Sustainablog

This blog will cover some news items related to Sustainability: Corporate Social Responsibility, Stewardship, Environmental management, etc.

1.10.05

Procter & Gamble to Save a Cool $1 Million with New Energy Efficiency Measures


Procter & Gamble to Save a Cool $1 Million with New Energy Efficiency Measures

GreenBiz.com, 29 September 2005 - The Procter & Gamble Co. (P&G) expects to save over $1 million by implementing new energy-efficiency measures at its U.S. plants. The consumer products giant will continue to work with long-term partner Cinergy Solutions on its energy program, which has already produced savings in excess of $380,000.

Cinergy Solutions will implement projects at P&G plants on the East and West coasts. The initiative covers four key areas:

  • Retrofitting lighting systems will deliver savings of more than $900,000 annually.
  • Retrofitting P&G's existing compressed air system will reduce the online time for the compressor, avoid potential air interruptions, and save more than $100,000 annually.
  • Retrofitting the existing mill water waste stream will recover heat from the waste water to preheat incoming water used by the existing Reverse Osmosis (RO) system. This will deliver annual savings of $230,000.
  • Retrofitting the existing turbine inlet filter at the same plant will save $250,000 annually and improve the gas turbine performance to increase on-peak output, and reduce compressor deterioration and off-peak fuel consumption.
"Procter & Gamble is continually striving to improve energy efficiency and reduce environmental impact," said Paul Jackson, associate director of global business services at P&G. "Cinergy Solutions worked with us to identify grants and rebates that provided funding from sources such as California's Summer Lighting Energy Efficiency Program -- this was critical in helping us achieve these additional efficiencies."

Nestlé S.A. (CH) - New Presentation: Presentation "Nestlé et la responsabilité de l'entreprise"

New Presentation

Presentation "Nestl� et la responsabilit� de l'entreprise"

* �Cr�er de la valeur pour l'entreprise et la soci�t�
Marc W. Pfitzer, Managing Director Foundation Strategy Group
* �L'engagement de Nestl� pour la caf�iculture durable�
Patrick Leheup, Commodity Sourcing Manager Nestl� S.A., Coffee &
Beverages SBU

This presentation was given today at a seminar organised by UBS
Geneva for institutional investors interested in the topic of
socially responsible investment. The presentation is available in
French only at
http://www.ir.nestle.com/Nestle_Overview/Corporate_Responsibility/Presentations/Presentations.htm


----- Forwarded by Luba Labunka/Armonk/IBM on 09/29/2005 10:53 AM -----


Nestlé S.A.

Published: 10:07 29.09.2005 GMT+2 /HUGIN /Source: Nestlé S.A. /SWX: NESN /ISIN: CH0012056047

New Presentation




Presentation "Nestlé et la responsabilité de l'entreprise"
  • «Créer de la valeur pour l'entreprise et la société»
    Marc W. Pfitzer, Managing Director Foundation Strategy Group
  • «L'engagement de Nestlé pour la caféiculture durable»
    Patrick Leheup, Commodity Sourcing Manager Nestlé S.A., Coffee & Beverages SBU

This presentation was given today at a seminar organised by UBS Geneva for institutional investors interested in the topic of socially responsible investment. The presentation is available in French only at
http://www.ir.nestle.com/Nestle_Overview/Corporate_Responsibility/Presentations/Presentations.htm




Nestlé S.A. Investor Relations Vevey, Switzerland


----------------------------------------------------------------------


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Fortune Rates Top 100 Corporate Citizens: "It doesn't seek to label the good or bad but rather to identify the smart" [IBM ranks 24th]


Fortune Rates Top 100 Corporate Citizens

GreenBiz.com, 27 September 2005 - Fortune magazine has announced the results of its 2005 Accountability Rating, a rating of corporate responsibility of Fortune Global 100 companies. The Accountability Rating -- compiled by the London think tank AccountAbility and the consultancy CSRnetwork -- scores companies on how seriously their future decisions will consider nonfinancial matters. Topping the survey is BP, followed by Royal Dutch Shell Group (No. 2); Vodafone (No. 3); HSBC Holdings (No. 4); Carrefour (No. 5); Ford Motor (No. 6); Tokyo Electric Power (No. 7); Electricite de France (No. 8); Peugeot (No. 9); and Chevron (No. 10).

The Accountability Rating is not an index of how much good the company does or how loud its critics are. "It doesn't seek to label the good or bad but rather to identify the smart," says Simon Zadek, chief executive of AccountAbility. "It's a business, not a moral, rating. It looks at the world's biggest corporations and asks, 'Do they understand how to create and exploit effective business opportunities by addressing the needs of the poor? Do they understand how to make money by investing in environmentally sound business practices? Are they, in short, prepared to maximize the opportunities for our changing world?'"

"Many of the existing measures of corporate responsibility are focused on short-term issues," says Zadek. "They make a narrow assessment of how thorough a company's social reporting is. Or they attempt to name and shame by exposing negative social and economic impact...They do not offer clear insight into where a company wants to go and how smart it is in converting society's changing expectations into marketable products and services." The fact that oil and chemical companies have high ratings simply indicates that these companies face the biggest hurdles and are taking corporate responsibility seriously.

This is the second year the Accountability Rating has been applied to the Fortune Global 100. The results are encouraging: The average score has risen to 32 from 24 last year (out of a maximum of 100). This year a third of the companies achieved a score of 40; last year only one in ten did. Most of the bettered scores this year can be attributed to improvements in public disclosure -- one of the six criteria by which companies are measured -- to the level and quality of formal auditing of social and environmental performance, and to the number of companies reaching out to engage with nontraditional stakeholder groups.

The biggest success story on this year's list is HSBC (No. 4), which gained the most on this year's rankings. In the past two years HSBC has named a subcommittee of its board to oversee corporate responsibility and make it its No. 1 strategic goal. That was good enough to rank 45th last year. But his year, HSBC has committed to the World Bank's Equator Principles in deciding whether to lend to dam and forestry projects, and it started using an outside standard, AccountAbility's Assurance Standard, to help verify that new governance structures were a good response to shareholder needs.

"It will be interesting to see which corporations get smart first in aligning their business strategies to emerging social and environmental risks and opportunities," concludes Zadek. "One thing is clear: Those that will not or cannot change their strategies will ultimately not maintain their rankings in the Fortune Global 100."

Complete results of the survey are available online.


2005 rank*
2004 rank**
Company
Global 100
rank
Accountability
score
Sector
Region
1
1 BP
1
78
Oil, Chemicals
Europe
2
3 Royal Dutch Shell
4
72
Oil, Chemicals
Europe
3
9 Vodafone
53
71
Utilities, telecoms, other services
Europe
4
45 HSBC Holdings
36
63
Financial services
Europe
5
5 Carrefour
22
60
Trading and merchandise
Europe
6
23 Ford Motor
8
58
Automotive and aerospace
North America
7
6 Tokyo Electric Power
90
57
Utilities, telecoms, other services
Asia
8
22 Électricité de France
64
56
Utilities, telecoms, other services
Europe
9
10 Peugeot
41
56
Automotive and aerospace
Europe
10
27 Chevron
11
55
Oil and chemicals
North America
11
Statoil
95
53
Oil and chemicals
Europe
12
40 RWE
78
53
Utilities, telecoms, other services
Europe
13
4 Unilever
81
52
Consumer products
Europe
14
17 General Motors
5
50
Automotive and aerospace
North America
15
2 Suez
79
49
Utilities, telecoms, other services
Europe
16
Repsol YPF
97
48
Oil and chemicals
Europe
17
Enel
93
48
Utilities, telecoms, other services
Europe
18
14 Total
10
48
Oil and chemicals
Europe
19
BASF
91
47
Oil and chemicals
Europe
20
Renault
80
47
Automotive and aerospace
Europe
21
8 Hewlett-Packard
28
47
Computers and electronics
North America
22
15 DaimlerChrysler
6
47
Automotive and aerospace
Europe
23
20 Aviva
35
47
Financial services
Europe
24
52 International Business Machines
20
46
Computers and electronics
North America
25
34 ING Group
17
45
Financial services
Europe
26
72 Fortis
30
45
Financial services
Europe
27
18 Matsushita Electric Industrial
25
44
Computers and electronics
Asia
28
48 General Electric
9
43
Computers and electronics
North America
29
31 Hyundai Motor
92
43
Automotive and aerospace
Asia
30
24 Toshiba
72
42
Computers and electronics
Asia
31
Dell
84
41
Computers and electronics
North America
32
7 Toyota Motor
7
41
Automotive and aerospace
Asia
33
33 Fujitsu
99
41
Computers and electronics
Asia
34
49 Tesco
54
41
Trading and merchandise
Europe
35
28 UBS
66
39
Financial services
Europe
36
Royal Bank of Scotland
58
39
Financial services
Europe
37
56 ConocoPhillips
12
37
Oil and chemicals
North America
38
HBOS
87
37
Financial services
Europe
39
29 Citigroup
16
36
Financial services
North America
40
Johnson & Johnson
88
36
Consumer products
North America
41
36 Sony
47
36
Computers and electronics
Asia
42
19 Nestlé
43
36
Consumer products
Europe
43
13 ENI
33
36
Oil and chemicals
Europe
44
21 Procter & Gamble
77
36
Consumer products
North America
45
44 Hitachi
23
35
Computers and electronics
Asia
46
53 Fiat
57
35
Automotives and aerospace
Europe
47
42 Credit Suisse
61
35
Financial services
Europe
48
64 Siemens
21
34
Computers and electronics
Europe
49
55 Exxon Mobil
3
34
Oil and chemicals
North America
50
46 BNP Paribas
45
33
Financial services
Europe
51
70 J.P. Morgan Chase & Co.
65
33
Financial services
North America
52
25 Deutsche Bank
68
33
Financial services
Europe
53
73 Crédit Agricole
60
33
Financial services
Europe
54
30 Deutsche Telekom
37
31
Utilities, telecoms, other services
Europe
55
54 AXA
13
31
Financial services
Europe
56
41 Volkswagen
15
31
Automotive and aerospace
Europe
57
50 France Télécom
63
30
Utilities, telecoms, other services
Europe
58
43 Pemex
51
30
Oil and chemicals
North America
59
Pfizer
77
29
Consumer products
North America
60
12 Munich Re Group
55
29
Financial services
Europe
61
38 Royal Ahold
49
29
Trading and merchandise
Europe
62
37 Nissan Motor
29
29
Automotive and aerospace
Asia
63
16 BMW
71
29
Automotive and aerospace
Europe
64
Prudential
89
27
Financial services
Europe
65
Robert Bosch
83
27
Automotive and aerospace
Europe
66
81 E.ON
69
27
Utilities, telecoms, other services
Europe
67
63 Deutsche Post
75
27
Utilities, telecoms, other services
Europe
68
57 Samsung Electronics
39
25
Computers and electronics
Asia
69
Marathon Oil
94
25
Oil and chemicals
North America
70
51 NEC
96
25
Computers and electronics
Asia
71
26 Honda Motor
27
24
Automotive and aerospace
Asia
72
66 Allianz
14
23
Financial services
Europe
73
85 Target
82
22
Trading and merchandise
North America
74
75 Verizon Communications
38
22
Utilities, telecoms, other services
North America
75
35 Nippon Telegraph & Telephone
18
21
Utilities, telecoms, other services
Asia
76
65 Altria Group
50
21
Consumer products
North America
77
67 Metro
42
21
Trading and merchandise
Europe
78
68 Bank of America Corp.
52
19
Financial services
North America
79
Valero Energy
73
16
Oil and chemicals
North America
80
76 Zurich Financial Services
59
14
Financial services
Europe
81
ThyssenKrupp
85
13
Computers and electronics
Europe
82
80 Sinopec
31
12
Oil and chemicals
Asia
83
83 China National Petroleum
46
11
Oil and chemicals
Asia
84
59 Home Depot
34
10
Trading and merchandise
North America
85
92 Kroger
67
10
Trading and merchandise
North America
86
88 Boeing
76
10
Automotive and aerospace
North America
87
93 Nippon Life Insurance
56
9
Financial services
Asia
88
78 U.S. Postal Service
44
7
Utilities, telecoms, other services
North America
89
87 Wal-Mart Stores
2
7
Trading and merchandise
North America
90
82 McKesson
26
6
Trading and merchandise
North America
91
99 American International Group
19
6
Financial services
North America
92
89 AmerisourceBergen
74
6
Trading and merchandise
North America
93
91 Cardinal Health
48
5
Trading and merchandise
North America
94
100 Assicurazioni Generali
24
5
Financial services
Europe
95
74 Time Warner
100
5
Utilities, telecoms, other services
North America
96
97 Costco Wholesale
86
4
Trading and merchandise
North America
97
84 State Farm Insurance Cos.
62
4
Financial services
North America
98
90 Dai-Ichi Mutual Life Insurance
98
3
Financial services
Asia
99
98 Berkshire Hathaway
32
2
Financial services
North America
100
State Grid***
40
Utilities, telecoms, other services
Asia

Not available.
* The Accountability Rating 2005 uses the 2004 FORTUNE Global 100 list.
** The Accountability Rating 2004 uses the 2002 FORTUNE Global 100 list.
*** No annual report in English was available for review.
From the October 3, 2005 Issue

Managing Beyond the Bottom Line
Today good financial performance isn't always good enough. Here's how the FORTUNE Global 100 stack up when ethics are baked into the mix.
FORTUNE
Thursday, September 22, 2005
By Telis Demos

Corporate social responsibility used to be simple: Present an oversized check to charity, get photographed with some sick kids, and call it a day. Now the world's largest corporations are expected not only to make money for their shareholders but also to do good by their stakeholders—a much broader group that includes anyone and anything affected by their business, from employees to emus.

Making environmental, social, and ethical considerations part of doing business is a tough assignment. Even defining what "responsibility" means is challenging, much less quantifying it. "The difficulty is plain," says Charlotte Grezo, director of social responsibility at Vodafone, the giant British telecom company. "It's like the good old management adage says: You need to measure to manage."

That's why a movement to define and standardize what corporate responsibility means and how to achieve it has gained steam over the past decade. One of the leaders of the effort is the London think tank AccountAbility, which, along with consultancy csrnetwork, has devised a method to score companies. That method has been used to compile their second annual rating of the world's 100 largest companies, published on the following pages.

Other groups have tallied corporate sins and sent out press releases about the worst of the bunch. It's good to know who the worst offenders are, but not all billion-dollar businesses are in the same line of work: Big retail doesn't do deep-water drilling; big oil doesn't open sweatshops. By contrast, the Accountability Rating doesn't look at the social, environmental, or ethical impact but at whether a company's management is accountable for its actions. That means knowing who your stakeholders are, making sure management listens to them, and providing public disclosure. "The goal is to create a GAAP for nonfinancial reporting," says Jonathan Cohen, executive director of the William James Foundation, a Washington, D.C., advocacy group for corporate social responsibility.

There are disadvantages to that approach. Some might find it surprising that oil and chemical companies have the highest average rating of all the industry groups. But the ratings shouldn't be read as an index of how much good the company does or of how loud its critics might be. They're meant as a measure of how seriously the company's future decisions will consider nonfinancial factors. And by that indication, the future of Big Oil might be much brighter than its past.

That's certainly the opinion of BP spokesman David Bickerton, whose company came out on top of the ratings for the second year in a row. "Responsibility is about how embedded ethical issues are in decision-making within the organization," he says. "We believe that's what you really need to explain." While BP's chief executive John Browne is known as a believer in green energy and corporate citizenship, it's the company's in-depth, candid reporting that wins points in the Accountability Rating.

To get to the point where sustainability reports like BP's are taken seriously requires a lot of infrastructure. For the FORTUNE Global 100, saying that nonfinancial goals are a top business priority comes relatively easily: Nearly two-thirds of them identify some nonfinancial goal as part of their long-term business mission. But only half the companies use an external set of standards to evaluate their nonfinancial performance, and a quarter employ an outside auditor.

One success story is HSBC (No. 4), which gained the most on this year's rankings. "Three years ago we talked a lot about philanthropy," says Francis Sullivan, the bank's advisor on the environment. "Now we're talking more about corporate governance." In the past two years HSBC has named a subcommittee of its board to oversee corporate responsibility and made that its No. 1 strategic goal. That was good enough to rank the company 45th last year. But this year HSBC committed to using the World Bank's Equator Principles in deciding whether to lend to dam and forestry projects. And it started using an outside standard, AccountAbility's own Assurance Standard, known as the AA1000, to help verify that the new governance structures were a good response to stakeholder needs. "HSBC wants to be seen as a csr brand," Sullivan says.

As useful as the new csr tools and vocabulary have been for companies like HSBC, their adoption remains uneven. European companies outrank Asian and North American companies. Of the top 20, only three are American and only one is Asian. (That's partly because many European countries, including France, require responsibility reporting.) By industry, oil and chemical companies rate the highest, and retailers and health-care companies the lowest.

Low scores, however damning they might seem, require a bit of context. The rankings rely heavily on public disclosure. For a company that doesn't report thoroughly on its social and environmental performance, few aspects of the scoring system will come into play. Without the relevant information, there is no way for the Accountability Rating to assess criteria such as governance reforms, performance incentives, or nonfinancial auditing. So for a company like Time Warner (parent of FORTUNE's publisher), which includes diversity and the well-being of its employees in its mission statement but does not publicly commit to environmental or broader social goals, or to any international responsibility standards, most of the Accountability Rating's criteria cannot be applied.

That's not to say that firms without environmental concerns don't find csr standards useful. Vodafone (No. 3) says the approach has led it to take social projects more seriously. "We don't have a lot of the big pollution issues," says Grezo. "What we do have is the potential to deliver lots of social benefits." Among stakeholder concerns that Vodafone has responded to, she says: cellphones for the blind and limiting children's access to adult content on web-enabled phones.

Many companies credit csr principles with changing the way they do business. Niel Golightly, director of corporate responsibility at Ford Motor (No. 6), says that without the principles CEO Bill Ford has instituted, Ford never would have entered the hybrid market. Nor, he says, would it have been able to negotiate with the Sierra Club to help promote the new Mercury Mariner hybrid to the club's membership. Ford's assurance program (it subscribes to the AA1000) helped convince the Sierra Club that it was serious about environmentalism. "Without some tangible commitment, whether it be in the form of our reporting or of putting these products into the marketplace," Golightly says, "the dialogue would not have worked."

To be sure, the techniques identified by AccountAbility and csrnetwork as central to responsible decision-making are not guaranteed to result in better outcomes. Perhaps it will take a decade or two before corporate observers and critics will be able to decide whether talking to stakeholders and telling managers to listen actually changed anything. And the experience of the top companies on the list—whether they become favorites of activists or exploit huge new green businesses or do nothing different at all—will probably determine the movement's future.


Responsibility Isn't a Blame Game
FORTUNE
Thursday, September 22, 2005
By Simon Zadek

When GE CEO Jeffrey Immelt announced in May that the company would double its spending on green technology research, it was no grand, self-sacrificing attempt to save the planet. It was an example of astute business strategy. And Immelt was upfront about that. "We plan to make money doing it," he said. Similarly for BP chief executive John Browne. His leadership role in the oil industry on climate change is aligned with BP's long-term success, which depends on a transition away from its current focus on oil.

In those ways BP, GE, and a growing number of global corporations are doing what companies that are successful over generations do best: profitably providing products and services that satisfy society's changing expectations and needs. And that's exactly the standard to which business should be held accountable.

Business cannot and should not try to solve all our problems, as some social and environmental activists argue. Nor should it be blamed for all our existing problems—though it often shares responsibility. Energy companies should not be held accountable for the effects of carbon-hungry consumer demands, even though they help stimulate those demands. And it is not the fault of food companies that stressful modern life can lead to unhealthy eating habits, even if it has often proved profitable to market food laden with sugar, fats, and carbohydrates. To play the blame game is to miss the bigger picture.

Many of the existing measures of corporate responsibility are focused on short-term issues. They make a narrow assessment of how thorough a company's social reporting is. Or they attempt to name and shame by exposing negative social and environmental impact. Such metrics can be useful, but they provide only a snapshot of what happened last year, reflecting the results of even more distant business decisions. They do not offer clear insight into where a company wants to go and how smart it is in converting society's changing expectations into marketable products and services.

That is where the Accountability Rating is different. It doesn't seek to label the good or the bad but rather to identify the smart. It's a business rating, not a moral one. It looks at the world's biggest corporations and asks, Do they understand how to create and exploit effective business opportunities by addressing the needs of the poor? Do they understand how to make money by investing in environmentally sound business practices? Are they, in short, prepared to maximize the opportunities of our changing world?

The international investment community is beginning to ask the same questions, recognizing that the corporations that manage their social and environmental risk effectively will also increase their long-term market value. Former U.S. Vice President Al Gore, now chair of Generation Investment Management, a fund-management company, is among those who take that view. At the launch of AccountAbility's report "Mainstreaming Responsible Investment" at this year's World Economic Forum, Gore said, "Incorporating social and environmental factors into investment decisions may seem exotic to some fund managers and pension fund trustees today. But there is no doubt it will be core to tomorrow's successful investment strategies and practices."

The rating, devised by AccountAbility and csrnetwork, a corporate-responsibility consultancy, is unique in focusing on underlying drivers of tomorrow's performance. The Dow Jones sustainability index also takes that perspective, but it focuses on a self-selecting group of companies. The Accountability Rating scrutinizes the top 100 companies in the FORTUNE Global 500.

This is the second year in which the Accountability Rating has been applied to the FORTUNE Global 100. And the results are encouraging: The average score has risen to 32 from 24 last year (out of a maximum of 100). This year a third of the companies achieved a score of 40; last year only one in ten did. But the figures are still disturbingly low for the world's largest companies. The gap between the leaders and the laggards raises important questions about the latter's ability to manage underlying risks and emerging opportunities, although in some cases low scores may stem more from a lack of public reporting, the basis on which the scores are determined.

Of the six categories measured, three are broadly about how companies relate to the outside world (public reporting, assurance, and stakeholder engagement), and three are about their internal workings (strategic intent, governance, and performance management). For both years the three internal drivers scored higher than the external ones. However, most of the bettered scores this year can be attributed to improvements in public disclosure—to the level and quality of formal auditing of social and environmental performance, and to the number of companies reaching out to engage with nontraditional stakeholder groups.

Readers might be surprised to see that five of the top ten companies are energy producers, responsible for significant amounts of greenhouse-gas emissions. Two others are automakers, whose businesses are often criticized as environmentally damaging. But there's a perverse logic at work: Companies that face the toughest social and environmental issues are often the first to figure out how to turn risk into long-term business opportunity.

When we look at regional variations, Europe continues to lead the field. European businesses scored an average of 40, while U.S. corporations had an average score of 24—a significant improvement over last year's rating of 16 but still lagging behind Asian competitors, which had an average score of 28. U.S. corporations fall short most markedly in the rating's stakeholder engagement and assurance criteria. Few seem willing to engage with their stakeholders to understand their concerns and to co-design solutions, and even fewer want to subject themselves to independent evaluation of their social and environmental performance.

European companies also score well in complying with internationally recognized labor, human rights, and environmental standards. Only about a quarter of the FORTUNE Global 100 companies based in the U.S. have signed or implemented those types of initiatives, compared with some 88% of the European companies. U.S. companies are also much less likely to adopt voluntary social and environmental reporting and auditing standards like the AA1000 Assurance Standard.

A company's score on the Accountability Rating reflects how effective it is likely to be in handling emerging changes in its business environment. Looking forward, two factors are likely to count. First, it will be fascinating to see how global businesses handle their growing Chinese operations and what impact an emerging cadre of Chinese companies trying to establish global brands will have on international business practices. Will the shifting competitive environment secure or undermine the fragile international consensus on topics like business and human rights? One event to watch will be a conference on the subject hosted jointly by the Chinese government and the UN Global Compact in Shanghai later this year.

The second area to watch is whether the financial community will respond to pressures to factor more social and environmental issues into their investment decisions. In some areas, such as climate change, there are already signs of change. As Rick Murray, Swiss Re's chief claims strategist, commented at the World Economic Forum earlier this year, "Companies that are not adequately managing the consequences of climate change on their business will not be welcomed as our customers in the future." A growing number of banks like Citigroup and ABN Amro are moving beyond their niche of green financial products and embedding social and environmental criteria in the core of their risk-assessment procedures. Growing concerns about pension fund deficits will add pressure on governments to ensure that investors are focusing on businesses' long-term performance. And as the planning horizon extends, social and environmental issues will become more material to business performance.

It will be interesting to see which corporations get smart first in aligning their business strategies to emerging social and environmental risks and opportunities. One thing is clear: Those that will not or cannot change their strategies will ultimately not maintain their rankings in the FORTUNE Global 100.


Simon Zadek is chief executive of AccountAbility, a corporate-responsibility think tank in London. Feedback simon@accountability.org.uk


Survey Methodology
By
Simon Zadek

The Accountability Rating is a proprietary tool developed by AccountAbility, a London think tank on corporate social responsibility, and csrnetwork, a British consultancy. It measures the extent to which companies have built responsible practices into the way they do business and looks at how well they account for the impact of their actions on all stakeholders. Companies earn a score in each of six categories, for a maximum total of 100. The categories are:

Stakeholder engagement. Does the company engage in dialogue with people who have an interest in or may be affected by its business?

Governance. Do senior executives properly consider stakeholder issues when formulating corporate policy?

Strategic intent. Does the core business strategy seek to achieve social and environmental targets as well as financial ones?

Performance management. Do the company's management processes, business standards, and incentives seek to achieve social and environmental goals?

Public disclosure. Does it provide a detailed report of social and environmental performance?

Assurance. Does the company secure appropriate independent assurance of its social and environmental management processes and reporting?

The Accountability Rating is based on publicly available information, primarily annual reports and social and environmental reports published before July 15, 2005. Both AccountAbility and CSRnetwork have clients, partners, and members among the FORTUNE Global 100.

However, in undertaking the Accountability Rating, neither organization considers those relationships nor any gifts or other influences. Further information and a detailed statement of methodology are accessible at www.accountabilityrating.com.

Dow Jones Sustainability Indexes Launch United States and North America Indexes



Dow Jones Sustainability Indexes Launch United States and North America Indexes

SocialFunds.com, 23 September 2005 - When conducting a study on socially responsible investing (SRI) indexes covering the US market, Northfield Information Services had to isolate US companies from the Dow Jones Sustainability Indexes (DJSI) World Index because DJSI did not offer a US index. That changes today, with the launch of the DJSI United States Index, comprised of 93 companies, as well as the DJSI North America, which adds 18 from Canada for a total of 111 components.

"This is obviously an exciting milestone for us," said Alex Barkawi, managing director of Sustainable Asset Management (SAM) Indexes, which manages the DJSI. "The DJSI North America and DJSI United States provide a significant expansion of our index family and the first equity benchmarks for the region based on SAM's research methodology."

SAM uses a best-in-class approach that selects companies with best practice on corporate social responsibility (CSR) across all sectors, while most US SRI indexes apply negative screens, for example excluding companies that manufacture tobacco, alcohol, or firearms. These indexes include the Domini 400 Social Index (DSI), the Calvert Social Index (CALVIN), the FTSE4Good US Index, and the Citizens Index. The Jantzi Social Index, which covers the Canadian market, combines a best-in-class approach with some exclusionary screens, such as nuclear power, but not gambling.

DJSI also offers versions of its indexes with exclusionary screens applied. These absolute screens on alcohol, tobacco, and gambling and threshold screens (five percent of sales) on armaments and firearms reduce the DJSI North America portfolio by six companies, and the DJSI United States by five. DJSI also offers customized screening for institutional investors.

Negatively-screened indexes particularly appeal to mission-based institutional investors seeking to align their portfolios with their organizations' values. The best-in-class approach particularly appeals to fiduciaries who want to maintain diversification across the entire market while simultaneously prioritizing strong corporate sustainability performance.

"The concept of sustainability has gained increasing recognition in financial markets over recent years as investing in companies committed to sustainability principles makes a lot of sense for the long term," said Michael Petronella, president of Dow Jones Indexes.

Currently, 56 asset managers in 14 countries manage $4.1 billion in assets through DJSI-licensed products, according to Dow Jones Indexes Editor John Prestbo. SAM chooses companies based on its Corporate Sustainability Assessment, which is based on information garnered from a questionnaire sent to companies (and verified) as well as other tracking other sources, such as sustainability reports and press accounts. PricewaterhouseCoopers (PwC) conducts an assurance of this assessment process.

Companies that performed strong enough on this assessment to make it into the DJSI United States Index include those generally considered to be sustainability leaders, such as Dell (ticker: DELL), Intel (INTC), Johnson & Johnson (JNJ), Starbucks (SBUX), and Whole Foods (WFMI). The index also includes companies that have taken actions recently which exhibit sustainability leadership, including Cinergy (CIN), Gap Inc. (GPS), and General Electric (GE). And there are companies in the index that some stakeholders and investors dub as irresponsible, such as Caterpillar (CAT), Chevron (CVX), Coca-Cola (KO), Computer Associates (CA), McDonald's (MCD, and Walt Disney (DIS).

Banks dominate the list of 18 Canadian companies that were selected for the NA index, including Bank of Montreal (BMO), Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (BCM), Royal Bank of Canada (RY), and Toronto-Dominion Bank (TD). The DJSI North America Index also has a high concentration of Canadian oil and gas companies, including EnCana (ECA), Nexen (NXY), Shell Canada (SHC), Suncor Energy (SU), and TransCanada (TTRP).

In between the assessments, SAM conducts Corporate Sustainability Monitoring on a constant basis to insure its index constituents maintain acceptable levels of responsibility. SAM monitors companies and the media on a daily basis to identify crisis situations, at which point it administers an Impact Evaluation to assess "the impact of the crisis on the reputation of the company and its core business."

"If the impact of the crisis is far reaching, covered worldwide in the media or is an important concern for the company, then the second step is an analysis of the quality of the company's crisis management," states the DJSI Index Guide for North America and the United States. "This step comprises a monitoring of how well the company communicates, informs the public, acknowledges responsibility, provides relief measures, involves relevant stakeholders and develops solutions."

"In this context, SAM Research weighs the severity of the crisis in relation to the company’s reputation and quality of crisis management," continues the document.

A $100 laptop for the poor could affect the computer industry


Cheap tricks
Sep 29th 2005
From The Economist print edition



A $100 laptop for the poor could affect the computer industry

THE idea is as audacious as it altruistic: provide a personal laptop computer to every schoolchild—particularly in the poorest parts of the world. The first step to making that happen is whittling the price down to $100. And that is the goal of a group of American techno-gurus led by Nicholas Negroponte, the founder of the fabled MIT Media Lab. When he unveiled the idea at the World Economic Forum in January it seemed wildly ambitious. But surprisingly, it is starting to become a reality. Mr Negroponte plans to display the first prototype in November at a UN summit. Five countries—China, Brazil, Egypt, Thailand and South Africa—have said they will buy over 1m units each. Production is due to start in late 2006.

How is the group, called One Laptop Per Child (OLPC), able to create a laptop so inexpensively? It is mainly a matter of cleverly combining existing technologies in new ways. The laptop will have a basic processor made by AMD, flash memory instead of a hard disk, will be powered by batteries or a hand-crank, and will run open-source software. The $100 laptop also puts all the components behind the screen, not under the keyboard, so there is no need for an expensive hinge. So far, OLPC has got the price down to around $130.

But good news for the world's poor, may not be such great news for the world's computer manufacturers. The new machine is not simply of interest in the developing world. On September 22nd, Mitt Romney, the governor of Massachusetts, said the state should purchase one for every secondary-school student, when they become available.

Sales to schools are just one way in which the $100 laptop could change the computer industry more broadly. By depressing prices and fuelling the trend for “good-enough computing”, where customers upgrade less often, it could eventually put pressure on the world's biggest PC-makers.

28.9.05

Globalisation?s sharpest critic was Adam Smith: We need to learn from the business leaders who have shown they can contrib


Globalisation’s sharpest critic was Adam Smith


It is easy to rail against globalisation, but there are voices old and new with valid suggestions of how it can work to the common good
“Free markets and free men” – favourite rhetoric of the Bushes, father and son.

But what might those words have meant to people trapped in New Orleans in the aftermath of Hurricane Katrina?

The writer John Ralston Saul comments that the soundbite is topsy-turvy. He says: “It was not free markets that produced free men. The story of democratic societies goes the other way round.”

Adam Smith could not have put it better.

Imagine for a moment that Adam Smith and George Bush are standing together, looking at the broken levees, the wrecked houses, the looted shops and the dysfunctional hospitals a few days after the Hurricane.

Smith says to Bush: “Free markets and free men? Freedom depends upon social order. You have created an economy so focused on free markets that it has ceased to be the servant of society. How come you have this chaos while the poorer countries affected by the tsunami can boast that not a single person died in the aftermath of the tsunami?”

Five years ago I was underwhelmed by the most hyped critics of globalisation. People like Naomi Klein and David Korten wrote powerful polemic, but what was their alternative? They could not accept that good was done by well-led companies or envisage better rules for the conduct of capitalism.

The recent critiques of writers like John Ralston Saul, Jeffery Sachs, George Soros and Joseph Stiglitz are more balanced. They say:

Global trade is potentially a source of great enrichment to the world.

But the rich and powerful countries have for too long tried to have their cake and eat it – intellectual property rights disputes and the present European Union protectionism problems being the latest examples.

We need appropriate protectionism to allow for developing economies to emerge – look at the damage the EU is about to do to the sugar industry in Guyana.

There is no automatic virtue in the unrestricted capital flows of the kind that so exacerbated the South-east Asian crises of the late 1990s.

Institutions such as the IMF need to be reformed and refocused away from the orthodoxies of the financial community.

There can be no one approach to global capitalism. We need the non-G8 countries to have a louder voice in international decision-making.

Let’s get away from the idea of “cloned globalisation”. One of the reasons, argues Jeffery Sachs, that Bangladesh has doubled its income over the past ten years is that it has developed the kind of micro-businesses and micro-finance that enabled women first employed in the textile factories to lift themselves towards relative security and independence. India, China, Chile, Botswana, Hungary each is finding its own way.

This is the kind of thinking that now needs to be absorbed and reflected in the behaviour of the global companies of tomorrow.

The first task of any company is to survive and prosper. Larger companies that have established global franchises can never afford to be complacent. But from their position of strength they do have a unique role in acting as citizens in the emerging global order. What we need from their leaders is a new recognition of mutuality between economy and society and a new tolerance of different routes to success, for example through family and mutual ownership alongside public ownership.

No company can thrive for long in a social vacuum. We need to learn from the business leaders who have shown they can contribute beyond the predictable pursuit of shareholder value. We have seen BP committing itself to new carbon disciplines years ahead of its peers; Anglo-American, leading the way on Aids in southern Africa with its generous programme of employee vaccination; and GE, publicly committing to increasing the proportion of its investment that goes towards tackling ecological issues.

As Adam Smith put it 200 years ago, “he is not a good citizen who does not wish to promote, by every means in his power, the welfare of the whole society of his fellow citizens”.

To modify the Bush soundbite: “Free men; responsible companies; fair trade rules; restrained capital flows, and diverse free market solutions which grow out of rather than dictate to society.”

Mark@tomorrowscompany.com
www.tomorrowscompany.com

Can companies that make products that kill be socially responsible?


Can companies that make products that kill be socially responsible?


Mallen Baker considers the thorny questions surrounding dangerous products and their consumption
The defence and tobacco sectors present a tough challenge for the corporate responsibility movement
The defence and tobacco sectors present a tough challenge for the corporate responsibility movement


Killing people is wrong. That's one of the earliest principles established by any civilised society. So how can a company be considered socially responsible if its products - used as instructed - result in loss of human life?

There are some obvious contenders in this category.

Immediately the armaments and tobacco companies spring to mind. There are other industries where there are some tricky grey areas around the potential for lethal consequences if products are abused (alcohol, for instance). But let's not go into those grey areas, let's just stay in the land of black and white for just a moment.

Five years ago, there wasn't much discussion on such points. Corporate social responsibility was largely defined as what companies do to "put something back" and companies that killed tended not to be visible in that broader movement.

Since then, there is a growing agreement that corporate responsibility is rather more to do with how the company creates wealth rather than simply how it spends it. At the same time, tobacco and armaments companies have joined the fray, producing social and environmental reports and even winning awards for them.

This has provoked a certain degree of disquiet. The campaigners have dismissed any claims to responsibility on the part of such companies, drawing attention to the worst impacts of the use of their products. Likewise, some on the CSR movement have felt uncomfortable about their newly discovered allies, and would really wish they would go away and play their role of corporate villain with a little more conviction.

The tendency to damn the tobacco and arms firms is entirely understandable. It is often fueled by real outrage over the very real human consequences of these products. And yet such a position almost certainly creates unintended consequences.

The first question is whether the industries concerned can ever be legitimate. This is not a question that any individual company acting on its own can answer - it is in the gift of a broader society to establish that something is legitimate or not.

If the people of the world believe that, for instance, tobacco is a product that simply should not be allowed, governments can act to simply ban it. There is no doubt, after all, that if tobacco had been discovered for the first time today it would never be allowed to go on sale if its full health consequences were revealed.

Governments seem rather disinclined across the world to actually ban tobacco. Presumably because the approximately 1bn people across the world who smoke would be rather cross at the prospect. So the official line has been in most places that this is an adult product, and that it was an area for legitimate informed choice.

That being the case, we then have an option on how that informed choice is met. We can have unscrupulous companies, very happy to sell as much as possible with little care to the consequences. Many would agree that such a description certainly fits some of the tobacco companies historically.

Alternatively, we could see a different type of company. One that seriously invests in research to develop reduced harm products. One that manages its environmental impact carefully, and treats the people in its supply chain with respect. One that supports on develops its own people, and which aims to improve society through that process of "giving something back".

That would surely be the definition of a socially responsible tobacco company. You might still not think that any existing company actually meets this definition. But a number of those companies are now stating that these are all things that address, or aim to address. If we agree that it is important how these companies operate, we should welcome the aim and then judge them by their actions.

The alternative is that we say that we don't care whether these companies ignore the harm caused by their product, despoil the environment and treat their suppliers and staff badly - because we think they are so far beyond the pale already.

Of course, that's all very well for tobacco. At least there's informed choice behind the consumption of their products (or could be). The armament is slightly different, of course. In that case, the use of the company's products will generally result in the loss of life of people who did not choose to enter a contractual relationship with the company!

Sadly we have not yet achieved the kind of world that can do without weapons.

Writing as someone who would generally believe that for most crisis situations there are non-aggressive options which could be fully exploited, nevertheless a cursory glance at the history of humankind shows that states have often needed to defend themselves from aggression. This remains the case. So it is not the fact of weapons, but their potential use that is the issue.

This is an area fraught with problems. Companies are not in a position to decide the legitimacy of states to act in their own defence. Of course, where there are international sanctions in the face of a major breach of international law the position is pretty clear. Often, this is not so simple. Even a non-armaments company such as Caterpillar can get caught up in this - a target of protestors because its generally useful bulldozers were being used by the Israeli military to bulldoze Palestinian homes.

On the one hand, of course, innovation in the sector has led to a considerably different profile for major wars fought in the modern age. The recent Gulf war - whatever one thinks of the politics of the whole affair - was one where there was generally an expectation in the international community that the use of 'smart' weapons should lead to a minimum of civilian casualties.

Compare this to the vast loss of military and civilian life in the first and second world wars. In principle, socially responsible production of weapons should mean that the nasty business of war, whilst never being desirable nor to be quickly entered into, can be operated according to more civilised rules of engagement.

I know this is tricky stuff. When I made this argument at a recent event in Vienna, the chair turned to me with polite incredulity and said "so you advocate killing people more nicely"! But the point is that, as with all these industries, there are choices to be made about how products are developed, to whom they are sold, and how they are ultimately used which means that we have an interest in seeing armaments companies working through what this means for how they run their business.

The challenge with all of these arguments, of course, is when market logic works against socially desirable outcomes. At the end of the day, the Chairman of a tobacco company may genuinely believe that it is about informed choice, and growing market share not the overall number of people smoking, but country-level managers will know that their remains one simple equation. More cigarettes sold = more profit.

Likewise, the problems of arms companies selling to undesirable states or intermediaries is fed by the same market logic. To break that logic in the face of shareholder expectations would take the vision of a Mandela - and such people are frankly in short supply.

That is why the companies that kill will struggle to persuade the world that they can be trusted. The various stakeholders around the industry need to review how the logic of the market could serve socially desirable outcomes rather than the opposite.

After all, we have seen damaging products, such as leaded petrol, phased out in some countries through the use of tax incentives, or through announced bans to follow in a given period of time, leading to real innovation in acceptable alternatives. It will take action this strong to really shape the market.

In the mean time, we at least need to encourage the view amongst the companies whose products kill that they need to strive to address these problems - and that means accepting the principle that they can be run as socially responsible companies.

This article is extracted from the latest issue of the Business Respect e-newsletter by Mallen Baker. Reproduced with kind permission. For more articles and news summaries please visit
www.mallenbaker.net/csr

27.9.05

Corporate Social Responsibility a Myth, Says Article in Stanford Social Innovation Review


Original article can be found here: http://www.ssireview.com/pdf/2005FA_Feature_Doane.pdf

Corporate Social Responsibility a Myth, Says Article
 

By Staff

(AXcess News) Stanford, CA - An article recently published in the Stanford Social Innovation Review says that large corporations care little about corporate social responsibility, focusing more on profits for their shareholders.

As a result, the corporate social responsibility movement - which assumes that companies can do well by doing good - is lulling the public into a false sense of security, warns Deborah Doane, author of the featured article.

"CSR as a concept simplifies some rather complex arguments and fails to acknowledge that ultimately trade-offs must be made between the financial health of the company and ethical outcomes," argues Doane.

Doane went on to say, "When trade-offs are made, profit undoubtedly wins over principles".

Among alternatives to CSR that Doane proposes is a change to the legal structure of the corporation both in Europe and the United States, so that company directors would view as company stakeholders not just shareholders, but communities, employees, and the environment as well.

The Stanford Social Innovation Review is published by the Center for Social Innovation at the Stanford Graduate School of Business.