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Climate Denial, Chauvinism and Making Integrated Reports Readable: SAP, BSR and CDP Respond

11 Friday Jul 2014

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In a recent conversation with SAP’s Sustainability Chief Peter Graf about the company’s second Integrated Report, the conundrum between sustainability goals and economic growth kept coming up. Were the two diametrically opposed? Was the ‘conundrum’ a red herring as Henk Campher recently put it?

Working with the SAP team, we decided to turn it into a live discussion. And along with Graf, BSR CEO Aron Cramer, CDP’s Executive Director Nigel Topping and our partner Triple Pundit, we took to Twitter. For one hour, we discussed the trials and tribulations of pursuing sustainability featuring 232 participants contributing 1,388 tweets and over nine million impressions.

But as is often the case, our panelists were not able to respond to all the questions in the hour. Here then are their responses to all the questions we were unable to answer – some questions have been modified for grammatical purposes.

How does a company reconcile a clear need in the realm of sustainability when it’s not a $$$ win for the company? What mechanisms can be used to overcome this barrier? [from @bradzarnett, @beltwits,@thesustoolkit]

Nigel Topping: “Ultimately sustainability issues are business issues and thus addressing them must change the value story. If it changes the story short term you get a P+L benefit, if long-term then through enhanced quality of earnings, talent retention, market share or some other metric, which can also be converted sustybiz-snapshotinto an economic measure.

“Sometimes this is easy – reducing energy waste saves money so the GHG reduction may just be sustainability icing on the cake. But this same action may be making the company more resilient in the face of likely regulation. Remember that value creation is part science part art.”

Aron Cramer: “”As things stand today, market structures and incentives don’t make it easy for companies to make the long-term investments that are often needed to work towards sustainability. We all know that for publicly traded companies, markets often push decisions towards the short-term. As such, emerging efforts to redefine financial success with more attention to long term value, such as integrated reporting, are crucial.”

Peter Graf: “If company itself has no economic reason to do so then the only levers I know of are consumer/customer pressure, public pressure or legislative pressure. If those are applied, then what seemed like an ‘externality’ again becomes revenue and cost relevant.”

Most companies see CSR as taxation without representation. What can companies do to circumvent this view and start acting now? [from @Odyamvid]

Topping: “Companies who see CSR in this way are most likely right! And at the same time leaving value on the table precisely because they are stuck in a mindset, which starts with the assumption that CSR is nothing to do with business. We really do need to see the back of woolly CSR initiatives where no one knows why they exist. There must be a value creation story – it could be direct via resource efficiency or risk mitigation or it could be indirect via brand value enhancement, talent retention, building capacity early to respond to expected consumer trends.

“If you can’t find those plausible stories, which you can tell with conviction to your front line staff, then best just to save your money – you are creating a bigger risk by acting in-authentically. Shareholders can rightly criticize you for wasting their money and NGOs can rightly criticize you for not taking issues seriously.”

Cramer: “This reflects an outdated and discredited understanding of CSR. Indeed, sustainability is about aligning strategy with changing operating conditions and not “taxation.” That said, there are issues where companies should be more active in promoting public policy frameworks that create the right kinds of incentives.  One great example has to do with supply chain labor issues, on which governments have de facto outsourced the responsibility to enforce labor laws to the private sector.”

Graf: “CSR needs to be perfectly aligned with the strategy and how the company creates value. At SAP we focus on education and entrepreneurship in our CSR projects, because they help us drive long-term success as a business. If CSR is not focused on this type of shared value (value to the company and value to society), then it is only a brand building exercise with little substance.”

How can a corporation reconcile short-term needs of shareholders and longer-term sustainability objectives? [from @greengageEnv]

Graf: “Short and long-term value creation do not need to be in conflict. In essence, it’s a balancing act, like always in business. For example, companies have always balanced investments into the future and current revenues to manage their margin.”

Topping: “Companies need a portfolio of innovation to address different time cycles of the dynamics which exist in markets.”

What role do business leaders have regarding climate denialism by other businesses like the stand taken by the U.S. Chamber? [from @kayakmediatweet]

Topping: “Very few business leaders are climate deniers. Even if they don’t believe the science, they have to respond to the growing level of regulation (22% of global emissions are now subject to a price). Leaders have a responsibility to see major change coming and to get out ahead of it, but not too far ahead!

“Climate change is rewriting the rules in many industries – just look at Tesla outselling BMW in California and with a market cap half of General Motor’s already! Leaders also have a responsibility to manage risk. As Bob Litterman, former Chief Risk Officer at Goldman Sachs keeps reminding us – there is an inevitability about the coming price signal on carbon and the less a company is prepared the harder it will be hit. This is already starting to play out in the oil and gas sector with investors pushing dividend returns instead of risky exploration expenditure.”

Cramer: “Businesses very often see further out than governments do. Businesses also like to innovate.  Organized business associations, more often than not, take a lowest common denominator approach that is in fact inconsistent with business interests. Leading companies should use their voice to call for smart regulation and then innovate and compete to succeed. There is a huge opportunity for just such efforts in the run-up to COP-21 in Paris in late 2015: the business voice should be heard, and if it is, companies will help lead the way to  low carbon prosperity. Leaders recognize the importance of this step.”

Graf: “I have personally never used climate change as part of the business case for any sustainability project. Not at SAP. Not with customers. Unless you’re in an industry that depends on climate to be stable (e.g., agriculture), the much better way to argue is the cost of energy, and not the implications and risk of climate change. Energy cost is something I have to deal with today, tomorrow and every day thereafter. There’s zero argument around the probability around that.”

Is the biggest challenge for Integrated Reporting adoption around SME supply chains to ensure sustainable business? [from @mbauerc]

Topping: “No, integrated reporting will impact large listed companies primarily – and the way their integrated thinking leads to changed supply chain engagement will impact the SMEs. In many cases this will allow for disruptive innovations from the savvy small guys.”

Graf: “SME’s adopt more sustainable practices because their customers are expecting it from them. The push is coming from the mega-buyers like the retail giants and trickles down the supply chain from there.”

Integrated reporting is great but how do you get people to read it? [from @angryafrican]

Topping: “Make it the story of your business. I hear more and more business leaders explaining how new graduates are interviewing the companies for evidence of integrated thinking, awareness of the systemic challenges faced by society and a coherent company approach that uses the power of the corporation to make good money by adding real value to society. Telling the integrated story starts at recruitment and goes all the way to analyst calls – it will need to become the same story.”

Cramer: “This challenge affects ALL forms of reporting. But a more broad-minded report is likeliest to attract attention: Integrated reporting could ‘save’ reports.”

Graf: “You need a great overarching story (one story, not many), and use video, interactive charts, etc. to make it interesting. Moreover, use social media to promote it.”

When reporting on energy, carbon, GHG, how can we make it relevant and benchmarked? Standalone figures too abstract to mean much? [from @miamiaki,@jackwysocki]

Topping: “At CDP, we help companies benchmark many environmental indicators and practices against their peers – that’s just good practice but of course it requires good data. Benchmarking process as well as output is important to drive learning and change – for example, what percentage of capex is committed to energy efficiency, does this get same or better payback than average? This sustybiz-tweetalso helps overcome any lagging perceptions that these  metrics are not business-relevant.”

Graf: “We always like to talk in visual explanations. Like ‘SAP consumes the same amount of electricity as a 250,000 people city.’ Or ‘Our customers collectively emit at least one sixth of the world’s man made emissions.’

How has the cloud affected our lives besides our ability to reduce environmental impact? [from @orange_harp]

Graf: “In all the ways that we all experience every day, from music, video, smartphones, millions of apps, social media, social platforms, etc.”

Where do we stand on CSR across the tech industry? Is our personal info staying private? [from @mr_rosenwald]

Graf: “Let me put it this way: I am very conservative about which information I am sharing on the web. The industry is running the risk of losing customer trust. We have to work together to ensure that’s not happening.”

Cramer: “While attention has so far focused on tech companies, almost every business has access to personal information. Companies can look to the principles established via the Global Network Initiative to ensure that this information is treated properly.”

Is part of the gender gap problem that the tech sector is too much of a chauvinistic culture? [How can we] attract women through culture change? [From @angryafrican]

Graf: “I am very proud that SAP has set a target to increase the ratio of women in management positions to 25% by 2017. We have gone up about 3.5% over the last years.”

Originally written for and published on CSRwire’s Commentary section Talkback on May 12, 2014.

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As Delaware Registers its First Benefit Corporations, a Conversation With the Early Adopters

09 Wednesday Jul 2014

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On August 1, 2013, Delaware welcomed a record 17 companies to register as Delaware benefit corporations on the statute’s first effective …

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Examining The Sustainability of the Royal Bank of Scotland: Facing Your Demons

09 Wednesday Jul 2014

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The finance sector continues to ride on the coattails of what started as a severe decline in trust, market performance and profits in 2008. And Royal Bank of Scotland [RBS] was no exception, facing its own share of customer distrust and instability as well as a government bailout.

However, in its most recent CSR Report, the bank – as compared to its contemporaries – makes a marked effort to address these concerns and makes a public promise to examine its “financial stability, our customers, the way we use the resources around and the practices that we have.”

What really piqued my interest was the press release issued by the bank, which right from the headline – Royal Bank of Scotland Extends Meetings with Biggest Critics – told me change was afoot.

I caught up with Duncan Young, Deputy Head of Sustainability who is also in charge of producing the bank’s annual CSR Report. We began with an obvious question – I couldn’t hesitate – about a specific statement in CEO Stephen Hester’s quote that highlighted the Report’s very first page: What will it take to “build a really good bank”?

Aspirational Goals: “Building a Really Good Bank”

“There’s been debate about how aspirational that statement is…and a recognition that the sector has had a difficult time in recent years. We want to regain the trust of our customers and wider stakeholders – and we’re not going to become a really good bank till we do that,” he explained, adding: “We’ve spent the last few years working to make the bank secure and stable again. And made fairly significant progress. But as we go through the process of regaining trust with wider society, we think we need to deliver the kind of solutions that equate with us being a good bank.”

Fair enough. But what does an overarching statement of “becoming good” involve for an organization that serves a cross sector of business and consumer populations?

“We have significantly enhanced the remit of our Group Sustainability Committee this year. They will now cover wider reputational issues, impact on customers as well as U.K. industry practices, where too often, in the past customers were taken for granted. Today, we want to put customers at the heart of what we do to make sure we don’t make those mistakes again,” he said.

As for the committee’s expanded remit, “The committee will operate at the board level with full  RBS_Report_Cover_Alternativesupport from our leadership. Members will meet six times a year to review its larger mandate, which now includes conduct, culture and reputation, a very current issue for the industry.”

Underlining this is of course a sense of loss. As Young put it, “We are well aware that we have suffered heavily since the financial crisis and need to rethink how we work with our customers.”

“After the crisis, we were bailed out by the taxpayer. Our fundamental goal since has been to make the bank safe and secure. We’re getting there. Our loan to deposit ratio – traditionally held as a good measure of a bank – was at 140 percent at one point. Now we’re down to 100 percent, which is deemed to be a measurable sign of a stable bank,” he said.

“We’ve also repaid key aspects of government support. But it’s important that we focus on maintaining a culture now that ensures past mistakes do not recur. We have a much stronger focus on conduct risk and our engagement efforts are making sure the bank’s leadership are much better placed to pick up on issues of market behavior, reputation risk and have an understanding of what customers’ expectations are from us. That’s another reason why we have significantly increased our disclosures,” Young emphasized.

Transparent Leadership: Engaging With Critics

So how does the company plan to address and interact with its critics?

“We have had a program where the sustainability committee meets with our biggest external critics where they can make the case about their interests in how we operate directly to the executive team. Last year, we held three engagement sessions with 14-15 separate groups attending. This year, we transparency at RBSwill have six more. In fact, even as we talk, committee members are meeting with a few organizations to discuss cyber security and its impact on the bank and our customers,” offered Young.

The leverage and stature of the committee has proven an important approach in increasing the bank’s stakeholder engagement, according to Young, because of the members’ ability to represent critical points of view and risks directly to the leadership. “This ensures that our top leadership does not lose sight of our key stakeholders and the dialogue informs their decision-making and specific business-related outcomes,” he added.

The CEO Speaks

Another first for the bank: Publishing a Q&A with its CEO that makes a mighty honest effort at addressing issues like trust, stability, its lending practices as well as the 2012 LIBOR rate-fixing scandal. Highlights:

On sustainability:

“Our long-term success will be determined by how well we understand our customers and communities, and how well we can service their needs in a responsible way. 2012 was a very challenging year for the sector, but it certainly served to underline that point.”

Lending to small businesses:

“It’s a difficult environment at the moment. Ongoing economic uncertainty has unsurprisingly driven down demand from businesses. SME loan applications were down 19% from 2011. Nonetheless, we continue to provide significant support to customers. RBS advanced more than £74 billion to UK businesses and homeowners in 2012. We’re approving a higher proportion of loan applications than ever – 93% in the last quarter of 2012.”

Royal Bank of Scotland CSR Report

The impact of the LIBOR rate-fixing scandal:

“There is no place at RBS for such behavior. That’s why we’re determined to correct the control and risk management failures that originated in RBS during the financial boom years, of which attempted LIBOR manipulation is an example. This is a painstaking task, that’s been undertaken over several years and we can’t detect and solve every problem as fast as we would like. The aim is to create a safe and secure RBS that serves customers well and that, in the right way, creates value for those who rely on us.”

On customer trust:

“Staff don’t set out to serve customers poorly, but banks too often had other priorities before the crisis. They saw customers as a means of making money.”

On executive pay:

“The investment banking bonus pool has gone down by 20% on last year, despite operating profits in the markets division being up by nearly 70%. In fact, since 2009 our investment banking bonus pool has shrunk by more than 70%. We’ve also increased transparency around pay. But there’s a balance – we need high quality people if we are to achieve the goals we set out in 2008. So we must deliver reform, while not making the business unmanageable.”

Regaining Trust with External Stakeholders…

The report’s materiality map, worth a look by anyone interested in disclosure and how it can increase shareholder value and business performance, shows customer trust as the bank’s number one material risk. I asked Young how his team was planning to address this:

“Stakeholder engagement is one piece. We make our senior leaders available to the media, release quarterly disclosure and take advantage of public forums to explain where we’re taking the company, how we’re working on renewing customer trust and engaging with enterprise,” he said.

Other efforts include programs like “Working with You” where relationship managers spend a minimum of two days a year working with their clients to get a real understanding of those businesses, an accreditation scheme to ensure our bankers are suitably skilled and qualified, and simplifying our product range to make life easier for our High Street customers.

“It’s not just about the products but also how we offer them. We have to acknowledge that we’re operating against the backdrop of a tough regulatory landscape and immense pressure. The repercussions of offering the wrong products in the past continue to be felt across the organization and we have to get this right,” he added.

…And Employees

What about the bank’s internal culture? With massive layoffs having made headlines not too long ago, Employee retention at RBSwhat is Young’s team doing to retain and attract top talent? “Despite all the changes and the restructuring, our employee engagement measurements stack up very well. We’re quite pleased, for example, with our ongoing commitment to demo gender diversity at the executive level. We’re not at the optimum point but we’re getting much better at employing more women,” said Young.

Take a look at the report and you see Young’s sentiments reflected right from Page 1. It is commendable that the bank, despite its difficult regulatory environment and consumer marketplace, is facing up to its critics, shifting its cultural rotunda and putting programs in place that can ensure 2008 does not repeat itself. As Young put it, the report manages to “strike a realistic tone and successfully acknowledges that we did have a difficult year.”

After all, we’ve gone hoarse advocating to reporters that they mustn’t view CSR/sustainability Reports as yet another marketing document but as a piece of disclosure that is tied to materiality, engagement and business performance.

Final words? “If people read nothing more than the first 15 pages, they would get a good oversight of our challenges and how we’re responding. That’s mission accomplished for us,” offered Young.

Originally written for and published on CSRwire’s Commentary section Talkback on May 15, 2013.

The True Value of CSR Reporting: In Conversation with Campbell Soup’s VP for CSR

07 Monday Jul 2014

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The soon-to-be-released report will mark Campbell Soup’s fourth CSR Report. This report comes amidst a CEO change – Denise Morrison took on the chief job at Campbell Soup last year joining a small group of women CEOs in the Fortune 500 – and a period of what Director of Diversity & Inclusion Kevin Carter calls a time of “deep introspection” for the company.

Carter’s note is well taken. With the economy sputtering and flailing, reports continue to suggest that consumer confidence and trust remain low. For a food manufacturer then, this means not only staying ahead of the curve of quickly changing taste preferences but also understanding its unique role in encouraging nutrition across an increasingly complex and fragmented consumer base.

And amid a tepid economy, where does the true value of CSR and sustainability reporting lie? Can these reports and the effort required to produce them extend beyond an exercise in sharing key metrics, the year’s highlights – and a few, incredibly sparse media mentions – to true learning experiences for companies to better their processes and make gains that help them and their communities become more sustainable?

The True Value of CSR Reporting

Dave_Stangis_CSFor VP of Public Affairs and Corporate Responsibility, Dave Stangis – his third report since taking the job at Campbell Soup – the true value of Campbell Soup’s reporting goes far beyond setting the right goals and reporting on the progress.

“The true potential of CSR reporting* is that while companies go through this chronological reporting effort once a year, the organization and business units are executing their strategies and working on metrics year-round. The process of reporting creates an opportunity to build a Campbell Soup Britannica or World Book to work off of and use as a record of the company’s progress,” he said in a recent interview.

“All year-long, we are collecting examples, building the narrative, monitoring our progress and continually evolving materiality assessments,” he continued. Often, great examples of progress emerge that would otherwise never rise to the spotlight in a multinational company.

“As you dig in, you find cross-functional teams working together on strategy, benchmarking, indicators, etc. There are, of course, always things to improve on but the stories and ideas that emerge from this heels dug in reporting exercise are incredibly useful in moving our company forward,” he said.

Connecting the Dots: Recognizing the True CSR Heroes

In recent weeks, CSRwire readers read from a number of top executives at Campbell Soup on their stories and contribution to the 2012 CSR report. Trish Zecca discussed the fine balance between nutrition and taste while Amanda Bauman discussed how the company is tackling hunger and obesity in its communities and Dr. Daniel Sonke gave us an in-depth account of the relationship between agriculture practices and corporate sustainability. Finally, D&I Director Kevin Carter offered his insights on how the company is prioritizing intercultural teams, moving diversity beyond compliance, and tentatively dipping its toes in social media.

For Stangis, these are the true heroes.

“These are the people who are behind the images and stories in the report. They are invested in the business Campbell_Soup_Volunteersand their work and there is a discernible amount of pride and work ethic that goes along with that,” he said.

“For our CSR Communications Manager Niki Kelley – creating this report is her life for six months and I’ve told her, she’s the one who knows more about the entire company than anyone else in the company.”

5 Questions for Campbell Soup’s VP for CSR

What is Stangis most proud of in the latest CSR report?  “It’s the nuances that a lay reader won’t realize but that are critical to the progress we are making,” he said. To explain further, we decided to play five questions:

1. Whose Interested:

“We continue to evolve our understanding of our various audiences [for the CSR report]. We want to connect with our employees on the frontline as well as in the C-suite. We need to impact our neighbors and make the content relevant to our customers and consumers. Most readers are looking for quick snapshots and I want to validate, reinforce and build trust and credibility in that short timeframe.”

2. What’s New:

“We’ve really worked hard on strengthening the wellness and nutrition metrics from a product perspective…we’re not driving a health ultimatum, but we are offering more healthy choices for consumers. Readers that pay closer attention will notice a growing sophistication in our strategies and metrics across the board. This report also includes the first full description of our Healthy Communities Initiative that we’ve launched in Camden, NJ.”

3. What’s Often Hidden:

“We work hard to make sure nothing gets lost in the details, but there is a ton of content that most readers will miss on a casual glance. The CEO Letter can give the readers a sense of how Denise Morrison thinks and interacts with the CSR and sustainability strategy.”

“We’re bridging from an employee engagement (only) mindset to a performance culture that leverages engagement to drive better business results. This isn’t something that is immediately obvious to external readers but it’s a priority for us.”

4. What’s Measured Gets Managed:

“Last year we discussed our community programs but this year the report really talks about these in a strategic and measurable manner. We continue to advance our metric set from product conception to societal impact. We’ve mapped our production sites with the WBCSD Global Water Tool and as we’ve brought our Community and Foundation functions into tighter alignment with our CSR and Sustainability strategies, we are shifting from measuring activity to measuring outcomes.”

5. Uncharted Territory: 

“The big news this year from a sustainability perspective is our traction on renewables. We’ve had smaller efforts in the past but in 2011 we went from dipping our toes in the water to flipping the switch on one of the largest solar installations in the country. This represents a cultural shift for the company. Large scale renewable projects just weren’t in our solution set and now we are evaluating new renewable opportunities across our plant network that reduce our greenhouse gas emissions and save money.”

Solar_Panels_at_Campbell_SoupFor Campbell Soup, a global footprint means a holistic vision of sustainability that encompasses its products, employees, communities and supply chain.

And for Stangis, publishing an annual report is not only a testament to his team’s efforts but also a way to measure what’s not working. Having led CSR at Intel before joining Campbell Soup, Stangis is a veteran in the world of CSR reporting, and has seen firsthand the evolution of the sector.

“What comprehensive reporting does today is set up a process that continues to position the company in the long-term. This wasn’t the case when we started reporting. Now we’re anticipating issues and breaking down communication silos that are inherent in the company,” he explained.

Challenges Ahead: More Data, Clarity of Purpose

Any regrets? “We need to keep pushing ourselves for better data every year, especially for our international footprint. It’s only when you dig in that you realize how much better a fully integrated measurement and reporting system would be,” Stangis confessed.

The journey – as for most companies taking on the responsibility and challenge of reporting on their corporate social responsibility and sustainability efforts – is far from over.

And as a seasoned sustainability executive, Stangis understands the daunting task that lies ahead for Campbell Soup in a crowded market, evolving taste preferences and the continuous challenge of consumer education.

“We still have to plug people into what we are doing, the reason why we are doing it [and make it make sense],” he said, noting that it isn’t just the external stakeholders that need the dots to be continually connected for them.

“We have to do a better job at communicating the strategic intent and shareowner value delivered by a comprehensive CSR program.  Our internal teams, our C-suite – it’s our job to help them understand  the story across the board.”

Originally written for and published on CSRwire’s Commentary section Talkback on May 24, 2012

Weaving Ethics & Accountability into Free Enterprise: Leadership in Crisis

03 Thursday Jul 2014

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“An entrepreneur is the engine of change. The dilemma: The glue that connects entrepreneurs, capital and the legal system.”

The real problem with companies today?

“A lack of purpose, intent and transparency.”

That’s how Erik Trojian, director of policy for nonprofit B Lab, opened his presentation at the recent seminar held jointly by Georgetown University, the Caux Round Table and the Sustainable Business Network of Washington (SBNOW).

The theme of the two-day seminar was weighty: Ethics, Leadership and Sustainability – to explore how the capitalist spirit of free enterprise and social entrepreneurship can help transform economic systems and promote social justice, basic rights, and human freedom around the world.

Common among the presentations of the day was a repeated emphasis on corporate governance, beginning with Trojian.

Modern Capitalism & Benefit Corporations

Trojian and his team are on a mission: To get all 50 states of the United States of America to sign the benefit corporation legislation into law. So far, they have succeeded in seven states.

He explained their goal:

“Modern capitalism began at a particular point of time in a certain type of culture. Somewhere in the 1960s, values began to shift and outcomes began to change. We want corporations to have an alternative form of operation that predicates protecting a business’ social and environmental communities.”

After a powerful presentation on the what, how and why(s) of the benefit corporation – a subject that has been covered quite comprehensively by CSRwire in recent weeks – Roderick M. Hills, Sr., former chair of the SEC and cofounder and chair of the Hills Program on Governance at the Center for Strategic and International Studies took the podium.

“Fixing” Bad Corporate Governance

“The Securities Exchange Commission [SEC] was set up to have more finite control of corporations’ governance. Auditors were expected to act on all suspicions. We convinced the New York Stock Exchange to address disclosure and transparency,” he started.

The next antidote according to Hill: The Foreign Corrupt Practices Act.

“The Act’s real problem was its uncertainty. They don’t want to deal with figuring out what is a crime and what isn’t resulting in people doing whatever they want to do. Plus the Act was not valid outside the geographic boundaries of the U.S. The rest of the world has no incentive to use this,” he said.

Aligning Board Service with Governance: A Conversation with Lucy Marcus

What’s really wrong with most corporation’ boards set up and governance standards according to him? His concerns were multifold so I turned to Lucy Marcus, renowned corporate governance expert, CEO of Marcus Consulting Ventures and Reuters columnist for some answers:

1. Too Much Agreement in the Boardroom

“There are too many directors today who would rather quit than disagree.”

Lucy: Asking the hard questions in the board room is essential, and also being willing to be persistent in the pursuit of the best outcome for the company and stakeholders is essential. Those are the kind of independent directors we want in the boardroom.

Anyone who is not willing to operate in this new reality doesn’t belong in the boardroom, and as we develop & educate new directors they need to know that this is what shall be expected of them.

2. The Fiduciary Responsibility of Directors

“There is a paradox in the country. Independent director doesn’t equal independence today. Every director has a preset job description regardless of who he represents/brings to the board.”

As directors it is vital that we understand going into the post what our job is inside and outside of the boardroom, what skills and knowledge we bring to the table, and also that we also operate beyond those strict skills we bring to also be able to synthesize data quickly and to make decisions in a well-informed and responsible manner.

3. Mandatory Retirement

“The mandatory rotational retirement is a terrible idea. There is no auditory protocol built-in and it gives directors too short a time to compel change, set standards, make a difference.”

I believe strongly in term limits. Best practice, as set out in the U.K., is several terms that add up to 9 years, and I think this is correct.

There is no way that someone can maintain their independence for much longer than that, and if the board room is to remain a place for dynamic discussion, it is incumbent upon boards to continually refresh themselves so that the people around the table bring a balance of continuity and change and the company is able to keep its finger on the pulse of changing agenda items, be it corporate social responsibility, technology, or anything else that is relevant to continued strength, growth and wellbeing of the organization.

If Capitalism Isn’t Bad, Are Capitalists?

Despite the somber notes, Bob Edgar, president and CEO of Common Cause, perhaps encapsulated the day – and our present crises – most succinctly with one question:

“Is it appropriate for [a form of] capitalism to exist that leads to unemployment, slavery and excess profits above all else?”

Readers: It’s your turn to participate in this dialogue and become the change makers you seek from our leaders. How are you solving ethical dilemmas between personal values and professional responsibilities?

As Chairman of the Hershey Company James Nevels put it recently at the BCCCC conference, “CSR above all begins and ends with personal responsibility.”

How do you define personal responsibility – and extend that to corporate responsibility?

Originally written for and published on CSRwire’s Commentary sectionTalkback on April 4, 2012.

Bob Willard’s Business Case for Sustainability: A Better Way to Make a Bigger Profit

03 Thursday Jul 2014

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The constant struggle between business’ social and environmental responsibility and investor demands is already an old tale. “The field has stretched and magnified so quickly that even though I have only been doing this work for three years, it feels like 10,” confessed a fellow attendee at a recent conference.

It’s true. Increasingly, more of us – those of us who eat, drink, sleep and dream CSR and sustainability – succumb to the comfort of believing that the sector is steadily progressing toward safer, clearer, more transparent practices.

But are we?

With Wall Street continuing to demand quarterly results, stringent returns on investments and short payback periods, are we really supporting sustainability in its truest sense? The examples, after all, are endless: Apple’s factory standards, Goldman Sachs’ unethical business practices, Chevron’s continued governance malpractices as reported by the Amazon Defense Coalition, and a new report that calls Wal-Mart’s sustainability championship as mere greenwashing.

As the CECP’s Margaret Coady remarked recently on CSRwire Talkback, how can sustainability executives tie consumer expectations and investor pressure into cohesive strings of action? Are the two sides completely incompatible?

Bob_Willard_The_Sustainability_AdvantageBob Willard, author of The Sustainability Advantage – and the updated The New Sustainability Advantage – recently held a well-attended webinar organized by the Toronto Speaker Sustainability Series [TSSS] on objections handling for sustainability executives. Some of his lessons – which you will soon be able to download as a useful reference guide, courtesy TSSS – focus on identifying mind shifts, behavioral change, graciousness and emphasizing education.

Now, Willard is traveling to New York to present at the Ethical Sourcing Forum on March 29 – 30, 2012 on connecting these lamentations with the business case for sustainability. A former IBMer, Willard’s work is renowned for its articulate arguments and concrete examples. His book is a firestorm of information and data. Here’s what the founder of Interface, the late Ray Anderson, said:

Bob Willard has performed a service of inestimable value: quantifying the business case for sustainability. By focusing at the level of the firm, Willard has bypassed the overriding but somewhat esoteric question, “How long can the rape of Earth by the modern industrial system go on before ecological collapse?”

The answer to this big question lies in the cumulative effect of millions of firms, large and small, waking up to the untapped profit potential that’s all around them. Bob Willard has shown how to capture that potential in real profits. Consequently, the answer to the big question is: Let the rape stop now; there’s a better way to make a bigger profit. Read this book to learn how.

Willard believes that until recently, there has been little evidence expressed in business language to show executives actual benefits from sustainability strategies. But that sustainability strategies can drive new bottom-line opportunities, avoid impending risks, and be a catalyst for business innovation, even in an economic recession.

While there are speakers aplenty who can talk about sustainability today in logically constructed sentences, there are few who have decades of experience to back up their arguments and can not only envision sustainable capitalism but show us how to get there. Willard falls in the latter category. So, if you are in the New York City area, join the CSRwire team at the Ethical Sourcing Forum to learn and engage with the leader himself.

Originally written for and published on CSRwire’s Commentary sectionTalkback on March 16, 2012.

2011: The Year Business Learned to Say Mea Culpa

02 Wednesday Jul 2014

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These were just some of the things that kept us busy in 2011. While some represent the changing marketplace, others are age-old struggles between activists, consumers, employees and corporations. Yet, they all represented the emergence of new forces at play in our corporate corridors.

Yes, 2011 represented despair for many – the jobseekers, the underemployed, the single parent, the shopper, the CEO, the trader – but with despair, as CSRwire’s CEO Joe Sibilia noted, comes hope, adaptability and often, solutions.

And it is at that stage that most of us converged in 2011.

Transparency: Is Business Ready?

Take, for example, the recent BSR conference held in San Francisco. My panel addressed a topic that is bound to get most of us shifting in our chairs: Sustainability in a Hyper-Transparent World. Ouch, right? Joined by executives from Oxfam, Intel and SourceMap, the conversation included several uncomfortable moments (I offered up Zappos as an example to the audience, citing that the company livestreams its all hands meeting in order to live its mission of “building open and honest communications.”) and featured several probabilities, suggestions, and potential solutions by a group that included lawyers, sustainability executives, CSR officers, reporters, strategists, entrepreneurs as well as nonprofit leaders.

“When you are increasingly naked, fitness if not optional.” – Macrowikinomics

That the panel attracted a full room of senior executives willing to discuss difficult issues like privacy, corporate governance and stakeholder responsibility is a start.

The C-Suite Headlines Sustainability

Till last year, while much was being written about CSR and sustainability, executives were largely absent from the dialogue. In 2011, this changed ever so subtly. Earlier in the year, Best Buy CEO Brian Dunn took the stage at one of the year’s most prolific conferences, the Boston College Center for Corporate Citizenship’s annual conference. He discussed the importance of employee wellbeing, organizational design, transparency (Kathleen Edmond was the first Chief Ethics Officer to start a blog on ethical issues in the workplace) and the importance of stakeholder engagement.

“The more you peel the onion, the more you realize there is to be done. You just need to be constantly excited about peeling the onion.” – Brian Dunn, CEO, Best Buy

At Net Impact, Nike’s Hannah Jones took the stage as did REI CEO Sally Jewell. BSR kept the momentum going by featuring Ofra Strauss, CEO of the Strauss Group, Autodesk CEO Carl Bass and Anheuser-Busch CEO Carlos Brito.

These chiefs weren’t exactly looking to gain brownie points. They were after all speaking to the choir in some respects and to an audience that for the most part, gets business and social responsibility. But what made each of them stand out was their honesty about the difficult problems facing us today – a first? – agreement on the role of business in adding to today’s social and environmental mess.

“In the last few years, business has lost tremendous trust in the marketplace. That we are GOOD now rests on us.” – Ofra Strauss, Chairperson and former CEO, The Strauss Group

Mea culpa, they all said. Followed by: Here’s how we are trying to change ways, rethink growth, repurpose missions and reengage stakeholders.

That’s a start.

Social Media Engagement: 140 Characters Rule

Despite all the naysayers of social media, there is no denying that for any organization that sells a product or service today, having a dedicated presence on Facebook and Twitter is a prerequisite. With engagement reaching never-seen-before proportions, even Chief Sustainability Officers are learning to communicate in 140 characters or less.

“We must see social problems as business opportunities.” – Carol Cone, EVP, Edelman

But several companies dipped their toes in active engagement by trying out new formulae: Best Buy released their annual CSR report by hosting a live webinar (that I moderated) with their Sustainability team and a parallel conversation on Twitter. As I quizzed them about the report, questions poured in from Twitter: What was Best Buy doing in the area of conflict minerals? What about human rights? Recycling? How about consumer education? And why the low diversity ratio of employees?

Squirm they did, admitting that the issues were complex they did, but answer they also did.

They weren’t the only ones though.

Timberland (that was acquired by VF earlier in the year) launched their new Communications portal, McDonald’s hosted a live chat on Twitter with VP of CSR Bob Langert, UPS held several chats during the holiday season from sustainable gifting to green packaging choices.

Communicating your sustainability story is an important cog in the wheel called trust and the choice to engage is no longer a valid option. How you choose to do so, however, will continue to differentiate you from your competitor.

Making Business Sense out of Sustainability

Several large organizations came forward in 2011 asking jobseekers and students applying for jobs in sustainability and CSR to understand how to relate their core competencies and knowledge to the issues facing us today, i.e., water depletion, carbon emissions, climate change, etc.

How can depleting levels of water relate to a professional services firm, for example, or a bank? Why must a software company invest in engaging and educating its supply chain?

Climate Corps: Creating Jobs & Savings

The Environmental Defense Fund’s Climate Corps program is one of very few initiatives that have managed to tie sustainability with business strategy and growth while creating jobs out of the process.

From placing seven MBA candidates as summer fellows in 2008, the program has quickly grown in popularity, placing 96 students at 78 companies in 2011. The fellows spend an entire summer working with their host companies on identifying energy efficiency solutions, implementing carbon management processes and helping diverse businesses embed environmental sustainability into their strategies.

The results: Millions in savings. While few get direct job offers from the Fellowship, most have had success finding jobs where their unique mix of experience, passion, and the ability to tie business strategy with sustainability, is appreciated and utilized in changing processes, setting standards and adapting organizations to a fast-changing reality of limited resources.

This is a start.

Organizational Design & Sustainability

Where does sustainability fit in your organization?

Everywhere, really, is the only correct answer, irrespective of where the chief sustainability officer sits. This, finally is getting addressed by what I consider a crucial component at any company: The HR and recruitment teams. In collaboration with IE Business School, I moderated seminars with recruiters, HR directors and organization design consultants on the value of CSR in candidate recruitment and retention.

We discussed the relationship between productivity, values, respect and growth. We heard from students who want to work for socially responsible companies and executives who are redirecting their organizations to instill a culture of ethics, responsibility, accountability and pride.

Mea culpa, most of them said. That’s a start.

Originally written for and published on CSRwire’s Commentary section Talkback on December 30, 2011.

CSR and Sustainability in Mainstream Media: Citizen Journalism Or Simply Shared Value?

18 Thursday Aug 2011

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One of my most common complaints, after “Why Don’t Executives ‘GET’ CSR?” is why mainstream media hasn’t been giving due diligence to sustainability, corporate governance, employee engagement, social responsibility, the confluence of business, society and the environment, and everything else that connotes CSR.

2010: Professor Aneel Karnani’s Case Against CSR and Michael Porter’s Creating Shared Value

In 2010, there were a few noteworthy attempts. Aneel Karnani’s editorial in The Wall Street Journal on The Case Against Corporate Social Responsibility, which evoked numerous blogs, response pieces, live panels and tremendous conversations.

[READ: Why There Is a Case for Corporate Social Responsibility, Despite WSJ’s Obituary]

Then came Michael Porter’s piece on Creating Shared Value in Harvard Business Review. Not only did Porter start a flurry of debates, white papers and panels, the report even introduced new hashtags for Twitter users: #CSV and #sharedvalue; and a new hangtag for consultants.

Everyone understood shared value, they could contextualize the term, even measure it, and therefore, make a better case for business and social responsibility.

Debating Semantics: CSR vs. Sustainability

At Vault and more recently at Forbes, my effort has always been to highlight issues that needed addressing, questioning, cajoling, and analyzing. Soon after Porter’s piece, I asked two experts in the field to take on the debate, which often gets lost as semantics: Henk Campher, SVP for CSR and Sustainability with Edelman, and Alberto Andreu, Chief Reputation and Sustainability Officer with Telefonica accepted the challenge.

Campher took us through the evolution of the term “CSR,” concluding that corporate social responsibility, does indeed, fit best.

Here’s an excerpt:

We should look at the description of CSR itself. Why do we use these very specific three words to describe what we do? I would argue that the concept is actually a very good description of what we do today. Here’s why:

Corporate implies that this is about business.

  • It not only describes that we are busy with a discipline involving business but goes deeper.
  • It is about profits – how we make them and how we can make more of them today and tomorrow.
  • It is not about charity.
  • It is about building a sustainable business model that will continue to deliver business results for stakeholders – especially shareholders.

Social tells us this is about society.

  • It is about the impact business has on society and how we can manage this impact to ensure both business and societal benefit.
  • Even the environmental part of CSR is about society – how we can minimize environmental impact to benefit society in the end of the day.
  • The new developments in CSR – sustainability – further continue to prove that CSR is about a mutually beneficial relationship between product and service development, and societal value chains.

Responsibility reveals that business does carry a responsibility in this world–to do business in a way that benefits both business and society. Further, this responsibility gives business the opportunity to create new solutions to the needs of society. I would even argue that it is their responsibility to develop these new solutions and benefit by capturing new avenues of sustainable profit.

All three concepts—Corporate, Social and Responsibility—tell us exactly what we do today. CSR is also the perfect reminder of the relationship between business and society, and the responsibility they have towards each other. None of the other concepts proposed today actually tell us what we are doing and what we should be doing.

Andreu on the other hand, prefers sustainability over CSR. His key points:

Using CSR as an expression is not an academic problem but one that has very tangible consequences for companies.

Organizational: The classic case of the left hand not knowing what the right is doing. Most of the time, the rest of the company doesn’t know what the CSR team/executives do.

Defined functional areas don’t suffer from the same vagueness. HR is dedicated to people, the finance team crunches numbers, the operations team is in charge of systems and back up, etc. But how do you identify the team dedicated to such a vast array of duties, i.e., diversity and inclusion, environmental management, climate change, ethics, corporate volunteer management, social sponsorships, entrepreneurship, multistakeholder engagement, transparency, SRI, reputation, and human rights?

What we get instead is a big mess.

Structural: If CSR is about philanthropy, management will accordingly participate in sponsorship, PR and communications exercises because their objective is maximizing the return of investment in reputation building, not responsible and ethical business. For most companies, in fact, it is common practice for the CSR manager not be associated with evaluating social and environmental risk.

Budgetary: Let’s be honest. We all know that it is much easier to ask for a budget to implement philanthropic programs than for mapping out a business’ core environmental risks, or implementing an ethics code, or auditing the supply chain. Even in the best case scenarios, other areas of an organization will manage these issues as part of their day-to-day work but the reality is that when something is difficult to communicate, resource allocation becomes a much harder task.

Management: It’s easy to measure the impact your donations are having by stringing out the appropriate key performance indicators (KPI) for any given year. But what KPI efficiently summarizes responsible behavior? The resulting scorecard is usually so large and convoluted that even the most dedicated executives give it up because of its sheer confusion and lack of focus.

His conclusion:

The concept of CSR has been exhausted, we have to expand it for effective impact, and for that, we have to adopt sustainability. And that’s why I say, “It’s sustainability, stupid!”

The reason these debates work is because they compel people to chime in, share from their own experiences and research, and crowd-source solutions that everyone can agree on. While the debate elicited several comments on Vault, the tweets, comments, advice and feedback continued to pour in for weeks after publication.

Citizen Journalism Or Simply Responsible?

At the end of the day, media — and journalists — have a responsibility to business, to society, and to a global audience as well. Back in India when I was making the leap from kindergarten to first grade, it was The Times of India and other newspapers that became my primary sources of reading, grammar, comprehension and GK (a common monicker for ‘general knowledge’ used by school kids, at least in those days!).

Today, journalists are expected to inform and engage a vocal audience of readers. Bring in social media tools and you have a vocal and ready consumer base willing and confident to discuss, debate and make choices in real time with you. And this is where the CSR debate with Campher and Andreu did well.

For me, as a journalist and a resolute CSR practitioner, it is indeed heartening to see that those small, infrequent attempts are now becoming frequent analogies and commentaries within the circles of mainstream media.

In fact, here are three reports in recent weeks that came to my attention:

While I give kudos to Light, Lahart and Lohr for highlighting these, we — the journalistic community — must evolve to a state of journalism where good and bad business practices and sustainability are part of everyday reporting and dialogue.

The incredible work of Alice Korngold and Ann Charles on Fast Company, my fabulous co-contributors on Forbes’ CSR blog, and Marc Gunther at Fortune must become more commonplace, much more grassroots, more mainstream.

Some call it citizen journalism. For me, it’s just plain professional responsibility. We owe it to our organizations, the economy, future generations, our planet, and at the end of the day, to ourselves.

More:

The 2011 CSR Debate: CSR is an Evolution, Not a Revolution
The 2011 CSR Debate: “It’s Sustainability, Stupid!”

Social Media and Leadership: Are Twitter and Facebook 21st Century Necessities?

12 Friday Aug 2011

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There is a lot of love for social media among many in the corporate social responsibility (CSR) and sustainability community. [Take this short survey and have your say: Useful, necessary engagement tool or hate it and a complete hassle?]

Lucy Marcus, founder of Marcus Venture Consulting, for example, posted a blog today on Harvard Business Review, that talks about a particular Groupon deal that annoyed her enough to tweet about it and how that rose several eyebrows and an eventual resolution.

David Connor recently wrote about his love for Twitter, calling it a fascination and being constantly impressed by the simplicity of engagement and the tangible sense of community the platform provides. In his post, he alluded to a recent confession of mine, simply titled: In Defense of Twitter: 5 Reasons Why I am a Mad Tweeter, which was a response to an alternatively headlined Wall Street Journal article.

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For those interested, here is a recount of my top five:

1) Community: Twitter has provided me with a very diverse community of individuals who are eager to engage, argue and collaborate.

2) Soundboard: Without the 20 odd tweets I send out every day, I wouldn’t get any work done. Sounds counter-intuitive, I know—but it’s true. You’ve got to go where your audience is. They have a voice and they like to use it—and as a blogger, hearing what’s working and what’s not is inarguably essential.

3) Collaborations: And of course, without Twitter, I wouldn’t have made HR Examiner‘s Top 25 HR Digital Influencers for 2011 or named among the Top 100 Thought Leaders by Trust Across America. Nor would I have been able to successfully put together the recent panel on responsible business with Carol Sanford, Jeffrey Hollender, Sarah Murray and Bank of America, or been able to interview thought leaders like Campbell Soup’s Dave Stangis, PwC’s Shannon Schuyler, EMC’s Kathrin Winkler and many others while at Vault—and collaborated with enterprising students like Ashley Jablow, Catherine Chong, entrepreneurs like Myles Lutheran and the EDF Climate Corp fellows, or published the much-referred to series on job hunting in CSR.

4) News: Believe it or not, Twitter has become a significant source of my daily news. With the help of coordinated lists, I can scan the morning news in one stream all at one source.

5) Innovation: How many times have you read an 800-word article in one the mainstream newspapers and thought “Wow, that’s interesting, I wonder how I could learn more” or “I’d love to get involved” but haven’t known what to do next? Well, because it’s so easy to connect with others on Twitter without having to jot down strenuous emails or phone calls, now you can!

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But Connor also brought up transparency and corporate accountability.

And here is where most companies struggle with the plethora of choices available today under the domain of social media: Facebook, Twitter, LinkedIn, Quora, Digg, StumbleUpon, Reddit, and the new kids on the block BranchOut and Google+, to name just a few.

So, how helpful are these channels? BRANDfog, a social media and CSR consulting firm launched a survey last week that begins to dig deeper into some of these questions.

Social Media and Leadership:

Should CEOs be engaging on Twitter for example? Does that help gain trust with customers, loyalty with employees, or raise the bar on transparency?

Recruitment Decisions:

Has social media become a benchmarking tool for prospective candidates in their recruitment decisions?

CSR and Sustainability:

And does a presence on social media help companies illustrate their brand values, mission and corporate citizenship?

What do you think? Take this short survey and have your say. Is social media emerging as the differentiator in today’s crowded market of jobs, business, and consumer loyalty?