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People Get Sustainability, Business (and Marketers) Don’t: 20 Minutes with the CEO of Unilever

11 Friday Jul 2014

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Last month, Unilever CEO Paul Polman was in town – New York – to receive the Lifetime Achievement award from the Rainforest Alliance. As Rainforest Alliance President Tensie Whelan put it, “Paul has made several lifetimes of difference by leading Unilever to become a game changer.”

The company’s work with the Rainforest Alliance is well-known – by setting targets like sourcing 100 percent of its palm oil sustainably, Unilever has made it easier for other companies to follow suit and helped complex supply chains become comfortable with change and collaboration.

And, the company hasn’t stopped at palm oil.

Today, roughly 50 percent of the company’s tea originates on Rainforest Alliance Certified farms as it works toward sourcing 100 percent of its raw agricultural materials from sustainable origins (that figure currently stands at 48 percent).

Having recently interviewed Unilever’s Marketing Chief Keith Weed on the company’s refreshed goals and commitments, the opportunity to discuss sustainable development from the vantage point of the outspoken CEO was tempting. We caught up over a quick phone call:

The Unilever Sustainable Living Plan:

“When we launched it we said we don’t have all the answers. One of the reasons why we are working so wellUnilever CEO Paul Polman with Rainforest Alliance is because we share common goals. Take tea for example: Standards are driving up fast in an industry that’s not easy to standardize. [This is where the] scale of Rainforest Alliance is significant – and essential for the USLP to come alive.

“[Its] only been a year since the Rana Plaza fire happened. Those 1,050 women worked in conditions that were little more than modern-day slavery. We’re determined not to let that happen in our supply chain. So we’ve put some goals to match our resolve. We’re going to help more women gain access to training and land rights. The transformation can be substantial.”

Pushing forward in the absence of political will/action:

“In the absence of politicians, we need to move faster. Climate change is a great opportunity for business. Report from the White House is an encouraging sign. Needle is starting to move in the U.S. The tornadoes and hurricanes are starting to drive the message home for people.

“Besides, this is probably the only opportunity we’ll have. The Millennium Development Goals, for instance, are due to be completed next year – the urgency cannot be watered down.”

The most critical challenge for business:

“The biggest challenge is [that] we cannot scale our ambitious goals alone. It’s a major challenge to create the right partnerships and increasingly difficult to get the political sector to participate. How do you create size and scale in a vacuum?”

The changing role of marketers:

“I always say, don’t blame the consumers. There are many examples where consumers are leading business, especially the young ones. They’re changing our lives and systems.

“Consumers are speaking out everyday but we don’t want to see it. Then we say the consumer doesn’t want to change. If we can tap into the enormous movements, we can create change much faster. That’s the job of the modern-day marketers. Their job has changed. It doesn’t work any more to push consumption. We need a new model and get companies to adjust their marketing strategies as well as their job roles.”

People get it, business doesn’t:

“I spend a lot of time on how to develop leaders who can lead us through partnerships, with purpose, can think long-term and beyond 2020. On my way back from Abu Dhabi last month, I was reading an article that reported university students rebelling against the way economics [is being taught]. If teachers are teaching Milton Freidman’s theories, who is going to change the economy? For my kids, sustainability is the new normal. They don’t want to watch TV or buy the newest gas-guzzling car. Their generation is already thinking differently. Yet, marketers keep saying consumers don’t want it.

“Our understanding of consumers [and consumption] is too narrow. We need to get much closer to consumers. If we go to any of the emerging markets – 81 percent of the world’s population lives outside the U.S. and Europe – most of the growth is occurring in climate stretched areas today. They might not understand Rio+20 or climate change language but they know that weather patterns are changing, water is decreasing, etc.”

From mindless to mindful consumption:

“Marketers should switch from asking whether consumers are willing to pay for something to which consumer doesn’t want less poverty, more education, a healthier world with cleaner air and better nutrition.

“We just need to be astute about solutions. Look at the Edelman survey – consumers expect more and more from business, and if business understands this, it is a wonderful time. Children die from diseases which we can solve with hand washing – new market – marketers should be very excited by this. But that connection is not there.”

Three actions to change the world:

“We must get out of short termism because lots of solutions are long-term [climate change, access to education, water shortage, etc.] – and we can only solve them if we invest over longer periods and evaluate the social and economic capital. Then business people can optimize these. For example, 40 of the top 100 companies are already pricing carbon internally. They’ve committed to stay within these limits. Business is leading because they see the cost of action vs. inaction. We have now 40 countries that are pricing carbon including China. We have 20 other countries that are putting a tax on carbon. The system is starting to move.

“We need to give politicians Unilever Sustainable Livingconfidence that this [focus on sustainable development and long termism] will not kill jobs or stifle growth. The exact opposite is in fact true but we need to provide the proof points.

“We need to get companies to adopt integrated reporting quickly as well as become comfortable with transparency. It’s going to take much more than a nine-to-five job to bring all of this together. We need leaders and we’re short on them.”

If this was his last interview as the CEO of Unilever:

“We can use our scale to transform systems and change. We need to create a better place than the one we were born in. Ninety-nine percent of people are not in a position to make a difference. We can. We need to force change – it’s our duty to leave the place in a better place. I hope this drives Unilever and everyone else.”

Originally written for and published on CSRwire’s Commentary section Talkback on June 2, 2014.

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.

Integrated Thinking: SAP Refocuses Sustainability Targets to Maximize Impact

11 Friday Jul 2014

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How do you continually increase your positive social and environmental impact while growing your economic bottom line?

It’s a question that has many sustainability professionals preoccupied as global business returns to some sense of stability amid a rising urgency to curtail its footprint and address critical issues like climate change.

For technology companies, which are targeting emerging markets for growth and increasingly touting the efficacy of the cloud as a solution, this is a particularly precarious question. Peter Graf, chief sustainability officer at SAP, believes integrated thinking can help.

We chatted live with Graf and sustainability heavyweights BSR CEO Aron Cramer and CDP Executive Director Nigel Topping on April 11, 2014, at #SustyBiz.

But before you grab the recap, here’s some context.

Green Consumption: SAP Shifts to Cloud

In its second Integrated Report, SAP offered more context regarding its decision to shift to a cloud business model. The technology giant also announced it has started to power all its data centers and facilities globally with 100 percent renewable electricity as of January 1, 2014, which it predicts will help “eliminate carbon emissions caused by its customers’ systems by moving them into SAP’s green cloud.”

SAP_integratedreport_2013

Ambitious or not, the new goals indicate a significant shift for the company as it figures out how to involve its consumers in its sustainability targets without compromising on its growth ambitions. And according to Graf, switching to Integrated Reporting was important to help move the company closer to thinking in a more integrated manner about its business model, its impact and its long-term future.

As he stated in an interview last year, they didn’t have to change tracks. But it was time.

“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.”

Creating Value

So how has Integrated Reporting helped SAP integrate its sustainability goals with its business strategy?

“One, it has brought business strategy closer to how we create value – our green cloud is a perfect example of that. Second, we have aligned the structure of our report with the IIRC framework, including new navigation that allows people to filter content according to different types of capital (ESG). We’re also continuing to support the G4 framework and have become better at explaining the short-, mid- and long-term impact of integrated reporting than last year,” said Graf.

And how does SAP’s performance stack up for 2013?

For one, as its business has grown so have its emissions and environmental footprint. “As a cloud company, we acquired Ariba and Success Factors but kept our budget stable to buy renewables, which is why renewables reduced [from] 51% in 2012 to 43 % 2013. It is clear that we want to put sustainability into the core of how we create value. So moving to 100% renewable electricity is a natural consequence of the shift of our business model into the cloud.”

Retention is marginally down as is employee engagement.

“While employee engagement was slightly down by 2%, our overall score of 77% continues to represent an industry leading performance. We believe the small reduction is due to our shift in strategy to the cloud. The good news is that we have already taken steps to drive employee engagement up toward our goal of 82% by 2015.”

Debating the Efficacy of Cloud

Which brought us back to the question of cloud computing. With mixed feedback from the media, how does the company explain the rationale? “The cloud has a variety of advantages. First of all, you achieve better economies of scale. The entire data center is shared between all customers using our servers, network, storage, etc. We have also been implementing a wide variety of energy efficiency measures, such as cold isle containment, more efficient hardware, and detailed energy consumption transparency,” he said.

And because SAP now has a green cloud, the carbon emissions of its customers get eliminated.

But it’s also key to put all of this against the lens of consumption. As Graf noted, while energy consumption of IT is growing at 3.8%, data centers usage is growing 7.1%. “Data centers are doubling in growth vs. IT as a whole when it comes to energy consumption. That’s why a green cloud is critical.”

How? By leveraging multiple routes to get to its goal of 100% renewable energy. “First of all, we are producing some of the renewable electricity ourselves in solar plants in the U.S. and Germany. Second, we are procuring renewable energy and renewable electricity certificates from a small, select group of providers.” SAP is working with CDP and the WWF to determine criteria that the production of renewables the company acquires will have to meet. “Finally, we are producing carbon offsets ourselves by investing into the Lifelihoods Fund, an investment fund that literally plants hundreds of millions of trees and returns carbon offsets rather than financial returns,” he added.

A Triple Bottom Line Conversation

From carbon credits to direct investment in renewables, SAP is implementing a comprehensive strategy aimed at taking advantage of all available avenues to reduce its negative impact. But Graf’s emphasis on influencing end-user impact also brings us full circle back to where we started: How can technology companies most demonstrably and positively influence consumption and development?

For Graf, it’s about going back to basics – and embedding sustainability into the core of your  tweet-jam-sap-sustybizbusiness strategy.

“Sustainability and growth are not contradicting. The problem is that most companies run a “sustainability strategy” in parallel to their corporate growth strategy. In such a setup, sustainability goals are often perceived to be in contradiction to growth aspirations. The trick is to evolve from having a sustainability strategy to a corporate strategy that is sustainable. It’s about taking a broader point of view, understanding the impact of decisions not only on financials, but also on the environmental or social capital of the company,” he said, adding, “Any conversation of growth needs to be a triple bottom line conversation. ”

So is the way forward for companies to decouple sustainability from growth? How can companies continue to grow and expand their business profiles—profitability—while reducing their negative impact? It was a compelling conversation – grab the details at #SustyBiz!

Originally written for and published on CSRwire’s Commentary section Talkback on April 10, 2014.

#SodexoCR: A Conversation on Integrated Reporting, Responsible Supply Chain Management, Values, Ethics & More…

09 Wednesday Jul 2014

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https://storify.com/AmanSinghCSR/sodexocr-a-conversation-on-integrated-reporting

 

Shared Success at Verizon: No Silver Bullet for Sustainability, Say CSR & Sustainability Chiefs

09 Wednesday Jul 2014

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Verizon recently released its second Integrated Report, combining the company’s financial and non-financial data and metrics into one clean look at its overall performance.

While the technology giant has been publishing its environmental, social and governance results for almost a decade, integration with the firm’s financial performance is relatively new. And Verizon saw several significant changes in 2012 to its approach to sustainability and shared value – which Verizon calls “shared success” – including a reformat of its Foundation’s model.

In a recent webinar, I had the opportunity to discuss the report, Verizon’s goals, challenges and a whole host of issues with Verizon’s CSR and sustainability chiefs Kathy Brown and Jim Gowen, along with an engaged audience.

Here are excerpts – and a link to the webinar recording.

Whether you’re eager to learn more about Verizon’s approach to sustainability or what the future holds for integrated reporting and sustainability standards, the webinar will provide you with exemplary context, insights into one company’s efforts to reduce its impact, and how a multinational must pick a strategy that is holistic, focused and measurable.

Shared Success:

Kathy Brown: “When Lowell McAdam became our CEO a year and a half ago, he brought with him a set of principles by which he inspired us to live. It is a value-based approach to our work in the market. We deliver outstanding communication and technology for our communities and country. And we are to share our success with the community. While Michael Porter gets a deep bow for creating Shared Value, these pillars – solutions, service and sustainability – state our mission and our version of shared success.”

Verizon's Shared Success Innovation Process

“We want to achieve measurable social impact. We can do a number of things at one time because our technology is powerful enough for us to find a way to do well for our shareowners and stakeholders, communities and countries in tackling the world’s problems…Specifically, we are focusing on how technology can bring transformational change in education, healthcare and energy management. The platform is our fiber network [and] our wireless network. Through these [networks] we are able to reach millions of users and applications that can literally change the world.”

Setting Aggressive Targets:

Jim Gowen: “Our sustainability program includes aggressive targets, follow-up and our people [who] really do make the difference. In September 2009, when we created the Office of Sustainability, one of the challenges was how were we going to make an impact on a business that [in many areas] is growing exponentially. So we set the Carbon Intensity Metric as the way to grow most efficiently. We set an objective by 2020 to improve our carbon efficiency by 50 percent. Since 2009, we have driven our carbon efficiency 37 percent.”Verizon_networks

“But as I often tell my employees, that was the easy part. Now comes the tougher part. We’ve taken care of all the low hanging fruit. How do you keep that momentum going? For example, e-waste is one of our biggest impacts. We’ve set a goal of collecting more than 2 million pounds of e-waste by 2015. That’s no small feat.
We’re doing that internally as well as externally with our Recycling Rallies.In the last two years, we’ve held 36 of these [across the country]. That objective is very important to Verizon and our customers.”

Environmental Footprint: Setting the Stage

Jim: “Our environmental footprint is quite large. Supporting hundreds of millions of customers takes a lot of work. We operate 42,000 cell towers, 31,000 facilities globally, and [a] 38,000 private fleet of trucks and vans, etc. We had to concentrate on our own resources and see how to become sustainable.”

“We focus on four key areas: making our networks more efficient; expand[ing] our renewable sources of energy; run[ning] our fleets more efficiently; and reduc[ing] the lifecycle cost of ownership of how we operate.  From purchasing to logistics and sustainability – they all match up nicely.”

Highlights from 2012: From Packaging to the “Magic Bus”

Jim: “How do we make our packaging more environmentally-friendly? How do we handle the end of life for that? We asked our OEMs to make their equipment more energy efficient – 30 percent more than legacy equipment. Then we looked at our consumer stores: 131 stores have been LEED certified so far with the U.S. Green Building council, and a pilot is underway to increase that number across our markets.”

“We recently launched our Magic Bus program. The idea was generated by one of our line managers in New York who suggested that, instead of driving our own vans around very congested areas of New York, why couldn’t we drop off our employees with their equipment to provide service to our customers?”

“From that originated a three-month pilot where we used vans that could host eight to 10 technicians with their equipment and inventory on board, and we started driving them around areas of Manhattan. We would pick [up] and drop them [off] and provide service to them throughout the day when they needed it. The benefit was significant – for our customers and our employees. We’ve now started 25 of those Magic Buses in New York and removed 250 of our vans off the roads of New York City.”

No Silver Bullet for Sustainability

Jim: “There is no silver bullet and no magic button. It’s going to take a lot of trial and error and a lot of commitment. While we think and look at our lifecycle approach, we’re still in our immaturity stage,  and the Verizon_reportopportunities ahead of us are so powerful that we can have a significant impact”

From Sustainability to Integrated:

Kathy: “Our Shared Success Council is made up of senior executives across the company – including marketing officers, product managers, general counsel, etc. – who are clearing the strategy for growth and in the process, sharing the idea of Shared Success. The report recognizes these efforts.”

“The process involves a lot of collaboration between executives and the folks on the ground. We focus a lot on our data, and we don’t see this journey as involving any one data point. It’s a journey of doing business, and the report reflects that. We’ve shown enormous efforts and growth, and the information is easy to read and use for our stakeholders across the board.”

Jim: “The report also helps us tell our story concisely. Our customers are asking, as are our investors. They are asking how we’re measuring ourselves? What are our goals – people want to invest in sustainable companies – and how are we incrementally achieving those?”

Technology and Health Care: Powerful Answers

Kathy: “We need to work on reducing costs on factory delivery systems and improv[ing] patient outcomes. Think about what you have on your iPad or phone today. We believe we can, in a more systematic way, think of security and identity issues for patients, fast connections, and [the] ability for patients and doctors to talk to each other in a secure environment through our technology, etc. We call this Powerful Answers.”

Who’s Reading the Report?

Kathy: “Internally, the audience is our employees who can have sense of our values as a company. Externally, people want to do business with companies with a heart but also have the technology and wherewithal to solve their problems. Beyond individuals, this includes communities [and]  governments who take on big ideas about congestion, smarter cars, health care, etc. This report does a good job [of] painting the bigger picture for this audience.”Verizon_Powerful_Answers

Jim: “[The] hip market that will change the world [is] using our technology, and this report helps them see first-hand the choices they have. Sustainability at Verizon is driven by our employees and our communities, not just one executive.”

Supplier Responsibility:

Jim: “Over the last couple of years, we have queried our top 200 suppliers, which represent 80 percent of our total spend, to ask them how they manage their CO2 and greenhouse gas impact. What goes into the products they supply to Verizon? And we were very surprised at the answers we got back and tallied them up and graded them.”

“Whether they’re early adopters or much more mature with their sustainability strategies, we’ve set ourselves a 2015 goal: to operate with over 40 percent of our suppliers that have targets and greenhouse gas emission goals. That impact is significant, and we’ve already seen that through the innovation they’re bringing to us about how they can become more sustainable and continue working with us.”

Evaluating Success:

Kathy: “We get all sorts of consumer indicators of how we’re doing in our community. We know how they use our network, what they think of it, etc. Once we start asking consumers how we’re doing in terms of impact, the responses have been very good. But it has been a challenge to do that in a broad way across many segments.”

For more insights from Verizon, listen to the webcast.

Originally written for and published on CSRwire’s Commentary section Talkback on April 18, 2013.

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

09 Wednesday Jul 2014

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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.

The Unruliness of Corporate Responsibility & Hyper Transparency: Quotable Quotes from Net Impact & BSR 2011

09 Wednesday Nov 2011

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I spent the last two weeks attending and speaking at the Net Impact and BSR conferences. As is typical at both conferences there is always too much to choose from and a lot to absorb. Since I cannot offer you a summary of each and every panel I attended/spoke at, here are some of the top line quotes heard at the conferences:

CSR: Always a Difference in Opinions

“CSR used to be about doing the right thing. Now it’s all about how it makes business sense.” – Campbell Soup’s VP for CSR Dave Stangis

“I hate the term CSR. It has slowed the movement and in many ways ensured that it is not built into systems, accounting, etc. I prefer [the term] sustainability although that’s not a big favorite either.” – Lynelle Cameron, Director of Sustainability, Autodesk

“We think CSR is good business.” – Suzanne Keel-Eckmann, National Director for Corporate Responsibility and Sustainability, Deloitte

A bag of sweet potato fries at Burgerville in Portland, Oregon: Social messaging done right?

“CSR should be led by charity and employee engagement, not CSR departments.” – Meg Garlinghouse, Head of Employment Branding and Community, LinkedIn

“Our CEO still believes that he is the company’s chief sustainability officer. But he realized that we need to be more organized and structured in our efforts because there is a lot to be done.” – Bea Perez, Chief Sustainability Officer, Coca-Cola in response to Reverse Cause Marketing: Coca Cola’s Pursuits in the Middle East

The Role of Business in Social Enterprise

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

“I worked on Wall Street, driven by greed. Regardless of what anyone says, greed is not good. You get so immersed in the system you forget what all you can do with your life.” – Charles Kane, Former CEO and Board Member, One Laptop Per Child

“A lot of charities are beginning to worry that a lot of the problems they have been trying to solve are not going away. Business still tends to be more sustainable.” – Steve Andrews, CEO, SolarAid

“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 

Personal Responsibility

“When you know what you’re doing is helping thousands, the payback is so much more fulfilling than any number of stock options and bonuses.” – Charles Kane, Former CEO and Board Member, One Laptop Per Child

“We need to change without giving up who we are. There are no riots against business that are profitable. We need to talk with them, not talk to them.” – Ofra Strauss, Chairperson and former CEO, The Strauss Group

“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

The Role of an MBA

“No profession exists to make the practitioners rich. There is always a higher purpose.” – Gregory Unruh, Director, Lincoln Center for Ethics, Thunderbird School of Global Management

“I don’t know if its [The MBA Oath] is going to work. But it is in the right direction and symbolizes a complete shift in mentality.” – Max Anderson, President and Cofounder, The MBA Oath

“I’m waiting to see the day when a new employee tells me they attended a class in college called Change Agent 101.” – Anonymous 

Transparency

“We’re from the Midwest. We don’t advertise our initiatives. But lately there has been a shift in this thinking and our communication style. Transparency is a journey and we are in the early stages of that.” – Kate Heiny, Group Manager of Sustainability, Target

“The priority should always be why not disclose instead of why disclose.” – Chris Jochnick, Director, Oxfam America

“When you are increasingly naked, fitness is not optional.” – Quoted by yours truly during a BSR panel on hyper-transparency. Citation: Macrowikinomics

Integrated Reporting

“For us, integrated reporting starts with the thinking within the company on how they will sustain their value in the future. Integrated reporting starts with integrated thinking.” – Jessica Fries, Director, International Integrated Reporting Committee

11 Challenges for Corporate Sustainability: A Review

24 Saturday Sep 2011

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Early this year, at the Global Reporting Initiative’s official launch in North America, Director of the Conference Board’s Center for Sustainability David Vidal asked a room full of senior CSR and sustainability executives:

What are the top three reasons for your company’s reluctance to embrace sustainability—and adopt sustainability reporting?

Now, as I prepare my keynote presentation for the Center’s annual summit next week on Innovation, Sustainability & Social Media, the answers to David’s question six months ago remind me of how quickly some businesses — and the sustainability space — are evolving.

Here’s what I wrote then on Vault’s CSR blog:

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The responses that came from an audience representing the glitterati of the corporate social responsibility world might surprise.

Keep in mind that a majority of them (I’m almost tempted to say all) don’t need another lecture on the business case for CSR or sustainability, are active advocates, and represent companies that–for a multitude of reasons–recognize the link to their bottom lines.

What these responses point to, however, is the continued sense of reluctance across senior leadership toward combining the social and environmental with corporate. The path to effective CSR isn’t a linear process by any means and these responses should help those who continue to struggle with mental and ideological barriers within their companies.

Because knowing the challenge is half the battle.

As you go through these, make an elementary checklist. Which of these sound familiar? How did you tackle them? Do any seem/remain insurmountable in the current corporate reality of thrift and inflexibility? Share your perspectives by leaving a comment or connecting with me @AmanSinghCSR.

And, without further ado, and in no particular order:

  1. Doubt
  2. Liabilities
  3. Denial
  4. Resources
  5. Causality
  6. Lack of Global Standards
  7. Benchmarking
  8. Lack of comparative credibility
  9. Uncertainty
  10. Fear of the unknown
  11. Fear of the known

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My estimation is that this list continues to evolve depending on the industry, the chief in charge, and even by which quarter we are in.

In coming days, I will review these challenges  — after hearing from some of business’ most eminent executives at the Annual Summit —  and hopefully shed some light on how some businesses’ have indeed managed to overcome them, and found advantage in doing so.

Stay tuned!