Corporate Responsibility Reporting Trends and Best Practices

Corporate Responsibility
Corporate Citizenship
Corporate Sustainability
Sustainability Reporting
2009
Reana Rossouw
Next Generation Consultants

Overview
• The basics and definitions
• Responsibility vs Irresponsibility
• Sustainability Trends
• Sustainability in Practice – Case Studies
• Strategy Development, implementation
and integration
• Reporting
• Frameworks and Compliance

Organisations today faces a three
fold pressure to succeed:
• To be:
–More
innovative and
competitive
–More
productive and
profitable
–More
responsible
and
sustainable

Sustainability Reporting

…is an organisation’s
public account of its
economic,
environmental and
social performance in
relation to its
operations, products
and services.

• Note: Organisation
includes corporate,
governmental and non-
governmental
organisations
*www.krikor.info

Doing well by doing good - CSI
Doing well by being good – CSR
Ensuring survival – Sustainable Development

Sustainability Framework
Corporate Responsibility
Managing risks and impacts
across Economical, Social,
Environmental dimensions

Corporate
Sustainability

Corporate Citizenship Corporate Governance:
Values, Beliefs, Principles, Compliance, Standards,
Policies, Contexts, Frameworks, Principles,
Definitions Guidelines

CS and the different interpretations
• Different strokes for different folks:
– To Chinese consumers, the hallmark of a socially responsible
company is safe, high quality products
– For Germans, it is secure employment
– In Thailand, sustainable development is defined as holistic
development which involves six dimensions: economic, social,
environment, politics, technology and knowledge, and mental
and spiritual balance.
– In Bolivia, there is a particular emphasis on political dimensions
(e.g. good governance and participation) and on the cultural and
spiritual identity of diverse indigenous peoples
– For Africans it is about proving legitimacy and credibility and
ensuring poverty is alleviated
– In South Africa what matters most is a company’s contribution
to social needs such as healthcare and education

Theoretical Model

www.naturalstep.com

What drives business
sustainability?

Changing Supply: Changing Demand: Changing Rules:

•Natural Resources •Consumers •Policy &
•Employees •Stakeholders Regulation
•Capital Markets

Sustainability’s Influence on
Corporate Functions
Function Impact
Marketing Changing consumer interests might lead to missed opportunities.
The need to align sustainable consumption and production.
Talent Management Talent pool’s growing interest in working with companies that attend
to sustainability.
Finance Stakeholders’ demand for increased transparency.
Financial markets’ growing evaluation of companies’ sustainability
efforts.
Operations Eliminating energy inefficiencies in owned operations.
Ensuring suppliers’ compliance with a code of conduct.
Ensuring access to needed (and limited) resources, such as water
and energy.
Information Technology Need to minimize the energy inefficiencies in older technologies.
Developing technologies to minimize the need for virgin materials
used to provide value to consumers.
Legal New regulations with which to comply.
Strategy The very markets in which companies compete are poised for further
change. In some industries, the adaptation of sustainability is
paramount to corporate survival

Lets Define…

• Sustainability
– Meeting the needs of the
present without
compromising the ability of
future generations to meet
their own needs

• Triple-bottom-line (TBL)
– Considers, measures and
refers to achieving a
balance between
integrated (economical)
financial, social and
environmental contributions
and performance to society
www.deloitte.uk

Definitions (cont’d)
• Corporate sustainability
– A business approach to create
long term shareholder value
by embracing opportunities and
managing risks derived from
economic, environmental and
social developments

• Sustainability reporting
– Generic term for extra-non-
financial reporting. Refers to
the account an organisation
gives to describe its
performance on a number of
sustainability dimensions such
as economic, environmental,
social, ethics, governance,
product and market
responsibility, performances
and impacts.

• Corporate Citizenship (CC)
– Considers the rights and responsibilities of companies within a
broader societal context relating to:
• Managing the enterprise – how efficiently and ethically the
company governs, controls and manages its operations
• Workplace practices – how it manages its employees, workplace
conditions and employment practices
• Third party interactions – how it engages external stakeholders in
the company supply chain, marketplace, government and community
• Environment – how it controls its impact on the environment
• Transformation – how South African companies meet their
obligations to help all citizens become meaningful economic
participants
• Product and market stewardship – how it markets, what it
produces, how it goes about taking product to market and owning up
to the promises made in marketing and product development

• Corporate governance
– Generally refers to the process by which organisations are
directed, controlled and held to account. It encompasses
authority, accountability, stewardship, leadership, direction and
the control exercised in the organisation
• Corporate (Social) Responsibility (CSR) (CR)
– A good corporate citizen (a responsible one) is one that has
comprehensive policies and practices in place. These enable it to
make decisions and conduct its operations ethically, meet legal
requirements and show consideration for society, communities
and the environment.
• Corporate Social Investment (CSI)
– Refers to a company’s contributions to society and community
that are extraneous to its regular business activities.


• Integrated Sustainability Reporting (ISR)
– Relates to non-financial reporting as suggested and
outlined in the King Report on Corporate
Governance for South Africa – namely reporting on
the nature and extent of a company’s social,
transformation, ethical, safety, health and
environmental management practices and policies.

• Most companies in South Africa use the GRI – Global
Reporting Initiative as the benchmark for their reporting
standards

• In South Africa, it is expected that the Companies Act
will be passed into law on July 1, 2009. The Act will be
effective from March 1, 2010.
• The new provisions (in the Act) will be based on ‘King III’
which applies to all entities, regardless of the manner
and form of incorporation and establishment.
• King III recommends that sustainability reporting should
– be focussed on substance over form and should transparently
disclose information that is material, relevant, accessible,
understandable and comparable with past performance of the
company
– be formalised as part of the company’s reporting processes
– have independent assurance

The Concept
• It is no longer just about being ethical and fair in
our dealings, nor just about managing our social
or environmental impacts, nor just about being a
good neighbor in our local communities,
although all of these are important
• It is about turning social, economic and
environmental challenges into opportunities
for brand/product/process innovation, business
development and competitive advantage.
• CR is not only central to business strategy
but is increasingly becoming a critical driver
of business growth

Key Drivers
• Key driving forces include:
– Investor and consumer demands and governmental and public
pressure
– Particularly important is the support from Socially Responsible
Investing (SRI) Indices .
– The corporate responsibility movement is now entering a
mainstreaming phase aided by standardisation activities such as
the GRI, the AA1000 series and the ISO2600 guide.
– The field of responsible business strategy and practice is
becoming one of the most dynamic and challenging
subjects corporate leaders are facing today and possibly
one of the most important ones for shaping the future of our
world.

Foundations of the business case
• An international imperative
– The power of multinational companies
– Universal rights and standards across developed and
developing economies
• A national imperative
– Conscious effort to address past imbalances and exclusions
– The socio economic benefits of a stable, more equitable
society
• Individual company rationale – it makes business sense
– Strong brand and reputation
– Employer of choice
– Market Position
– Trust of financial markets and increased shareholder value
– New ‘green’ products/services and new markets
• Both risk and opportunity management

What should business be doing
• Commit to corporate action
– Incorporate long-term measures into a
definition of success, targeting profitability
that is sustainable, and supported by a
responsible record in managing social,
environmental and employment matters
• Understand the issues
– Making operations environmentally and
socially sustainable, making society
sustainable, selling products responsibly,
influencing suppliers
• Use precedent and best practice
– Comply with standards, codes and
guidelines
• Embed the right management
approach
– From board and executive level the
authority for sustainability must be
devolved throughout the organisation
through all processes, systems and
operations
• Convert risks and opportunities into
actions
• Manage and measure performance
www.leryco.co.uk • Communicate and report

Benefits of Sustainability
• Increased profit
• Increased access to capital – new sources (investment)
• Reduced operating costs/increased operational efficiency
(environmental practices)
• Enhanced brand image and reputation
• Increased sales and customer loyalty
• Increased productivity and quality
• Increased ability to attract and retain employees
• Reduced regulatory oversight
• Reducing risk and increased risk management
• Competitive advantage
• Increased market share

Challenges of Sustainbility
• Managing in an integrated manner the full lifecycle of CR strategy
formulation, implementation, evaluation and evolution incorporating
stakeholder participation
• Aligning responsibility strategy to corporate strategy focusing on:

– Rationalising and harmonising the economic, compliance, ethical and
sustainability dimensions of corporate responsibility and sustainability in the
context of stakeholder requirements
– Managing non-financial risk, particularly brand, reputation, local licence to
operate and to performance instability as an integral part of corporate
sustainability management
– Integrating eco-design and other sustainability requirements into product and
service offerings

• Managing the sustainability performance requirements into product and
service offerings
• Managing the sustainability performance optimisation process to
continually increase stakeholder satisfaction
• Developing strategic responsibility and sustainability capabilities

Challenges for individual
companies
• Discussion
• How do we define
sustainability
• What is our language
• What matters to us most
• What will drive us in
future
• What are our (company
specific, industry specific)
future risks and
challenges
• What is our 2020/2025
vision

Objectives and motivations of
sustainable companies
• Increased transparency and improved
governance aimed at rebuilding public trust and
investor confidence
• Delivering wider societal value including support
for health and human rights improvements and
environmental protection
• Contributing to regional development and global
partnerships for sustainable development
• Addressing in a balanced way the concerns of
their key stakeholders

Strategic Map
Risk Management Shareholder Social Innovation –
– regulation and Value performance stability
competitive policy – eco efficiency –
fair globalisation

Corporate
Competitiveness

Company Law Sustainable
Corporate Stakeholder Corporate
and compulsory Development
Governance management - Sustainability
regulation
reputation

Corporate Social
Responsibility
Investor
Social demands SRI –
Accountability - philanthropy
ethics corporate
Voluntary citizenship
Regulation

Responsibility and Sustainability Pathway

Cost Saving Resilience
Efficiency New Future

Innovation

Compliance
Reputation Connectivity
Risk Stakeholders
Management

Responsibility and Sustainability Pathway

Revenue Generation New Revenue Streams

Innovation

Licence to Operate
Revenue Protection
Freedom to Operate

Framework
• Eight core characteristics
– Understanding society: understanding the role of each player in
society – government, business, trade unions, non governmental
organisations and civil society
– Respecting environment: considering the cost of natural economics,
placing a value on natural resources and calculating benefits
– Building capacity: participating in partnerships and creating strategic
networks and alliances
– Questioning business as usual: challenging the way of doing things
and being open to new ideas
– Shareholder relations: identifying stakeholders, building relations,
engaging in dialogue and balancing demands
– Strategic view: taking a strategic view of the business environment
– Harnessing diversity: respecting diversity and adapting to different
situations
– Quality control: feedback on the effectiveness of the CR process,
communication and training programs should be an integral part of CR
quality management

Driving Forces
SRI
Investor Government
Demands Pressure

Green
Buying Corporate Regulation
Responsibility
and
Sustainability

Consumer
Demands
Public
Public Pressure
Confidence

CSR and Sustainability Guides
Corporate Responsibility and sustainability implementation

Brand and Reputation Management

Corporate Corporate
responsibility and Innovation, Production, Distribution sustainability
sustainability performance
strategic Social Capital Management management
management

Environmental Capital Management

Stakeholder Engagement

Corporate Responsibility and Sustainability principles, best practices – case studies – trends
Reference sector specific CSR/CS Systems

TBL - CS Framework
Market
Impact
Social
Industry Impact
Product
Impact

Clients SUSTAINABILITY
SUSTAINBILITY Brand
Impact

Economic
Suppliers Environmental Impact
Impact

Governance Compliance Transformation

TBL Framework
Environmental Social
Key Drivers: Key Drivers:
Climate Change Making operations socially sustainable
Escalating operating costs Making society sustainable
National Energy Efficiency strategy and accord Selling products responsibly
Whitepaper on renewable energy Influencing suppliers
Green Building Council of SA
Risks Risks:
Unquantified supply and cost risks for operations Loss of business due to failure to achieve scorecard objectives
Escalating building operating costs Government censure and loss of business
Penalties and sanctions Operational restrictions
Reputational damage Additional regulations
Opportunities: Opportunities:
Lower carbon footprints High BEE ratings
Decreasing operating costs Business partner of choice
Productivity gains Government business opportunities
Reputational gains Reputation gains
Focus Areas: Focus Areas:
Water Consumption BEE; Employment Equity and skills development; Workplace
Fuel consumption conditions and policies; Occupational health & safety
Electricity Consumption Employee wellness; HIV/Aids; Enterprise Development
Waste and Effluent Management Corporate Social Investment; Ethical consumerism
Emissions and climate change Responsible marketing and advertising; Product pricing
Carbon trading Product access; Packaging & Waste; Preferential procurement
Environmental rehabilitation Product sourcing and traceability

Stakeholder Framework
Employee Product
Relations Product Stewardship Development

Product
Customer Access
Relations
Market Stewardship
Supplier Product
Relations Social Impact Knowledge

Product
Broker Management
Relations
Brand Stewardship
Product
Shareholder Distribution/
Relations Marketing
Pricing Sales Practices
Practices
Community
Relations
Marketing Communication
Sponsorship & Public
Practices Practices
Investor Relations Practices
Relations

Stakeholder issues
Stakeholders Key Issues
Shareholders Return on Investment
Corporate Governance

Employees Salary & Benefits
Health & Safety
Training & Development
Equal Opportunities
Communications

Consumers Price/Value
Easy access to products/services/ distribution
Quality of product
Advertising policy
Business Partners Jobs sustained
Payment of bills
Technology transfer

Government and Community Tax contribution
Local economic impact
Transfer pricing policies
Charity contributions
Community investment
Commercial sponsorship

Environment Sustainable raw materials
Emissions – water/air
Energy efficiency
Waste management
Reduced packaging
Recycling

Issues Framework

Responsible Investment
Products Responsible Drinking
Services Responsible Consumption

Zero Carbon footprint
Zero Omissions
Recycling
Reduction of electricity
CS

Environment Stakeholders

Medical Aid for the poor
Medical Aid for retirees
Incentives for green/healthy living
Employer of Choice

Issues Frameworks

www.labnet.co.uk & www. Parlermo.co.uk

Industry Sustainability Frameworks
Brand Management
Customer Relationship Management Social
Economical Innovation Management
Piracy Protection
Supply Chain Management
Privacy Protection Occupational Health & Safety
Market Opportunities Stakeholder Engagement
Price Risk Management Standards for Suppliers
Access & Impact Products/Services
Social Integration
Business Risks & Opportunities Product Quality & Lifecycle Management
Climate Change Strategy Responsible Marketing
Environmental Policy & management Human Rights & Corruption
Operational Environmental Footprint Capacity Building
Operational Eco Efficiency Corporate Social Investment
Packaging
Raw Material Sourcing
Biodiversity
Recycling
Transport & Logistics Environmental
Emissions/Carbon
Hazardous Substances

Industry Framework
Industry Economic Environmental Social
Financial Services •Anti Crime •Business Risks and •Code of Ethics in
•Brand Management Opportunities Investments/Financing
•Customer Management •Financial Products & Services •Occupational Health & Safety
•Stakeholder Engagement •Business Risks/Project •Financial Inclusion
Finance •Standards for suppliers
•Environmental Policy
•Carbon Footprint

Retailers •Customer Management •Environmental Policy/Climate •Health & Safety
•Health & Nutrition Strategy •Standards for Suppliers
•Emerging Markets •Genetically Modified
Organisms
•Reduced Packaging
•Raw Material Sourcing

Media •Brand Management •Environmental management •Code of Ethics for Advertising
•Customer Management systems •Editorial policy
•Lobbying Activities •Hazardous substances •Ethical Conduct
•Product Piracy •Eco-efficiency •Protection of Children
•Volatile Organic Compounds •Stakeholder Engagement

Telecommunications •Brand Management •Climate Strategy •Digital Inclusion
•Customer Relationship •Electro Magnetic Fields •Impact of Telecommunication
Management •Environmental Services
•Privacy Protection Policy/Management System •Stakeholder Engagement
•Service Development •Operational Eco-Efficiency •Standards for Suppliers

It’s not all about reporting…

It’s about management and
business practices.

In the bigger scheme of things…
Sustainability and Corporate Responsibility
• Acts as a strategic lever
• Supports marketing
messages & brand
values
• Supports and underwrites
business objectives,
business development
and business growth
• Delivers on shareholder
value and wealth
• Adds strategic and
economic value to the
organisation
• Creates a new future

Effective CR requires companies to:
• Develop guidelines
• Build collaborative
partnerships
• Engage with external
stakeholders
• Develop indicators to
measure progress
• Measure results and
impacts
• Incorporate CR into
strategic business
decisions and activities
• Build social capital
among management

Sustainability Trends

Reputation vs Risk vs Compliance

What about the recession?
• According to a new study from Panel
Intelligence, 80 percent of sustainability
leaders surveyed (65 execs from Fortune
500 companies) in November say they
intend to maintain or increase spending
in areas related to sustainability next
year. In fact, they reported that
sustainability and clean technology
spending, as a percentage of corporate
revenues, is expected to increase 73
percent through 2010.
• Another recent study by A.T. Kearney
reveals that, as a result of “ecoflation”
(based on future analysis of increases in
commodity prices, environmental and
governmental policy and climate situations),
packaged goods companies may expect a
reduction in earnings of 19 to 47 percent
in the next decade if they do not
implement adequate sustainability
measures. That’s nothing short of
startling. Thankfully, unlike much of the rest
of the business world of late, optimism and
sound business sense do not seem to be in
short supply among corporate responsibility
leaders of some of the world’s leading
companies.
www.coneinc.com

Sustainability & recession
• Responses from 65 sustainability executives of Fortune
500 companies.
– Sustainability and clean technology spending - as a
percentage of corporate revenues - is expected to increase
73 percent through 2010.
– Eighty-two percent of respondents rated energy efficiency
as the most important area of current focus and investment.
– Corporate spending on sustainable waste management
initiatives is expected to grow by 20 percent in 2009, the
highest percentage increase of any subcategory.
– Cost savings, revenue generation and brand strength are
the most important drivers of environmental and clean
technology initiatives.
– Nearly 55 percent of respondents observe no financial
criteria (i.e. ROI, payback period) when evaluating
sustainability projects for their respective organizations.
– A majority of respondents believe capital remains available
for sustainability projects.

• Business practices are an additional purchasing
influence, as today's savvy consumers are now
asking "Is this a good company?" and "What does it
stand for?"
• The environment and economic development are
among the top four causes consumers want
companies to address, along with health and
education
• Consumers may become activists if companies
engage in negative business practices; 85 percent
would consider switching to another company's
products/services
• Relevant and compelling communication are key to
breaking through www.mckinsey.com

Green is the new black
• Sustainability labels, virtual
meetings and zero waste
are the order of the day
• Bottomline - Six Rs –
rethink, refuse, reduce,
reuse, repair and recycle
• Closer tie between Green
Marketing and Overall
Brand Image
• Environmental and social
responsibility initiatives will
be tied into overall brand
communications.

CS crossing the divide
• Smart grid takes off – consumers getting serious
and off the grid – own water, own heating, own
energy, own recycling
• Year of the carbon market – While the U.S. hasn’t
adopted any federal carbon regulations, 850 U.S.
cities representing all 50 states have adopted the
standards laid out by the Kyoto Protocol.
• Green building sets the code – More and more
cities are adjusting commercial building code to
lessen the environmental impact of the building.
• Banks for the new economy – Motivated in part by
the failings of large financial institutions in 2008,
banks, particularly smaller firms, will focus on
creating long term personal relationships and will
invest in things that matter to their members. And
right now, members want to bank with sustainable
institutions; firms that are showing that they care
about their environmental impact.

• Green jobs hiring blitz – With more focus on energy
efficiency and renewable energy more qualified individuals
will be needed to fill empty slots. One study estimated that
number to be 4.2 million over the next 30 years. Two
sectors expected to lead this job creation are
manufacturing and utilities.
• Tapping into water conservation – Of the earth’s natural
resources, water is one of the most undervalued relative to
its diminishing availability. The often easy, but previously
overlooked, water efficiency measures are gaining
recognition for their ability to save the firm money with little
extra cost.
• Get on the bus – According to the American Public
Transportation Association (APTA), public transit use saw
a 50-year high in 2007. Another study found 76% of
individuals surveyed support public funding for the
improvement and expansion of transit and 80% consider
increased investment in public transit as an increase in
their quality of life. Millions of government funded dollars
are set to expire in 2009, if not used or specific projects
began.

• Solar’s future luster - While solar
installations have predominantly been
photovoltaic (PV) systems for home
and businesses, utility scale solar
farms and concentrated solar thermal
plants are set to surge. This growth
will be accelerated by an increase in
venture capital investment and an
extension on the life of federal tax
credits.
• 'Go green’ goes down – Businesses
will no longer be able to say they have
gone green and have little to show for
it. Consumers will want to see the long
term sustainable efforts businesses
are making. Being green as become
more common, which means firms will
need to be authentic and internally
committed to being sustainable.
• Biomimicry – a new language, a new
future, going back to nature for future
sustainable solutions

What are people talking about – the
Buzz Trend
• Global Warming/Climate
change
• Renewable
energy/Alternative fuels
• Resource conservation
• Carbon Emissions
• Pollution
• Packaging/Plastic
• Transportation
• Toxins
• Organics

www.greenconsumer.com

The future …

• THE FUTURE….
– CS will continue to spread across the supply chain and across
borders. Climate change, urbanisation, and poverty are global
challenges that require global solutions. With their capital, power,
and innovative potential, firms have a moral responsibility to help
solve these problems. As a result, CS has to consider an ever
increasing range of social and environmental factors from around
the globe. Finally, globalisation results in an intensified scramble
for resources, capital, labour and market share. CS helps
companies to raise their attractiveness as a customer, partner,
employer, or supplier.

Finding Solutions
• CS is no longer just about being good, managing the public image,
or improving products: Sustainability and efficiency initiatives save
costs and increase the value of the company. The FTSE4Good
Index and the emergence of external CS rankings highlight how
companies are increasingly assessed in terms of their
sustainability and CSR activities.
• Solution-oriented CSR is the key vehicle to promote sustainability.
CS could be the business blueprint for the future. It will reshape
business ecosystems, changing the way companies are organized
and engage with their stakeholders. In a customer-driven
economy, CSR will be actively managed, an integral part of
company strategy, and a hard factor for company success. It will
impact the nature of competition, foster the development of
sustainability related innovations, and facilitate the emergence of
new, more successful, business models. As companies are forced to
become more socially and environmentally responsible CSR will
move into boardrooms and tighten its influence on decision-making
processes. For the future world of business, CS is clearly not a
short-term phenomenon, but a trend-driven necessity.

Fad or Trend?
• A new class of consumer* –
sustainability consumer
– 30% of adults in the US
– 40% of adults in Europe
– “people who value wealth, the
environment, social justice, personal
development and sustainable living
– Make purchasing and charitable
decisions based on their own morals –
morals they expect the corporations
they buy from to respect
– Sustainability consumers are behind
the international expansion of organic
food sales
– Sustainability investors make 50% of
all investment decisions and are
driving socially responsible
investments
* www.ethicalconsumer.com

CSR Monitor 2007 – Global Study*
• Key Findings

– Significant numbers of investors take a company’s social performance
into consideration when making investment decisions – 61%
– In wealthy countries, social responsibility makes a greater contribution to
corporate reputation than brand image – 49% of CSR factors compared
to 35% for brand image and 10% for financial management
– Companies that ignore social responsibility place market share at risk –
42% will punish socially irresponsible companies
– Views and behaviors of opinion leaders indicate that consumers social
expectations of companies will continue grow
– North American consumers represent the most socially demanding
market for companies
– Two distinct groups of citizens making up a third of the world are
engaged in pressurising companies to assume greater social
responsibility – conventional activists and social activists
*Mckinsey Research

2009 GlobeScan Report
• Consumers in India, Brazil and China scored the highest -- and
those in the U.S., the lowest -- for green behavior among the
countries included the Greendex survey conducted by Globescan
• Green building is on the rise, spurring new technologies that save
energy and money while creating more healthful workplaces.
• There is a green race taking place in the automobile industry, with
every major manufacturer planning to introduce electric vehicles.
• The leading consumer product makers and retailers are starting to
rigorously assess the environmental impact of their products using
sophisticated metrics, sending signals up the supply chain that
tomorrow’s products will need to hew to higher levels of
environmental responsibility.

www.greenbiz.com

Ethical Consumers
• Ethical Consumers worry about…
– Organic meat, produce and baby food
– Fair Trade coffee, tea, bananas,
chocolate, honey
– Paper/Timber certified as sustainably
managed by the Forest Stewardship
Council
– Energy-efficient light bulbs and
renewable energy
– Unleaded petrol and low-sulphur
diesel
– Recycled paper
– Landfill and the management of
natural resources such as water, the
environment and healthy food

But seriously how serious?*
• Marks & Spencer – Plan A
– Business wide 500M Pound eco-plan
• Carbon neutral, no waste to landfill, extend sustainable sourcing,
set new standards in ethical trading and help customers and
employees live a healthier lifestyle
• Tesco’s – “making sustainability a significant driver of consumption” 500 M
Pound plan
– Developing a carbon counter “carbon calorie” value of all products,
introduce green loyalty card points for customers who buy organic,
fairtrade and biodegradable products, increase range of energy-efficient
goods
• MacDonald’s health drives pays off – sales growth of 5.8% since
introducing new advertising campaign introducing healthy eating and
exercise
• Danone, Kellogg’s, Kraft, Nestle, Tesco, PepsiCo, Morrisons have
launched 4m Pound campaign to promote GDA labels (guideline daily
amount) for healthier eating – committed to produce more responsible food
products
• Kellogg’s Special K products have become mega brands with over 500m
Pounds in retail sales per year – Special K bars 286m Pounds per year –
10 000 steps per day has increased brand awareness and market share by
more than 35% - “being a responsible corporate citizen is working for us”
* Food Review – February 2007

More examples
GlaxoSmith GlaxoSmithKline believes slashing prices and
Kleine sharing patents will help the one in six people in
the world suffering from a neglected tropical
disease

Walmart Ethical retailing – From Evil Empire to jolly green
giant

Barclays Reducing the number of unbanked and
providing access to affordable credit through its
Financial Inclusion programme

Unilever Establishment of a sustainable agriculture
initiative to secure a sustainable supply of raw
materials necessary to deliver the business and
its brands.

Wolseley The development of an innovative new centre
for the building and construction sector to
showcase technology and products that are
designed to address sustainability concerns.

What is a corporate’s responsibility?

What is typically corporate socially responsible
behavior and what is not?

Lets Talk:

What about Tiger Brands and the
R100 million fine?
Sasol and the €100m fine?

Industries in the spotlight
• Tobacco and Liquor Advertising – addiction to
nicotine and alcohol (BAT, Distell)
• Total ban of advertising to children (Youth brands) -
Kellogg's
• Obesity amongst world population - McDonalds
• Consumer Boycotts – Gillette and L’Oreal – animal
testing
• Heinz – tuna fishing nets harming dolphins
• Lesbian/Gay rights – Phillip Morris – US election
campaigns
• Caterpillar – War in Iraq
• Nestle, Nescare and Nescafe – from babies to
mothers
• Starbucks – from coffee to drugs
• Nike and Gap – child labour
• Coke – anti globalisation – more precious than water
• Sarah Lee – food porn
• Enron, Worldcom, Parmalat – internal corruption
• Cape plc – exploited mineworkers in unhealthy
asbestos mines
• De Beers – Blood diamonds in Africa
• Saambou, Masterbond. Fidentia and Leisurenet –
defrauding investors
• Banks – excessive credit, exorbitant fees
• Telkom - monopoly

How may liters of water does it
take to make one hamburger?
Or 1 tin of coke/beer?

What best describes Sustainable
Development/CR/CC in your company?
Stage 5 The way we define business:
Strategic
Transforming Embedded in the corporate DNA

Stage 4 An integrated concept:
Integrated Commitment TBL, + economic, social and
environmental Factors

Stage 3 Stakeholder
Coherence
Innovative Engagement and Management

Stage 2 Functionality:
Capacity
Engaged Philanthropy, community relations
Environmental protection

Stage 1 Just the basics:
Credibility
Elementary Jobs, Profit, Taxes

Path to Corporate Responsibility
(Harvard Business Review)
5 1
Defensive Stage
Civil Stage
Unexpected Criticism
Collective actions
Activists, Media, Customers
Advocacy
Responds – via crises communications
Education
strategy
Practices

4
Strategic Stage 2
Realign strategy to address Compliance Stage
business practices Policies, Reputation Management,
Competitive Edge Risk Management
King II, JSE SRI, GRI, BEE, etc.

3
Managerial Stage
Standards – Past PR &
Communication

Development of Citizenship
Outside In/Inside Out
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Compliant Engaged innovative Integrated Transforming

Relating to Issues Defensive Reactive Responsive Pro-Active Defining
society: Management Policies Programmes Systems
Outside In
Stakeholder Unilateral Interactive Mutual Partnership Multi-
Relationships Influence Organisational
Alliances
Transparency Flank Public Public Assurance Full Exposure
Protection Relationships Reporting

Responding Citizenship Jobs, Profits & Philanthropy, Responsible Sustainability Change the
to society: Concept Taxes Environmental to or Triple Game
Inside Out Protection Stakeholders Bottom Line

Strategic Legal Reputation Business Value Market
Intent Compliance Case Proposition Creation or
Social change
Leadership Lip service, Supporter, in Steward, on Champion, in Visionary,
out of touch the loop top of it front of it ahead of the
pack
Structure Marginal: Functional Cross Organisational Mainstream:
Staff Driven ownership functional alignment Business
coordination Driven

Defining Sustainability
• Discussion – non-negotiables

– Senior Management
commitment and understanding
– Establishing sustainability
objectives
– Leadership on key issues
– Establishing partnerships
– Integration of sustainability
throughout the Organisation
– Sustainability management
systems , measurement and
reporting
– Framework for stakeholder
engagement
– Enabling innovation
– Building capacity
– Effective corporate governance

What is good citizenship?
What are corporate responsibilities?*
• Ethics, governance and acting
responsibly
• Responsibility towards society
• Serving broader stakeholder
interests
• Good HR Practices and
employment equity
• Good environmental practices
• Product and market
stewardship
• Focus wider than the pursuit of
profits
• Assist government with socio-
economic agenda
• Ensuring long term business
survival
*Corporate Citizenship Handbook

Inhibitors of Good Citizenship
• Lack of financial resources
• Lack of time to understand and implement
• Poor awareness and knowledge of the
subject area
• Lack of skills and understanding of the
subject area
• Poor management buy-in in the importance
of responsible business practices
• Employees not interested – see it as a
burden
• No real business benefit evident to
executive management
• Poor executive support

Its really very simple …. sustainable and
responsible business practices means…
• Discontinuing product offerings that are considered harmful but not
illegal
• Selecting suppliers based on their sustainable business practices
• Choosing manufacturing and packaging materials that are the most
environmentally friendly
• Providing full disclosure of product content
• Developing programs that support employee well being
• Establishing guidelines for marketing to children
• Providing increased access for disabled populations
• Respecting privacy of consumer information
• Developing process improvements such as eliminating the use of
hazardous waste materials
• Ensuring everybody can afford your product

Is this serious stuff?
Is anyone paying attention to this?
• Sustainability strategy and management
– Anglo American, Anglo Platinum, Exxaro, Kumba, Liberty, Mondi, Pick &
Pay, Santam
• Stakeholder engagement
– Engen, Sasol, Exxaro
• HR management and development, skills development and training,
BEE & Transformation
– Old Mutual, Rand Merchant Bank, Liberty Group, Absa, Engen
• Enterprise Development – Anglo Plat & American
• Customer Care and Satisfaction – Nedbank & Liberty
• Supply Chain Management – Metropolitan, SAB
• Emissions, air pollution and carbon footprint – ArcelorMittalo, Exxaro,
Mondi
• CSI – Absa, Engen
• Energy use, efficiency and renewables – Anglo American, Engen,
Exxaro

If its any consolation…
It’s a journey.
Some of us are starting out
Some of us are re-aligning and re-focusing, re-adjusting
Some of us are perfecting
Some of us are benchmarking already.

Standards & Compliance
Frameworks & Guidelines
Industry Initiatives

Refer to Handout

Laws and compliance
International Local
Prescribed laws, •Universal Declaration of Human •SA Constitution & Bill of Rights
aspirational principles Rights •Companies Act
conventions and •International Labour Organisation •Basic Conditions of Employment Act
standards (ILO) Standards •Labour Relations Act
•ISO 9000 •Occupational Health & Safety Act
•ISO 14001 •National Environmental Management Act
•OHSAS 18000 •Mineral & Petroleum Resources Dev. Act
•OECD Guidelines •National Water Act
•Ecocert •Directors Fiduciary Duties
•Fairtrade and Ethical Trading Initiative •Common law & judicial precedent
•Kyoto Protocol •NOSA grading
•Equator Principles •National Small Business Act
•AA1000 •Environmental Management Act

Guidelines •Global Reporting Initiative •King II
•AA 1000 Series •JSE Listing Requirements
•SA8000 Standard •JSE SRI Index
•UN Global Compact •New Partnership for Africa’s
•Sigma Guidelines Development (NEPAD)
•Dow Jones Sustainability Index
•FTSE4Good Index

Transformation Initiatives •“Region-specific” Initiatives •Broad Based BEE Act
•Employment Equity Act
•Skills Development Act
•Industry Charters
•Preferential Procurement Act

Don’t let it scare you
• Select appropriate standards by asking
– What material challenges face your company?
– Are there any codes or standards that you cannot
avoid?
– What are the expectations of the marketplace and
your shareholders in relation to the management of
non-financial issues?
– Categorise the standards…which standards relate
to the different stages of business management i.e.
planning, implementation, accounting and reporting –
or categorise according to functional business unit
i.e. HR, marketing etc?
– Which business strategies and management
practices, add value and economic growth and
contribute to social cohesion?
• In choosing a standard, companies may need to
take in more than one context, i.e. the industry,
geography, political context, regulatory
environment
• The chosen standards should further business
goals and strategy and improve business efficiency

One step at a time…
Governance JSE-SRI; King III, Companies Act
Report GRI – www.globalreporting.org
Assurance AA1000 Assurance Standard
AA1000 Stakeholder Engagement
Standard
Issues Management Tool
www.accountability.org.uk
Carbon Disclosure Project www.cdproject.net
Industry Standards Equator Principles (financial)
Ethical Trading (retail)
Forest Stewardship (paper)
IT DEPENDS ON WHO YOU ARE IT DEPENDS ON WHAT YOU
(Industry) WANT TO DO/ACHIEVE

Industry Based Initiatives
• The rise of industry based initiatives in CSR is one of the major
transformations in the landscape of CSR
• Momentum is growing in developing countries around sustainability issues,
and industry initiatives provide an architecture that allows for consultation
between
– Developed and developing countries
– Private and public sectors
– Producers, buyers and retailers
• Industry based initiatives can be useful in
– Establishing collective to-do lists
– Identifying comparative advantages of individual companies
– Defining roles for individual companies
– Distributing CSR activities by working in partnership
– Stakeholder engagement is easier
– Providing common systems for monitoring, verification, certification and reporting
– Building consumer confidence and managing reputation risk better than a single
company can on its own
– Providing economies of scale and access to public funding for structural changes
within an industry, within supply chains or regions
– Serving as portals for dissemination of information in a coordinated manner

Global Compact

• The UNGC is a multi-stakeholder platform
rooted in universally accepted conventions
– Human Rights
– Labour Standards
– Environmental Principles
– Anti Corruption Principles
• More than 6000 participants in 120 Countries
• SA – Sasol, Nedbank, Eskom, etc. 40
signatories
• SA – Part of GRI and Sustainability Reporting
process

UNGC – Membership
Commitments
• Leadership commitment (board & management) – Letter
to UN
• Willingness to engage in continuous performance
improvement (set strategic & operational goals,
measuring results, communication internally and
externally)
• Openness to dialogue and learning around critical issues
(participate in events local and global, engage in
stakeholder engagement and dialogue)
• Commitment to transparency, accountability and public
disclosure (annual COP – Communication on Progress)
– COP – Report against at least 2 indicators
• Labour, environment, human rights, anti corruption

UNGC – COP Reports
• CEO Statement of commitment
• Description of practical implementation of
10 principles (1st year only 2 indicators)
• Definition of performance indicators &
measurement of outcomes (GRI/ETHOS)
• Post on GC website and own plus
communication to stakeholders
• Verification – external consultants,
stakeholder feedback, peer review

Case Study – Danisco
(2 indicators – 1st report)

Where do we start

What is the process

In summary…

Allowing external stakeholders to
Influence corporate strategy to
ensure the future sustainability
of the company and all its stakeholders.
Its about owning up to your
responsibilities

Changing and adapting business
strategy and operations to support Its about the learning in the process
the new responsibilities of becoming more responsible
It is a new awareness and consciousness

Managing CR – the process…
• Engaging Stakeholders
• Embedding citizenship in organisation
– Structures and resources for managing
corporate citizenship
– CEO involvement
– Management commitment
• Communicating citizenship
– Reporting
– Referencing codes and standards
– Verifying reports

Elements of integration

Stakeholder Management
Engagement Systems

Reporting and
Verification

Let’s make it work!
• Engaging with stakeholders
– By obtaining input and feedback, management
systems can be developed and changed
• Embed management systems and actions
– Developing a framework to translate policy into
management systems and actions, and to entrench
responsible and considerate behavior across all
management structures
• Reporting should follow performance
– Reporting becomes a logical extension of responsible
citizenship practices, using it as a tool to support the
process, focusing on issues that are material, setting
targets derived from action plans and tracking
performance

Sustainability Process

1.
Identify
Stakeholders
2.
10.
Initial Identification
Assess, Redefine and re-map
Of material issues

3.
9.
Determine and define
Measure, monitor
Engagement, objective and
And assess performance
scope

Stakeholder
Engagement
8. 4.
Operationalise Establish engagement
And internalise learnings Plan & period schedule

7.
5.
Understand material
Determine and define
Aspects, identify opportunities
Ways of engaging that work
And risk 6.
Build and strengthen
capacity

Sustainability Process (1)

http://www.wbcsd.org/web/images/case/Alcoa/sustainability-process.jpg


www.fmcg-sustain.com.au/.../approaches/

www.melbournewater.au

Strategic • Strategic Sustainability is:
– integral to the business model and fundamental
Sustainability to the business
– a source of differentiation, builds organisational
reputation with key stakeholders and helps
branding
– gives a leading edge through innovation,
patents, licences, low cost, speed to market and
first mover advantage
– hard to copy
– builds margin and returns via increased prices,
lower costs, lower assets; and importantly
– it is likely to be specific to the company, in the
organisation’s upstream business processes
and is often externally focused
• Tactical Sustainability, on the other hand, is:
– an ‘add on’ and does not impact core business –
every company can do it. It is not a source of
differentiation; it offers no real leading edge (and
in the case of carbon will become purely a
compliance issue), and is easy to copy by
competitors. It does not build margin because all
firms use it and customers can compare and
bargain. Tactical Sustainability is likely to be
generic to the industry, in the organisation’s
downstream processes and often internally
focused.

What Should You Do?
• Develop Capability:
– Sustainability is becoming more important. Organisations need to develop the
capability to scan the external environment for changes in legislation, pressure
from key customers, consumers and competitors, cost increases in key inputs,
technology opportunities, etc.
• Bottom Line Focus:
– During this economic crisis, economic performance is even more important. Set
sustainability strategies with higher expectations of economic benefits and
focus on those sustainability initiatives that attract customers and consumers,
and address costs, without being capital intensive.
• Link to Business Strategy:
– Consider how your approach to sustainability aligns with your overarching
business strategy and differentiates your offer and market position from your
competitors. The more strategic your approach, the greater the benefits will be.
• Set Targets:
– Research / develop targets, measures and controls and report regularly.
• Resource Appropriately:
– If you have a sustainability strategy, allocate good people, assign clear
responsibilities, clarify priorities, coordinate/simplify the multiple initiatives ,
and share/replicate successes.
• Build Capacity:
– If you don’t have a sustainability strategy, educate managers and seek out best
practice (including results), pilot various approaches and demonstrate results,
audit key areas to identify improvement opportunities, prepare a strategy to
prioritise and coordinate the overall approach.

Design and execute an implementation plan
• Develop objectives and communicate objectives (communications)
• Review organisational structure to provide for new processes and
systems (human resources)
• Create committees for specific development areas, and ensure it is part of
job descriptions. Reward systems should also be developed.
(management)
• Business planning must be modified to reflect new priorities
• Management information systems must be enhanced to reflect new
information requirements (information technology)
• Marketing activities require enhanced market research efforts, which
influence the way products are designed, produced, packaged, marketed
and promoted (marketing & sales)
• Production processes and operating procedures must be assessed
against regulations, industry practices or new standards (production)
• Regulatory requirements must be identified (corporate affairs)
• Managers responsible for procurement must reassess (buyers) their
choice of suppliers, to ensure sustainable and responsible objectives are
being met right throughout the supply chain
• Financial planning should consider capital requirements for process
changes and the effect of new mechanisms (finance)

It involves the whole organisation!

Implementation Groups
• Define governance structures and
management systems
– The Board + Committees
– Board structure, accountability, remuneration
– Board composition
• Stakeholder management
– Identify stakeholders
– Engaging stakeholders
– Identifying stakeholder requirements
– Responding to stakeholders concerns
• Reputation Management
– Identify and assess issues influencing
reputation
– Conduct Corporate Reputation Audit
– Evaluate shareholder and stakeholder
activism issues
• Risk Management
– Identifying, evaluation, managing and
monitoring material risks pertaining to
sustainability
– Implementing governance and risk
management plan
• Reporting on material risks and progress on
measures
www.volkswagen.com

Process
• Sensitising – becoming aware of the issues
• Discovering – becoming aware through experimentalism – small
projects and concrete projects
• Embedding – linking structure and strategy with systems
• Routinising – linking CR to the company’s core competencies

Develop a supportive corporate culture

• Re-training may be required
• Exposure to new stakeholder
groups may be required
• The importance of change and
the impact of change needs to
be explained to all levels within
the organisation
• The lead must come from
senior executives and the
board

Develop measures and standards of
performance
• Industry charters, BEE scorecards are
already public measurement tools, others
will have to be developed
• Other compliance issues both global and
local reporting initiatives need to be studied
to ensure relevance and appropriateness of
reports
• Industry specific sustainability initiatives
need to be evaluated:
– Clothing Industry (Ethical Clothing)
– Retail Industry (Fairtrade)
– Mining Industry (Kimberly Process)
– Petrochemicals & Manufacturing Industry
(Kyoto Agreement)
– Liquor Industry (Dublin Principles)

• For CR and sustainability to
become part of the business,
Embedded Sustainability company leadership must
– Take ownership of the
consequences of corporate
behaviour and the
company's inter-
connectedness in society
– Understand the broad
social and environmental
risks, challenges,
opportunities
– Understand the possible
progression and
consequences for the
company of economic,
environmental and social
impacts
– Drive appropriate
responses as an integral
part of the core business
strategy and long-term
value
– Embed CR into corporate
value systems

Developing a strategy
• Benchmark locally
• Benchmark globally
• Benchmark against industry
• Benchmark against
competitors
• Benchmark outside the
industry

www.cadbury.com

Effective Sustainability Management
• Be sure to get approval and buy-in from the executive
• Appoint a champion to drive the process
• Engage senior management and make them understand the rational for
the company’s sustainability agenda
• Make sustainability issues relevant for the management team in the
context of their business operations
• Ensure that they are involved in co-creating the companies sustainability
policies, criteria and measures
• Fine-tune, with management a population of sustainability measurement
indicators that are appropriate and relevant for the business
• Agree on targets against which to be measured in relation to each
sustainability indicator
• Embed the process in the organisation’s management system in a rigorous
and structured way
• Measure, monitor and provide feedback on a regular basis

This is going to cost money…
• Indicators of performance
– Realistic levels of
expenditure (how much?)
– Expenditure within the
definition of CR & CS
– Continuity of expenditure
– Staff participation
– Partnerships
– Stakeholder participation
– Application of non-cash
resources
– Reporting on outcomes
– Reporting on business
benefits

www.dfic.co.uk

Stakeholders
Customers
Owners Media

Employees Consumers

Shareholders/
Suppliers
Investors

Local
Communities Corporation Financiers

Local
Society
Authorities

Provincial
Lobby Groups
Government
National
Environment Future Government
Generations

Stakeholder
Engagement and
Management
• Identify all stakeholders
• Find out what are the
imperatives
• Define the key drivers
(needs and expectations)
• Enter into dialogue
• Understand the challenges,
obstacles and conflicts
• Develop indicators of
performance

• *www.stakeholdermap.com

Coca Cola
Stakeholder Engagement Methodology

*www.cocacola.co.uk

Key Challenge
1. Failure to identify and engage with stakeholders is likely to result in sustainability
reports that are not suitable and, more damaging, that lead to poor performance by (a)
damaging customer satisfaction and perceptions, (b) adversely affecting employee
motivation and morale, (c) damaging relationships in the supply chain, and (d) possibly
compromising an organization's reputation with the wider community.
2. Balancing stakeholder expectations in a way that does not compromise the long-term
sustainability of the organization.

Stakeholder engagement should inform
future business strategies
• It assists with priority
determination
• Confirms material risks
• Set sustainable development
policies and objectives
• Developed by internal
stakeholders in response to
external stakeholder
expectations
• Responses to stakeholder
issues through policies and
strategies must be clear,
concise and measurable –
determine level of aggregation
www.gsk.com

Determining Risks, Impacts,
Targets
Materiality

Materiality, Impact & Risk

www.kovet.hu

Materiality (1)

www.segro.com

Materiality (2)

www.merck.com

Materiality (3)

www.intel.com

Materiality (4)

www.omron.com

Risk Profiles (5)

www.gtnews.com

AIG Risk Profiling (6)

www.aig.com

Core - Basic
Working with indicators (1) Specific - Basic

Marketplace Marketplace
•Customer complaints about products and services •Complaints about late payments of bills
•Advertising complaints upheld •Average time to pay bills to suppliers
•Upheld cases of anti-competitive behaviour •Proportion of suppliers and partners screened for human rights
•Customer satisfaction levels compliance
•Provision for customers with special needs •Proportion of suppliers and partners meeting expected
Environment standards on human rights
•Overall energy consumption •Perception of the company's performance on human rights by
•Water usage its customers
•Solid waste produced by weight •Proportion of company’s managers meeting the company’s
•Upheld cases of prosecution for environmental offences standards on human rights within their area of operation
•CO2/greenhouse gas emissions •Perception of the company’s performance on human rights by
•Other emissions (eg Ozone, Radiation, SOX, NOX etc.) its employees
•Net CO2/greenhouse gas measures and offsetting effect Environment
Workplace •Use of recycled material
•Workforce profile by Gender •Percentage of waste recycled
•Workforce profile by Race Workplace
•Workforce profile by Disability •Pay and conditions compared against local equivalent averages
•Workforce profile by Age •Workforce profile compared to community profile for travel to
•Staff absenteeism work area for gender, race, disability and age
•Number of legal non-compliances on health and safety and •Perception of the company's performance on human rights by
equal opportunities legislation its employees
•Number of staff grievances Community
•Upheld cases of corrupt or unprofessional behaviour •Perception of the company's performance on human rights by
•Number of recordable incidents (fatal and non-fatal)including the local community
sub-contractors
•Staff turnover
•Value of training and development provided to staff
•Perception measures of the company by its employees
•Existence of confidential grievance procedures for workers
Community
•Cash value of company support as % of pre-tax profit
•Individual value of staff time, gifts in kind and management
costs

Working with indicators (2)
Core Specific
Advanced Advanced
Marketplace Marketplace
•Social impact, cost or benefits, of the company’s •Customer loyalty measures
core products and services •Recognising and catering for diversity in
advertising and product labelling
Environment
•Environmental impact over the supply chain Community
•Environmental impact, costs or benefits of •Project progress and achievement measures
companies core products and services •Leverage of other resources

Workplace
•Impact evaluations of the effects of downsizing,
restructuring etc.

Community
•Impact evaluations carried out on community
programmes
•Perception measures of the company as a good
neighbour

Corporate Responsibility Mistakes
• Lacking vision
– It is not about “where are we now and what might we do about CR”.
– It is about “where do we want to be in 10 years time”
– Then it’s about “what and how do we need to change to bring about our vision for the
next ten years”
• Oblivious to the scale of required change
– The magnitude of change, the required new creative and innovative thinking is not
about selectively modifying existing business practices
– It is about new, more responsible and smarter ways to create shareholder value and
wealth
• Sub strategic
– It is not a staff function at a sub-strategic level with little connection to the strategy of the
business, its core competencies and capabilities or management know-how
– It requires an understanding of the significance of the range of issues that contribute to
CR and the ways that it may affect business. This means to address the possibility of
changing systems in the core of the business, changing incentive systems,
changing the focus of decision-making, and management systems in the core of
the business while implementing CR projects in specific business units

CR Mistakes (cont’d)
• Unsophisticated view of CR
– Many companies do not separate the two roles of CR – protecting the assets of the firm
and providing a basis for the creation of new value
• Inability to hear outside voices
– CR demands new views from a range of stakeholders. With no clear distinction between
value protection and value creation, it is not easy to engage stakeholders in appropriate
ways, to ask them appropriate questions and to listen, understand and adhere to their
suggestions
• Sticking with old managerial competencies
– Few have recognised that the competencies required in the past may not meet the
needs of the future. I.e. stakeholder engagement, product development, environmental
management, risk management are new management skills development areas
• One worldview approach
– Many CR programs, focus only or a company’s home country specific compliance
requirements. This does not do justice to the real difference between CR agendas across
countries, or specific communities and stakeholders. Excessive uniformity is an almost
universal mistake in CR.

CR Mistakes (cont’d)
• Uneven approach
– Making substantial commitment and achieving good CR performance in
some divisions, or business areas, while other parts of the company
might view it as irresponsible. E.g. many companies have made carbon-
neutrality pledges without tackling other big CR issues such as child labour or
unsafe working conditions.
– In doing so they often create the impression that their CR are driven by image
considerations rather than a deep-seated conviction that requires CR as a
core business asset.
• Non-participative management
– Many CR programs have been formulated and implemented through top-
down directives, not matched by the requirements to make CR a part of
company culture and procedures.
– Best practice requires companies to manage CR through a network of
‘change champions’ but this is rarely practiced
• Failure to see CR as innovation
– The failure to see that CR is best practiced on a continuous innovation
process that links CR to a company’s business model. Many companies
are seeking to be more innovative for competitive reasons, yet few regard
their CR programs as directed to value protection or value creation or as
innovation in its own right.

Working with actual reports
and strategies
Practical Session

Best Practice

Awards and Recognition

Accountability Rating
• Top 10 – 2006 • Top 10 – 2007
– BHP Billiton – BHP Billiton
– Anglo Platinum – Sasol
– Anglo American – Lonmin
– Nedbank Group – Anglo American
– Sasol – Nedbank Group
– SAB Miller – Anglo Platinum
– Anglogold Ashanti – Gold Fields
– Santam – Barloworld
– Barloworld – Anglogold Ashanti
– Kumba Resources – Santam

Accountability Rating
• Assessed according to
– Strategy, Governance, Performance Management,
Stakeholder Involvement, Public Disclosure,
Assurance
• Key Trends
– Materials sector – mining, chemical, metals and
glass, oil and gas – best performing sector
– Followed by Financial sector (38%) and industrial
sector (35%), retail/FMCG sector (29%)

SA – Accountability Ranking
1 BHP Billiton 78.6 26 Edgars Consolidated Stores 39.7
2 Anglo Platinum 70.1 27 Richemont Securities 38.8
3 Anglo American 69.4 28 Investec Ltd 38.1
4 Nedbank Group 67.4 29 Investec Plc 38.1
5 Sasol 66.0 30 Unitrans 37.4
6 SAB Miller 61.6 31 Firstrand Group 37.0
7 Anglogold Ashanti 54.9 32 AECI 36.4
8 Santam 54.7 33 Allied Electronics Group 35.5
9 Barlowworld 54.2 34 Liberty Group 34.8
10 Kumba Resources 53.8 35 Network Healthcare Holdings 32.8
11 Harmony Gold 52.9 36 Imperial Holdings 31.7
12 Massmart Holdings 51.3 37 JD Group 30.1
13 Aveng 49.1 38 Old Mutual 25.2
14 Sappi 48.9 39 Nampak 24.9
15 Impala Platinum Holdings 48.4 40 Datatec 24.1
16 Telkom SA 48.0 41 Super Group 24.0
17 Absa Group 46.6 42 Dimension Data Holdings 22.6
18 Pick & Pay Stores 46.6 43 Shoprite Holdings 22.5
19 Standard Bank Group 45.7 44 Murray & Roberts Holdings 20.0
20 Woolworths Holdings 45.1 45 New Clicks Holdings 19.3
21 MTN Group 43.0 46 Steinhoff International Holdings 19.0
22 Bidvest Group 41.7 47 Mittal Steel 18.9
23 Gold Fields 41.7 48 The Spar Group 16.9
24 Metropolitan Holdings 41.1 49 Naspers 14.5
25 Sanlam 40.0 50 Remgro 13.0

• High environmental impact classification
– 2006: Anglo American PLC, Anglo
SRI Index America Platinum Corp Ltd, Impala
Platinum Holdings Ltd, Oceana
Group Ltd, Sasol Ltd, Tongaat-Hulett
Group Ltd
– 2007: Anglo American, Anglogold
Ashanti, Aveng, Gold Fields, Group
Five, Highveld Steel, Illovo Sugar,
Merafe Resources, Sasol, Tongaat
Hulett
• Medium environmental impact
classification
– 2006: Edgars, Medi Clinic, Telkom,
Woolworths
– 2007: Massmart
• Low environmental impact classification
– 2006: Liberty, Nedbank, Remgro
– 2007: Absa Group, African Bank
Investments
• Set criteria to measure environmental,
social, corporate governance and
broader economic practices - Also
consider policies, management,
performance and reporting

Others - SA Results
• SA Companies on the Dow Jones
Sustainability World Index
– African Bank Investments Ltd, Investec Ltd,
Nedbank Group Ltd, Bidvest Group Ltd
• Good Governance Awards
– Focuses on remuneration practices, corporate
ethics and integrity, risk management, BBBEE
and transformation
• Overall Winner - 2006 – FirstRand Group – 2007 –
FirstRand Group

SA Sustainability Reporting Rewards
• Ernst & Young Excellence in Sustainability Reporting
– 2006: Sasol (1st), Anglo American Platinum (2nd), Bidvest (3rd),
BHP Billiton(4th), Kumba Resources(5th)
– 2007: Sasol, Barloworld, Massmart Holdings, Nedbank Group,
Absa Group, Telkom, Kumba Resources, Anglogold Ashanti,
Edgars Consolidated Stores and Aspen Pharmacare Holdings.
– Focuses on sustainability context, report content and boundary,
triple bottom line impacts, report quality and effectiveness,
assurance and credibility
• ACCA South Africa Awards
– Anglo Platinum, Spier (1st runner up), African Bank & Sasol
(jointly 2nd runner up), Woolworths (best improved report),
Massmart (best newcomer)
– Focus on completeness, credibility, communication

Why report?
• In response to pressure from advocates and communities related to specific
events or business practices
• It is an effort to strengthen the reputation and market competitiveness,
• Maintain the ‘licence to operate’
• Demonstrate a serious commitment to a code of conduct to which
organisations subscribe
• Maintain and strengthen trust with community and advocacy groups,
investors, consumers and other stakeholders
• Link disparate functions such as finance, marketing, R&D and operations into
a more strategic vision and operation, opening new conversations that pave the
way for discovery and innovation
• Identify trouble spots and unanticipated opportunities, in supply chains,
among customers, communities or regulators, or in the areas of reputation and
brand management
• Access and measure the value of sustainability practices in the
organisation in relations to the organisation’s overall business strategy and
competitiveness
• Reduce share price volatility and uncertainty occasioned by surprise,
untimely or incomplete disclosure

From Annual Report to Sustainability
Report
• Annual financial reports now need to include environmental, social and economic
impact and not just focus on publishing of historical financial results.

– Description of commitment to economic, environmental and social goals
– Performance against benchmarks, targets and industry norms
– Major challenges for the organisation in integrating financial performance with
environmental and social performance
– Percentage of board directors that are independent, non-executive directors
• Profitability
– Increase/decrease in retained earnings at the end of the period, used to
calculate return on average capital employed
– Total recycling and reuse of water
– Organisation’s indirect economic impacts
• Taxes and subsidies
– Subsidies received broken down by country or region
– Total sum of all taxes of all types paid broken down by country or region

Corporate Responsibility Reporting Trends and Best Practices

Corporate Responsibility Reporting Trends and Best Practices

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