Business for Social Responsibility Issues Brief

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Business for Social Responsibility Issues Brief Overview of Corporate Social Responsibility

Introduction

A variety of terms are used - sometimes interchangeably - to talk about corporate social responsibility (CSR): business ethics, corporate citizenship, corporate accountability, sustainability. BSR defines corporate social responsibility as "achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment." We also say that CSR means addressing the legal, ethical, commercial and other expectations society has for business, and making decisions that fairly balance the claims of all key stakeholders. In its simplest terms it is: "what you do, how you do it, and when and what you say."

In this sense, CSR is viewed as a comprehensive set of policies, practices and programs that are integrated into business operations, supply chains, and decision-making processes throughout the company - wherever the company does business - and includes responsibility for current and past actions as well as future impacts. The issues that represent a company's CSR focus vary by business, by size, by sector and even by geographic region. In its broadest categories, CSR typically includes issues related to: business ethics, community investment, environment, governance, human rights, marketplace and workplace. (See other BSR reports on each of these topics).

The field of corporate social responsibility has grown exponentially in the last decade. More companies than ever before are engaged in serious efforts to define and integrate CSR into all aspects of their business, with their experiences being bolstered by a growing body of evidence that CSR has a positive impact on business economic performance. New voluntary CSR standards and performance measurement tools continue to proliferate amidst the ongoing debate about whether and how to formalize legal CSR requirements for companies. Stakeholders - including shareholders, analysts, regulators, activists, labor unions, employees, community organizations, and the news media - are asking companies to be accountable not only for their own performance but for the performance of their entire supply chain, and for an ever-changing set of CSR issues. All of this is taking place against the backdrop an ever more complex global economy with continuing economic, social and environmental inequities.

Business Importance

There is a growing body of data - quantitative and qualitative - that demonstrates the bottom-line benefits of socially responsible corporate performance.

Improved Financial Performance: Business and investment communities have long debated whether there is a real connection between socially responsible business practices and positive financial performance. In the last decade an increasing number of studies have been conducted to examine this link. One of the more recent analyses - a 2002 DePaul University study - showed that overall financial performance of the 2001 Business Ethics Best Citizen companies was significantly better than that of the remaining companies in the S&P 500 Index, based on the 2001 BusinessWeek ranking of total financial performance. The ranking was based on eight statistical criteria, including total return, sales growth, and profit growth over the one-year and three-year periods, as well as net profit margins and return on equity. The Best Citizens scored ten percentile points higher that the mean ranking of the remainder of the S&P 500 companies.
Reduced Operating Costs: Some CSR initiatives can reduce operating costs dramatically. For example, many initiatives aimed at improving environmental performance - such as reducing emissions of gases that contribute to global climate change or reducing use of agrochemicals - also lower costs. Many recycling initiatives cut waste-disposal costs and generate income by selling recycled materials. In the human resources arena, flexible scheduling and other work-life programs that result in reduced absenteeism and increased retention of employees often save companies money through increased productivity and reduction of hiring and training costs.
Enhanced Brand Image and Reputation: Customers often are drawn to brands and companies with good reputations in CSR-related areas. A company considered socially responsible can benefit both from its enhanced reputation with the public as well as its reputation within the business community, increasing a company's ability to attract capital and trading partners. A 2001 Environics International CSR Monitor survey showed that the factors most influencing public impressions of companies were social responsibility (49%); brand quality/reputation (40%); and business fundamentals (32%). The answers in the survey represent the percent of respondents mentioning these factors as one of their top two.
Increased Sales and Customer Loyalty: A number of studies have suggested a large and growing market for the products and services of companies perceived to be socially responsible. While businesses must first satisfy customers' key buying criteria - such as price, quality, availability, safety and convenience - studies also show a growing desire to buy (or not buy) because of other values-based criteria, such as "sweatshop-free" and "child-labor-free" clothing, lower environmental impact, and absence of genetically-modified materials or ingredients.
o A 2001 Hill&Knowlton/Harris Interactive poll showed that 79% of Americans take corporate citizenship into account when deciding whether to buy a particular company's product; 36% of Americans consider corporate citizenship an important factor when making purchasing decisions.
o A 2002 Cone Corporate Citizenship Study found that of U.S. consumers who learn about a firm's negative corporate citizenship practices, 91% would consider switching to another company, 85% would pass the information to family and friends, 83% would refuse to invest in that company, 80% would refuse to work at that company and 76% would boycott that company's products.
Increased Productivity and Quality: Company efforts to improve working conditions, lessen environmental impacts or increase employee involvement in decision-making often lead to increased productivity and reduced error rate. For example, companies that improve working conditions and labor practices among their suppliers often experience a decrease in merchandise that is defective or can't be sold.
Increased Ability to Attract and Retain Employees: Companies perceived to have strong CSR commitments often find it easier to recruit and retain employees, resulting in a reduction in turnover and associated recruitment and training costs. Even in difficult labor markets, potential employees evaluate a company's CSR performance to determine whether it is the right "fit". For example, a survey conducted by The Aspen Institute Initiative for Social Innovation through Business between 1999 and 2001 found more than half of MBA students would seek another job if they found that their values conflicted with the business where they work.
Reduced Regulatory Oversight: Companies that demonstrably satisfy or go beyond regulatory compliance requirements are given more free reign by both national and local government entities. In the U.S., for example, federal and state agencies overseeing environmental and workplace regulations have formal programs that recognize and reward companies that have taken proactive measures to reduce adverse environmental, health and safety impacts. In many cases, such companies are subject to fewer inspections and paperwork, and may be given preference or "fast-track" treatment when applying for operating permits, zoning variances or other forms of governmental permission. The U.S. Federal Sentencing Guidelines allow penalties and fines against corporations to be reduced or even eliminated if a company can show it has taken "good corporate citizenship" actions and has an effective ethics program in place.
Access to Capital: The growth of socially responsible investing (SRI) means companies with strong CSR performance have increased access to capital that might not otherwise have been available. In its 2001 report on socially responsible investing in the United States, the Social Investment Forum reported that social investing rose to $2.34 trillion despite an extended market downturn for most of the two-year period since the publication of the 1999 study. The primary driver for this growth was portfolios screened for socially concerned investors, which climbed 36 percent from $1.49 trillion in 1999 to $2.03 trillion in 2001. This amount accounts for nearly 12 percent of the $19.9 trillion in investment assets under professional management in the U.S.

Key Developments

Several factors have converged over the last decade to shape the direction of the CSR field. Here are some of the most notable ones:

Increased Stakeholder Activism: Corporate accounting scandals have focused attention more than ever on companies' commitment to ethical and socially responsible behavior. The public and various stakeholders have come to expect more of business. Increasingly, they are looking to the private sector to help with myriad complex and pressing social and economic issues. There is a growing ability and sophistication of activist groups to target corporations they perceive as not being socially responsible, through actions such as public demonstrations, public exposes, boycotts, shareholder resolutions, and even "denial of service" attacks on company websites.
More Sophisticated Stakeholder Engagement: On the corporate side, the debate for companies has evolved from whether to engage with stakeholders to how to engage. Companies and stakeholders have, in many cases, progressed beyond "dialogue for dialogue's sake," and are looking to rationalize the process.
Proliferation of Codes, Standards, Indicators and Guidelines: New voluntary CSR standards and performance measurement tools continue to proliferate, adding to an already complex landscape. The recent U.S. accounting scandals have created another surge of standards development in an already crowded field. At the same time, there is a growing consensus among many in the CSR community that voluntary external standards (ranging from broad, aspirational standards such as the UN Global Compact and the Global Sullivan Principles, to issue-specific standards such as the CERES environmental principles or the SA8000 labor standard) need to be consolidated and streamlined.
Accountability Throughout the Value Chain: Over the past several years, the CSR agenda has been characterized in large part by the expansion of boundaries of corporate accountability. Stakeholders increasingly hold companies accountable for the practices of their business partners throughout the entire value chain with special focus on supplier environmental, labor, and human rights practices. Additionally, company purchasing power is being viewed as a unique resource that contributes economic development investment capital, as well as facilitating basic trade of products and services.
Transparency and Reporting: Companies are facing increased demands for transparency and growing expectations that they measure, report, and continuously improve their social, environmental and economic performance. Companies are expected to provide access to information on impacts of their operations, to engage stakeholders in meaningful dialogue about issues of concern that are relevant to either party and to be responsive to particular concerns not covered in standard reporting and communication practice. Leadership companies are also investigating various types of audit and verification as a further means of increasing the credibility of their transparency and reporting efforts. Increasingly, demands for greater transparency also encompass public policy; stakeholders want to know that the way companies use their ability to influence public policy is consistent with stated social and environmental goals. As part of this move toward greater disclosure, many companies are putting increasingly detailed information about their social and environmental performance - even when it may be negative - onto their publicly accessible websites.
Growing Government Interest and Action - Europe is Leading the Way: In Europe, CSR has moved to a prominent place in both the business and policy agenda. A great deal of this activity has been catalyzed by the public sector. The European Commission has placed CSR at the core of Europe's competition strategy, and has issued a Green Paper on CSR and a subsequent communication outlining the Commission's definition of CSR and steps that companies, governments, and civil society can undertake to refine their commitments to CSR. This has led to the creation of a European Multi-Stakeholder Forum on CSR that will recommend to the Commission how to more fully embed CSR in policy and practice. National governments have also been active; requirements for social and environmental reporting have been established in France and considered in the UK, and Denmark has made efforts to promote cross-sectoral collaboration. European companies have also increased their commitment to CSR, and have participated prominently in the World Summit on Sustainable Development and the UN Global Compact, as well as individual company initiatives. Other initiatives are underway at least at a policy development level in South Africa, Brazil, and Argentina. The Organization for Economic Cooperation and Development (OECD) has done some work to convene member states and private and civil society stakeholders to discuss how it might do more to encourage member states to implement and enforce its Guidelines for Multinational Enterprises.
Convergence of CSR and Governance Agendas: In the past several years, there has been a growing convergence of the corporate governance and CSR agendas. In the 1990s, the overlap was seen most clearly on issues such as board diversity, director independence, and executive compensation. More recently, an increasing number of corporate governance advocates have begun to view companies' management of a broad range of CSR issues as a fiduciary responsibility alongside traditional risk management. In addition, more and more CSR activists have begun to stress the importance of board and management accountability, governance, and decision-making structures as imperative to the effective institutionalization of CSR.
Growing Investor Pressure and Market-Based Incentives: While religious and socially responsible investors have been pressuring companies on their social, economic, and environmental performance for the last 30 years, CSR is now more and more part of the mainstream investment scene. The last few years have seen the launch of several high-profile socially and/or environmentally screened market instruments (e.g., indexes like the Dow Jones Sustainability Indexes, FTSE4Good, and the KLD / Russell/Mellon products, as well as screened investment offerings from Morgan Stanley, Citigroup, Credit Lyonnais and Vanguard). This activity is a testament to the fact that mainstream investors increasingly view CSR as a strategic business issue. Many socially responsible investors are using the shareholder resolution process to pressure companies to change policies and increase disclosure on a wide range of CSR issues, including environmental responsibility, workplace policies, community involvement, human rights practices, ethical decision-making and corporate governance. Activist groups are also buying shares in targeted companies to give them access to annual meetings and the shareholder resolution process.
Advances in Information Technology: The rapid growth of information technology has also served to sharpen the focus on the link between business and corporate social responsibility. Just as email, mobile phones and the internet speed the pace of change and facilitate the growth of business, they also speed the flow of information about a company's CSR record. A company's reputation for labor practices in Indonesia can, for example, immediately be made known to individuals in Indiana.
Pressure to Quantify CSR "Return on Investment": Ten years after companies began to think about CSR in its current form, companies, their employees and customers, NGOs, and public institutions increasingly expect returns on CSR investments, both for business and society. This is leading to questions about how meaningful present CSR practice is, and the answers to those questions will determine - in part - both the breadth and depth of CSR practice for the next decade. Companies want to determine what their CSR initiatives have accomplished so that they can focus scarce resources most effectively. Societal CSR advocates want to see demonstrable social and environmental improvements, while critics will continue to assert that CSR is just a fig leaf helping to preserve the status quo.

External Standards

The increased interest in CSR has been paralleled by substantial growth in the number of external standards produced for business by governmental, non-governmental, advocacy and other types of organizations. These various standards are designed to support, measure, assist in implementation, and enhance accountability for corporate performance on CSR issues. While many of the standards produced are single-issue (e.g., focused on environmental performance or corporate governance), others address a range of CSR issues. The standards listed here are only those that are broad in scope, encompassing multiple CSR issues. The majority of CSR-related standards produced in recent years ask companies to voluntarily develop and implement policies and practices and commit to specific performance standards on various CSR issues. More recently, a limited number of standards have been developed that, rather than providing substantive recommendations for implementation of specific CSR policies and practices, are designed to provide guidance for companies seeking to report on their social, environmental, and economic performance. In many cases, these performance standards and reporting standards are complementary.

AccountAbility: Launched in 1999, AA1000 is an accountability standard designed to complement the Global Reporting Initiative's (GRI) Reporting Guidelines and to improve accountability and performance by learning through stakeholder engagement. The standard helps users to establish a systematic stakeholder engagement process that generates the indicators, targets, and reporting systems needed to ensure its effectiveness in overall organizational performance. The AA1000 Series builds on the AA1000 Framework, adding a series of specialized modules beginning with the AA1000S Assurance Standard, the first assurance standard for social and sustainability reporting. (http://www.accountability.org.uk/default.asp)
The Global Reporting Initiative is a reporting standard rather than a performance standard. It was established in 1997 with the mission of designing globally applicable guidelines for preparing enterprise-level sustainability reports including both social and environmental indicators. The GRI is convened by CERES (Coalition for Environmentally Responsible Economies) and incorporates the active participation of corporations, non-governmental organizations, international organizations, United Nations agencies, consultants, accountancy organizations, business associations, universities, and other stakeholders from around the world. The GRI first released its Sustainability Reporting Guidelines in 1999 and is now a permanent, independent, international body with a multi-stakeholder governance structure. Its core mission will be maintenance, enhancement, and dissemination of the Guidelines through a process of ongoing consultation and stakeholder engagement. The GRI has begun to add sector-specific supplements, beginning with financial services and tour operators. (http://www.globalreporting.org/about/brief.asp)
Social Accountability 8000 is a standard that specifies requirements for social accountability to enable a company to develop, maintain, and enforce policies and procedures in order to manage those issues which it can control or influence; and demonstrate to interested parties that policies, procedures and practices are in conformity with the requirements of this standard. The requirements of this standard apply regardless of geographic location, industry sector, or company size. The standard is maintained by Social Accountability International and covers standards and monitoring programs for child labor, forced labor, disciplinary practices, nondiscrimination, wages and benefits, working hours, health and safety, freedom of association and collective bargaining, and management systems. (http://www.sa-intl.org)
United Nations Global Compact: The UN Global Compact was formally launched in September 2000. UN Secretary-General Kofi Annan called on world business leaders to voluntarily "embrace and enact" a set of nine principles in their individual corporate practices and to support complementary public policy initiatives. The standard includes specific practices that endorsing companies would commit to enact, as well as a section describing the benefits to business for embracing each principle. (http://www.unglobalcompact.org)
Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises: The guidelines are recommendations addressed by governments to multinational enterprises and are voluntary principles and standards, not legally enforceable. Governments adhering to the Guidelines encourage the companies operating within the countries to observe the guidelines wherever they operate. The guidelines were first published in 1976 and updated most recently in June 2000. (http://www.oecd.org)
Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance: The Interfaith Center on Corporate Responsibility (ICCR) has published "Principles for Global Corporate Responsibility," which is not a standard but a "collective distillation of the issues of concern" to religious-oriented institutional investors developed by groups in the U.S., Canada, and the U.K. The ICCR is comprised of more than 275 religious institutions that use their investments to promote social change. The principles cover the entire spectrum of CSR issues, including workplace, community, the environment, human rights, ethics, suppliers and consumers. The principles are published as a reference tool that companies (and investors) can use to benchmark or monitor their own policies, or those of the companies in which they invest. (http://www.iccr.org/)
The Caux Round Table (CRT) promotes principled business leadership and the belief that business has a crucial role in identifying and promoting sustainable and equitable solutions to key global issues affecting the physical, social and economic environments. The CRT is comprised of senior business leaders from Europe, Japan and North America, and is based in Caux, Switzerland. The CRT has produced "Principles for Business," a document which seeks to express a worldwide standard for ethical and responsible corporate behavior for dialogue and action by business and leaders worldwide. The principles include the social impact of company operations on the local community, a respect for rules and ethics, support for multilateral trade agreements that promote the "judicious liberation of trade," respect for the environment and "avoidance of illicit operation," including bribery, money laundering, and other corrupt practices. (http://www.cauxroundtable.org)
The Global Sullivan Principles: Introduced in 1999, the Global Sullivan Principles expand upon the original Sullivan Principles, which were developed by the late Reverend Leon H. Sullivan in 1977 as a voluntary code of conduct for companies doing business in apartheid South Africa. According to Rev. Sullivan, "The objectives of the Global Sullivan Principles are to support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision-making committees and boards; to train and advance disadvantaged workers for technical, supervisory and management opportunities; and to assist with greater tolerance and understanding among peoples; thereby, helping to improve the quality of life for communities, workers and children with dignity and equality." (http://globalsullivanprinciples.org/)
The Keidanren Charter for Good Corporate Behavior comes from Nippon Keidanren, the Japan Business Federation. The 10-point charter states: "Corporations, in addition to being economic entities engaged in the pursuit of profit through fair competition, must be useful to society as a whole." Keidanren members agree to follow the spirit of the charter as "the criterion of their corporate behavior." The charter was revised in October 2002 to emphasize roles and responsibilities of corporate executives in an attempt to prevent the recurrence of corporate misconduct. (http://www.keidanren.or.jp)
Asian-Pacific Economic Cooperation (APEC) Business Code of Conduct: APEC is billed as "the primary international organization for promoting open trade and economic cooperation among 21 member economies around the Pacific Rim." The Code, issued as a draft in 1999, is an aspirational standard that draws significantly on a variety of other internationally recognized codes and standards. The drafting of the Code was initiated by business leaders from companies operating in APEC countries and is designed to supplement and support companies' existing codes of conduct. In addition to providing recommendations for specific "company action" on a range of issues, the Code addresses policy recommendations to APEC country governments.

Implementation Steps

Each company differs in how it implements corporate social responsibility. The differences depend on such factors as the company's size, sector, culture and the commitment of its leadership. Some companies focus on a single area - the environment, for example, or community economic development - while others aim to integrate a CSR vision into all aspects of their operations. Below are some key strategies companies can use when implementing CSR policies and practices. Greater detail for many of these items can be found on this website.

Mission, Vision and Values Statements: If CSR is to be regarded as an integral part of business decision-making, it merits a prominent place in a company's core mission, vision and values documents. These are simple but important statements that succinctly state a company's goals and aspirations. They also provide insight into a company's values, culture and strategies for achieving its aims. The mission or vision of a socially responsible business frequently references a purpose beyond "making a profit" or "being the best," and specifies that it will engage in ethical and responsible businesses practices, and seek to make decision that balance the needs of key stakeholders, including shareholders/owners, employees, customers, suppliers communities and the natural environment.
Cultural Values: Many companies now understand that corporate social responsibility cannot flourish in an environment where innovation and independent thinking are not welcome. In a similar vein, there must also be a commitment to close the gap between what the company says it stands for and the reality of its actual performance. Goals and aspirations should be ambitious, but care should be exercised so the company says what it means and means what it says.
Corporate Governance: Many companies have established ethics and/or social responsibility committees of their boards to review strategic plans, assess progress and offer guidance about emerging CSR issues of importance. Some boards that do not have these committees have the full board consider issues of corporate social responsibility. In addition to having committees and boards, some companies have adopted guidelines governing their own policies and practices around such issues as board diversity, independence, terms, and compensation.
Management Structures: The goal of a CSR management system is to integrate corporate responsibility concerns into a company's values, culture, operations and business decisions at all levels of the organization. Many companies have taken steps to create such a system by assigning responsibility to a committee of the board, an executive level committee or a single executive or group of executives who can identify key CSR issues and evaluate and develop a structure for long-term integration of social values throughout the organization. One important observation though is that there is no single universally accepted method for designing a CSR management structure. This is definitely not a "one-size-fits-all" exercise. What works for one company may not work for another, and vice versa. What does work, though, is following a process that allows you to design a structure that aligns your company's mission, size, sector, culture, business structure, geographic locations, risk areas and level of CSR commitment.
Strategic Planning: A number of companies are beginning to incorporate CSR into their long-term planning processes, identifying specific goals and measures of progress or requiring CSR impact statements for any major company proposals.
General Accountability: In some companies, in addition to the efforts to establish corporate and divisional social responsibility goals, there are similar attempts to address these issues in the job descriptions and performance objectives of as many managers and employees as possible. This helps everyone understand how each person can contribute to the company's overall efforts to be more socially responsible.
Employee Recognition and Rewards: Most companies understand that employees tend to engage in behavior that is recognized and rewarded and avoid behavior that is penalized. The system of recruiting, hiring, promoting, compensating and publicly honoring employees all can be designed to promote corporate social responsibility.
Communications, Education and Training: Many companies now recognize that employees cannot be held accountable for responsible behavior if they are not aware of its importance and provided with the information and tools they need to act appropriately in carrying out their job requirements. These companies publicize the importance of corporate social responsibility internally, include it as a subject in management training programs, and provide managers and employees with decision-making processes that help them achieve responsible outcomes.
CSR Reporting: Thousands of companies have come to understand the value of assessing their social and environmental performance on a regular basis. Annual CSR reports can build trust with stakeholders and encourage internal efforts to comply with a company's CSR goals. The best reports demonstrate CEO and senior leadership support; provide verified performance data against social, environmental and economic performance indicators; share "good" and "bad" news; set goals for improvement; include stakeholder feedback; and many times are verified by outside auditors. According to SustainAbility's Global Reporters 2002 Survey, the GRI has made it easier for newcomers to produce sophisticated reports.
Use of Influence: Some socially responsible companies recognize that they can play a leadership role in influencing the behavior of others, from business partners to industry colleagues to neighboring businesses. They understand that ultimately it is in everyone's best interests to have as many companies as possible honoring the requirements and expectations of corporate social responsibility.

Leadership Examples

These "leadership" practices have been chosen as illustrative examples. They are intended to represent innovation, higher than average commitment, unusual industry practice or a comprehensive approach to this issue. Periodically, the examples listed may be changed.

Chiquita Brands International, Inc
U.S.-based Chiquita, the world's top banana producer, is recognized as a leader in corporate social responsibility for its institutionalized CSR management structure, rigorous labor and environmental standards, committed participation in international certification programs, industry-leading labor agreements, and candid sustainability reports. Chiquita has a Vice President-level Corporate Responsibility Officer, as well as a steering committee of managers that meets monthly to coordinate and guide corporate responsibility efforts. All of Chiquita's business units are held responsible for their CSR performance. Chiquita uses the SA8000 labor standard and the Rainforest Alliance's Better Banana Project standard, which call for curtailing the use of toxic chemicals, controlling pollution, conserving soil and water, and protecting the health and safety of workers. Chiquita received Rainforest Alliance's first Sustainable Standard-Setter Green Globe Award for its environmental standards. Chiquita says it spent $4.8 billion less on agrochemicals in 2001 than 1997 and saved an additional $3.8 billion in 2001 by using recycled materials. All of Chiquita's Latin American farms have been certified by the Better Banana Project and the company participates in the Eco-OK label, which recognizes products grown in accordance with environmental and social standards set by outside groups. In 2001, Chiquita signed a landmark labor agreement with regional and international unions based on the SA8000 standard that commits them to fair dealing and continuous improvement, and allows union input in Chiquita's CSR reports. Chiquita's second CSR report, issued in 2002, was recognized as one of the top 50 reports by SustainAbility. The report has is published on Chiquita's website, and openly recognizes both improvements and shortcomings.

The Co-operative Bank plc
The Co-operative Bank has a long history as one of the most innovative banks in the United Kingdom and a reputation as a leader in corporate social responsibility. Among other programs and practices, the company is recognized for its (1) strong ethical investment policy statement; (2) social auditing practices; and (3) ethical marketing strategies. The Bank's 8-point ethical investment policy outlines the company's position on socially responsible investing, including its decisions not to finance weapons deals to oppressive governments, and not to invest in companies involved in tobacco, the fur trade, animal testing or exploitative factory farming. According to its chief executive, the Co-operative Bank's ethical and ecological policies, which it frequently strengthens and revises based on extensive customer input, are inextricably linked to its business success; it's ethical policies are the most frequently cited reason customers choose the bank. The company has also been a pioneer in the area of stakeholder relations and social reporting, producing a "Partnership Report" each year since 1997 that measures impact and identifies improvements the company could make in social responsibility areas such as customer satisfaction, ecological sustainability, workplace practices, community involvement and ethics. The report includes the statement of an outside auditor who assessed the report using the AA1000 standard. Through its ethical marketing campaign, Co-operative Bank has contributed over $3.2 million to various causes and advocates for issues including fair trade and living wages, environmental protection, the acceptance of diversity and bans on the financing of landmines.

Starbucks Coffee Co
Starbucks defines CSR as conducting business in ways that produce social, environmental and economic benefits to the communities where they operate. Starbucks has been widely recognized for its commitment to numerous stakeholders including coffee growers, the environment, employees, and communities, while simultaneously achieving rapid financial growth. The company has a Senior Vice President of CSR who provides strategic development of policies, strategies, processes and tools to align corporate social responsibility with business success, and has oversight of the company's environment, business practices and community efforts. Since 1998, Starbucks has supported Conservation International's (CI) Conservation Coffee program, which encourages sustainable agriculture practices and the protection of biodiversity through the production of shade-grown coffee and the institution of coffee purchasing guidelines. Starbucks' work with CI won a Sustainable Development Partnership award in 2002 at the World Summit for Sustainable Development. The program has resulted in a 60 percent price premium paid to farmers and a 220 percent increase in the coffee growing land preserved as tropical forests. The amount of shade-grown coffee purchased by Starbucks in 2002 is estimated to be 20 times the amount it purchased in 1999. In 1997, Starbucks formed a partnership with a division of the Environmental Defense Fund to develop environmentally preferable disposable coffee cups and promote increased use of reusable cups by customers. The company has also been praised for its generous employee benefits and its commitment, unusual in the industry, to provide full benefits to both full and part-time employees. Starbucks has taken a leadership role by being the first coffee company to adopt a "framework for a code of conduct" to improve the quality of life for workers globally. Starbucks also has a number of programs to help benefit communities in which the company has stores, as well as in the developing economies where its coffee is grown, harvested, and processed.

B&Q
B&Q is a do-it-yourself retailer and part of British retail group Kingfisher plc, which operates nearly 1,400 stores in 16 countries and has annual sales of almost $16 billion. About 22 percent of B&Q's turnover is timber and timber related products and the company has worked to lessen its impact on forests and other environments since 1991. B&Q has monitored its suppliers' social and environmental practices, sourcing 99 percent of wood-based products from independently certified well-managed forests, becoming a model to other companies and encouraging change in its business partners. B&Q also managed to reduce environmental impact at its stores by minimizing packaging, increasing recycling and improving energy efficiency and waste management. More recently, B&Q has adopted a more holistic approach to corporate social responsibility through the theme of "being a better neighbour:" "We believe sustainable development is about improving the quality of life for all the people we touch. This can only be achieved by striving to be a better neighbour, whether it is to our store or global trading neighbourhoods." Based on the headline indicators outlined in the UK government's sustainability strategy, B&Q has identified 16 key issues - from Economic Growth to Water Quality - that are necessary for a quality life, and it has identified how it, as a neighbor, can address these issues. The company has found that close monitoring of the supply chain helps to ensure healthy working conditions, maintain good environmental practices and increase the company's profits through improved brand loyalty, reduced operational costs and a more integrated and efficient supply chain. B&Q helped to found the Forest Stewardship Council (FSC). B&Q is a member of a British coalition organized by the WWF that requires an environmental audit of all suppliers and won the Business in the Environment award from Business in the Community in 2000. B&Q also takes diversity in employment - particularly age diversity - seriously and also strives to serve diverse communities, including the disabled. B&Q has awarded almost 1,000 Better Community Grants to local store-run community projects.

Novo Nordisk A/S
Novo Nordisk is a Denmark-based pharmaceutical company specializing in diabetes care. Novo has worked to achieve a "triple bottom line" - social and environmental responsibility and economic viability - for more than 10 years, and is viewed as a CSR leader by many. The company is a leader in its stakeholder engagement process; its commitment to rigorous reporting; its approach to environmental management; and its efforts to enhance global access to diabetes care. Novo Nordisk has integrated CSR into its governance structures, committing its board to oversee continuous social, environmental and economic performance, as well as creating dedicated positions such as the Senior Vice President of Stakeholder Relations. Novo uses an aggressive stakeholder engagement program that seeks to learn the needs and concerns of Novo's stakeholders, such as diabetics, employees and the environment, to direct its CSR activities. Novo also invests in partnerships that seek to address these social and environmental goals. The company is a signatory to the UN Global Compact and a member of the Nordic Partnership, a collaborative effort between WWF and 16 of Scandinavia's largest businesses that committed the companies to a standard of sustainable business practices covering workplace standards, environmental management and human rights. Novo also took part in the development of the GRI Guidelines as an early member of the Global Reporting Initiative (GRI). Novo used the Guidelines and an external auditor to prepare and assure its 2001 annual sustainability report, which was named one of the seven best by SustainAbility. For more than a decade, Novo has followed a proactive environmental policy aiming to be one of the front-runners in defining, engaging and reporting on how business can address global environmental challenges. In its latest undertaking, Novo is implementing the ISO 14001 environmental management structure at all of its production facilities with staff working continuously to reduce the consumption of resources such as clean water and fossil fuels. Novo's commitment to the social aspect of the triple bottom line was questioned in 2001 when the pharmaceutical company joined an industry-wide legal action against the South African government to protect patents there. Novo pointedly addressed this criticism in its sustainability report, explaining how the criticism led the company to reflect on its responsibility to help lessen the global inequities in health care. Novo produced a creative response to the criticism by establishing the LEAD initiative (Leadership in Education and Access to Diabetes care), which aims to improve diabetes care in developing countries. One LEAD initiative is the World Partner Program, which has evaluated the dilemma diabetes causes in developing nations. Another element of LEAD is the establishment of the World Diabetes Foundation, through which the company will donate approximately $73 million over the next ten years.

Sample Policies

Aviva plc
http://www.aviva.com/responsibility/policy.htm
Formerly CGNU plc, Aviva is a global insurance and financial services company. Aviva's CSR policy:
"Aviva, as a member of the international business community, recognises its Corporate Social Responsibility commitments in its various roles, which include insurer, investor, employer and consumer. We reflect these commitments in a family of eight policies, which relate to: Environment, Community, Workforce, Human Rights, Health and Safety, Suppliers, Customers and Standards of Business Practice.
"We recognise that our business activities have direct and indirect impacts on the societies in which we operate. We endeavour to manage these in a responsible manner, believing that sound and demonstrable performance in relation to corporate social responsibility policies and practices is a fundamental part of business success.
"We are committed to continuous improvement in our corporate social responsibility programme and encourage our business partners to strive for matching performance. "Our business units throughout the world are committed to achievement of our policy objectives and our performance will be periodically reviewed and externally verified to help us meet our policy goals and we will publish reports regularly."

British airport operator BAA plc
http://www.baa.co.uk/main/corporate/sustainable_development_frame.html
"We believe in responsible development - cleaner, smarter growth. We understand the need to challenge our own and the industry's environmental performance and we understand that the ultimate aim has to be to de-couple growth from environmental impact. This also means working with our stakeholders to understand their concerns and grow in the most acceptable way to them. This philosophy of cleaner, smarter growth underpins our sustainable development philosophy."

For BAA, this means:

Promoting a vision for cleaner, smarter growth in aviation which maximises the positive benefits for society - facilitating prosperity, regeneration, regional and UK competitiveness, cultural exchange and social inclusion - while minimising negative social and environmental impacts.
Pursuing a stakeholder partnership approach to the decision making-process on new developments and other issues affecting the wider community, listening to and understanding the concerns of stakeholders, developing practical programmes of action to address them.
Integrating strategies, incentives and reward systems to ensure that sustainable development priorities are reflected in day-to-day decisions and operations at each of our airports.
Improving performance through objectives, externally audited targets, key performance indicators and by reflecting these priorities in relationships with business partners and suppliers.
Influencing solutions for wider environmental improvements and aviation's contribution to climate change directly through the industry as well as Government and bodies such as Airports Council International and the UN International Civil Aviation Organisation.
Proactively engaging in global, EU and national government consultations and forums on the sustainable development of the aviation industry.
Acting responsibly as a corporate citizen and employer.
Thinking long-term and seeking to be challenged by leading experts.
Communicating our performance within the company and externally via a process of integrated annual sustainable development reporting supported by annual external audit and verification.
Exploring the environmental and financial gains to be secured through innovation and technology.

Alcan Inc
http://www.alcan.com/corporate/AlcanCom.nsf/libweb/Shared+values
"As we focus more attention on sustainability in our business, we rely on a straightforward interpretation of this concept to provide context for our efforts. Sustainability involves:

Improving performance - increasing the social and economic benefits and reducing the environmental impacts of our activities over the short and long term, and becoming a more profitable and competitive organization;
Strengthening relationships and partnerships - recognizing and working with our employees, stakeholders and shareholders to address their needs and the needs of the Company; and
Demonstrating integrity and commitment - maintaining the high standards we value as a company in our day-to-day operations."

Interface, Inc
http://www.interfaceinc.com/goals/vision.html
"Our Goal: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits - by 2020 - and in doing so we will become restorative through the power of influence."
"Our Vision: Interface will become the first name in commercial and institutional interiors worldwide through its commitment to people, process, product, place and profits. We will strive to create an organization wherein all people are accorded unconditional respect and dignity; one that allows each person to continuously learn and develop. We will focus on product (which includes service) through constant emphasis on process quality and engineering, which we will combine with careful attention to our customers' needs so as always to deliver superior value to our customers, thereby maximizing all stakeholders' satisfaction. We will honor the places where we do business by endeavoring to become the first name in industrial ecology, a corporation that cherishes nature and restores the environment. Interface will lead by example and validate by results, including profits, leaving the world a better place than when we began, and we will be restorative through the power of our influence in the world."

Awards

The number of CSR-related awards has grown in the last decade. While a handful of awards, listed below, cover general CSR performance and leadership, many more awards cover specific areas, such as environmental responsibility, workplace practices, ethics and community involvement. These awards can be found in other BSR reports on those subjects.

Most Admired Companies lists are produced by a number of media outlets in various parts of the world, including Report on Business in Canada, Fortune and Corporate Reputation Review in the United States, Asian Business in Asia, and Management Today and the Financial Times in the United Kingdom. Corporations are judged on numerous criteria, including corporate social responsibility qualities such as reputation for ethics and honesty and community and environmental responsibility.
(http://www.robmagazine.com
http://www.fortune.com
http://www.henrystewart.com/journals/crr/
http://www.clickmt.com/index.cfm
http://www.ft.com)
Best Companies to Work For lists are compiled by Fortune, Report on Business, and other publications. Several publications also create more specific lists. For instance, Working Mother lists the best companies for working mothers, and Fortune has a list of best companies for minorities.
(http://www.fortune.com,
http://www.robmagazine.com,
http://www.workingwoman.com)
Business Ethics Awards, given annually by Business Ethics magazine, honor companies that demonstrate leadership in ethics and social responsibility. The awards vary annually and have included Environmental Excellence, Human Rights Initiatives, Employee Ownership, and General Excellence in Ethics. Business Ethics also compiles an annual list of "The 100 Best Corporate Citizens," honoring companies that serve four stakeholder groups well: employees, customers, the community (which includes the environment), and stockholders.
(http://www.business-ethics.com/)
American Business Ethics Award (ABEA), given by The American Society of Chartered Life Underwriters (CLU) & Chartered Financial Consultants (ChFC), recognizes companies from public company, private company, and small business categories that demonstrate a firm commitment to ethical business practices in everyday operations, management philosophies, and response to crisis or challenges.
Awards for Excellence, including "Company of the Year," are given by Business in the Community, a U.K.-based CSR consultancy, in association with the Financial Times. The awards recognize "companies that demonstrate the value of reviewing and improving the way they do business to have a positive impact on business and society."
(http://www.bitc.org.uk
http://www.ft.com)
Corporate Conscience Awards, given annually by Social Accountability International, are intended to "honor and bring to public attention companies that demonstrate a recognition, at the corporation's highest executive levels, of a responsibility to respect the rights and promote the well-being of all stakeholders, whether employees, consumers or the community; and to uphold environmental stewardship."
(http://www.sa-intl.org)
The Ron Brown Award for Corporate Leadership, given to "honor companies for the exemplary quality of their relationships with employees and communities," is administered by The Conference Board. Awarded by the President of the United States at a White House ceremony, it is given to companies that have "demonstrated a deep commitment to innovative initiatives that not only empower employees and communities but also advance strategic business interests." All privately and publicly owned companies are eligible to apply for the award.
(http://www.conference-board.org)
The Henry Morrison Flagler Award, given by the Kenan Institute of Private Enterprise, recognizes the significant and vital role that entrepreneurial leaders play in advancing private enterprise and improving society. The award is made annually to an individual who has demonstrated exceptional entrepreneurial leadership through the creation of innovative and highly effective institutions that span the boundaries of business and society.
(http://www.kenaninstitute.unc.edu)
BBB International Torch Award: The Council on Better Business Bureaus, representing local Better Business Bureaus in Canada, Mexico, and the United States, confers annual marketplace ethics awards on one company in each of four size categories - (1) more than 1,000 employees, (2) 100 to 999 employees, (3) 11 to 99 employees, and (4) 1-10 employees. Awards go to companies "in recognition of their outstanding commitment to exceptional standards in relationships to their consumers, employees, suppliers, competitors, shareholders, and surrounding communities."
(http://www.bbb.org/torchaward/bbbtorch.asp)
The Distinguished Corporate Citizenship Award is awarded by the Center for Ethical Business Cultures to individuals who demonstrate sustained and imaginative leadership in corporate social responsibility.
(http://www.cebcglobal.org)
U.S. Department of State Award for Corporate Excellence: The U.S. Department of State began giving an award for corporate excellence in 1999 to publicize U.S. companies that exhibit exemplary behavior abroad. State Department diplomats nominate U.S. companies operating in their geographic areas. Recent winners of the award include Coca-Cola Co., Ford Motor Co. and Solar Electric Light Co.
(http://www.state.gov/e/eb/cba/bs/ace/)
Award for Corporate Citizenship in the Americas is given by Trust for the Americas for corporate social responsibility in Latin America. (http://www.trustfortheamericas.org)
Other Regional Awards: Some governments or regional organizations offer awards to companies that demonstrate corporate social responsibility. For instance, Peru 2021, a nonprofit, selects on an annual basis the company that best exemplifies corporate social responsibility in Peru with the "Corporate Responsibility Award". The Queen's Awards for Enterprise give awards for British companies showing outstanding achievements in sustainable development.
(http://www.peru2021.org
http://www.queensawards.org.uk)

Resources

The following list is not comprehensive. It is an illustrative group of the many nonprofit, public sector and/or academic resources working with the private sector in the area of corporate social responsibility. The resources identified below have been included because they provide information or support that is relevant to companies, and they are national or international in scope. Periodically, the examples listed may be changed. At this time, the list does not include for-profit resources.

Accion Empresarial
http://www.accionempresarial.cl
Acción Empresarial is a non-profit business membership organization that promotes socially responsible practices and activities of companies operating in Chile.

AccountAbility/Institute of Social and Ethical Accountability
http://www.accountability.org.uk/default.asp
AccountAbility is an international, not-for-profit, professional institute dedicated to the promotion of social, ethical and overall organizational accountability, a precondition for achieving sustainable development and the AA1000 Series of standards.

Business for Social Responsibility
http://www.bsr.org
Business for Social Responsibility (BSR) is a global nonprofit organization that helps member companies achieve commercial success in ways that respect ethical values, people, communities and the environment.

Business in the Community
http://www.bitc.org.uk
Business in the Community is a nonprofit organization based in the United Kingdom that strives to "inspire business to increase the quality and extent of their contribution to social and economic regeneration by making corporate social responsibility an essential part of business excellence."

Center for Ethical Business Cultures (CEBC)
http://www.cebcglobal.org
Founded in 1978, the Center for Ethical Business Cultures (formerly known as the Minnesota Center for Corporate Responsibility) is a non-profit business association that assists leaders in creating ethical and profitable business cultures at the enterprise, community and global levels.

The Conference Board
http://www.conference-board.org
The Conference Board is a global business membership and research group linking executives from different companies, industries and countries to improve business enterprise systems and enhance the contribution of business to society.

Co-op America
http://www.coopamerica.org
Co-op America is a non-profit membership group representing the interests of smaller companies with social and environmental missions as well as individuals interested in the same issues. The Co-op America Business Network (CABN) provides hands-on tools and resources for smaller companies seeking to implement socially responsible practices and to market their products to socially conscious consumers. On its website, Co-op America publishes The Green Pages, listing hundreds of socially responsible companies.

Empresa (Social Responsibility in the Americas)
http://www.empresa.org
EMPRESA is a consortium of non-profit business organizations committed to corporate social responsibility in various countries of the Americas. The group co-sponsors regional conferences and offers a variety of tools and resources in Spanish and Portuguese to help businesses implement more responsible policies and practices.

Instituto Ethos
http://www.ethos.org.br
Instituto Ethos is an association of over 660 Brazilian companies of all sizes and sectors that are interested in developing their business activities in a socially responsible manner and believe in a permanent and continuous process of evaluation and improvement.

CSR Europe
http://www.csreurope.org
CSR Europe is a European business-driven membership organization whose "mission is to help companies achieve profitability, sustainable growth and human progress by placing Corporate Social Responsibility (CSR) in the mainstream of business practice."

Fundacion Esquel
http://www.esquel.org.ec
(Website is in Spanish, with some English pages) Fundacion Esquel (Foundation Esquel) is a not-for-profit private organization that aims to strengthen the practice of socially responsible business in Ecuador in order to promote lasting change in the conditions of poverty, using sustainable development practices. Fundacion Esquel hosts periodic conferences has established a technical assistance program to help grassroots organizations, businesses and NGOs practice social responsibility and a seed capital fund to support business investment in social and economic development projects.

Interfaith Center on Corporate Responsibility (ICCR)
http://www.ICCR.org
The Interfaith Center on Corporate Responsibility (ICCR) promotes investments in community economic development within its coalition of more than 275 Protestant, Roman Catholic and Jewish institutional investors with an estimated combined portfolio value of $110 billion. Each year ICCR-member religious institutional investors sponsor over 100 shareholder resolutions on major social and environmental issues.

International Business Leaders Forum (IBLF)
http://www.iblf.org
The Prince of Wales International Business Leaders Forum (IBLF) works to promote "socially responsible business practices that benefit business and society and which help to achieve social, economic and environmentally sustainable development in emerging and transition economies."

Investor Responsibility Research Center (IRRC)
http://www.irrc.org
The Investor Responsibility Research Center provides institutional investors with impartial research on a full spectrum of corporate social responsibility issues, as well as their relationships to the financial performance of companies worldwide.

Nippon Keidanren
http://www.keidanren.or.jp
In May 2002, Keidanren (Japan Federation of Economic Organizations) and Nikkeiren (Japan Federation of Employers' Associations) joined to create Nippon Keidanren (The Japan Business Federation), a comprehensive economic organization that, among other things, maintains the "Keidanren Charter for Good Corporate Behavior" and the "Global Environment Charter."

M.A.A.L.A. (Business for Social Responsibility in Israel)
http://www.maala.org.il
(Website in Hebrew and English) M.A.A.L.A. (Business for Social Responsibility in Israel) is an Israeli non-profit organization that strives to "help Israeli companies strengthen their long-term business success by making social responsibility an integral part of their key-business strategies, and to be the leading force in facilitating the encounter and exchange of idea between the business sector and community in Israel."

Observatoire sur la Responsabilité Sociétale des Entreprises (ORSE) (Study Center for Corporate Social Responsibility)
http://www.orse.org
ORSE is a nonprofit French network begun in 2000 to study and promote socially responsible investment (SRI), corporate social responsibility and all the issues related to sustainable development.

Peru 2021
http://www.peru2021.org
(Website is in Spanish) Peru 2021 is an organization of business leaders in Peru who are committed to contribute to economic, social and civic development in Peru through the promotion of corporate social responsibility and through the construction and dissemination of a national vision toward the year 2021, when the country will celebrate its bicentennial independence.

Philippine Business for Social Progress
http://www.pbsp.org.ph
Philippine Business for Social Progress (PBSP) is a private, national and non-profit foundation. PBSP believes that helping the poor help themselves is the most effective, sustainable approach to reducing poverty, releasing human potential, and achieving better socio-economic equity.

Social Accountability International
http://www.sa-intl.org
Social Accountability International (SAI) works to improve workplaces and combat sweatshops through the expansion and further development of the international workplace standard, SA8000, and the associated S8000 verification system.

Social Investment Forum
http://www.socialinvest.org
The Social Investment Forum is a U.S. nonprofit organization of more than 600 investment professionals and institutions that promotes the concept, practice, and growth of socially responsible investing. The group offers the "Online Guide to Socially Responsible Investing," and awards the Moskowitz Prize for outstanding research in socially responsible investing.

Social Venture Network (SVN)
http://www.svn.org
The Social Venture Network is a nonprofit network whose members have launched new enterprises, taken stands on public policy issues and improved their own "triple bottom line" performance for people, planet and profits. SVN has developed "Standards of Corporate Social Responsibility" and an integration guide for companies, and promotes community investment and fair trade.

Trust for the Americas
http://www.trustfortheamericas.org
The Trust for the Americas is a non-profit organization affiliated with the Organization of American States (OAS). It was created to promote private sector participation in implementing mandates of the Summits of the Americas through development projects in the Hemisphere.

This document contains information from a variety of public sources such as newspapers, books, on-line services, and reports from various NGOs and academic studies, as well as information shared directly by companies. Where appropriate, we have made reference to the source of information and sought approvals for its use. If you are aware of any information in this document that is inaccurate or not properly attributed, or if you have additional information that could be helpful to us as we update this report, please contact us. Thank you.