Hoijtink Advies

Corporate Social Responsibility,

from whim to a matter of strategy

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Remember 2000?

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•Dow Jones 12000 and rising•Unknown prosperity because of internet•Fukuyama’s ‘End of history’•Sustainability: for idealists and do gooders•Corporate Social Responsibility (CSR): Esso’s chairman ”it is none of our business”

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2010

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• Copenhagen• Economic crisis• The state of the planet• The people on the planet• Dow Jones sustainability index• Buzz words: CSR, sustainability, People Planet Profit

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What about the planet and people in 2020?• Is that your business?• Not my problem• Shouldn’t the government act?• Are things really that bad? • You abide the laws, rules and regulations, so what?

The correct questions?

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Wrong questions

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National Geographic March 2010: cattle farming and wolves

“We have to realize that the general U.S. population wants wolves. That population is also our customers for beef. It’s not a good idea to tell your customers they don’t know what they’re doing. So instead of taking a hard line and fighting to get everything back to where it was 50 years ago, we’re trying things like…”

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It is your business because:• Many stakeholders worry about the state of the planet and the fate

of its people• ‘The business community has its own responsibility’ • They want you to act • Their perceptions count • You nor your company can change that, so…

Go with the flow

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How far should you go, what should you do?• Not a thing?• A bit more?• A real effort? • Be a front runner?

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How far you should go depends on:• Who do you have to/want to make happy? • Your risks (defensive reasons)• Possible benefits (offensive reasons)

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Who do you want to make happy?

All your stakeholders, however

people are not the same:• Environmentalists 3%• Cultural creatives 30% • Average 42%• Laggards 25%

Difference per stakeholdergroup: clients, employees, bankers, trade unionleaders, politicians, civil servants, retailers, shareholders, suppliers,

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What may happen if you can’t make them happy?

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Risks. Clients.Philips suppliers programme:• program from industry peers in

order to create a better impetus for change within electronics sector

• helps create a sustainable supply chain

• supply managers must select suppliers and business partners in accordance with these principles

• (2015: 50% of all products 10% above average in packaging use, energy efficiency, waste, life span)

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Risks. Employees.A serious sustainability programme results in:• Higher employee loyalty• Less employee turnover• Easier recruitment of top quality people

• 90% of Belgians: employers should care about the environment• 60% of Flemish take the environmental efforts of their potential employer into consideration• Novo Nordisk, 5 % drop in staff turnover, after launching CSR programme• Sears: 20% reduction in staff turnover since implementing CSR program   • Canada: CSR important to employee morale 50%, loyalty 41%, retention 29%, recruitment of top employees 25% and productivity 12%

(Society for Human Resource Management)• Canada: 70% would consider changing jobs if their employers did not operate in a socially responsible manner• Aspen Institute: 26% of MBa students 2007 say the potential of making a contribution to society is important in job selection compared

to 15% in 2002

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Risks. Banks.RABO AAA top 25 cooperative

bank• Discusses CSR efforts with

clients• Refused cattle transport

company• Stopped business with mink

farms and non sustainable fishing companies

• 2001: ‘treason’ • Profiting from sustainability

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Risks. Civil servants.• Heavy rains caused collapse

of roof• Years of discussions to rebuild• Heavy rains caused collapse

of roof• Reopening after a very short

period of time

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Risks. Retailers.

Albert Heijn pork choice: • Standard• Animal Protection, Better Life, one star• Animal Protection, Better Life, two stars• Animal Protection, Better Life, three

stars=biologic

• From 2011: No more standard pork, only ‘Better life Pork’

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Risks. Retailers.

Walmart: ‘we only want to do business with companies that support our CO2 emission targets’

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Risks. Shareholders.• Vedanta Mining Company• Dongria Kondh tribe protests new mine• Actress Julie Christie supports claims • Scottish Universities Pension Fund sells shares

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Risks. Mars• $ 100.000.000

investment in sustainable supply chain cocao

• Prevents burning rain forest

• Improves quality cocoa trees

• Better quality of life farmers

Target: all Mars cocoa sustainable in 2020

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Mars, a first result

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Risks.

GM

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Risks industry level

“A vegetarian in a Hummer is better for the environment than a meat eater in a

Toyota Prius”

???

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Risks industry level

The supply chain:• Climate change for 51% caused by livestock (WWI,Washington)

• Meat: perceptions about the industry, livestock farming, animal transport…

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Risks: pet food industry

• Poultry: slaughterhouses, free range chickens….

• Unilever Europe: 475 million free range eggs

• Unilever: PT Smart palm oil plantation…

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Risks pet food industry

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Risks: pet food industry • Fish: overfishing, sea bottoms, extra catch, fish farms, pollution,

mangrove forests…• Mars: Whiskas-Sheba Europe MSC fish (The Guardian)

• Corn: toxins• Origins, control…

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Risks pet food industry

• Carbon footprint meat• Diminishing demand• Carbon footprint pets: Twice a 4 by 4 for

dogs? (R&B Vale, University of Wellington)

• Paul McCartney in EP

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Risks

Company level:• Waste: packaging, transport, energy. Pollution, noise…• Working conditions, equality• Suppliers: office equipment, transportation, • Transparency • Stakeholder discussions• Safety measures• Integrity

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Possible benefits:

• Reputation is a leg up for doing business• Your whole company benefits from a good reputation• CSR is one of the most important factors in reputation

• CSR results in cost savings• It may boost your sales, the more so if you aim at

environmentalists and cultural creatives

• Motivates employees• Improves internal and external contacts• Leadership

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Possible benefits:

10 years ago • sustainability for do

gooders and idealists• well meant non-

sophisticated products• low quality, simple

packagings and presentation

Today• a good CSR reputation

stands for quality, ‘up to standard’, sexy

• Whole Foods Markets• Hybrid cars

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Novus headquarters• largest array of solar panels in Missouri (5,000

square feet);• 100% of energy purchased through renewable

energy credits;• 30% of materials from recycled content,

(countertops from recycled milk jugs plus scrap aluminum, fitness center floor from recycled tires);

• under-floor air distribution system for high energy efficiency;

• saving thousands of gallons of water by special landscaping

• plant “canopy” for natural shading;• storm water system to reduce runoff;• skylights and floor-to-ceiling windows to maximize

use of natural light; • preferred parking for low emission and fuel efficient

vehicles.

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Canidae Woodward Oklahoma• wind energy• 34 towers• up to 50 Mw

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Cardinal Pet Care•Azusa plant 100 % solar powered•White cool roof temperature reduction

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How far you go is a strategic choice, because:• It influences all aspects of your business• It is a long term approach • It decides where your business will be in 2020

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How far you go:

DSM, Shell, AKZO Nobel, TNT, ING: green bonuses for board members

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Other examples:•Guide dog programme: Purina Brazil•PetPartners: Purina USA•Animal shelters: Purina USA•Can recycling through Recycle Bank•Energy from renewable sources•Environmental certification ISO 14001

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Planning:• Prioritise-concentrate; maximise impact • Use existing know how (proven checklists)• Formulate/implement targets• Do not forget the nice things (people’s business!)• Be transparent• Stakeholders dialogue (also with NGO’s)• Communicate• Prove what you say• Right tone of voice• Have patience

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Some tips:• involve your employees• formulate precise sustainability targets• use sustainability-related criteria in a

decision-making process like capital expenditure budgetting

• join forces, look for partners (horizontal, vertical)

• up to 75% of consumers prefer green products

• up to 20% of consumers prepared to pay slightly more

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So what will your answer be when your stakeholders ask you about your CSR programme?

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Questions?

j.hoijtink@hoijtinkadvies.nl