Our first ever magazine. Appalling layout, but some still-relevant articles!

1. Issue 1 • December 2001 Free news and analysis at www.ethicalcorp.com
Plus
Mark Wade Wally Olins
An exclusive Interview with the founder of the Shell Report The legend talks to Ethical Corporation
GoodCorporation’s CEO
FTSE4Good The options for effective reporting standards
Signs of an investment sea change? and special interviews with
Rob Lake
Henderson Global Investors
Creating Trust Emma Howard Boyd
The leading thinkers on CSR and brand management Jupiter Asset Management
Genoa 2001: Would you like this to happen outside your HQ?
w w w .e t h i c a l c o r p .c o m

2. December 2001 Ethical Corporation magazine
Editor’s notes
elcome to the first edition of Ethical Corporation magazine, the first independent by-industry, for-industry
W briefing on the business case for corporate social and environmental responsibility. Our objective is to serve
the growing demand for business intelligence from large enterprises about who’s benefiting from imple-
menting ethical practices right through their companies and how they’re doing it.
You can subscribe free to this magazine by simply filling in one of the reply cards inside or by visiting our website
www.ethicalcorp.com.
In this issue we speak to a broad cross section of industry experts and analysts to find out why companies like Shell
and the Co-operative Bank have embraced corporate responsibility and hear the advantages they’ve gained. We’re also
talking to leading thinkers such as Warwick Business School and the New Economics Foundation for a cross-industry per-
spective.
Investors and stakeholders are pushing these issues where it matters - with their cash. Find out what some of the
leading fund managers like Henderson and Jupiter have to say about CSR involvement and what they’re looking for
from your company.
As branding supremo Wally Olins puts it, business has moved to the front pages, and now is the time for you to
address the issues in your corporation.
Let us know if you would like your company to be interviewed for next month’s issue or if you are interested in
contributing an article. Meanwhile, enjoy the first issue!
Toby Webb
Editor
Contents
4| Wally Olins on ethics and product differentiation
Ethical Corporation magazine 6 | The man from Del Monte, he say ‘good’
is published monthly by 7 | Leading think tank NEF gives us its view of profits and ethics
FC Group
9 | GoodCorporation's CEO gives us the standards lowdown
3rd Floor, Black Lion House
45 Whitechapel Road 10 | CorporateCulture suggests 10 steps to CSR success
London, E1 1DU
12 | We speak with Mark Wade, Founder of the Shell Report
United Kingdom
14 | Rob Lake, Henderson Global Investors, on global SRI
Publisher 15 | Warwick Business School on the next generation of executives
Christian Braun
christian@ethicalcorp.com 17 | FTSE4Good - measuring a sea change in investment? We ask FTSE’s Gareth Parker
+44 (0)20 7375 7153 18 | Emma Howard Boyd, Jupiter Asset Management, on changing attitudes to SRI
19 | CSR Duo, Richard Aylard and Jordana Friedman, Burson Marstellar
Editor
Toby Webb 21 | Publish & be praised, by Flag
toby@ethicalcorp.com
22 | Ethical brand and that customer base: we talk to the Co-operative Bank
+44 (0)20 7375 7561
24 | Real Ethics, Robert Jones
Design 25 | New resources - helping you formulate your strategy
Alex Chilton Design
© Copyright 2001 First Conferences Ltd. All rights reserved. This document contains original material protected by copyright. No unauthorised use of material
alex@alex-chilton.co.uk herein may be made without the prior consent of First Conferences Ltd. Ethical Corporation magazine is a proprietary creation and trademark of First Conferences
+44 (0)20 7736 5568 Ltd. Please note the views of the contributors in this publication are their own and not those of Ethical Corporation magazine.
www.ethicalcor p.com 3

3. December 2001 Ethical Corporation magazine
inter view
Business has moved to the front pages
Ethical Corporation speaks with Wally Olins
down the street and buy from another. This Today even the most conservative and
can happen almost everywhere that products threatened of corporations knows that it has
are commodities, not in all cases, but in to do something. It’s becoming part of their
many. vocabulary, even if they don’t believe in it.
With individuals like Richard Branson or Whether or not they believe in it doesn’t
Anita Roddick, the company is associated matter. They will do it not because they want
with the reputation of the person, and vice to but because their share price will go down
versa. The Virgin brand is a manifestation of if they don’t get involved.
what Richard Branson purports to be, and is The fundamental of any corporation is
therefore inseparable in the consumer’s share value. Everything has to be measured
mind. against share value, market share and profit.
Making money by behaving badly will not
In what ways are corporate social work if everyone knows about those that are
responsibility and branding currently doing it. Social pressures are now becoming
Can you give us a quick rundown on colliding? sufficiently powerful to make companies
your career to date? Look at the way in which Nike and others behave better. Business has moved to the
I began my career in the advertising industry have had bad press on ethical business issues front pages.
and started Wolff Olins with Michael Wolff and the way the ‘No Logo’ movement is BP is projecting itself as a highly respon-
in 1965. Wolff Olins has created a number of treating brands as a scapegoat, an enemy and sible social creature. It may or may not be,
very well known brands, Orange, 3i, First a power beyond control. Then you can see but it understands the power of social
Direct among many others, and has offices why it is that a lot of people are attributing to responsibility. Exxon are not bothering –
worldwide working with a number of global brands a deliberate attempt to manipulate they believe it has no bearing on their profits.
corporations. and control. But you only have to look at The Exxon attitude is the one that was
Omnicom bought Wolff Olins a few brands like Levis and Marks & Spencer to see shared by most companies in the past. Over
months ago and I left amicably. I am that the customer is still in control. They fell the next 10 years I believe we will see a real
Professor of Marketing and Branding at sev- from consumer favour and suffered because shift to the BP attitude as consumer groups
eral universities and I write books and lec- of it. and the media increasingly highlight compa-
ture at conferences and seminars. Of course, brands are trying to manipu- nies’ ethical activities.
late the customer. We live in a world that is
In a recent Economist article deeply manipulative. Children try to manip- Which firms would you highlight
“Who’s wearing the trousers?” ulate parents and vice versa. But corpora- whose practices are taking ethical
you stated that “the next big thing tions and their brands cannot directly control considerations into account?
in brands is social responsibility… consumers, however hard they try. The cor- Most companies are starting to try very hard.
It will be clever to say that there is poration will instead have to anticipate what Most large European companies like Shell
nothing different about our product consumers want and provide it. Now con- and BT take this very seriously. Business is
or price, but we behave well.” sumers want to see socially responsible com- front page news and this means that corpo-
Is this something that your current panies. And they will buy their products. rations and their brands will be pressurised
experience would confirm? It is in the interests of a corporation to into doing what consumers wish them to do.
It’s clear to me that the difference between behave better for market share. Corporations Ethical business practices will become more
most products is now negligible – it’s are increasingly taking this into account. significant. s
increasingly about the company behind the
product rather than about the product itself, Is this a gradual change over Wally Olins advises various
especially where you have companies selling the last 10 years, or is there a sea corporations on branding and
services across a number of areas, like Virgin change happening here in corporate corporate identity issues. He is
or Tesco, for example. philosophy? Visiting Professor at a number of
universities. He has written many
Look at petrol companies – if you think a I think it is a sea change. I can remember 25 books, including the seminal work
particular company’s behaviour is bad, you years ago, the few organisations wanting a ‘Corporate Identity’, and is currently
can buy from a competitor. If you don’t want social audit back then were the very unusual writing a new book on branding. He can
to buy from one company, you just drive ones. be contacted on +44 (0)20 7224 2121
4 www.ethicalcor p.com

4. December 2001 Ethical Corporation magazine
CSR investment is not a choice
Toby Kent draws upon a specific case of Del Monte in Kenya, recently acquired by Signor Cragnotti’s Cirio
empire, and argues that wherever one sees the responsibilities of business lying, good business sense dictates
that companies address the needs both of their employees and of the societies in which they operate.
etting the man from Del Monte to DMKL produce indicates the changed
’s cancelled in April 2001, but the damage
G say yes is not easy. The basis of one
of the world’s most successful
advertising campaigns is Del Monte’s com-
world in which we live and companies oper-
ate. It underlines that issues of corporate
responsibility relate to how companies treat
done to the company is more enduring.
Employee and community relations have
notably improved, but profits remain down.
mitment to growing and using only the local communities, as well as how they treat The events at DMKL show that corpo-
finest, freshest produce. The message is simple: their employees. It also shows that corporate rate social responsibility is not simply a lux-
the Del Monte label guarantees quality to social responsibility is as much about the ury in which companies invest when they
those who consume it. It also implies that the way in which companies interact with feel they can afford it. In a commercial world
attentions of the Del Monte man bring happi- employees and communities as it is about in which “the customer is always right”
ness to the producers of the foods he chooses. how much one spends. investing in employee welfare, or social
The case of Del Monte Kenya Limited DMKL did not entirely neglect peoples’ investment, is almost as much about what
(DMKL) showed that getting the man from needs, but the wider society, both in Kenya your customers demand you pay as about
Del Monte to say “yes” to spending on the and later in Italy, felt that the company was what your company feels it can afford to pay.
welfare of his employees and the communi- not contributing what it could afford for, and DMKL has learned from its experiences,
ties surrounding his Kenyan plantation had thus should offer to, its employees and near- but it was a costly lesson. Had the DMKL
been more difficult than getting him to by communities. management always listened to the concerns
spend on more obvious business interests. At The situation reflects the complex, “glob- of employees and local communities they
the time DMKL was owned by the Imerman alised” world which we inhabit. We are could have avoided the boycott altogether.
South African group, and the commitments becoming used to the idea of living in a more Expensive developments could have been
to meeting the highest product standards interconnected world, and many changes are spread over years as part of company growth
were not translated to meeting standards of driven by multinational companies which rather than as large, unexpected capital out-
employee care. Certainly local communities supposedly roam the world looking for com- lay, and productivity is unlikely to have been
did not always cheer the arrival of the Del petitive advantage, undermining govern- harmed by better employee relations.
Monte man. ments and national interests. However, responsible action is not worth a
In fact, animosity between DMKL man- ’s In response, suggests Mary Kaldor of the company’s investment if it does not address
agement, staff and neighbouring communi- London School of Economics, we see an the concerns of those you want to impress.
ties grew to such an extent that by 2000 the increasingly active civil society, making its If done well, responsible corporate
unions, local NGOs and representatives of claim to regain the space “grabbed” by behaviour will minimise expenditures that
the Catholic church combined to organise a multinational corporations. Alternatively, it companies may come to pay as a matter of
boycott of Del Monte’s products in Italy, one may be that as people in developed countries expediency. It will also reduce the risk of
of the company’s key export markets. travel to places and are kept informed of internal, client, or consumer conflict. The
DMKL had drawn criticism from activist events around the world, almost regardless of DMKL case shows the power of consumers
students in Kenya since the 1970s. their occupations, they project this “worldli- to influence business decisions. However,
Nevertheless, as an export-focussed business, ness” onto their everyday lives. consumers, or customers are not always end
DMKL did not pay much attention to the Whatever the motivation for the growth users but may be clients, or other companies
demands of a few local radicals. Why should of consumer activism and the changing rela- in supply chains. Whoever they are, reputa-
they when they paid their 5,000 employees tions between western societies and the firms tion matters.
relatively well, provided social facilities, which were once perceived as representing Corporate social responsibility is not
including housing, education for employees’ their interests, the changes are significant. about being nice. The potential to limit
children and healthcare - social goods that Companies must fully understand these expenditure, maintain or improve employee
many argue should be supplied by governments, shifts to avoid damaging their reputations, and community relations, control risk and
if not individuals themselves? In addition, a and thus their profits, as DMKL has shown. promote reputation means that applying cor-
further 50,000 people in the neighbouring The Italian consumer boycott of Del porate social responsibility strategies is sim-
town of Thika are directly or indirectly sup- Monte’s goods was directed against the com- ply good business sense. s
ported by Del Monte’s presence. pany’s Kenyan operations, but the negative
Despite such capital outlay and the ben- publicity undermined the Del Monte brand
Toby Kent can be contacted by email
efits of the company’s presence, the fact that at large. Swift Del Monte Kenya Limited at CSR@tobykent.com
this was not enough to head off a boycott of action appeased its critics. The boycott was
www.ethicalcor p.com 6

5. December 2001 Ethical Corporation magazine
No more global business as usual
Corporate ethics after September 11
By Deborah Doane, Head of Corporate Accountability, New Economics Foundation
recent article in the Financial Times ee stress. At the same time, companies are exceptions, they haven’t led to any signifi-
A (Oct. 8) reported on a forum that
had taken place at Harvard Business
School, the home of globalised business.
still having to grapple with long-term con-
siderations and the question of what CSR
will ultimately mean. James Farrar, CSR
cant change. BP well-known for its CSR
,
programmes, including stakeholder dia-
logue, rebranded itself last year as “Beyond
Students, it seems, were discussing how cor- Manager at British Airways, for example, Petroleum”. Unfortunately, there is little evi-
porate social responsibility can help bridge recognises that their immediate social dence of BP “doing well by doing good”. BP
the gap between have and have-not nations responsibility is to their staff and to the sur- had to climb down on its rebranding exercise
as one way to reduce terrorism. US business vival of the business… “but, over time, what at its AGM in April, admitting that it could-
students, as a result of the horrific events of the brand is and what BA stands for will n’t commit itself to any serious investment in
September 11th, are now being forced to change.” renewable energy.
consider how their actions impact on society. Perhaps less apparent than the immedi- A recent study by the University of
Immediately after the attacks, many from ate concerns is the more pressing need for Sussex has found that companies with envi-
the NGO movement thought that CSR dis- companies to understand the link between ronmental management (EMAS) systems
cussions would be put on the back-burner their regular business actions and their global, perform no better in this regard than those
and that there would be little opportunity to social and environmental impacts, in partic- without. And much of social reporting has
continue the dialogue with companies that ular, how they can have a more positive resulted in “corporate spin” rather than
has progressed relatively well over the last influence on global poverty and inequality. It improvements to social performance (see
few years. Impending layoffs and financial is an opportunity for CSR programmes to Corporate Spin: the Troubled Teenage Years
concerns would surely take precedence over break the PR barrier – that is, to be fully of Corporate Social Reporting, New
discussions about CSR programmes and imbedded in a company’s operations and Economics Foundation, 2000).
policies. outputs.
In some cases this has proven to be true. CSR programmes, to
US-based Dole Food Company has just date, have been based
“Since September 11th there
scrapped its director responsible for CSR on the assumption that has been an unprecedented level
policies, in spite of their commitment to they can improve the
improving labour standards. bottom line. But as one
of discussion across businesses
At the same time, since September 11th, corporate leader said in Europe and North America
there has been an unprecedented level of dis- at an Environment
cussion across businesses in Europe and Council conference last
about their impact on society”
North America about their impact on socie- spring, “this is still a
ty. CSR has an even greater relevance today leap of faith”. More importantly, we need to CSR cannot save the world, nor can it
than it did just two months ago. “The cata- have a better understanding of how CSR completely rebalance the inequities that
clysmic events of September 11th are only programmes can actually have an impact on have emerged over the last half-century
likely to intensify society’s scrutiny of busi- social and environmental performance of the across the globe. As Oded Grajew of the
ness… many in the media are arguing that a company. Instituto Ethos in Brazil says in a new book,
certain redistribution of the west’s economic Corporate social responsibility emerges, The Civil Corporation, “If business is so
wealth, rather than redeployment of its mili- in part, from a frustration that the corporate powerful and now doing so much good, how
tary power, will be far more effective in sector yields considerable power and that the come so much is still wrong in the world?”
countering further acts of global terrorism” advantages of the free-market, globalised An embedded CSR programme, however,
writes John Griffiths, director of Rocket economy have not necessarily delivered an can make a difference: to employees; to rela-
Science, a consultancy. equal benefit to all. Those in the south have tionships with customers; and to suppliers.
Some of the issues companies are dealing become servants to the system, yet fail to And there is also the potential to see greater
with are more immediate, such as mitigating derive sufficient benefits. benefits of business delivered to the south –
risk in order to renew insurance policies or CSR programmes were meant to partial- the current servants of global capitalism.
coping with the obvious concerns of employ- ly overcome this. But, to date, with few When employees and shareholders are
www.ethicalcor p.com 7

6. December 2001 Ethical Corporation magazine
consulted, they generally don’t agree with as a marketing tool. While it is laudable and to the detriment of the majority. Basic servic-
the state of the world. A recent survey by important that many companies are con- es, such as water and electricity, are now
Powergen found that 77% of respondents tributing to the disaster relief funds to help delivered by private northern hemisphere
believe that environmental and social per- victims of the attacks, it should not be used companies in many developing countries,
formance of the company ranked just as high as a replacement for more serious engage- often in an unregulated manner.
as financial performance. “Aligning a com- ment with the issues.
pany’s values with those of its employees Corporate Philanthropy
makes a more highly motivated and produc- at BA may have suffered “What can companies do? First,
tive workforce”, says Rob Lake of due to financial con-
Henderson’s Global Investors. cerns, but CSR pro-
they can commit themselves to open,
What can companies do? First, they can grammes will continue honest dialogue with stakeholders
commit themselves to open, honest dialogue as the need to align
with stakeholders – not just those from the CSR more closely
– not just those from the inside.
inside. Stakeholder councils provide one way with governance struc- Stakeholder councils provide one
for companies to formalise this process and tures becomes more rel-
ensure that external factors are taken into evant than ever before.
way for companies to formalise this
consideration in a company’s decision-making. A more sophisticated process and ensure that external
The Co-operative Bank, winner of this approach to CSR
year’s Impact on Society award, is intending engages thoughtfully
factors are taken into consideration
to raise a discussion on its website about how with the local commu- in a company’s decision-making.”
the events of September 11th may have nity as partners in the
changed its customers’ views about a variety process. The implemen-
of ethical issues, and in turn, to help deter- tation of properly monitored and enforced How can companies see the benefits of
mine what the bank’s response should be. It labour standards, such as fair wages and living these services delivered to a larger portion
is proceeding cautiously, however – the conditions, should involve community actors of the population, in an affordable and
dialogue is intended as a way to determine in order to ensure that the best of intentions accessible manner? The pharmaceutical
what is important to its stakeholders in light are not led astray. A simple signing of a code industry’s excessive profits through intellec-
of the events, not a PR exercise to raise its of conduct is no longer sufficient. tual property rights means that many in
own profile. Third, they should consider how the developing countries have little access to
Second, companies must go beyond CSR endless pursuit of profits benefits a few, often affordable medicine for highly curable ill-
nesses.
CSR has, to date, failed
to deliver any tangible bene-
fits on a sufficient scale. But
this doesn’t mean that we
should give up on corporate
responsibility. Following a
heightened awareness of
global issues since
September 11th, we should
be giving it more, rather
than less, attention.
Companies that do sur-
vive the short-term crisis will
emerge in a completely dif-
ferent operating environ-
ment – one in which CSR
has the potential to help face
the challenges that will see
them survive over the
longer-term, for the benefit
of the many, not the few. s
For more information visit
www.neweconomics.org
8 www.ethicalcor p.com

7. December 2001 Ethical Corporation magazine
Effectively implementing business
ethics in the enterprise
Companies realise why they should be socially responsible, but the question
of how is not so straightforward, says Michael Littlechild
t is difficult to find a dissenting voice in environment, labour and so on. For multina- own values or have the expertise to judge
I the current chorus of approval for social
responsibility. The number of convincing
reasons for being socially responsible is
tionals the UN Global Compact provides a
set of principles covering the environment,
labour and human rights to which compa-
whether they can be monitored effectively.
The second is whether to have inde-
pendent verification. Those against cite the
growing and, whether these come from nies can sign up. difficulty of verifying soft issues and the
investors, consumers or employees, most There are alternatives to common stan- problems of short-term reviews by auditors
companies recognise the importance of dards. The most popular is to create a home- who have not been part of the process of
addressing social and ethical issues. But once made code of conduct. Companies devise crafting the values. These arguments seem to
companies have decided that they want to do their own ethical criteria, communicated in be losing ground to the need for credibility
something… what then? Putting these prin- their literature and on their websites directly which independent review can bring. Again
ciples into practice is the real challenge. to their suppliers and customers. They may there may be a differentiation by size here.
An increasing number of companies are employ certifiers to check their compliance, The vast majority of companies that are not
choosing to adopt one of a variety of stan- but generally this is for internal purposes household names have little hope that we
dards on offer that cover various aspects of rather than as a public audit of their adher- will take their word for it. The big brands
social responsibility. Some companies have ence to their own rules. Another more might have thought differently in the past,
obvious key single issues to deal with resource-intensive alter-
because of the business they are in. Chemical native adopted by some
"It is not much use to have an
industries, for example, have focussed on the large companies is social
environment, and clothing manufacturers reporting. Again, this is outstanding record on pollution
on labour conditions. In response to these based on a home-made
reduction if indecent work practices
concerns, existing standards generally cover code, as the social report
one stakeholder group. The ISO series is makes public the activi- are endemic in the supply chain"
perhaps best known for its quality (ISO ties and progress under
9000) and environmental management (ISO the code and may be externally verified. but the ethics of the largest companies have
14000) standards. The demands of health Reporting frameworks have been developed in been called into question in recent years. As
and safety have created other standards, from recent years for this purpose, such as the a result, many multinationals have taken
the international OHSAS 18001 to individ- AA1000 and the Global Reporting Initiative, refuge in independent verification, believing
ual national standards. To meet concerns that provide methodologies on social report- that although openness may expose weak-
over sweatshops and child labour there are ing and their external verification. nesses, it will also inspire the greater confi-
standards such as SA8000 and the UK-based So companies trying to understand what dence that the whole process is seeking to
Ethical Trading Initiative, which focus on social responsibility actually means in practice achieve.
labour practice throughout the supply chain. are faced with a variety of possible solutions. Every company is different: we all have
However, many companies are now There are two key decisions of principle to be different focuses depending on the type of
moving on from dealing with their sector’s made. The first is whether to adopt an exist- business we do, the issues we face and our
headline issue to respond to the broader ing standard or devise an own code. Own own organisational culture. But the princi-
pressure on companies to be all-rounders. It codes have the benefit of being tailored to the ples of social responsibility apply to everyone
is not much use to have an outstanding business and reflecting the values of the – and make business sense for everyone.
record on pollution reduction if indecent shareholders, management and, if consulted, Choosing the best way to deal with the issues
work practices are endemic in the supply employees and other stakeholders. Common of social responsibility depends on what your
chain. Gradually, the fragmented nature of standards have the converse benefit of being company needs and what you can invest, not
social responsibility is developing into a shared with others and so are perceived as just financially, but also in terms of both time
more comprehensive approach that tries to neutral. Stakeholders and the public as a and effort. s
bring together all parts of the business’ whole do not fear that the company has
impact on society. In response there are now omitted issues that it finds inconvenient. Michael Littlechild is the CEO of
GoodCorporation. For more information
standards that offer an overall management Moreover, few but the largest companies can
visit www.goodcorporation.com
approach, encompassing the key areas of afford the process of sifting and choosing their
www.ethicalcor p.com 9

8. December 2001 Ethical Corporation magazine
How to protect a trusted brand
With a raft of critics attacking global brands and with businesses waking
up to corporate responsibility, John Drummond suggests ten simple steps
to help organisations win trust
Within this new sense of purpose is the do things in your business. Shell have their
concept of balance. Increasingly, sharehold- business principles. Southern Sun Group of
ers understand that managing simply to South Africa have defined their top ten
secure financial results can bite you on the accountabilities to stakeholders. Johnson &
bottom line. Johnson have a credo. Hewlett Packard have
rules of the garage. The big trick is develop-
2: Create a workforce committed ing a framework which makes sense for you.
to your purpose But there are three critical factors:
Articulating your purpose gains you at least
two things. First, you communicate a con- • your convictions need to emerge from
sumer benefit (and win a bit more trust). your business
Second, you stand more chance of achieving • they need to be genuine convictions and
that rare thing – employees working togeth- strong enough to remain in place when
er for a common goal. tested
But there’s more to it than defining a • they need to be translated into practice
direction. There has to be a conscious deci-
sion to create a common culture. Carol 4: Manage the intangibles
Lavin Bernick took over from Alberto Culver The model of business success has changed.
as Vice Chairman and Director of Pfizer and Past financial success only provides one
realised the company was facing a cultural dimension of value. Other factors which can
1: Articulate a clear sense crisis. Changes included making an annual add to the value of a business include a clear
of purpose ‘state of the company’ address and creating strategy, a strong board, customer loyalty,
First, revisit the purpose of the business. The the role of Growth Development Leader. employee skills, new revenue streams,
purpose should be inspirational for everyone She says, “Passion is probably the single competitive differentiation, reputation and
with a stake in the business. That means it pre-requisite to cultural change… if you’re innovation.
will probably include a social dimension. not passionate about it, don’t even bother.” They may be called intangibles, but that’s
There are very few businesses that do not Believe in your product or service but don’t not a good name. They’re very tangible. If
make a social contribution. You take away oil presume employees will gather round the you successfully manage values and value
or banking, the utilities or transport busi- flag. Creating a co-operative culture where you earn trust.
nesses and watch the knock-on effect on employees work together on a shared goal
everyone’s lives. won’t happen by accident. 5: Develop a clear strategy
To get to your purpose, ask what the A co-operative culture involves a planned for corporate social
world would be like without your product or approach, employee involvement, the shar- responsibility
service. Social aspects of a business mission ing of best practice and common policies and Here’s a prediction. In the next decade or so,
is not a superficial aspect of branding. It processes. When you are on this road, you corporate social responsibility will merge
should be an accurate representation of your won’t simply find it easier to retain existing into corporate governance and corporate
role or it won’t be credible. employees, you will also become a magnet reputation. They’ll become the same thing.
Take Pfizer’s refreshing statement of pur- for like-minded people. In the meantime, it’s not too difficult to cre-
pose: “We at Pfizer dedicate ourselves to ate your own model for managing CSR.
helping humanity and delivering exception- 3: Define “how we do things There are some useful starting points.
al financial performance by discovering, around here” For example in the UK there are the
developing and providing innovative health People have a lust for a clear framework of Business Impact Task Force model and the
care products that lead to healthier and more how to behave. Usually called values, the fact new GoodCorporation mark.
productive lives.” is there are many ways of defining how you The trick is to recognise that there is not
10 www.ethicalcor p.com

9. December 2001 Ethical Corporation magazine
one holy grail in CSR but at least seven. digital TV And for the last few years I’ve
. story to tell but not telling it? There are won-
However, that’s for another day. The initial been proposing businesses use their access to derful hidden stories about the contribution
challenge you have, as Richard Holme and market to move beyond employee volunteer- of business. Look at the recent social web
Phil Watts from Rio Tinto and Shell have ing to customer volunteering for social caus- sites of BT and Diageo. There are many hid-
said, is to find your “magnetic north”. es. It’s coming. den gems in almost every business.
You need to define why you want to man- But even the best don’t invest. They don’t
age CSR. And that varies from company to 8: Manage risk including invest in communications. And when they
company. Drivers include attracting ethical risks relating to trust do, they make several key mistakes:
investment, compliance, competitive It’s bizarre that the risk management or cor-
differentiation, improving reputation and porate audit departments still focus on • they sometimes forget that people are
winning customer loyalty. financial risk. New corporate governance interested in people
requirements in the UK and the new • they sometimes forget that good
6: Create a brand with Company Law Review know that directors communications are about a dialogue
personality have wider responsibilities. not about an annual report
There is no reason why common principles The sentiment they express is that the • and they sometimes forget that we are
of success should lead to conformity, but they directors have a duty to manage longer term as interested in future plans as past
often do. People articulate their purpose and risk relating to reputation, business probity, performance
values in the same way as others. They fol- health and safety and social or environmen-
low the same reporting guidelines. They fol- tal issues.
low the same techniques in eBusiness, Manage risk effec-
employee communications, financial man- tively and you can head “Passion is probably the single
agement, setting objectives and every other off chunky financial risk prerequisite to cultural change…
aspect of business. And that is not a good like more regulation and
way of winning trust. I prefer Madonna’s legislation, windfall taxes if you’re not passionate about it,
advice - express yourself. or consumer boycotts. don’t even bother.”
People who win trust are open, visible, My own conviction
engaging and they tend to have their own is that a new discipline
personality. That personality is diverse. You will emerge called integrity risk manage- So what is this? So what are these ten
can see it in the buzz as you walk into the ment. It’s not difficult. It’s applied common steps? They don’t add up to PR, corporate
reception of Asda HQ in the UK. sense. You simply spot the areas where there responsibility or branding. So what are we
You can see it in the amazing ideas of is a potential gap between your policy and talking about here? Is it a new concept?
Semco of Brazil, who devolve “to the max”. your practice and you manage it. Could we call it sustainable branding or
And you can see it in the words of Ralph trust marketing?
Larsen, Chairman and CEO of Johnson & 9: Leverage social change You can if you like. I prefer business com-
Johnson, in their European CSR report for Businesses still tend to think good corporate mon sense. And it isn’t hair-brained wishful
2000 (that’s an invitation to seek them out). responsibility is about managing the foot- thinking. Many of these actions are taking
print of their impact on society. But real place today in businesses of many sizes. Also,
7: Listen and involve people progress will be achieved when they use let’s not imagine this is only relevant for
in strange new ways their muscle to achieve genuine social companies. This is as relevant for govern-
Why is this at 7? The first step to win trust is change linked to their business. I see a ments and not-for-profit institutions. It’s the
to listen. If a company does not have its fin- growth in campaigns which go beyond basic way things are going.
ger on the pulse of stakeholder opinion, it charitable fund-raising or PR into new terri- Our choice is simple. We can create sus-
doesn’t have a feel for its corporate health. tory – working on a single cause and tainable businesses which are authentic, aim
And it’s not just about good old fashioned campaigns which make a tangible social for balanced results, behave responsibly and
quantitative and qualitative research. difference. win trust because they deserve it, or we can
Look at the recent creation of a consumer It’s a difficult balancing act, but it can be step boldly down a cul-de-sac of increased
panel by the radio station Classic FM. done in a way which wins trust and leads to consumer cynicism. Where do you want to
Members will be recruited from listeners via genuine social and business benefit. There is be? In the wake or in the vanguard? s
on-air advertisements. As GWR chairman nothing wrong with mutual benefit. And
Ralph Barnard says, the aim is “to meet the there is nothing wrong with business playing
growing need for consumers to have a more a social role. John Drummond is the Strategy
effective voice in broadcasting.” Director of Corporate Culture.
The truth is that there are a bunch of 10: Invest in communications
but make it a dialogue For more information visit
new ways of engaging customers. We’re www.cc-plc.com
already seeing more engagement through What is the point, I ask, in having a great
www.ethicalcor p.com 11

10. December 2001 Ethical Corporation magazine
inter view
Shell’s Mark Wade speaks with
Ethical Corporation magazine
Mention corporate ethics and the name of Shell often comes up. We spoke
with Mark Wade, founder of the Shell Report and a key member of Shell’s
Sustainable Development Group, to find out more about the business benefits
and challenges
What’s your background with Shell? portfolio. In our case as an energy major that cial approvals, how you bring this into the
I’ve been with the group for 22 years. I started would mean a long term evolution away way in which you motivate and reward staff.
out as a research biochemist in support of from hydrocarbons as the basic fuel stock to
our chemicals business. I was a founder renewable or alternative energy sources. So Can you tell us how the
member and am a current member of the ultimately one can view that as the goal. management structure works
Sustainable Development Group in the cor- But I also have to be very upfront and say at the very top level for strategic
porate centre of Shell International. that we can sow the seeds for that now, we decisions on this within Shell?
can bring in the new technologies, we can We have at the executive level what we call
How is Shell going about becoming help develop the markets and the infrastruc- the Sustainable Development Committee,
a truly sustainability-supporting ture, but let’s not kid ourselves: hydrocar- which is chaired by Phil Watts, the
company? bons are going to remain the mainstay of the Chairman of the Committee of Managing
Firstly, our commitment to sustainable energy scene for at least the next thirty years Directors. This committee comprises of very
development is to contribute to sustainable and the transition away from them is going senior representatives off the Chief
development. That means that you need to to be a long process. Executives committees of each of our five
manage your operation in a way that is main businesses: Exploration and Production;
responsible in terms of respect for the envi- What are the internal challenges Chemicals; Oil Products; Gas; and Power
ronment, of respect for people and of being you’ve faced at Shell? How do and Renewables. The committee also com-
mindful of human rights. corporate communications, prises heads of corporate centre functions
You can do that within your existing busi- marketing and corporate strategists like human resources, finance and legal as
ness model in that you can run your affairs interact in terms of
in a way that recognises these broader implementing
responsibilities. In this regard, when you get socially and
“We want to take the concept of
oil and gas out of the ground you do it more environmentally Corporate Social Responsibility into
cleanly, more safely, more efficiently. responsible
When you refine it you are very con- strategies?
the decision-making process and
cerned about eco-efficiency aspects. And I think it operates at a hardwire it into the systems and
when you sell the products you try to do it in more fundamental level
the way that is going to involve the lowest that that. The idea is
processes on the one hand, and to
quantity of sulphur, lead, aromatics and so that we want to take the bring it into the hearts and minds of
on. And when you explore in sensitive areas concept of corporate
of the world you do it in a way that respects social responsibility
people on the other”
biodiversity and the rights of indigenous into the decision-mak-
people or whatever the particular issue might ing process and hardwire it into the systems well as company secretaries and us in the
be. and processes on the one hand, and bring it Sustainable Development Group. It meets
That type of contribution to sustainable into the hearts and minds of people on the twice a year currently and looks at the whole
development can be done within your exist- other. approach of driving this type of thinking
ing business model. On the other hand, you It’s a cultural change that we are trying to across our organisation.
can also view it as evolving within what I engineer as part of Shell’s overall transfor- Beneath that there is what we call the
would call the fourth dimension of sustain- mation. So in that regard it’s not just a ques- Sustainable Development Panel, which
able development, that of time. tion of individual departments – it’s about comprises representatives from those same
You can say you can use this agenda to how you bring this into your strategy and areas but at a rather more workaday level
inform the way you evolve your product planning, how you bring it into your finan- who are still very senior but who can roll
12 www.ethicalcor p.com

11. December 2001 Ethical Corporation magazine
their sleeves up and make this happen in a and the development of social capital within What are institutional investors
practical sense throughout the organisation. the respective communities are some of the asking for from Shell today that
Externally we also have the Social main issues with which we will be confronted. they didn’t ask for 5 years ago?
Responsibility Committee, non-executive Clearly there has been a very significant
external directors of the board of the two Where are the CSR-related business increase in interest in socially responsible
parent companies of the Shell Group, Royal opportunities in the future for Shell? investment funds. This is coming from the
Dutch Petroleum and Shell Transport In terms of business opportunities, I think general public who want to make sure that
and Trading. This meets on a twice-yearly that depends on the business model. In their money is invested in ways they feel
basis to review our internal governance a group of companies like Shell we have comfortable with.
processes regarding the application of Shell’s hugely different businesses. We have oil It’s also coming from pension funds
business principles, to help shape safety and exploration and production, where many which are being managed on behalf of all
environmental policies and procedures and of the relationships are with national oil sorts of organisations, such as unions and
to shape our commitment to sustainable companies. universities, who are telling their fund man-
development. What are the advantages there of CSR? agers they want their members’ money
Well, we’re seen as a company of enormous invested in a way they would feel happy
Are you feeding the message about technological strength and as an organisa- with. There’s no doubt that this is growing
sustainability and responsible tion of great integrity in that we don’t bribe rapidly, but it still represents quite a small
behaviour out to your suppliers? and take a very strong stand in that area. proportion of overall investment in the stock
It’s a mammoth challenge. One important Shell has the economic capability to take markets.
component is that when we form new joint very long-term views of emerging energy When we look at the more mainstream
venture relationships or contractual supplier systems and have the
relationships our business principles are economic clout to make
clearly on the table during those negotiations. the massive investments
“When we form new joint
We have to be satisfied that the conduct of which are often venture relationships or contractual
that joint venture or contractual relationship required to help a coun-
will uphold those principles or operate in a try generate income
supplier relationships our business
way which is compatible with them. from its indigenous principles are clearly on the table
That’s the first element and we have right mineral wealth.
of audit in terms of HSE and other ways of So you need to
during those negotiations”
ensuring that our businesses are managed demonstrate to govern-
with integrity. That’s the front line if you like. ments that you can behave responsibility and investors, I think that to a large extent these
The second line is more on the hearts help them meet their strategic energy needs. considerations are not top of their agenda.
and minds side again, to use our influence to You also need to demonstrate that you can do When it comes to making judgements on
help people see the business case for corpo- this in a way which is sensitive to companies in this more mainstream area
rate social responsibility such that there is a the environment and to the needs of local they’re going to be looking for the most part
willingness to want to go these routes. But communities. If you can do this then you are at the more traditional measures of predict-
it’s a big challenge and the further you push likely to be seen as a preferred partner. In ing future value growth. Nevertheless, our
the envelope on your supply chain or rela- some of the other business models, such as commitments to CSR and sustainable devel-
tionships the more difficult it becomes. business-to-business, you can look at opment are seen as neutral in that regard. So
improving your costs through eco-efficiency. long as we can be seen to perform as an effec-
What are emerging corporate In some of the business-to-business con- tive organisation then they will continue to
responsibility issues today for sumer models you might use an awareness of recommend us.
the energy industry? society’s expectations for the delivery of goods, Of course, you do see the growth in
In the energy industry, the biggest issue is mindful of the environment and respectful of things like the FTSE4Good indices and the
that of climate change and companies’ human rights in their supply chain and pro- Dow Jones Sustainability Indexes and
responses to that particular issue. That is a duction. there’s a whole raft of these type of indices
major challenge, in terms both of how you You need to make sure that your goods now. Shell is in the FTSE4Good. We’ve been
address the issue of climate change and of and services are in line with that. If people in the Dow Jones Sustainability Indexes
the impacts that has on the way you manage are looking for things which are greener, since their inception and last time around we
your business. You have to look at what busi- cleaner and safer, then that can be used were the top sustainability company in the
ness opportunities can come from it. For to inform the type of products you would energy sector. s
extractive industries clearly there are other produce. So there’s a number of different
environmental issues. Biodiversity is of ways that you can use an understanding of
For more information on Shell visit
concern. When operating in sensitive parts CSR and where it’s come from in terms of www.shell.com
of the world the rights of indigenous people society’s expectations to deliver business value.
www.ethicalcor p.com 13

12. December 2001 Ethical Corporation magazine
inter view
Influencing ethical policy
Investment fund managers are playing an important role in encouraging
business ethics within enterprises and establishing responsible funds for
investors. Ethical Corporation speaks with Rob Lake of Henderson Global
Investors to find out what institutional investors are looking for from enterprises
The Review will lead to legislation in a cou- using child labour is very great for a major
ple of years that will probably require com- high street brand.
panies to report on aspects of environmental For example, currently there is a lot of
and social performance. But we are already discussion about chemicals in the home
asking companies questions about these being potentially hazardous to consumers.
issues now, whatever the outcome of the Companies need to get on top of public
Company Law Review.
We look at human rights
and socially responsible “What are the benefits? Well, supply
investment policies in chain savings, HR savings, R&D
all the companies we
research for potential savings. This is quickly turning into a
investment. We make a must-have scenario for companies”
point of seeking an
What’s your involvement in socially active dialogue with
responsible investment? companies on all the issues of business ethics opinion and safety aspects to keep up with
I’ve been the Head of SRI strategy at in all areas. We try to work out as much as public expectations.
Henderson since December 2000, after 14 we can about how companies work. Oil companies have issues of human
years at NGOs such as Friends of the Earth, For example, staff motivation and repu- rights, security in developing countries and
Traidcraft and the RSPB. Nick Robins, our tation are all-important to their future value of course climate change. Mining companies
Head of Research, has had jobs in similar to us. If we see that companies do not seem that work with the military in developing
organisations. The work I do now is surpris- to be taking notice of some of these issues, countries have some major issues they have
ingly similar to the work I did at NGOs – we will address this, as any other investor to look at.
working with companies to try to influence should, to help them have a full understand-
them to embrace SRI and ethical polices. ing of the importance of socially responsible From Henderson’s perspective,
Henderson’s global investments total just investment. where do you see this moving in
over £100 billion worldwide and Henderson Henderson has a constant dialogue with the next year or two, especially with
has large shareholdings in a large number of companies based on our risk management an apparant recession coming?
companies, which gives us some influence strategies to make sure that our funds per- The level of expectation of consumers on all
over their ethical policies. I believe that the form and that we have an understanding of these issue is rising – companies are going to
extent to which business can offer solutions the views of that company and the risks for be continually pressured to increase standards
to some global problems is significant. our money. We will, of course, ask for and to do things on a voluntary basis.
improvements if we believe them to be neces- Expectations will rise and public expectations
Can you give us some background sary. We are continually trying to build a more will still be there in any recession.
on Henderson’s investment in SRI? rounded analysis of companies into our main- What are the benefits? Well, supply chain
It started in the late 1970s beginning with stream investment process. savings, HR savings, R&D savings. This is
the Joseph Rowntree charitable trust. quickly turning into a must-have scenario
Henderson now has over £1 billion in SRI What are the challenges for for companies. There is a sense that interna-
investments, one of the largest ethical invest- companies you are working with tional companies need to be far more sensi-
ments in the UK. We invest for a variety of in implementing ethical practices? tive and show that they are socially responsi-
retail and institutional clients. It depends on which sector you are in. In ble in different countries and that they can
retail it’s often the developing world. The adapt to meet changing public needs. s
Will the Company Law Review reality is that operating in low labour cost
affect the way these funds are For more information visit
countries has some major ethical challenges
www.henderson.com
invested in the future? for companies. The reputational risk of
14 www.ethicalcor p.com

13. December 2001 Ethical Corporation magazine
Educating tomorrow’s executive
The business case for the integration of
corporate social responsibility
By Professor Alyson Warhurst, Director, Corporate Citizenship Unit,
University of Warwick, UK
ew journalists, politicians, corporate company culture so as to merit an image of to benefit. They have lost faith in the distri-
F CEOs or international agency profes-
sionals would bare-facedly reject cor-
porate social responsibility. But every year,
integrity and responsibility. They are also
aware that the ‘external costs’ of their opera-
tions (i.e. the costs of those environmental
bution powers of the governments that host-
ed these investments. They now frequently
resort to negotiating directly with business to
MBA courses in business schools all over the and social impacts beyond operating costs secure more immediate benefits in educa-
world are full. Full of ambitious would-be that previously the state or local host com- tion, housing and health – basic develop-
executives who argue that the “business of munities have absorbed) can no longer be ment rights – and in return they grant what
business is business”. Reiterating Friedman’s taken for granted, and over time, need to be is tantamount to a local ‘social license to
1970s utterances about the social responsibil- ‘internalised’. operate’. This is understandable, and most
ity of business being to make profit, from Globalisation also means that interna- companies respond rationally by seeking
which all benefits will ‘trickle down’ to those tional business is increasingly operating in dialogue not conflict. Some countries
who patiently wait, MBA students are most areas of conflict. Business can no longer pose require this in law, few are aware that such
reluctant to make the business case for CSR. as neutral. There exists a growing imperative prior consultation is enshrined in an ILO
Foremost they want to be taught how to for business operating in
make money fast. Indeed, one of the greatest areas where human “CSR is now not only a bottom line issue
discrepancies in the evaluations MBA stu- rights are infringed to
dents customarily make of their professors use legitimate influence but also a moral imperative, with respect
pertains to their appreciation or not of to promote human to the relationship between business
whether the case for CSR has been made rights even outside of
convincingly or boringly. At Warwick their areas of operation. and its internal/external stakeholders.
Business School, learning about CSR is a At the very least they are CSR is to be sidelined at your peril.”
compulsory part of every MBA. In some being called upon to
business schools it is a losing battle to make examine whether their presence and their (International Labour Office) convention or
one session an optional elective. indirect impacts contribute to, or under- in the national constitution of countries with
Nonetheless, for students or senior execu- mine, the development rights and opportu- strong indigenous communities, such as
tives alike, to reject CSR is to be oblivious to nities of their host communities. Colombia. Companies are also recognising
one of the most fundamental challenges to that they must take responsibility for the
have impacted international business over Some reflections wider impacts of their operations beyond
the last ten years. I offer the following reflections for those that their workforce and the perimeter fence.
still believe there is no business case for CSR With the recent liberalisation of investment
A moral imperative and that companies have no role to play in regimes worldwide, governments may have
Over the last decade, foreign direct invest- contributing to society other than through made downward adjustments in social wel-
ment by international companies in develop- profit-making. fare spending in order to accommodate tax
ing countries has increased tenfold and pub- Some believe that people will a priori breaks to attract these foreign investments,
lic funding of development assistance has benefit if business is allowed unbridled to sometimes with strong encouragement from
declined. CSR is now not only a bottom line make profit. This is called the ‘trickle down’ international financial institutions. Business
issue but also a moral imperative, with effect. The concept refers to economic meas- is starting to recognise that it has a responsi-
respect to the relationship between business urements of benefits, not equity or well- bility to address locally the social impacts
and its internal/external stakeholders. CSR is being considerations. Furthermore, history generated as a result of their investment
to be sidelined at your peril. has demonstrated that people living in opportunities. Companies are acknowledg-
Ethical deliberations are demanding poverty, especially indigenous communities ing that they cannot pay their taxes then
more time in the boardroom. Business lead- in the vicinity of remote agricultural, mining sleep easy in the knowledge that benefits will
ers are realising that they need to address and oil operations, have been among the last trickle down, other than through employ-
www.ethicalcor p.com 15

14. December 2001 Ethical Corporation magazine
ment, to their local host communities would be no need for corporate social invest- tributions to development as defined by spe-
through the lifetime of their investment. ment or for charities, but surely there is room cific affected groups.
for both while we are striving for a ‘trickle
The ‘triple bottom line’ down utopia’. In the meantime, appropriate Students and social policy
Some suggest that the greater the competi- consultation and active listening to stake- Finally, it is ironic that MBA students are
tive pressure on business the less able they holder needs and concerns should ensure good at scoring points today about the legit-
will be to serve wider social goals. But this that the strategies of companies wishing to imacy of NGOs, while their professors prob-
misses the fact that, in many countries, gov- pursue responsible practice are tailored to ably protested in the 1960s and 70s about
ernments and banks now select companies, local needs. apartheid, the coup in Chile, policy towards
award licenses and approve finance on envi- the Sandanista government in Nicaragua
ronmental and social track records and not No harm to development and the ‘cuts’ at home in education. Students
just on economic grounds. This is the ‘triple I have heard it asserted that companies, today, (MBAs or political scientists), are
bottom line’. through being obliged to operate to higher more likely to make a ‘hit’ on the stock mar-
Many companies are pushing CSR in the standards, are harming the development ket than hit the streets protesting.
supply chain by demanding that their sup- prospects of poor countries on account of They miss the important point about
pliers demonstrate ethical and environmen- eroded competitiveness. This seems miscon- why pressure groups exist. NGOs in most
tally sound practice. Research is showing ceived on two counts. cases endeavour to speak on behalf of people
that the conditions attached to investment First, economic wealth is no longer a sin- (or issues) who, for reasons such as human
financing and procurement, which are sensi- gle priority. Rather, broader concerns about rights infringement, have no ‘voice’ – i.e. dis-
tive to longer-term political, environmental health, wellbeing and quality of life are as placed communities, refugees, disadvan-
and health risks and liabilities, are drivers as important and, in some specific situations of taged groups such as women and children,
potent as government regulation in promot- weak government, busi-
ing more environmentally and socially ness can deliver these
responsible business practice. This in turn more efficiently and "Companies are acknowledging that
enhances a company’s competitiveness and directly to local commu-
contributes to its acquiring ‘preferred suppli- nities through corporate they cannot pay their taxes then sleep
er status’. social investment. easy in the knowledge that benefits
Some observers have expressed concern Secondly, communities
that there exists pressure from ‘socially and politicians in devel- will trickle down, other than through
responsible’ businesses to impose costs they oping countries have employment, to their local host
have accepted voluntarily on their suppliers strived hard to achieve
and that this is tantamount to unfair busi- high environmental and communities through the lifetime
ness practice. labour standards and of their investment."
The response here is that, yes, companies not to be considered as
can and do set higher and higher standards. ‘pollution havens’.
These improved social and environmental Moreover, research suggests that under- endangered species etc. It is through dia-
practices, in turn, are quite appropriately dif- taking environmental investment can pro- logue with NGOs that many of these issues
fused through the market. As a result, a mote economic, technical and energy effi- are put on the business agenda.
number of corporate initiatives in the areas ciencies and savings and reduce costs in the I am definitely not arguing that MBA
of human rights, biodiversity conservation long term through avoiding costly retro-fit- students are unworldly or immune from
and social development have addressed ting and reducing future liabilities. social responsibility concerns. In fact, the
development needs that were not being met Increasingly, some companies consider they most rewarding part of teaching is beginning
by governments. have a responsibility to use their legitimate with a class of sceptics and ending with an
This view, in a sense, is a corporate paral- influence to promote human rights and enthusiastic group of students who are
lel to the argument that we should not give labour codes of conduct as well as improved queuing up for further reading and case
money to charities as individuals as this takes environmental standards, as good corporate studies to make the CSR business case. s
away the pressure on governments to address citizens.
social development. While we might agree Just because we don’t all agree about Professor Alyson Warhurst holds the
with the theory, who are we to say that those what is ‘development’, is that justification for Chair of Strategy and International
living in poverty and those whose human doing nothing? I should think not! It misses Development at Warwick Business
School and is Director of the
rights are being infringed today should wait the growing importance to business of part- Corporate Citizenship Unit (CCU),
for governments to change tomorrow, or in nership and dialogue with stakeholders and University of Warwick.
the case of developing countries that have interested partners that can help companies
invited foreign investment in, for the benefits to understand what would actually consti- For more information visit
www.wbs.ac.uk
to trickle down? In an ideal world there tute improved social performance and con-
16 www.ethicalcor p.com

15. December 2001 Ethical Corporation magazine
inter view
Creating global benchmarks for
corporate responsibility
Ethical Corporation speaks with FTSE’s Gareth Parker to find out more about
what’s driving initiatives like FTSE4Good
Can you give us a little information becomes available. The principles on which indices and funds based on different concepts,
on your career to date and current the FTSE4Good indices are based are root- such as technology and growth, in the past few
job role at FTSE? ed in globally accepted international stan- years. FTSE4Good is possible because
As Head of Index Design at FTSE, my dards such as the UN Global Compact and investors are becoming more aware that they
responsibilities include the design both of the Universal Declaration of Human Rights. can play a role in social responsibility whilst not
FTSE’s indices and of bespoke indices for From this foundation, FTSE4Good identi- having to suffer lower financial performance in
FTSE’s external clients. As one of the origi- fied three key areas: their investments. The indices aim to express
nal five staff of FTSE, I have undertaken a • the promotion of practices that mitigate international consensus on the principles of
variety of roles within the company, damage to the environment responsibility to which companies should be
focussing on the calculation and manage- • the encouragement of respectful and con- expected to adhere and to establish these
ment of indices, the operation of data servic- structive relations with stakeholders principles as a global standard for corporate
es and the provision of consultancy services • the support and respect for the protection responsibility.
for FTSE’s clients. Managing the introduc- of international human rights.
tion of free float of FTSE indices and the FTSE hopes the development of the Do you believe the current political
planning and design of FTSE4Good have FTSE4Good indices will encourage and economic situation will have an
been career highlights to date. investors and companies, as well as the pub- effect on companies strategies for
lic, to engage in debate over their socially SRI / CSR? Non-core strategies can
Can you give us some background responsible practices. As companies are often be shelved in times of turmoil.
on the FTSE4Good indices and the encouraged by investors to adopt socially Have we come too far to go back now?
thinking behind them? Is this is a responsible practices, the level of disclosure Business leaders around the world now
charitable exercise or did the will increase. This will allow the index series recognise that companies enjoying the eco-
demand come from investors and to evolve and reflect the changing expecta- nomic benefits of globalisation can also
FTSE listed companies originally? tions of the market over time. demonstrate a commitment to corporate
FTSE created the FTSE4Good index series Information on the companies included in social responsibility. There is a deepening
in response to market demand as there was the FTSE4Good index series is sourced from conviction that a socially responsible
considerable interest in, and demand for, a research and analysis conducted by EIRIS approach will enhance the reputation of
recognised global benchmark for socially and its partners globally, under the direction companies and reduce business risks irre-
responsible investors. FTSE4Good provides of the FTSE4Good Advisory Committee. spective of market conditions.
a tool for investors to track the performance This research and analysis has been supple- Alongside this, there has been an increase
of a company’s corporate social responsibili- mented by the use of questionnaires. in demand from global investors for corpo-
ty against a comparable benchmark in a rate social responsibility issues as an invest-
transparent and objective way. FTSE4Good Why do you think corporations ment criterion. In the UK alone there has
is a new and different means of assessing best are approaching you to be listed been a rise in the number of ethical funds
practice in corporate social responsibility. in FTSE4Good? from 34 in 1998 to over 60 now, as well as the
Initiatives like FTSE4Good are making amount of investment in these funds - £1.8m
There are various different attempts companies more aware that investors expect in Q2 1998 to £4bn in Q3 2001.
at creating a standard for SRI, more than simply good financial perform- This trend is reflected across global
including the Global Reporting ance. FTSE4Good allows them to demon- investment markets and has indicated the
Initiative. How do these tie in with strate that they are meeting those challenges. need for the market to have a consistent,
your objective global standard for global standard by which to judge companies’
socially responsible investment? Profits and ethics used to be at corporate social responsibility credentials,
The Global Reporting Initiative is likely to opposite ends of the scale. What's hence the launch of the FTSE4Good series. s
contribute to the quantity and quality of data changed in the last decade and
available and therefore to the growth of where do you see this leading For more information visit
FTSE4Good, which will evolve with in the next ten years? www.ftse4good.com
investors’ standards as more information There has been a vast increase in the number of
www.ethicalcor p.com 17