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In Good Company: Singh on CSR

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The Social & Environmental Case for Carbon Offsetting: In Conversation with Barclays

09 Wednesday Jul 2014

Posted by Aman Singh in CSRwire

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Accountability, barclays, carbon, carbon offsetting, climate change, CSR, CSRwire, deforestation, Environment, ghg, governance, jillian fransen, leadership, lending practices, redd, social enterprise, Social Enterprise, Social Entrepreneurship, Social Responsibility, Supply chain management, Sustainability, sustainability, wildlife works


This is Part 1 of a series examining how leading companies are leveraging carbon offsetting and REDD+  to sustain their environmental footprint and target climate change.

“Our vision is about having a proportionate social impact on society.”

That’s how Jillian Fransen, Barclays’ director of Citizenship describes the bank’s elevated – and recently refreshed – sustainability agenda. Among the new elements: a three-year CSR strategy released last year, new stretch environmental targets, supporting growth among the SME sector, and a new Balance Scorecard, which benchmarks remuneration for the bank’s top 125 executives according to four Cs – one of which is Citizenship.

Fransen’s team is also on the cusp of launching an industry-leading Code of Conduct, besides managing and maintaining a 60 million-pound Community Investment Fund and a 20 million-pound Social Innovation Fund, created specifically to seed projects and partnerships that really push the needle on sustainability.

But, of all the things Barclays is doing, what piqued my interest was a core concentration on reducing its unavoidable emissions through carbon offsetting in the company’s climate program.

Carbon Offsetting: Need vs. Efficacy

Now while carbon offsetting has suffered from its share of misconceptions – and remains a relatively new idea in the U.S. – there is a critical need today to get past the debate and begin addressing unavoidable emissions.

Because despite the most robust plans in place that curb air travel and other activities, commerce requires both energy and fuel. And with the growth, availability – not to mention supporting infrastructure – of renewables relatively slow, it becomes a question of operating with what’s available. That is the reality for businesses. And Barclays is no exception.

Calling them “unavoidable emissions,” Fransen explained:

“We buy offsets for the footprint we incur outside our minimization program. We are doing everything we can to minimize emissions but there are those unavoidable emissions that we just cannot remove – like air travel. So to minimize their impact, offsetting fits quite well in our Climate Program.”

The Program focuses on three areas: climate change, developing products for low carbon economies and risk management services for clients with low carbon opportunities.

The firm, which wants to minimize its environmental footprint by 10 percent by 2015, works with Wildlife Works and Reducing Emissions from Deforestation and Forest Degradation [REDD+] projects for its offsets strategy. According to the United Nations website, REDD+ “is an effort to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development.”

As Sibilia decoded in his article, the intended impact of the offsetting (emission reductions) leads to not only forest conservation but also a parallel movement to create self-sustaining social enterprises that recuperate the local economies and build social independence. Therein lies the true impact of UN REDD Programmeoffsetting, he concluded.

For Fransen, similarly, the appeal of working with REDD+ lay in Wildlife Works’ expertise and experience in protecting threatened forests  – and its track record with local communities. “Twenty percent of emissions come from deforestation so it made sense for us to partner with organizations that could help us find areas where forests were being destroyed. That way we can have direct impact where it is most needed,” she said.

Then there is the added advantage of targeting local communities in key markets where Barclays operates. “We wanted to take accountability for our footprint. Additionally, Wildlife Works operates in Kenya, which is a key market for us. We are in 13 African countries – the oldest bank across eastern Africa — so having an on-the-ground partner there was key for us. ”

The real impact of implementing a carbon offsetting strategy then for Barclays?

“Create accountability for a footprint that the firm is otherwise unable to get rid of. That wakes people up. When we can have localized impact, it’s a win for us,” she responded.

Climate Change: Decoding the Impact of a Bank

Besides what seems to be the main area – air travel – what is Barclays most challenging source of carbon emissions?

“We have a network of hundreds of small branches. Our biggest challenge is availability and collection of relevant data about our water and paper use as well as waste. Not all our operations have the same level of management and facility support. Especially in Africa, it is very hard to ensure commitment to some of the improvements that are required in this year,” she said.

Another challenging area is the bank’s indirect impacts through its lending practices. “Where we choose to lend and what impact that has on the environment is critical. We need to hit this on a macro level. When you go to lend to an oil and gas company, we need to stand up to our commitment. They work with a minimum of 16 banks – we’re one piece of a large network,” she explained.

The Need For “Some Serious Leadership”

While our conversation mostly focused on Barclays’ carbon reduction strategy, it was hard to contextualize that without questioning what role Fransen’s contemporaries in the financial sector needed to play to sensibly address climate change.

Could Barclays continue to make progress without reciprocation from a sector busy repairing tarnished reputations from the financial crisis?

“There is a major shift going on toward a realistic understanding of what we need to do to adapt to climate change. In my opinion, none of this is happening quickly enough though. We need some serious leadership within our industry in the next five years to change gears on climate change,” she emphasized.

“Our biggest challenge is making it real for everyone in the organization. We have 142,000 employees that manage a matrix of clients and customers. The [impact they can have] is profound. I’d like to see us capitalize on this matrix much more. There’s a feeling, not limited to banking, that we’re doing our bit and everyone else will do theirs – and we’ll be okay.”

“Fact is, the issues are way more pressing for us to rest on that assumption.”

Originally written for and published on CSRwire’s Commentary section Talkback on August  28, 2013.

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Access to Medicine, Transparency & Ethical Governance: GlaxoSmithKline’s 2012 CSR Report

09 Wednesday Jul 2014

Posted by Aman Singh in CSR, CSR reporting, CSRwire, ESG

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avandia, carbon, clinical trials, community development, compliance, CSR, CSR report, CSR reporting, CSRwire, Disclosure & Transparency, Environment, ESG, Ethics, ethics, glaxosmithkline, governance, health care, paxil, Social Impact, Supply chain management, Sustainability, sustainability, Sustainability Report, transparency, vaccines, work culture


When a company is manufacturing critical need medicines and popular consumer products, how does it address increasing access to innovative products while managing its energy use?

On the launch of the GlaxoSmithKline’s 2012 Corporate Responsibility Report – a comprehensive read at 75 pages – I caught up with Director for Global Corporate Responsibility Clare Griffin for some updates.

Looking Ahead: GSK Switches Focus

For the first time the report, while focusing on the company’s 2012 performance, also includes a set of 23 forward-looking commitments across GSK’s business. The first thing that caught my eye in the report was the framework used to connect the firm’s vision with its business mission, assets, purpose and bottom line [see below]. How did the team use this chart to define CR’s focus at GSK?

“Lots of companies say they don’t have separate CR strategies; that they are completely embedded, etc. But how can you demonstrate that integration? This chart, for us, is a good way of explaining how CR is interwoven into our business. We have our business assets, our people, our priorities, our values, which leads us to create innovative products and drive access where people need it the most,” she explained.

“That’s the vision we want to create. We believe that if responsibility is absolutely integral to how we do business, we will deliver sustainable business growth for shareholders and benefits for our other stakeholders,” she added.

It’s all interrelated.

glaxosmithkline csr report

“For example, in the world’s poorest countries, our Developing Countries and Market Access (DCMA) operating unit has a clear objective to increase access to medicines and vaccines, while expanding our market presence and ensuring our business is sustainable for the long-term. This model is increasing our volume sales while increasing access to essential medicines and vaccines.”

Transparency, Pricing & Carbon: Challenges Ahead

“We will see through the implementation of our commitments on transparency of clinical trials data, continue with our commitments on pricing, and look to further harness manufacturing technologies to improve our carbon footprint,” writes GSK CEO Andrew Witty in the report.

Lots of promises in that one statement, I asked. How will these be implemented?

“We have a pretty diverse product line. Although pharmaceuticals are the majority, we also produce vaccines and consumer healthcare products. To improve our carbon emissions, we first invested in mapping our carbon footprint. For example, we found out that Amoxicillin, a very popular antibiotic, is Horlicksthe third-largest contributor to our carbon emissions due to the manufacturing process,” she said. “Our green chemistry team in Singapore has found a different way to produce Amoxicillin through using an enzyme instead which will cut carbon emissions from this process by 36,000 tonnes and reduce waste by 2,400 tonnes as well.”

Similarly with Horlicks, a popular malted milk drink: “We are working to further enhance an Indian government program aimed at modernizing milk production, and looking at introducing alternative energy generation, for example low-carbon biomass energy generation using waste wood to replace coal. Essentially, we are focusing on where we believe we can have the biggest impact,” she added.

Creating Access: Sharing Data From Clinical Trials

As for the transparency piece, while GSK has shared the summary results of all of its clinical trials – whether positive or negative – on a website accessible to all since 2004, the firm has committed to going further and now making anonymized patient-level data available to researchers.

“We’re setting up an independent panel which will review each request to make sure it is appropriate and will be using the data for valid scientific reasons. We also want the researchers to share their results back with the scientific community. We hope this initiative will be of value in developing and catalyzing a wider approach in the industry,” she explained.

Ethical Standards: Reinstating a Culture of Responsibility

Our discussion would not have been complete without taking into account, GSK’s rough tidings last year with the U.S. government. With the firm having to pay $3 billion to the U.S. government to settle allegations of unethical misconduct – failure to include information, etc. – in its sales and marketing practices around drugs Paxil and Avandia, several questions arose about the company’s corporate governance, accountability and sales practices – how do you move forward, I asked.

The company has taken significant steps to move beyond that, responded Griffin. “We have implemented a new incentive compensation system (Patient First) for our professional sales representatives who work directly with healthcare professionals in the U.S. The new system eliminates individual sales targets for these representatives as a basis for bonuses, and instead bases compensation primarily on sales competency, customer evaluations and the overall performance of their business unit,” she said.

glaxosmithkline csr report

The company has also brought together different Codes of Practices across regions and business units to create one Global Code and introduced standards that reinforce clear distinction between scientific dialogue and promotional activities. “These new standards govern the way we engage in scientific activities, such as advisory boards, publications, scientific congresses and medical education,” she said.

Other steps: A Corporate Ethics and Compliance Program for all employees, strengthened training programs, setting up an anti-bribery and corruption initiative and setting in motion disciplinary actions when needed.

“The 23 forward-looking commitments cut across the four areas of GSK’s responsibility: Health for all, Our behavior, Our People and Our Planet. It was important that we picked a time frame that is close enough that the current cadre of employees will be the people delivering the commitments while giving us enough time to create sustained change,” Griffin emphasized, alluding to the firm’s 2015 and 2020 goals.

Goals & Commitments: Highlights from 2012

So what were some of the year’s highlights for GSK?

  • The potential to bring around 15 new medicines and vaccines to patients over the next three years
  • 3.5 million pounds invested in R&D
  • 5 million pounds invested in the Tres Cantos Open Lab Foundation in Spain to fund research on solutions for diseases in the developed world
  • A concentrated focus on creating access, including monitoring the influential Access to Medicine Index, that measures what pharmaceuticals are doing to bring more medicines to more people [GSK won the top spot for the third time in 2012 although Griffin was quick to point out that “the index is a measure of what we’re doing, not the reason why we’re doing it.”]
  • A number of commitments around transparency established in 2012 including participating in the All-Trials Initiative, marking the next level of details on releasing results of GSK’s clinical trials.

What’s next?

“In 2013 we will continue to focus on innovation, access, and operating with transparency across the business. Specifically we will work to see through the implementation of our commitments on transparency of clinical trials data, continue with our commitments on pricing, and look to further harness manufacturing technologies to improve our carbon footprint,” finished Griffin.

Originally written for and published on CSRwire’s Commentary section Talkback onApril 16, 2013.

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SAP’s 1st Integrated Report: From Sustainability to Integrated Thinking

09 Wednesday Jul 2014

Posted by Aman Singh in CSR, CSR reporting, CSRwire

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CSR, CSR report, CSR reporting, CSRwire, culture, Disclosure & Transparency, employee engagement, energy, ESG, ghg, governance, health, iirc, integrated reporting, leadership, paul druckman, retention, sap, Stakeholder Engagement, Supply chain management, Sustainability, Sustainability Report, transparency, voluntary disclosure


Using Integrated Reporting as a catalyst for integrated thinking.

That’s how Peter Graf, SAP’s Chief Sustainability Officer expressed the firm’s decision to replace two reports – the annual report mandated by the law and submitted to the SEC indicating the company’s financial performance and the sustainability report , voluntary in nature and showing its non-financial performance– by one Integrated Report for 2012.

While Integrated Reporting is a fairly new trend – The International Integrated Reporting Committee [IIRC] website hosts a total of 41 Integrated Reports since 2011 – it’s not surprising.

As the trend of CSR and sustainability reporting grows – due to multiple factors including a recessionary economy, dwindling resources, emerging conflicts in supply chains and a better connected world – logically, Integrated Reporting is the next step for any organization truly attempting to be as transparent as possible about its financial and non-financial challenges and performance.

Shift in Engagement: From Sustainability to Integrated

At SAP, the impetus for the shift was the realization that “we needed to engage within our organization on a different level” according to Graf. “We have been reporting on our sustainability performance since 2008. The report has grown in sophistication over the years and we even won several awards in the last two years for our report’s interactive nature, etc. So technically, we could have continued on that road,” he added.

Last year, CSRwire collaborated with Graf and his team on a webinar to launch SAP’s new interactive report. Complete with social media buttons, comment sections and multimedia options, the report could be customized and perused in multiple ways depending on your agenda. The report was well received – and in a span of an hour SAP_Integrated_Reportwe received over 30 questions from a very engaged audience.  [Join us for a webinar with Peter Graf, IIRC CEO Paul Druckman and others today at 11am ET]

SAP set a trend last year, so why the shift again?

 

Connecting the Dots: The Bigger Picture

“We have been measuring key performance indicators [KPI] on the financial and non-financial side for quite a while. But one day, we started to put them all on a white board trying to draw connection lines between them. Before we knew it, the chart was pretty full. We started to do research both internally and externally , to better understand and compute those relationships. Suddenly it became clear, just how interconnected non-financial and financial performance indicators really are,” he explained.

“When I heard about Integrated Reporting for the first time, I got excited. But then I thought: It’s going to be a very long process to achieve the integrated thinking that must be portrayed in the report. I viewed the Integrated Report as an outcome. However, over time our team reached the conclusion that instead of waiting for the right engagement at SAP to happen, we should use the process of producing an integrated report as the forcing function to drive the necessary engagement,” Graf added.

“In its integrated report, SAP lays out the interdependencies between financial and non-financial indicators,” said Graf. Proof points like: an increase or decrease of one percentage of SAP’s retention employee retention at SAPrate saves/costs the company 62 million euros. And since 2007, a peak year for energy consumption at the company, SAP has avoided 220 million euros ($285 million) through energy conservation efforts.

“When these kinds of relations appear between financial and non-financial indicators, they do more than make the business case for sustainability. They serve as the catalysts for an integrated corporate strategy.” said Graf.

While the entire report is available online, a parsed version – “we kept out customer stories but retained all other ESG data and metrics” – is submitted to the Securities & Exchange Commission.

SAP’s 2012 Performance: Key Highlights

So what will you find in the integrated Report this year?

For one, retention was up [94 percent in 2012] as was diversity, i.e., the number of women in management [an increase of one percent from 2011 to 19.4 percent].

The goal: to reach 25 percent by 2017.

Total energy consumed stayed stable at 2011 numbers while revenue increased by 17 percent and emissions per Euro in revenue and per employee were reduced for the sixth year in a row. Overall emissions were slightly reduced, in spite of the company  adding 9,000 new employees in 2012. Finally, the use of renewable energy increased from 47 percent in 2011 to 60 percent in 2012.

Also intriguing to me was a section, which detailed SAP’s People Strategy.

I asked Graf what the strategy involved – and how did they measure the outcomes besides retention and diversity?

“Having a sound strategy around people is essential in a company that solely relies on its employees to create value. Thus our ability to compete is highly dependent on our human resources and it’s impossible to separate that from our financial performance,” he said.

“First, we want to hire more diverse people. We believe more diverse groups innovate better. Second, we want to nurture our talent through clear development plans, challenging assignments, social media, e-learnings, etc. And finally, we want to leverage employee engagement as a decisive factor. So we measure retention and diversity but also engagement, which is a core and central KPI in driving our overall performance in the future,” Graf added.

Measuring Employee Engagement: Critical to Business Performance

So what contributed to a drop in employee engagement in 2006-2009?

“I believe there are various reasons that led to a decrease in engagement during that time. Most important, however, is how we made it back to the high engagement scores of today: When economic growth came back after the recession, the leadership of the company changed, a compelling innovation strategy for growth was established, the company was given the purpose of helping the  world run better to improve people’s lives and Energy_consumption_SAP_2012overall we enjoyed strong and continuous revenue growth as a result. So, a combination of issues got us into low engagement scores and a combination of things got us back on track.”

SAP also measures a Business Health Culture Index. Does that measure the company’s engagement quotient and connect it with business performance?

“We use this index to measure the health of our employees. There are four times as many stress-related illnesses in the intellectual property industry as compared to other industries. So we use data from eight questions [purpose, leadership, recognition, empowerment, rewards, stress levels, compared to people my age I feel more/less healthy] to understand where we stand and what we need to do to take care of our employees.”

In 2012, SAP’s Health Index stood at 66 percent, a one percent increase since 2011 and significant growth since 2008-2009.

Integrated Reporting: Check. What’s Next for SAP?

With all the data and metrics dancing around in my brain, the only question left to ask was, what’s next?

“On the one side, we recognize that integrated reporting is an early trend and that we certainly have to continue to improve and learn. On the other side, we have the ambition to lead, even if this means that we may make a mistake that followers might be able to avoid,” said Graf.

“The next steps clearly are to continue to move away from just having a sustainability strategy to making our corporate strategy more sustainable. This requires an engagement with leaders across SAP that we have not achieved before moving to integrated reporting,” he added.

His recommendations for companies who might be complacent with limited voluntary disclosure or perhaps hesitant to mix the voluntary with the mandatory?

“As soon as people recognize that  integrated reporting helps companies understand and grow the way how they create value at their core, , it will pick up. More and more people know this intuitively today but when someone connects all the financial and non-financial numbers with each other, then the big picture emerges,” he said.

SAP’s Integrated Report 2012 is available at www.SAPIntegratedReport.com.

Originally written for and published on CSRwire’s Commentary section Talkback on March 25, 2013.

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