What is CSR and how is it connected with

Ethics and Governance?

Toby Webb, Founder, Ethical Corporation and
Stakeholder Intelligence. Lecturer, Corporate
Responsibility, Birkbeck, University of London
Chosun Ilbo CSR Conference, Seoul, April 10th 2013
Toby.Webb@stakeholderintel.com

What is CSR today?

CSR is about how you run
your business when noone is watching
It covers: Ethics, Integrity,
Products, Services,
Consumers, Investors,
Anti-corruption,
Suppliers, Tax payments,
Market Ethics,
Employees, Civil society
and the Environment

CSR today = Sustainable Business

Sustainable business does
not happen without
strategy
Strategy does not happen
without Governance
Governance does not
happen without Ethics
Ethics do not happen
without Stakeholder
Engagement
Paul Polman, Unilever CEO

Who are some of the leaders?

Unilever Sustainable Living Plan - 10

year journey towards sustainable growth
(2010)
Applies right across the value chain
Responsibility for own direct operations
Also for suppliers, distributors and how
consumers use Unilever brands
Underpinning Plan are around 60 targets

Marks and Spencer Launched Plan A in

January 2007, setting out 100
commitments to achieve in 5 years
Now extended Plan A to 180
commitments to achieve by 2015
Ultimate goal of becoming the world's
most sustainable major retailer

Who are some of the leaders?

General Electric - Eco-Innovation as business

strategy

2011 - Siemens reorganised operations into

four core business units:

Ecomagination business unit mainstream

focus on business innovation and sustainable
industrial products

Energy - efficiency in energy production and

distribution, including oil, gas and renewables

$2.3 billion invested in Ecomagination

products in 2011
Reduced GHG emissions 30% since 2004
Reduced wastewater by 45% since 2006

Healthcare - supplying technology (medical

imaging equipment and healthcare IT)
Industry - providing software and technology
services
Infrastructure and cities - sustainable
technologies (smart grid equipment and rail
vehicles)

How about an Asia-based company?

Golden Agri Resources A model for
sustainable palm oil

2010 - announced ground-breaking

deal with The Forest Trust to help
prepare for Roundtable on
Sustainable Palm Oil (RSPO)
certification by December 2015
Engagement with local NGOs for
monitoring of sustainable agriculture
implementation
Working with Greenpeace and
international NGOs
Won back business from Nestle and
Unilever: Share price went up!

No deforestation commitment:
Now extended to pulp & paper
Sister company APP in Feb 2013

Why do they choose to lead?

Unilever

Securing supply

Marks and Spencer

Customer trust

General Electric

Low carbon future

Siemens

Urbanisation trends

Golden Agri Resources

Market access

How do they engage with stakeholders?

Dialogue with civil society
Consulting experts on
agriculture, trust,
urbanisation, climate
change, energy futures
By using guidance and
standards
Listening to their
employees
Watching trends emerge

ISO 26000 Guidance Standard

Key guidance for CSR and Sustainability

ISO 26000
Dow Jones
Sustainability Indexes
FTSE4Good Index
Global Reporting
Initiative Guidelines
OECD Guidelines
UN Global Compact

BUT: Guidance not the whole

solution: You must study your
own Risk and Opportunities

 Ten year journey towards sustainable growth with 50 tough targets

Aim to bring safe drinking water to 500 million people
2011: Increased proportion of portfolio that meets highest nutritional
standards from 22% in 2010 to 25% in 2011
Aim: Halve the greenhouse gas impact of products across the lifecycle by
2020
2020 aim: Source 100% of agricultural raw materials sustainably
Sustainably sourced raw materials up from 24% in 2011 to 36% in 2012

Unilever: Business Benefits of Sustainability

Total sales 2008-2012 up 26% from 40bn Euros to 51bn

Siemens and Green Business Strategy

2011: Products and
solutions in Environmental
Portfolio generated
revenue of 29.9 billion:
41% of total revenue
Objective: Grow annual
revenue to 40 billion by
2014 with new,
innovative products and
exceptional growth in
fields like renewable
energy. These include:

Siemens and Green Business Strategy

Combined cycle power

plants and intelligent
building technologies: far
more energy-efficient than
comparable solutions
Renewable energy systems
and components: wind
turbines, steam turbines for
solar-thermal power plants.
Environmental technologies
for cleaner water and air

How do these examples link to stakeholder

engagement?
Employee engagement drives innovation and ideas
NGO partnerships bring science, experience credibility
Communities have increasing power & influence

Social media means no company escapes scrutiny

Big business want a long term vision from Governments:
And policies and incentives that enable investment and
longer term planning: So must lead by example

Social Media means no escape from the public eye

How do CSR and Sustainability improve Business?

Consumers want to trust brands, not products
Leading companies turning sustainability into opportunity all
over the world: New products / motivated people / cost
savings
9 billion people means less resources and innovation will be
essential: Sustainability = risk reduction
Corporate roles in changing inefficient systems will be vital:
The winning companies recognise CSR is systems change
CSR and Sustainability = Smarter business

Harvard Business School

Professor Robert Eccles,

Harvard Business School

Do other companies make money from CSR and sustainability?

London Business School & Harvard Business School research:
Firms with better CSR performance face significantly lower
capital constraints
Better stakeholder engagement and transparency around CSR
performance, are important in further reducing capital
constraints
That the relation is driven by both the social and the
environmental dimension of CSR
"CORPORATE SOCIAL RESPONSIBILITY AND ACCESS TO FINANCE" Available at: http://ssrn.com/abstract=1847085

Five ways ethics and governance are linked to CSR and Sustainability

1. CSR and Sustainability cannot exist without Business Ethics

2. Business Ethics cannot exist without good Corporate
Governance. Ethics always begins and ends with leaders
3. Good Corporate Governance is now seen by international
investors as part of good management by boards
4. Poor Corporate Governance is priced into share valuations
by analysts and large international investors
5. Good Corporate Governance begins with Rule Compliance

Why Transparency Matters

Compliance with international

best practice in Governance and
behaviour expectations = The first
step to building investor and
stakeholder trust Thats true for
Korea too!

BUT: Compliance alone is not

enough!

Transparency is an under-valued
method of building trust, both
from Markets
Lack of transparency affects trust

Why Transparency Matters

Responsible ownership is
about being accountable
to shareholders
Thats true for businesses
in Korea too
Fact: Investors reward
better managed
(governed) companies!

$18 Trillion in International Investor Assets

Conclusion: Eight Key Steps to Global Ethical Governance

1. Adopt best practice in International Corporate
Governance
2. Go beyond Compliance: Develop and integrate Ethics
3. Lead from the top of the company on Ethics
4. Use Ethics to build strategy in CSR and Sustainability
5. Engage employees, partners, suppliers and civil
society in strategy and policy development
6. Use engagement to drive innovation in Governance,
Practice, Product and Service Innovation across your
business
7. Embed ethics, CSR and Sustainability into your
business every day
8. Never forget: Ethics, Governance and CSR are how
smart business will be done in the 21st Century

Thank you!