEE on its own is insufficient in its present form to secure the results that it promotes – its own code needs some review; and most significantly, there has to be the active commitment of the private sector to address economic injustices. In this report, the IFC, the private sector affiliate of the World Bank, primarily addresses what the private sector in South Africa needs to do.

The IFC study, “Access to Finance for Women Entrepreneurs in South Africa: Challenges and Opportunities,”  (excerpts from which are reproduced below) was commissioned by the South Africa Department of Trade and Industry and undertaken by IFC’s Gender Entrepreneurship Market program.

For the full report, including graphs and methodology follow this link.

“Access to Finance for Women Entrepreneurs in South Africa: Challenges and Opportunities”

Access to finance in South Africa is not equal across all groups. Race and gender remain important variables in the lack of access, and black African women are at the bottom of the pile. This fact sheet evaluates the challenges and opportunities to government and financial institutions in addressing this key issue.

South Africa’s constitutional and legislative framework is progressive and highlights the importance of gender equality. The Broad-Based Black Economic Empowerment Act promotes “increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training”. The Act further notes that “to comply with the equality provision of the constitution, a code of good practice and targets therein specified may distinguish between black men and black women”.

Despite this, the Financial Sector Charter only specifies gender targets for staffing – and these are controversially low – and is silent on gender equality in terms of financial services outreach, enterprise development and in procurement finance. Most financial institutions work on an assumption that BEE strategy will automatically benefit women. This isn’t happening and black women in particular could remain marginalised if adequate measures are not taken to redress this.

An abundance of resources in both the private and public sectors is not matched by an understanding of women's enterprises, and attempts to accommodate this growing and potentially rewarding market are insufficient. Women in business face a number of barriers and prejudice remains an issue, as illustrated by the fact that women have better credit repayment records than men, yet still find it harder to raise finance than their male counterparts.

Obstacles to access
■ Financial literacy: poor understanding of financial terminology and lack of awareness of bank and microfinance services are an obstacle. A lack of understanding of credit processes and the role of credit bureaus also places women at a disadvantage.

■ Attitudes of banks: only one out of South Africa’s four major banks is contemplating a specific programme to increase its share of women-owned enterprises.

■ BEE code targets: codes and industry charters do not have sufficient targets for women’s
financial services outreach or business activity.

■ Lack of awareness of development finance: despite the resources available from private
and public development finance institutions, few women in business know about the different institutions, their products or how to access them.

■ Lack of financial confidence: overall women have less financial confidence than men.

■ Lack of appropriate products: bank services and products, including savings products are
often unaffordable, and the emphasis on collateralised and asset based lending disqualifies
most women from accessing business loans.

Financial landscape – black women remain on the edge
Black women are a huge potential market for financial institutions. Only 38% of black women are formally banked against 44% of black men and 94% and 91% respectively of white men and women (see graph 4).

■ While 88% of banked white women are able to reach their bank within 10 minutes, the corresponding percentage for banked black women is only 22%.

■ 42% of black women are financially excluded – they have no financial products at all (see graphs 5 & graph 6 overleaf). This compares to only 5% of white women who have no financial products at all.

■ The remaining 20% of black women use informal products such as stokvels, savings clubs, burial societies and informal sources of credit or have other formal products such as insurance and retail credit.

Financial institutions – are they reaching women?
Out of 170 women surveyed in four provinces, only 7 were familiar with the offerings for SME finance from development finance institutions in their provinces. This reflects inadequate marketing to this target market, and limited use of networks such as business women’s organisations and trade organisations for outreach. Some of the development finance institutions report reaching their targets on financing women’s business (see graph 7). Their strategies are, however, mainly based on an assumption of gender neutrality, and even more could be achieved by a concerted effort to analyse and exploit the strengths of this particular market.

Of the main commercial banks, only two have clear strategies to target the women’s market, and of these only one is targeting women in the small and medium enterprise (SME) sector. Banks’ management information systems (MIS) do not yet seem equipped to break down the market segments and gender disaggregated data is not yet readily available.

Microfinance is often cited as a resource for women’s economic empowerment. However, despite the growing number of self-employed women in South Africa, only two sustainable microenterprise lenders exist, Marang Financial Services and the Small Enterprise Foundation, which together serve about 56,000 micro entrepreneurs. Rural areas remain underserviced, further disadvantaging those already neglected by the first-tier banks. Urgent investment and expansion in this sector is required, and financing should be accompanied by impact assessments, particularly about the type of skills development that could encourage sustainable growth beyond micro-enterprise.

RECOMMENDATIONS

POLICY FRAMEWORKS
■ The Financial Sector Charter, other industry charters and BEE codes should be reviewed to include gender-specific financing outreach and procurement targets as well as definitions of women-owned business. This will help to ensure and monitor equal access for women to business opportunities.

FINANCIAL INSTITUTIONS
■ A national directory of business financiers should be regularly updated, published and widely disseminated in order to better inform entrepreneurs of services available in the market.

■ Financing institutions should disaggregate their portfolios and targets and put in place strategies that help them to better understand and serve the women’s market.

■ Financial institutions need to pay more attention to understanding the pportunities in the emerging markets and to having loan staff who understand the challenges of women in business.

■ A comprehensive capacity-building strategy and service for the microfinance sector is needed to meets the needs of the many self-employed women in South Africa, and to enable them to grow their skills and businesses beyond microenterprise.

BUSINESS DEVELOPMENT SERVICES
■ The 70/30 male/female ratio of BDS providers interviewed indicates that women need more access to business development services; such services should include more women mentors and advisors.

■ Non-financial support should be structured so that it facilitates access to finance for entrepreneurs and enables business growth at the same time.

■ BDS should be designed to meet the different requirements of micro and SME businesses at various levels of growth.

CREDIT REFERENCING
■ Women’s better repayment records should translate into improved access to credit.

■ Co-ordinated credit vetting should be promoted between different levels of financial institutions, including microfinance institutions. Alternate mechanisms of determining creditworthiness should also be explored to reduce dependence on traditional forums of assessment.

■ The impact of Community of Property marriage on women’s own credit records should be studied. Credit bureaus should begin to better disaggregate credit information in order to differentiate between personal, business and contractual causes.

■ Credit referencing should be demystified to make the public more aware of how to positively manage their records.

BEE FINANCING

■ Women need to recognised as an asset in themselves and not as a token or afterthought in BEE deals. The benefits of women BEE companies as shareholders and managers of companies should be better documented and highlighted.

■ Industry and financial institutions should put in place gender-specific procurement and enterprise development targets, with aligned and realistic financing mechanisms. Implementation of these should be properly monitored.

Posted 12/5/06

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Tomorrow’s Value: SustainAbility's 2006 Survey of Corporate Sustainability Reporting

On November 9, 2006, SustainAbility, an international CSR and sustainable development consultancy and think tank, released “Tomorrow’s Value,” its fourth international benchmark of corporate sustainability reporting, developed in partnership with the United Nations Environment Programme (UNEP) and Standard & Poor's. The 50 leaders and executive summary of the survey are reproduced below. For the full report click here.

THE 50 LEADERS

The 2006 results show BT head-and shoulders in front of the main pack of leading reporters. They come in seven percentage points ahead of the second group — Co-operative Financial Services, BP, Rabobank and Anglo Platinum — all of which achieve impressive scores of over 70%. A small but growing group of non-OECD companies make an excellent showing, with two companies ranking in the top 10, compared with zero in 2004.





EXECUTIVE SUMMARY

Tomorrow’s Value, SustainAbility’s fourth international benchmark of corporate sustainability reporting, has once again been developed in partnership with the United Nations Environment Programme (UNEP) and Standard & Poor's. This year we introduce a revised methodology, developed in close consultation with experts and leading corporate reporters, and — in line with our sense that the focus also needs to shift beyond disclosure and reporting to communication — we have adopted a portfolio approach. Tomorrow’s Value is the flagship document in a suite of publications exploring wider aspects of reporting, including communication with financial analysts and the wider innovation agenda. The field is currently extremely dynamic, with new entrants making up half of the 50 Leaders (Figure 1). Strikingly, half of the Leading 50 companies are complete newcomers, including four entrants from non-OECD countries. The pressures driving improved sustainability reporting continue to grow, with the Global Reporting Initiative’s recently launched G3 guidelines providing renewed impetus in terms of international standardisation. In parallel, the slow, grudging awakening of financial markets is being accelerated by growing concerns around climate change.

The field is currently extremely dynamic, with new entrants making up half of the 50 Leaders (Figure 1). Strikingly, half of the Leading 50 companies are complete newcomers, including four entrants from non-OECD countries. The pressures driving improved sustainability reporting continue to grow, with the Global Reporting Initiative’s recently launched G3 guidelines providing renewed impetus in terms of international standardisation. In parallel, the slow, grudging awakening of financial markets is being accelerated by growing concerns around climate change.

Tomorrow’s Value asks the question: How far has the value light bulb switched on in corporate brains and boardrooms? On current evidence, the answer is that the links between the evolving sustainability agenda and wider market opportunities are now better understood — with a small number of companies reporting the relationship with value in increasingly interesting ways. Partly as a result, some parts of the financial community are gearing up their use of non-financial, extra-financial and/or sustainability disclosures to better understand emerging environmental, social and governance risks. Nonetheless, our expert panel (page 9) concluded that most companies are still missing an important opportunity to communicate with financial analysts and institutions.

Conclusions
Key findings of the 2006 benchmark survey include:

Yesterday’s risks are mutating into tomorrow’s opportunities for value creation. Leadership companies — including BP, BT, GE and Philips — are shifting the focus of their sustainability strategy towards a more progressive and entrepreneurial approach that seeks to identify opportunities for strategic innovation and market building. The pioneers are still a minority, representing a quarter (28%) of our Leading 50, compared to 60% who demonstrate a more conservative, risk focused approach, but their numbers will likely grow.

Financial markets welcome — and challenge — sustainability disclosures. Cutting-edge sustainability reports are framed as a key component of — and platform for — a portfolio of information available to both socially responsible investment (SRI) funds and, increasingly, to mainstream investors. Our panel of financial experts agreed that their sector’s appraisal of stock volatility and long-term value is now benefiting significantly from heightened corporate transparency. Although around two-thirds (70%) of companies report some interaction with investors on sustainability matters, many reports still lack the hard targets and forward-looking information that makes required reading for analysts.

Sustainability drills into core business processes. Most so-called sustainability reports only constitute steps in that direction, but there has been a leap in the proportion of companies reporting the integration of sustainability-related factors into core decision-making. A central concept has been ‘materiality’, helping companies sort the critical risks and opportunities from the background noise. This year at least 80% of companies were rated as integrated on at least one aspect of their reporting, though this result leaves many gaps to be bridged.

Disclosures on public policy initiatives remain precariously weak. Despite growing pressures, under half of corporate reporters fail to sufficiently discuss and link their sustainability initiatives and commitments to the lobbying activities they undertake — and to the wider influence they exercise, either directly or through lobbying and trade organisations. Only around a quarter (28%) of the Leading 50 reporters covered this area meaningfully. That said, this result is a major advance on previous years.

International frameworks provide context and synchromesh. True sustainability reporting will require company-level reporting to be linked with value chain, sector and economy-level targets and reporting. Tomorrow’s Value spotlights — and encourages — an emerging effort by some leading businesses to link their individual targets and activities with broader macro-frameworks, to provide a sense of scale and to help measure the relative impact of individual contributions. The Millennium Development Goals (MDGs) are used in this way by over 20% of the Leading 50 reporters, a trend we see as likely to grow as we move towards the MDGs’ 2015 deadline.

The Future of Sustainability Reporting
While the GRI’s G3 guidelines indicate a growing degree of standardisation, there are also signs of a degree of splintering in the sustainability reporting field. Some companies are looking to broader frameworks, like the Millennium Development   Goals, to frame their reporting,  while others are already straining at the leash and pondering what a G4 set of guidelines might look like — hoping for a further upgrading of the materiality components.

As for the future of reporting we sketch a number of trajectories. These include: a progressive hardening of sustainability information requirements; a greater emphasis on value chain performance; a steady but irresistible shift in the centre of gravity of the field towards non-OECD country issues and perspectives; and a growing focus on value creation, business models and scalable, entrepreneurial solutions to sustainability challenges.

Key Recommendations
Tomorrow’s Value concludes with recommendations for practitioners, CEOs and boards, and investors. Key recommendations include:

- Corporate Responsibility Practitioners: Simplify.
Develop and apply robust materiality processes to produce tighter, more focused disclosures on responsibility, accountability and sustainability targets and performance.

- CEOs and boards: Rethink.
Review the ways in which the sustainability agenda is likely to change the competitive landscape, as through the growing involvement of companies like Wal-Mart. As the spotlight shifts to scalable solutions, how is the company’s strategy and portfolio of initiatives aligned?

- Investors: Recalculate.
Scrape aside the language issues and identify the key value drivers. Challenge companies to articulate the long and short term value creation potential of their sustainability activities. Watch out for our first briefing for analysts, due out early in 2007.

Posted 12/4/06

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The Human Rights Policies of the Fortune 500

Results of a survey conducted by
John G. Ruggie
Harvard University and
UN Secretary-General’s Special Representative for Business & Human Rights

Published September 1, 2006

To download as .pdf

On July 28, 2005, UN Secretary General, Kofi Annan commissioned Professor John Ruggie of Harvard University to research the current human rights practices, policies, and regulations of transnational corporations and other business enterprises, as well as to compile a compendium of best corporate practices in this area. As a part of his research, Professor Ruggie conducted a survey of the Fortune 500 in order to: a) gauge how companies currently define and implement their human rights responsibilities and b) determine any weaknesses or industry/regional differences. The report was prepared with the help of Business for Social Responsibility (BSR), a non-profit business association that works with corporations to create a more just and sustainable global economy; the International Organization of Employers (IOE), which represents the interests of business in the labor and social policy fields; the International Chamber of Commerce (ICC), a global business advocacy and education organization; and the International Business Leaders Forum, a non-profit advocacy organization (IBLF).

102 companies responded to the survey. While a higher percentage of North American and European Fortune 500 firms responded than did their counterparts in Latin America and Asia, Prof. Ruggie’s results nonetheless suggest several trends in how large, transnational companies approach human rights. 

Reproduced with permission is part I of Professor Ruggie’s report, which includes the survey’s overall results (part II, III, and IV of the report display results by region, sector, and the response rate by country, respectively) preceded by his analysis of its key findings:


Summary of Responses

This section summarizes the survey’s overall results (see Table 1), and indicates where and how these patterns varied depending on companies’ home regions or industry sectors (Tables 2 and 3, respectively).

1. Policy Uptake
Almost all respondents – nine out of ten – report having an explicit set of human rights principles or management practices in place (Question 2). At the same time, fewer than half overall say they have experienced “a significant human rights issue” themselves (Question 1). This substantial differential suggests that the majority of companies adopted their human rights policy or practices for reasons other than immediate necessity – in response to some embarrassing revelation, say – and that policy innovation and diffusion clearly also drive their uptake of human rights concerns.

There are some regional and sectoral differences. North-American firms are slightly less likely than Europeans to have adopted human rights policies or practices, even though proportionately they were somewhat more likely to have experienced a significant human rights issue. And firms in the extractive industries report having experienced a human rights incident at a higher rate than the others – while every respondent in this sector also says it has human rights policies and practices in place, perhaps reflecting recent efforts by the International Council on Metals and Mining to promote these steps among their member companies in the mining industry.

Almost all companies that report having human rights policies include them in their overall corporate code of conduct; only four out of ten respondents indicate having a freestanding human rights protocol (Question 3). There is no significant regional or sectoral variation on this dimension.

Roughly two-thirds of the respondents in the retail and consumer products sectors as well as in the extractive industries report that they also take human rights factors into account in project risk assessments – the former presumably concerning sourcing issues, and the latter in relation to the communities affected by their proposed operations.

2. Which Rights?
What areas of human rights do firms recognize in their policies and/or management practices (Question 6)? All respondents, irrespective of region or sector, include non-discrimination, by which at minimum they mean recruitment and promotion based on merit, not on race, gender, religion or other such factors. Workplace health and safety standards are cited almost as frequently and widely.

Freedom of association and collective bargaining is included by 87 percent of respondents overall. They are cited by every respondent in the extractive industries, and by U.S. firms more frequently than European.

Forced, bonded or compulsory labor together with child labor is the next most-frequently referenced area – by eight out of ten overall, somewhat more often by European than American firms. But European firms are more than twice as likely as their American counterparts to recognize the right to life, liberty and security of the person – despite the growing number of Alien Torts Statute cases that have been brought against U.S. firms for alleged violations of these rights.

Three out of four respondents indicate that they recognize a right to privacy; there is little regional variation but some differences across sectors (highest in financial services, lowest among retailers and manufacturers of consumer products).

European companies are more likely to recognize a right to health than their U.S. counterparts, and the same is true for rights to an adequate standard of living. In neither case, however, is the overall ranking as high as for the other rights already mentioned.

3. Rights for Whom?
We also asked companies which stakeholders their human rights policies and practices encompass (Question 7). Respondents could choose as many of the options as they thought relevant, and to add others not mentioned in the questionnaire. This made it possible to establish a relative ranking of whose rights companies believe they should be concerned with in formulating their policies and practices.

The overall responses are clear and robust. In descending order, company policies and practices encompass employees (referenced by 99 percent); suppliers and others in their value chain (92.5 percent); the communities in which they operate (71 percent); the countries in which they operate (63 percent); and others (23.7 percent), a category that includes customers, shareholders, and investors.

There are slight regional differences in this rank ordering. U.S. companies rank employees and value chains equally high, but place human rights issues of communities and countries of operation far lower than European firms do. They also rank communities lower than Japanese firms. Of the three regional clusters, Japanese companies are least likely to include the countries of operation within the spectrum of their perceived human rights concerns.

The same overall pattern also holds up across sectors – except that companies in the extractive industries rank their obligations to surrounding communities higher than to their value chains, which is not altogether surprising given that community-related issues have been their major source of liability.

4. International Instruments
Companies were asked what if any international human rights instruments their policies and practices draw upon (Question 5). Again they were given the opportunity to cite more than one and to add any not mentioned in the questionnaire.

Approximately one-fourth of the respondents skipped this question, presumably indicating that they reference no international instrument. Among the other 75 percent, ILO declarations and conventions top the list, referenced by seven out of ten. The Universal Declaration on Human Rights (UDHR) is the next highest. The only variations on this theme are in the extractive sector, where every single respondent cites the UDHR, and the fact that half of the Japanese respondents skipped this question compared to 25 percent of all respondents.

The Global Compact is referenced by just over half of the companies that reference any international instrument, the OECD Guidelines by fewer than half. As a source, they matter more to European than North American respondents.

In their optional responses, individual companies added a number of other instruments, such as the Voluntary Principles on Security and Human Rights and Social Accountability 8000, but none was widely referenced.

It should be noted that companies generally do not “adopt” any of these instruments verbatim. Several indicated in their optional responses that while they were “influenced by” or “support” these instruments, their policies do “not explicitly adhere” to or “explicitly reference” them. The follow-up study mentioned earlier examines actual company policies and management practices, and therefore should provide more detailed information about how close they get to the original sources that inspired them.

5. Stakeholder Engagement
Most respondents – more than eighty percent – indicate that they work with external stakeholders in developing and implementing their human rights policies and practices (Question 11). U.S. firms are somewhat less likely to do so than European or Australian firms, and Japanese companies significantly less likely than any of the others. No pronounced sectoral differences exist.

NGOs are the most frequently mentioned external partner except by Japanese companies (Question 12). Industry associations also feature prominently. International organizations are ranked a distant third except by U.S. firms, which place them fifth, behind labor unions and governments.
 
Only a few variations are found across sectors and they appear to be largely situational – for example, the pharmaceutical and financial services industries, typically more heavily regulated than the others, indicate working more closely with governments in developing their policies, and the pharmaceuticals also with international organizations – presumably the World Health Organization, UNAIDS, and the like.

6. Accountability
A final set of questions asked the companies if their human rights policies are subject to internal reporting and compliance systems; if they engage in external reporting; and if they conduct human rights impact assessments – corresponding to three features of voluntary accountability mechanisms in other areas of corporate activity.

Nearly nine out of ten respondents say that they have internal reporting and compliance systems in place (Question 8). Nearly three-fourths indicate that they also engage in some form of external reporting (Question 9). These responses hold across regions and sectors, although the financial services firms and companies in the infrastructure and utilities sectors fall below the others on both dimensions.

Most companies that do external reporting use a periodic publication or the company’s website as their preferred vehicle (Question 10). Fewer than half utilize a third party medium such as the Global Reporting Initiative or the Global Compact’s Communication on Progress. European companies are more likely to engage in external reporting than U.S. firms; Japanese companies are a distant last. Company-based platforms for reporting are preferred irrespective of industry sector, but three out of four extractives companies state that they also use a third party instruments.

Social impact assessments of planned or existing corporate activities are becoming a more common practice, and they are beginning to incorporate a human rights dimension into them. The International Finance Corporations new performance standards and the Equator Principles governing commercial banks’ project financing exemplify these developments. But strictly speaking, very few dedicated human rights impact assessments have ever been conducted by any company, and standard tools for them are only gradually being developed.

One-third of all respondents say they do conduct human rights impact assessments as a routine matter, and just under half that they do occasionally – for the reasons mentioned, presumably as part of broader social and environmental impact assessments. A combined total of one-fourth of the respondents either never conduct such assessments or they skipped the question. U.S. firms are more likely to conduct human rights impact assessments routinely than European companies, but only one of the Japanese respondents does so.

According to the survey, assessing the human rights impact of business operations is most widespread in the extractives sector, which can have a dramatic impact on host communities; in financial services, where due diligence is a standard business practice; and in retail and consumer products firms, which often have significant labor issues in their supply chains.

Concluding Observations

Some clear patterns emerge from this survey. Virtually all companies responding say they have human rights principles or management practices in place. The majority adopted them for reasons unrelated to any specific human rights incident. Work-place rights constitute their primary area of concern. Companies recognize significant obligations toward other stakeholders, but they decrease as they move outward from employees into value chains, communities, countries of operation, and beyond. The companies’ human rights policies draw on international instruments, and they are developed in cooperation with external stakeholders. An overwhelming number of respondents indicate that they have internal reporting and compliance system in place, and most that they also engage in some form of external reporting. Finally, including human rights issues in impact assessments is becoming a more common practice.

For obvious reasons, a survey of this kind cannot assess the effectiveness of companies’ policies and management practices. But it is safe to conclude that no survey conducted a mere five years ago would have yielded comparable results, indicating that policy innovation and diffusion has occurred in this domain. How far these patterns reach beyond the leading firms in the GF500 will become clearer with the completion of a follow-up study that examines the human rights policies of nearly 300 companies, including a larger number headquartered in emerging market countries.

We also found evidence of sectoral and regional variations around the overall patterns. Some sectoral differences are to be expected, reflecting the unique attributes of industries and their operating contexts. But significant variations based on the political culture of companies’ home countries are inherently more problematic. Human rights are considered to be universal, interdependent and indivisible. Yet in several instances we saw that European-based companies are more likely to embrace that conception of rights than the others, with U.S.-based firms tending to recognize a narrower spectrum of rights and rights holders. Differences of this kind are bound to be even more pronounced for companies domiciled in emerging market countries, underscoring the need for clearer and commonly accepted human rights standards for firms
.
Another issue of concern involves the elasticity of human rights standards in corporate policies. We saw that most of the companies with such policies include human rights in an overall corporate code or set of business principles; only a minority has a separate human rights instrument; and few of those adopt what the human rights community considers a “rights-based approach.” Within such a “rights-based” approach companies would be expected to take the universe of human rights (as contained in the UDHR and related covenants and conventions) and work back from them to define corresponding policies and practices.

In contrast, beyond the realm of legal requirements, companies that currently have human rights policies typically approach the recognition of rights as they would other social expectations, risks and opportunities, determining which are most relevant to their business operations and devising their policies accordingly. The latter model comes more naturally to business, but it also leads to variability in how rights are defined. Some of this variation may matter little. But ultimately there must be generally recognized boundaries around “what counts” as recognition of any particular right, again reinforcing the desirability of clear and commonly accepted standards.

A final issue involves accountability mechanisms. We saw that companies report on their human rights policies using their own websites or periodic reports far more frequently than third-party mechanisms. This may reflect limited third-party options available at this time, although the latest generation of the Global Reporting Initiative includes more detailed criteria for human rights performance and management systems. But it may also reflect reluctance by companies to move toward fuller transparency. For reporting to satisfy external stakeholders and maximize its utility to a company’s own strategic and management objectives, two core conditions must be met: the information must be broadly comparable across companies, and there needs to be some external assurance as to its trustworthiness and materiality. The survey did not probe this issue directly, but the overall findings and optional responses provide no reason to dispute assessments in professional circles that while comparability is slowly increasing, external assurance remains more limited.

The participants in this survey have made a significant contribution to several core elements of the SRSG’s mandate, for which he extends them his deepest gratitude. He hopes that they, too, will benefit from the publication of these results and observations – and, indeed, that all stakeholders do.


Table I
Responses - All Countries, All Sectors (i)

Question		Response %, (number)
1. Has your company ever experienced a significant human rights issue?	Yes No	45.9, (45) 54.1, (53)
2. Does your company currently have an explicit set of principles and/or management practices in place regarding the human rights implications of operations?	Yes No Other (ii)	91, (91) 4, (4) 5,(5)
3. How does your company take human rights into account? Select as many as may apply. * By means of a set of corporate principles on human rights specifically? * Within an overall corporate code or principles? * In operational guidance notes? * In overall risk assessment?		39.4, (37)   92.6,(87)                                39.4,(37)                                45.7,(43)
4. Does your company carry out human rights impact assessments for particular projects?	Never Occasionally Routinely	15.6, (14)              48.9, (44)              35.6,(32)
5. Do your company’s principles/practices reference any particular international human rights instruments? If so which one(s): * Global Compact *ILO Declarations or Conventions *OECD Guidelines * Universal Declaration on Human Rights * Other (iii)		56.6, (43)           71.1, (54)          40.8, (31)          61.8, (47) 34.2, (26)
6. Please Indicate what areas of human rights are included in your company’s policies/practices. Select as many as apply. * Right to life, liberty and security of person; * Forced, bonded or compulsory labor as well as child labor; * Right to privacy; * Freedom of association and collective bargaining * Non-discrimination; * Workplace health and safety; * Right to an adequate standard of living; * Right to Health * Others (iv)		57.4, (54)                                80.9, (76)                                76.6, (72)                                 87.2, (82)                               100, (94)                                 95.7, (90)                               42.6, (40)                                54.3, (51)                                 27.7, (26)
7. Which stakeholders do your company’s policies/practices encompass? Select as many as apply. * Employees * Suppliers contractors distributors joint venture partners and others in your value chain * The communities surrounding your operations * The countries in which you operate * Others (v)		98.9, (92)                                92.5, (86)                                71.0, (66)                                63.4, (59)                                23.7, (22)
8. Does your company have systems of internal reporting and compliance in connection with its human rights principles/practices?	Yes   No	88.2, (82)              11.8, (11)
9. Does your company engage in periodic external reporting of its human rights policies/practices?	Yes   No	73.4, (69)              26.6, (25)
10. When engaging in periodic external reporting of human rights practices what means are used? Select as many as apply. * The company’s website * A periodic publication * A third party medium (e.g. Global Compact Communication on Progress, GRI) * Other (vi)		82.6, (57)                                 88.4, (61)                                43.5, (30)                               11.6, (8)
11. Does the company work with external stakeholders in developing and implementing its policies and practices?	Yes No	82.4, (75)             17.6, (16)
12. Which external stakeholders does your company work with in developing and implementing policies and practices? Select as many as apply. * Governments * Industry associations * Labor Unions * NGOs * United Nations or other intergovernmental organizations * Other		54.1, (40)                               83.8, (62)                                60.8, (45)                               90.5, (67)                                63.5, (47)                                31.1, (23)
13. Industry Sector: * Extractives * Financial Services * Food and Beverage * Heavy Manufacturing * Infrastructure utilities * IT, Electronics & Telecommunications * Pharmaceuticals & Chemicals * Retail & Consumer Goods * Other (vii)		12.7, (13)               15.7, (16)                                   4.9, (5)                                       11.8,(12)                                    10.8, (11)                                     14.7,(15)                                    7.8,(8)                                        13.7, (14)              7.8, (8)


Total Number of Respondents: 102     

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For the full report and endnotes please visit: www.bsr.org/Ruggie500

 

Posted 9/29/06

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The Dow Jones Sustainability Indexes: 2006 Assessment Results

On September 6, 2006, SAM Group, a Zurich-based financial services group that focuses on the integration of economic, environmental and social criteria into investing, announced the release of its review of the 2006 Dow Jones Sustainability Indexes (DJSI), which were created with Dow Jones Indexes in 1999 to track the economic, environmental and social performance of sustainability leaders around the world.

The Indexes are reviewed annually in light of issues such as corporate governance, risk management, branding, climate change, supply chain standards, and labor practices. The DJSI are used by asset managers in 14 countries who have licensed the DJSI family as benchmarks and underlying for a variety of sustainability-driven portfolios, including mutual funds, segregated accounts, structured products, as well as two exchange traded funds. Currently, these entities manage an estimated total of over 5 billion USD in assets, a 30% increase since the 2005 review.

2006 Additions To and Deletions from the Regional Indexes
Significant changes have been made to the Indexes resulting from the review:

- Dow Jones Sustainability World Index: 46 new companies added as sustainability leaders, 36 deleted.
- Dow Jones STOXX Sustainability Index (pan-European sustainability benchmark): 26 companies added, 16 deleted.
- Dow Jones Sustainability North America Index: 17 companies added, 13 deleted.

What the 2006 Assessment Shows
According to press release, the assessment results also provide detailed information about recent sustainability developments in the corporate world such as:

-  The trend towards industry-specific sustainability management continues. Companies are getting increasingly educated about the specific sustainability risks and opportunities in their sector and continuously move beyond general aspects. Examples for this include waste-to-energy production of utility companies, digital inclusion in the communication technology industry, and closed-cycle bleaching in the paper industry.

- Competition increases for sustainability leadership. As sustainability gains recognition, an increasing number of companies are competing for sector sustainability leadership and differences between leading companies in most sectors are getting smaller.

- Huge discrepancies exist between companies concerning their operational risk
management. Only few companies report that they have established systems to quantify and visualize operational risks with tools such as risk maps, stress testing, sensitivity analysis, etc.

- Leaders quantify the value of their brands. Companies care about their brands and invest heavily into brand management, but few report that they are actually able to quantify the values of their brands and the returns on their brand investments.

- Climate change continues to attract increased attention. More companies recognize that climate change will have a major impact on their future operations and product offering. Leading energy firms include a climate change impact assessment in their M&A due diligence. The top financial institutions leverage their climate change know-how gained for internal assessments to market new products and services that go
beyond mere carbon emission trading (e.g. risk management systems, environmental impact assessments of potential investments, etc.)

- More global firms taylor their product offerings to the specific needs of developing countries. Mobile communication technology providers offer low budget mobile phones or install phone booths in under-developed regions. Consumer goods manufacturers adjust their global offering in terms of product packaging, product sizing, pricing and contents (e.g. adding iodine to salt).

- Overall, sustainability performance continues to advance across all sectors. At the same time, substantial room for progress in sustainability remains on the corporate agenda.

The Indexes
To view the indexes visit the DJSI website where readers can search for results by company, sector, and region.

Posted 9/25/06


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BP and Infosys Co-Chair Tomorrow's Global Company Inquiry

To download as .pdf

BP and Infosys (for more on Infosys see Ethical Leadership) are co-chairing a year long inquiry entitled, "Tomorrow's Global Company" launched by the non-profit research and agenda-setting, Tomorrow's Company, whose stated goal is to shape a business future that makes equal sense to staff, shareholders and society. Founded in 1998, Tomorrow's Company releases key reports and organizes events aimed at fostering dialogue about the most pressing issues facing the business world.

After consultation Tomorrow's Company has identified three issues that will be fundamental to the future success of business. Its programme of research, events and activities are designed to explore and build upon these themes:

1. 21st Century Investment - Towards a Better Investment System.
Does our current system serve the needs of savers and wealth creators? What changes are needed and how can we achieve a business-led rather than a government imposed improvement to the system?

2. An Inclusive Company - Leadership and Governance.
For solutions to today's corporate problems Tomorrow's Company draws on the richness of the inclusive approach. For example:

* making the board more effective by focusing their attention on the real drivers of success
* developing an effective and productive culture based upon shared purpose and values
* helping companies improve measurement and reporting based on a clear success model.

3. Business and Society - Closing the Gap.
What is the role of business in society at the local and global level? What obligations does it have to its many stakeholders?

The "Tomorrow's Global Company" inquiry, which is open to public comment and is geared toward theme 3, seeks to answer four questions:

1. What should be the role of a company in society, globally and locally, in the context of the changing global environment?

2. How should the future collaboration between the wealth-creating enterprises, the financial institutions, government and civil society be developed and managed? How can this be done in a way that does not undermine the strengths and remits of each party, while strengthening society and governance as a whole?

3. How can companies lead, manage and benefit from a diverse workforce whilst maintaining a strong core purpose and set of values?

4. How can companies address their critics and form productive relationships which yield positive outcomes?

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Business Ethics Magazine Releases Its 2006 “100 Best Corporate Citizens” Survey

The U.S. based Business Ethics Magazine has released its annual survey of the “100 Best Corporate Citizens” in its quarterly Spring 2006 Issue. Of the top 10 firms on the list, 7 of these are technology firms, which Majorie Kelly, Editor of Business Ethics attributes to the industry's proclivity towards sound environmental policies, high community involvement, and good employee relations. According to Kelly, these tendencies may be a function of their ability and interest in attracting and retaining highly talented individuals.

The list puts a numerical rating on performance in eight stakeholders categories: shareholders, community, governance, diversity, employees, environment, human rights, and product. According to Business Ethics Magazines press release: “Environmental, social and governance ratings are drawn from Socrates (TM), the online research database created by KLD Research and Analytics, Inc. in Boston, an independent research firm serving investment management professionals….

The universe of companies considered for the list encompasses U.S. firms in the Russell 1000, the S&P 500 and KLD’s Domini Social Index….Social scores use KLD’s assessment of “strengths” and “concerns” demonstrated in each category. The shareholder score is based on three-year average total return (stock appreciation plus dividends) through year-end 2005.”


The Top 10 Corporate Citizens:

1. Green Mountain Coffee Roasters Inc.
2. Hewlett-Packard Company
3. Advanced Micro Devices, Inc.
4. Motorola, Inc.
5. Agilent Technologies, Inc.
6. Timberland Company (The)
7. Salesforce.com, Inc.
8. Cisco Systems, Inc.
9. Dell Inc.
10. Texas Instruments Incorporated

The full list can be viewed on the Business Ethics website by following this link.

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“2006 Corporate Governance and Climate Change: Making the Connection.”

A new report from CERES

“…leading companies in many key industries are now tackling the issue [of climate change] at the highest level, with boards conducting strategic assessments and management setting performance goals for reducing greenhouse gas emissions and developing new climate-friendly products.”

However, many companies continue to ignore the issue as “low climate governance scores also were prevalent among entire sectors, including: coal companies, which are especially vulnerable to greenhouse gas regulations; food and forest product companies, which are vulnerable to natural resource impacts from climate change; and airlines, one of the fastest growing sources of CO2 emissions.”

These are just some of the finding of a first-ever report by Ceres, a US-based coalition of environmental groups and investment funds, entitled, “2006 Corporate Governance and Climate Change: Making the Connection.” The study, which assessed how 100 leading companies (76 U.S. and 24 non-U.S. in 10 business sectors) are tackling the growing financial risks and opportunities arising from climate change (which range from expanding greenhouse gas regulations to direct physical impacts to surging demand for climate-friendly technologies), shows significant improvements from a similar 2003 Ceres survey.

"More U.S. companies realize that climate change is an enormous business issue that they need to manage immediately," said Mindy S. Lubber, president of Ceres, “Investor pressure, expanding greenhouse gas limits and surging global demand for clean-energy products are compelling U.S. businesses to act, although many others still fail to recognize the enormity of this issue. Ultimately, management and board members at all 100 of these companies need to make climate a top governance priority."

The nine-month study drew from securities filings data, company reports, company websites, third-party questionnaires and direct company communications. It used a "Climate Governance Checklist," which covers five broad areas of corporate action: board oversight, management performance, public disclosure, greenhouse gas emissions, accounting and strategic planning, to assess company performance.

Using a 100-point scoring system, the report ranked the largest companies in the oil/gas, electric power, auto, chemical, industrial equipment, mining/metals, coal, food products, forest products and air transportation sectors, with operations in the United States. Those companies with a sustained commitment to controlling greenhouse gas emissions, disclosing data and strategies, supporting regulatory actions, and taking practical, near-term steps to find lasting solutions to climate change, received the highest scores.

Foreign companies led in five of the nine sectors (which excluded electric power) which included both U.S. and non-U.S. companies, while American companies led in the other four.

Among the industry sector leaders and laggards:

Sector	Leaders	Laggards
Oil/Gas	BP (90 points*)	ExxonMobil (35)
Chemical	DuPont (85**)	PPG (21)
Metals/Mining	Alcan (77) & Alcoa (74)	Newmont (24)
Electric Power	AEP & Cinergy (both 73)	Sempra Energy (24)
Auto	Toyota (65)	Nissan (33)

* Top score among the 100 companies
**Top score among 76 U.S. companies

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CSR’s Rising Importance

Executives Say They Face a Host of Worries About Society's Expectations of Their Companies, Which Can—and Must—Do Better

The McKinsey Global Survey of Business Executives : Business and Society, January 2006

Executives around the world overwhelmingly embrace the idea that the role of corporations in society goes far beyond simply meeting obligations to shareholders, according to the latest McKinsey Quarterly global survey. 

But executives also say that, for most companies, sociopolitical issues—such as environmental concerns and the effects of offshoring—present real risks. Indeed, finding ways to control them is so important, the executives say, that the effective management of sociopolitical concerns must start with the CEO.  Executives are far less certain, however, that corporations adequately anticipate which sociopolitical concerns will affect them. These executives also believe that the tactics—lobbying and public relations, for example—companies now use to meet such concerns are not the most effective ones. In addition, they think that the public will expect corporations to take on a significant role in handling the new pressures.

Some Findings From This Report:

• Business executives across the world overwhelmingly believe that corporations should balance their obligation to shareholders with explicit contributions "to the broader public good." Yet most executives view their engagement with the corporate social contract as a risk, not an opportunity, and frankly admit that they are ineffective at managing this wider social and political issue. Our findings highlight some of the key issues that businesspeople expect stakeholders, social and consumer activists, and the media to raise during the next five years. The responses provide striking evidence of the way environmental concerns, doubts about data privacy, the controversy around offshoring, and other sociopolitical matters have firmly inserted themselves into the day-to-day agenda of the executive suite.
  
  
• More than four out of five respondents agree that generating high returns for investors should be accompanied by broader contributions to the public good—for example, providing good jobs, making philanthropic donations, and going beyond legal requirements to minimize pollution and other negative effects of business. Only one in six agrees with the thesis, famously advanced by Nobel laureate Milton Friedman, that high returns should be a corporation's sole focus.


Reputational Risks
Many respondents stress the risks to the reputation of companies, as well as the potential for damaging their shareholder value, when they are expected to address social and political concerns. Across most sectors—notably consumer-facing ones—nearly three in ten respondents say that the media or interest groups have criticized corporations in their industries for "failing to meet social responsibilities generally expected of them but not required by law."  Executives believe that the solution lies in their own hands. Asked how adequately the respondents' companies anticipate social pressure—including criticism of their activities—46 percent say that they have "substantial room for improvement," and a further 24 percent admit to seeing "some room." Only 3 percent report that their companies are doing a "good job."

Is this just PR?
The choice of tactics is also an issue in assigning leadership. Asked who actually takes the lead in trying to manage the sociopolitical agenda of their companies, more than half of our respondents point to the chair or chief executive. A further 14 percent report that the public- or corporate-affairs department typically holds the reins. When asked who should take the lead, however, almost three-quarters opt for the chair-CEO and a mere 4 percent for the public- or corporate-affairs department. Judging by our survey, executives are hard-nosed about why companies are engaging in this new agenda. Only 8 percent think that large corporations champion social or environmental causes out of "genuine concern." Almost nine in ten agree that they are motivated by public relations or profitability, or by both concern and business benefits in equal measure.

Upcoming Key Issues
Looking ahead, executives expect that a wide range of concerns will dominate public and political debates. Asked which three issues will have the most impact, for better or worse, on the shareholder value of companies in their industries during the next five years, 41 percent choose job loss and offshoring. Also at the top of many minds are corporate political influence and involvement; environmental issues, including climate change; pension and retirement benefits; and privacy and data security. Surprisingly, perhaps, human-rights standards—a cause long championed by nongovernmental organizations—barely register as a concern. Among notable regional and industry differences, 47 per-cent of the respondents in North America mention health care and other employee benefits, while 39 percent of banking and finance executives point to privacy and data security.

Pharmaceuticals Looks Good
With executives generally positive about the wider social role business plays, which specific industries make the greatest overall contribution to the public good? Health care, mentioned by 49 percent of the respondents, tops all other sectors by a notable margin.  Despite the high-profile attacks of some interest groups, the pharmaceutical sector (buoyed particularly by North American support) also does well. More than a quarter of the respondents cite either agriculture, especially valued in China and India, though less so in Europe, or telecommunications, notably popular in developing countries, including China.

Such optimism is encouraging, since there is no sign that the new pressures on business will go away. According to the survey, 20 percent of the respondents believe that the public will expect companies to take on most of the added responsibility for handling social and political issues, while an additional 59 percent think the burden will fall equally on governments and companies.

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Corporate Responsibility & Emerging Economies

“Responsible Competitiveness is the precondition for an acceptable, viable globalization that aligns the extension of business opportunities and roles in development with reductions in poverty and inequality, and environmental security.”

A new report from AccountAbility (UK), which includes a National Corporate Responsibility Index (Nordic countries outperform the rest of the world, Pakistan comes last in 80 countries ranked).

Exploring Responsible Competitiveness
AccountAbility noted that it has joined with the United Nations Global Compact and a network of research institutes, business schools and civil society organisations to explore how responsible business practices can most effectively become an embedded feature of global markets. It said its findings in the new report are grounded in concepts, cases and statistics, including the latest Responsible Competitiveness Index (RCI) covering over 80 countries. The Report concludes
with proposals for advancing the practice of Responsible Competitiveness.

Profiling Responsible Competitiveness:The Challenge
All nations, states the Report, regions and communities share the three-part development goal of satisfying the needs of their citizens; playing their part in securing broader global public goods including civil and environmental security and basic human rights; and generating economic development. Realising this goal requires markets and regulation that create a ‘race to the top’ of escalating productivity, human development and environmental responsibility. The potential exists for such a positive relationship, but a competition-driven ‘race to the bottom’ remains a very real possibility. The facts of pervasive poverty and inequality suggests that the ‘trickle down’ of undirected economic growth will not deliver sustainable development on its own. What is required is a more responsible form of competitiveness.

Corporate Responsibility Constrained
Business leaders increasingly recognise the need to act responsibly, says AccountAbility. This is exemplified by the growth in adoption of the UN Global Compact’s 10 Principles, and the business community’s engagement in addressing the UN Millennium Development Goals. But individual businesses cannot go against the grain of the market. Being responsible sometimes does and sometimes does not pay. As with anything in business, success depends on a combination of good ideas, skills, luck and circumstance. While the growing significance of intangible assets has created opportunities for leveraging responsible business practices, the intensification of competition and the short-termism of investors constrain such practices.

Some Key Findings of the report include:

1. Access for developing nations to the markets of developed countries is increasingly linked to compliance with labor and environmental standards. Industries and nations around the world are improving their social and environmental performance with the specific intention of competing in developed markets and/or establishing a competitive edge.

2. Korea (28), Malaysia (30), Thailand (32), The Philippines (42) and India (43) are among the most corporately responsible emerging economies, according to the National Corporate Responsibility Index (NCRI).

3. Responsible business practices may well be a driver of national competitiveness, according to the Responsible Competitiveness Index, also included in this report. The index measures the impact of corporate responsibility on national competitiveness by adding the results of the National Corporate Responsibility Index as a new variable to the World Economic Forum’s Growth Competitiveness Index. Again the Nordic countries dominate the top of the list, suggesting that they are maintaining sustainable economic growth based on responsible business practices. More generally, Europe goes up the competitiveness ladder once corporate responsibility is taken into account, whilst several countries, including China and Japan see significant "falls" in their relative competitiveness levels.

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The Fortune Global 100 Accountability List

Published September 22, 2005

The Fortune Global 100 Accountability List shows US companies lagging behind their European and Asian competitors in managing and reporting their environmental and social impact. Simon Zadek, chief executive of a UK-based group called AccountAbility, commented that one reason US companies may lag behind their European counterparts is that American companies tend to only disclose and audit according to the law and do not report anything if it is not required. Zadek sees companies like Ford and Chevron as leaders who are "stepping up to the mark on some of these issues" but points out that more progress in necessary considering that the overall average score for companies was an abysmal 32 out of 100. One notable improvement was HSBC whose commitment to using the World Bank's Equator Principles to guide lending to dam and forestry projects as well as its use of AccountAbility's AA1000 standard to asses its governance structure helped the company jump from 45th place to 4th place. See the Fortune Magazine for the full list and the Financial Times for comments on the list. See also the AccountAbility website where more information on its AA1000 standard can be found.

The Top 5 Most Accountable Companies

• 2005 rank*	*	Company	Global 100 rank	Accountability score	Sector	Region
  1		BP	1	78	Oil, Chemicals	Europe
  2		Royal Dutch Shell	4	72	Oil, Chemicals	Europe
  3		Vodafone	53	71	Utilities, telecoms, other services	Europe
  4		HSBC Holdings	36	63	Financial services	Europe
  5		Carrefour	22	60	Trading and merchandise	Europe


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