The Electronic Industry Citizenship Coalition

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Analysis prepared for:

Creating Shared Value

September 30, 2013

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Economist: “Top trend in 2012”Forbes: One of three “megatrends for 2012”

The Shared Value Concept Is Gaining Global Momentum

© 2011 FSG4

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Seoul, 2011

Corporate Thinking Has Evolved Over the Past Decade

- Let’s minimize the problem and throw some money at it to show we’re contributing

- CSR & Philanthropy is about corporate reputation

“It is a problem”

- We need to add costs to fix the problem

- We need to report transparently on our results

- We can use our core business capabilities to find solutions

“Let’s solve the problem”

“It is not a problem”

- Let’s ignore or understate the problem

- Let’s minimize our responsibility

- Philanthropy is about personal values

- We can lower costs, grow revenues, or differentiate our value proposition by addressing social problems

- Even social problems we don’t usually affect pose opportunities

“It’s an opportunity to create shared

value”

© 2010 FSG5

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• The long-term competitiveness of companies depends on social conditions− An educated and skilled workforce− Safe working conditions − Sustainable use of natural resources− A flourishing local economy

• Business has an essential role to play in solving social problems− Only companies can create prosperity that funds government and civil society− Companies can create solutions to many social problems in ways that governments and

NGOs cannot− Competitions fuels innovation and efficiency− For-profit models are the most scalable and sustainable

− Businesses can overcome constraints that limit their growth

The “externalities” we have ignored have substantial internal effects

Societal and Corporate Success are Inextricably Linked

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Companies Create Shared Value by Leveraging Core Assets to Address Social Needs In Ways That Create Opportunities for Business Growth

Social NeedsCorporate Assets and Expertise

Business Opportunities /

Constraints

Shared Value

Shared Value creates tangible business value and enhances competitiveness, and does not just ensure compliance or protect/enhance business reputation

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While Each Component of The Portfolio Serves a Different Purpose, Shared Value Investments Maximize Social and Business Impact

Business Impact

Soci

al Im

pact

Traditional Community Engagement

• For society:Additional resources for good causes

• For business:Goodwill, license to operate, employee engagement,

Strategic CSR / Sustainability

• For society:Better resources for company related causes

• For business:Reputation uplift; compliance with sustainability standards

Shared Value

• For society:Targeted problem solving at scale

• For business:New revenues, lowered costs, increased growth potential

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8 © 2012 FSG

Companies Across the Globe Are Creating Shared Value

Enabling Local Cluster Development

Redefining Productivity in the Value Chain

Reconceiving Products and Markets

Three ways of creating shared value

© 2010 FSG9

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CSV Investment

Walmart is reducing transportation costs and helping sustain the livelihoods of small-scale farmers in the US and emerging markets by

working to source produce for its stores locally and by providing training and support to farmers near store locations.

Source: Company websites and reports, news articles

Social Goals• Increase income of small and medium farm

suppliers by 10 – 15%• Reduce waste and carbon emissions • Provide low-cost, healthy food for Walmart

customers – goal is to sell $1B in locally-grown produce by 2015

Business Goals• Reduce transportation costs –in the US

Walmart has already cut 100 million miles from delivery routes saving the company $200M in fuel costs

• Reduce food waste - goal of 15% in emerging markets and 10% in US by 2015

Redefining Productivity in the Value Chain2

Redefining productivity in the value chain

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Mars “Vision for Change” Strategy

A Revitalized Cocoa Sector in Côte d’Ivoire

Priority Goal: Improve Farmer Income

Improve Environmental Management of Cocoa

Growing Areas

Invigorate Rural Communities

Vision

Strategies

• Increase farm productivity• Promote tax/broad sector

reform• Improve quality• Promote certification• Improve access to market

information • Promote crop diversification

• Develop and promote environmentally friendly intensification methods

• Monitor environmental impacts of intensification and diversification

• Validate optimal agroforestry systems • Reclaim fallow cocoa growing areas• Conserve remaining forests

• Expand availability of rural services

• Ensure responsible child labor practices

• Improve rural infrastructure• Research rural migration

issues

Economic Environmental Social

Building a reliable supply of cocoa for Mars and improving farmer livelihoods

Goals

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CSV

Changing ‘What’s Good for Business is Good for Society’ to ‘What’s Good for Society is Good for Business’

Philanthropy/CSR

1.Create social benefit by redistributing some of the value created by business

Creating Shared Value

1.Create social and business benefit by “increasing the size of the pie”

2. Doing good is integral to a risk management strategy

2. Doing good is integral to a successful innovation strategy

3. Businesses help solve social problems because it is their responsibility to ‘give back’

3. Businesses help solve social problems because it part of their purpose and competitive advantage

4. All profit is equal 4. Profit that is good for society is more sustainable

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The Electronics Industry Can Take a Portfolio Approach to Engaging with Its Supply Chain

Traditional Community Engagement

Strategic CSR / Sustainability Shared Value

Social and Business Value

Support community engagement activities

Facilities have strong disaster preparation plans in place

Basic medical care and mental health services are available to staff

Workers see employment in the electronics industry as a long-term career and limit turnover

World-class health and wellness programs reduce absenteeism and boost productivity

Natural resource consumption is optimized to reduce operational costs

Labor is responsibly sourced, especially with student workers and labor agencies

Environmental impact is minimized

Excessive working hours are eliminated

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The Conditions Are In Place for the Electronics Industry To Serve As a Model In Addressing Supply Chain Issues

Reactive to consumer pressure

No industry-led coalitions that include the entire supply chain

Unstable customer-supplier relationship

Opportunity to be proactive

EICC engages the entire supply chain and can establish a common agenda

Stable customer-supplier relationships

Apparel Industry Electronics Industry

Small, poorly managed factories Well-managed factories and operations

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EICC Leaders Highlighted Four Guiding Principles to Guide the New Strategic Direction

1 BE PROACTIVE, NOT REACTIVE 2 CREATE TANGIBLE

BUSINESS VALUE

4 IMPROVE FOCUS AND RESULTS ORIENTATION3 IMPROVE EXTERNAL

COLLABORATION

© 2013 FSG

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EICC Can Evolve Its Vision to Focus on Creating Business and Social Value

EICC supports the development of a best practice value chain that other industries will want to replicate by:

Developing a common agenda across the entire supply chain

Driving measureable improvement in social and environmental issues in the electronics supply chain

Creating measurable economic value for businesses through sustained value chain investments

Vision for the EICC’s Strategic Direction

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Does This Strategic Direction Framework Capture EICC’s Key Areas of Activity Going Forward?

Update Code and hold members accountable

Provide structure & support for audits

Share audit results & improve efficiency

Support capacity building through tools & training

Assess internal data on emerging risks

Monitor external trends in issues

Engage stakeholders

Establish criteria for prioritization

Measurable improvements in S&E

conditions in the supply chain

Early warning system for emerging issues

Common baseline for S&E performance;

improvements at individual supplier levels

Solve Issues in the Value Chain

Learn from Emerging Risks

Establish Standards & Accountability

Areas of Activity Goals

Engage in differentiat-ed activities

Develop shared measures

Incorporate a platform for collaboration

Set a common agenda

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• There is an opportunity to transform thinking and practice about the role of the corporation in society

• Shared value gives rise to far broader approaches to economic value creation

• Shared value thinking will drive the next wave of innovation, productivity enhancement, and economic growth

• Businesses acting as businesses, not as charitable givers, are arguably the most powerful force for addressing many of the pressing issues facing our society

• A transformation of business practice around shared value will give purpose to the corporation and legitimize business again

The Purpose of Business

The Electronic Industry Citizenship Coalition

Welcomes you to

Sponsored by

Exhibitors