What will society’s demands on companies be in 2010? What will CSR mean, and what will it take to...
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Transcript of What will society’s demands on companies be in 2010? What will CSR mean, and what will it take to...
What will society’s demands on companies be in 2010?
What will CSR mean, and what will it take to be a solid CSR
performer?
Future Preview ved Terje Osmundsen
A dynamic future CSR scenario ECON-konferansen
23. Oktober 2001
Is this the new reality?
ECON-konferanse 23.10.01
Conflicting perceptions of the Future?
”The Global Knowledge economy”
”The Dream Society”-
”Die
Risikogesellschaft”
What model for the future NOW?
ECON-konferanse 23.10.01
Welcome to the world of interdepencence!
I believe this is a fight for freedom..The starving, the wretched, the dispossessed, the
ignorant, those living in want and squalor from the deserts of Northern
Africa to the slums of Gaza to the mountaiin ranges of Afghanistan:
theytoo are our cause.
Tony Blair, october 2001
ECON-konferanse 23.10.01
Business in the age of uncertainty?
-If we are to survive in tomorrow’s markets, we must focus on products and services which are continuesly being developed , often for customers and markets which do no yet exist, distributed by technology not yet available , and in competition with players we cannot yet identify.
ECON-konferanse 23.10.01
No time to think?
There are a huge number of people who feel that the future is arriving so fast that they’re hanging on by their fingernails. That the world has become so fast that there isn’t time to think through the complexities of the decisions they need to make.
ECON-konferanse 23.10.01
What is strategy?
Strategy is about setting yourselfapart from the competition.It’s not just a matter of being better at what you do - it’s a matter of being different at what you do...
Michael Porter (1997)
What is not different is not strategic...Strategy is not a way of positioning against competitors but of going around them...
Gary Hamel (2000)
ECON-konferanse 23.10.01
The corporate ”soul”
Culture• Who are we?• What do we stand for?• What rules do we have?
Core competencies• What are our core competencies?• What do we know better than others?• What unique relations do we have ?
In the future, building strong market positions will be about building companies with a strong personality and corporate soul
Jesper Kunde, 2000
Company culture and core
competencies
ECON-konferanse 23.10.01
Our approach to strategy
Company culture and core competencies
Tomorrows marketarena
(fremtidsbilder, scenarier, mulighetskartlegging)
(bedriftens sjel)
Business innovation
Unique positioning
Business Development
=
ECON-konferanse 23.10.01
Drivers Why does it happen?
Events What happens?
Authori-ties Owner
sCustomers
Employees
Suppliers Stake-holders Society
How does it affect us?
How do we do it?Scenario-based strategic development
What could happen?
Tomorrows market arena
ECON-konferanse 23.10.01
Future Preview – Positioning for the Future
Strategy navigationstrategy – scenario – innovation – idea lab
Future knowledgeresearch – lectures –trends, drivers –
knowledge net
Future businessdevelopment – conceptualization –
positioning – repositioning
ECON-konferanse 23.10.01
construction
real estate
energy
oil & gas
telecom/IT
public services
finance/banking/insurance
education
transport/logistics/distribution
media
TV/broadcasting
retail
labour union
Industry References
strategy navigation
future business
future mindset
Extensive Network
Inspiration,research
Institutt for Fremtidsforskni
ng
Global Business Network
Trends
Scenarios
Inspiration,
research
Positioning forthe Future
Learn
ing
stra
tegie
s
Innovest
Stra
tegi
c Val
ue
Adv
isor
ECON-konferanse 23.10.01
Index
IntroductionTrends and driversCRS themes
A new conceptCorporate citizenship – examplesNew stakeholders – financial aspects of CSRStakeholder awareness
Future perspectives on CSR
Critical drivers?
Individualisation
Deindustrialisation
Multiculturalism
GlobalisationEuropeanization
The Me Inceconomy
The digital transformation
Demographic changes
The Petroleum economy
The politicalstakeholder
Public finance
Greening of business Politics and Government
ECON-konferanse 23.10.01
Globalisation ....or?
Investments across borders is still increasing: customers and competition becomes global
Mergers, alliances, joint ventures, and trans-national ownership takes this trend further and leads to integrated values chains where the different parts is places in different countries
After september 11th: Will the trend reverse?
Financial Times 16. Oktober 2001
Index (1985=100)
100
10
1
0,1
0,01
1800 1825 1850 1875 1900 1925 1950 1975 2000
Kommunikasjon
Transport
Utviklingen av telekommunikasjon og personlig transport fra 1800 tallet til begynnelsen av 1980-tallet.Kilde: Grûbler, 1990.
ECON-konferanse 23.10.01
The climate challenge
Climate changes are real – poor countries will be the most affected
From Kyoto to a silent revolution in industry: “What is your CO2 account?”
CO2 trading will initiate the development of a global environmental regime
The Norwegian challenge: Forceful changes or expensive technology development
Environmental issues Energy consumption and prices Use of natural resources Use of recyclable materials Use of chemicals Increasing regulatory demands Increasing markets for environmental products Increasing environmental demands in the
supply chains
ECON-konferanse 23.10.01
From climate change to natural disaster costs
– Global oppvarming på 2 grader Celsius neste 100 år
– Økning i frekvens og intensitet på ekstrem vær
ECON-konferanse 23.10.01
”A/S Norway”Growth of the
”fund-capitalism”
Annual flow into European equities
0
200
400
600
800
1000
Currentannual flow
Forecastflow 2010
Source: Mc Kinsey, 1999
USD
bil
lion
s
Mutual fonds
Pension funds
Insurance funds &households
The Post-Capitalist revolution
In the globaI ”fund capitalism” the owner capital is anonymisedListed companies gets universal owners – the same funds owns everybody
Non-listed companies gets a stronger regional profile – ownership and customers is based locally
ECON-konferanse 23.10.01
Fiduciary Capitalism- How institutional investors can make corporations more
democratic
Universal OwnersUniversal owners must first be aware that they own the economy as a whole and then realize that this has implications for the way they monitor the business.A universal owner needs to augment firm-by-firm monitoring with a concern for the broader economic environment.These concerns include but are not but are not limited to general monetary and fiscal policy, regulatory policy, and the provision of important public and quasi-public goods such as education, tort law and the transportation and communication infrastructure.It also needs to pay attention to the activities of individual firms in its portfolio that may generate either positive or negative externalitiesIt needs to support companies that are engaged in activities that generate positive externalities, because it will capture the benefit across its portfolio
ECON-konferanse 23.10.01
Knowledge economy
Retu
rn
Strategic assets
Knowledge
Competencies
Creativity
Labour
Capital
Raw mateial
”knowledge is becoming the single most important company asset..”
Peter F. Drucker
ECON-konferanse 23.10.01
A Simple Model of Values Change
Affluent
Belonging
Survival
Middle-income
Poor
Economic Status Maslow’s
Needs
Values
Self-Actualization
Modern
Traditional
Postmodern
Source: Andy Hines - Ideation Leader, Dow Chemical
ECON-konferanse 23.10.01
Collective Individualism?
BRIAN: Look. You've got it all wrong. You don't need to follow me. You don't need to follow anybody! You've got to think for yourselves. You're all individuals!
FOLLOWERS: Yes, we're all individuals!
BRIAN: You're all different!
FOLLOWERS: Yes, we are all different!
Small lonely voiceI'm not. Source: Monty Python's Life of Brian
ECON-konferanse 23.10.01
From Things to Think
Su
rviv
al an
d W
ell-
bein
g
GNP per Capita
Economic Gains
Lifestyle
When you can take material things for granted,you think more about what it all means
Kilde: Andy Hines - Ideation Leader, Dow Chemical
ECON-konferanse 23.10.01
Norvegians on top in voluntary work
Each Norwegian performs on average one week of voluntary work a year – outperformed by Sweden by a day!8 out of 10 is willing to volunteer given that the circumstances are right (clearly defined task)Only 3 out of 10 actually does voluntary work
Reaseach by:
Aftenposten 13/3 2001
ECON-konferanse 23.10.01
Is CSR a new concept?Frederick Taylor – Scientific Management, 1911
Scientific management was not about rigid control of the labour force as has become synonymous with “Taylorism” – his concern for the employee had a humanistic nature!“The chief and essential feature of Scientific Management is the change in the mental attitude of both employers and employees toward their common work”“We can see our forest vanishing, our water powers going to waste, our soil being carried away by floods into the sea; and the end of our coal and our iron is in sight. We can se and feel the the waste of material things. But we cannot see or feel the larger wastes of human effort going all around us. Awkward, inefficient, or ill-directed movement of men leave nothing visible or tangible behind them”
Henri Fayol – General and industrial management, 1916Advocated for establishing an “Esprit de corps” e.g. through employer interest in employees health, strength, education, morale, and stability
Oliver Sheldon – The philosophy of management, 1923“Industry foremost exist to provide the commodities and services which are necessary for the good life of the community”“Industrial management, in a broad sense, is the function, practiced by whatever persons or classes, responsible for the direction of industry to the above end. It must therefore be governed by certain principles inherent in the motive of service to the community”“Management shall endeavour to interpret the highest moral sanction of the community as a whole, as distinct form any sanction resting upon group of class interests, or in other words shall attempt to give practical effect to those ideals of social justice which would generally be accepted by the most unbiased portion of communal opinion”.
Why didn’t we notice before?
ECON-konferanse 23.10.01
Growing income disparitiesChange in number og people with less
than 1$ a day, 1987-98
ECON-konferanse 23.10.01
Growth in SRI funds
0
500
1000
1500
2000
2500
1995 1997 2000
0
500
1000
1500
2000
2500
3000
3500
1990 1992 1994 1996 1998 2000
SRI Growth in the U.S.A. SRI Growth in the U.K.
ECON-konferanse 23.10.01
Historical data on SRI funds
Over the last three decades, assets of social responsible mutual funds grew about five times faster than those of all other fundsOver the last three decades, the rank of SRI funds grev more than twice as rapidly as those of all other funds
SRI funds tracked by Wiesenberger has grown 9.500%All other funds have grown 4.074% in the same period
The surge in SRI funds and assets has remained relative close to those of all other funds in recent yearsAssets in social and environmental responsible funds reached the $100 billion milestone for the first time in 2001If the current growth levels continue, more than a quater trillion dollars will be invested in SRI funds by 2011
Source: Pax World Funds, August 2001
ECON-konferanse 23.10.01
Does it pay to be green?
”The jury is in – overall, corporate sustainable development performance has a postive impact on business success”
(From study ”Buried Treasure: Uncoverinmg the business case for corporate sustainability”, UNDP april 2001)
Many funds did badly last year because they were overexposed to technology stocks. Other funds- particularly those invested in alternative energy companie- performed spectacularly well.
(Financial Times, June 2001)
The question of whether it pays to be green will dependon the company, its strategty and its circumstancesFinancial Times, June 2001
ECON-konferanse 23.10.01
The emerging stakeholder capitalism
Eco-enhanced funds
Traditional SRI fund(negative screening)
ECON-konferanse 23.10.01
1970 19991980 1995
Inte
gra
tion
level
Social Responsible Investments
Investments in Environmental Technology
Investment in Eco-Efficiency
Triple Bottom-lineInvestment
2000-5
F E SF E S 3 in 13 in 1
Value-based negative
screening
Low diversification High volatility Sustainable ?
Higher value creation Lower eco-footprint
Bottom line=
ShareholderValue
Triple evaluation Value driven Not market driven
Innovest SustainableValue‘21
The SRI Market Evolution
ECON-konferanse 23.10.01
Stakeholder Capital:• External stakeholder input, community boards• Plant closure policies / practices• Local recruitment• Local suppliers, contractors• Corporate philanthropy
Human Capital Development:• Employee Retention Rate• Work policy, diversity, job sharing, flexible schedule, telecommuting.• Training and Skills Development• Benefits, wellness programs, healthcare, child care, etc.• Health & Safety performance
Products / Services:• Human safety / Risk• Environmental harm / Risk• Product stewardship• Life cycle analysis• Social impact assessment• Respect of local culture
Supply Chain:• Screening standards• Education / training• Audits / Verification• Third Party Reviews• Positive Discrimination
International:• Developing country policies, standards and practices.• Human rights / Child Labor• Social and Environmental impact• Local economic/social benefits• Skills/Technology transfer
SVSV'21™
RATING
Social Strategy & Policy:• Social/ethical standards• Codes signatory / Child labor• Human Rights, SA 8000, ETI, ILO, etc.• Integration with Core Business• Consistency / International• Performance Indicators and Targets• Accounting /Reporting/Disclosure/Auditing
Example: SustainableValue’21
ECON-konferanse 23.10.01
• Corporate overview• Stock price performance• Key issues for investors• SRI screens involvement• Relative social performance
chart• Sustainability Strategy &
Mgt• Stakeholder Capital• Human Capital
Development• International issues• Product / Services• Supply Chain
SustainableValue’21 Company Profile
SustainableValue’21 profile includes:
ECON-konferanse 23.10.01
The emerging stakeholder capitalism
Eco-enhanced funds
Active engagement funds
Traditional SRI fund(negative screening)
ECON-konferanse 23.10.01
Financial Times 11.07.01: FTSE4Good aims for a clear conscience
STOCK MARKET INDICES SOCIALLY RESPONSIBLE INVESTMENT MOVES INTO MAINSTREAM THINKING:
The UK's top ethical fund managers yesterday welcomed the arrival of the FTSE4Good index as the latest sign that socially responsible investment is moving into the mainstream of City thinking.
Rob Lake, head of Henderson's SRI strategy, and overseeing Pounds 1.2bn of ethically invested assets, said the FTSE4Good index showed that ethical investing was growing in popularity.
"It indicates this is not just (the business) of a group of campaigning radicals - it's not just a blip."
ECON-konferanse 23.10.01
A powerful global conversation has begun. Through the Internet, people are discovering
and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and
getting smarter faster than most companies
ECON-konferanse 23.10.01
“
Changing consumer/investor demographics
Tightening global and domestic regulatory pressures – eg. U.K., European pension reforms
Increased transparency and velocity of information; NGO pressures
Broadening of fiduciary responsibility
Growing institutional shareholder activism
Growing CEO/CFO awareness of competitive and financial benefits
Recent SRI Fund Performance
Intensification of global industry competition: SRI factors become competitive weapons
Market Drivers
ECON-konferanse 23.10.01
The Iceberg Balance Sheet
• In 1930, intangible value represented roughly 30% of the market value of major corporations
• In 2000 it was 85%
• In 2010 and beyond ???
INTANGIBLE VALUEINTANGIBLE VALUE
TANGIBLETANGIBLEVALUEVALUE
Knowledge Capital
Speed & Agility
Innovation capacity
Structural Capital (external)
Stakeholder management
Social & environmental performance – “sustainability”
Source: Innovest Strategic Value AdvisorsFuture Preview SRI seminar - September 2001
ECON-konferanse 23.10.01
The new business agenda?
”Being global carries global obligations. Increasingly, HPs succees is defined by our ablility to see how our company fits into a much larger ecosystem of causes and effects – how the push and tug of on one side of the globe can positively og negatively affect families, companies, nations and entire peoples on the other side.
”To ensure that we are doing everything we can to unlock the doors to the information economy in a way that is not Western-imposed, US.centric or homogenous, diversity has long been key to HPs global strategy”
HP Chairwoman Carly Fiorina, IHT, 20.10.01
ECON-konferanse 23.10.01
The search for meaning?
F
Mening
Vekstmotiv
Fysiologiske
Trygghet
Sosial
Respekt
Selvrealisering
Mangelmotiv
”..the only factor becoming scarce in the world of abundance is human attention…”
Kevin Kelly; New Rules for the New Economy
ECON-konferanse 23.10.01
A question of Trust
TRUSTMARKA trustmark is a distinctive name or symbol that
emotionally binds a company with the desires and aspirations of its customers. It's an emotional connection -- and it's much bigger and more powerful than the uses that we traditionally
associate with a trademark.
ECON-konferanse 23.10.01
The challenge of the living company
From grassroots/NGO to authorities to financial investors!
Trust me cultureBroad socialacceptance
Tell me cultureSociety wants tobe told what is
going on
Show me cultureDemonstrate serious
intent to changefor the better
ECON-konferanse 23.10.01
20th century corporation
Creditors
Customers
Suppliers
The corporation was the centre of its own universeStraightforward relationships with customers, suppliersand competitorsRigid, hierarchical structure
The early 20th century
corporation
20th centurycorporation
CustomerShareholder
Customer
SupplierTrade unions
Customer
Customer
More sensitive to the external surroundingsBusiness units closer to markets“Them” and “us” thinking
The later 20th century
corporation
Supplier
Supplier
Govern-ment
Communitygroup
Potentialcustomer
Subcontractor
Corporation
Supplier
Potentialcustomer
Customer
Competitor
Share-holder
Jointventure
Corporation
Potentialemployee
Customer
Supplier
Government
21st centurycorporation
Share-holder
AllianceR&D
partner
A connected network between businesses, governments, unions, NGU’s, society and the physicale environment which contains them all
The 21th century corporate ecosystem
Mot et sammenkoblet næringsliv
ECON-konferanse 23.10.01
Future Excellence
dialog
Utv
iklin
g
Tid
Future Excellence:Future Excellence:shaping the living company shaping the living company
VisjonVisjonVisjonVisjon
Dagens Dagens realiteterealitete
rr
Læring
Identitet
Sosialt samspill
Utvikling
En organismes kamp for tilværelsen…
(fritt etter The Living Company av Arie de Geus)