Corporate Social Responsibility Study Steering Committee
10.00 am - 12.30 pm on 20th March 2003
Timber Trade Federation
Summary of Discussion
Participants: Paul Martin (Director General, TTF), John Hudson (DFID), Bob Andrew (DEFRA), Malaika Culverwell (RIIA), Emily Fripp (ERM), Frank Miller (CSR consultant) and Andy Roby (CSR Adviser, TTF)
The SCM consisted of a series of presentations by Andy Roby and Frank Miller on CSR, progress made to date and the content of the Guidelines, which was interspersed with questions and discussion.
The main points arising from the discussion have been grouped as follows:
1. CSR and Illegal Logging
Illegal logging has emerged as the main CSR issue so far for the timber trade, encompassing as it does environmental, social and development issues. If illegal logging is seen as a relatively short term tactical CSR issue, in the longer term sourcing timber from sustainably managed forests might be seen as the strategic objective of CSR in the timber trade. This fits with the TTF's vision of a sustainable trade based on well managed forests.
2. Issues and General Comments on CSR
The dilemma of competition versus collective action was discussed; the advantage of collective action for supplier assessment is becoming clear in terms of cost savings and more accurate information on sourcing. However this is contrary to current industry practice, which jealously guards relations with suppliers.
The issue of trans border legality was raised with the example of the US legislation Sarbanes-Oxley Act of 2002, which effectively applies US laws in other territories. This is known as extra-territoriality, a hot issue of debate in international law and CSR.
The relationship of timber traders to their clients seemed an important early CSR driver; e.g. B&Q buying from Finnforest.
The role of agents in the supply chain is crucial - they are closest to the suppliers and have most knowledge of the sources of timber - this may become a competitive advantage given increasing demand from the market for information on the source of timber.
The case study company Travis Perkins offers an interesting insight into the issues facing a company for whom timber is only a part of their product range.
CSR standards will be largely met by most certification schemes - which include social and environmental criteria.
3. Taking up the findings of the study
Publicity of the CSR study needs careful consideration - there are a range of organisations and individuals to target and many upcoming opportunities.
Government departments likely to be interested in this study include:
Cabinet, Treasury, DFID, DEFRA, FCO, DTI all of whom (except cabinet) sit on an interdepartmental committee chaired by Minister Massey of the DTI. The European Commission and other European Federations should also be targeted. It would be worth presenting the CSR study to IDEA - Improvement and Development Agency (http://eshtw02.idea-knowledge.gov.uk), which is promoting the government's sustainable development policies with local authorities.
Thought needs to be given to how the TTF will follow up on the CSR work.
4. Resources and ideas
Alan Knight, CSR Director of Kingfisher might be a valuable addition to the SCM - Bob Andrew and Frank Miller both know him and will contact him about joining the study.
The Chartered Institute of Purchasing and Supply (CIPS) are a valuable source of guidance on supplier assessment which the study should take advantage of.
The Global Reporting Initiative is another resource worth tapping.
5. The Guidelines
5.1 General
What will be the criteria for success of the Guidelines? Probably how well they will be used. Companies are also likely to pick up on ideas generated from the study and tracking the spread of these ideas across the trade would be a useful measure of success of the study.
5.2 Chapter 1: Country Risk Assessment
Use World Bank indices on governance and institutions - their assessment includes elements of corruption and human rights.
5.3 Chapter 2: Quality Assurance
The Guidelines on supplier assessment may well be overly ambitious - might have to tailor down as the study progresses.
On the question of quality assurance of products - do companies need an overall CSR policy first? Probably not if market demand requires the information on sourcing anyway.
The MIS-based approach was seen as a good way of embedding CSR concepts in business practice, providing a reporting framework for the company, board and general public, and as a means of setting and managing targets. The cost of updating MIS' may be a crucial obstacle. Ultimately want to build into standard contracts.
5.4 Chapter 3: Choice tables and supplier assessment
DEFRA procurement listing assesses government suppliers based on a range of critiera but rejecting suppliers is in practice quite tough - need a watertight case.
CSR study might recommend training in supplier assessment for traders.
5.5 Chapter 4: Stakeholder Relations
The relationship study has not had much interest so far, even from the big traders, but a need may emerge from the CSR study. Small companies are unlikely to be interested - they are less exposed and unlikely to be targeted by NGO campaigns or bad press.
If companies develop CSR principles it was recommended that they develop them slowly, testing them out with small focus groups, before going public in a big splash. Need to develop sets of values and principles in an evolutionary way.
Even small companies may need to manage relationships with local government, leaving national government to their representative bodies.
5.6 Prioritisation
On the 4 chapters of the guidelines it was recommended that emphasis be given the chapters 2 and 3 (quality assurance and supplier assessment). Chapter 1 can be handled quite quickly, whilst there appears to be little interest in Chapter 4.
5.7 Additional chapters:
These might include looking at best practice for driving CSR change within a company, e.g. the Travis Perkins preferred supplier programme. The buyer is seen as a key player and will need to set minimum standards for procurement, from which he/she can negotiate best prices. Cultural changes need to stem from the top (Board level) and have champion - it will be important to engage with the board.
Could be worthwhile exploring the way environmental policies have been adopted - how long, what worked, obstacles, solutions….
Possible 6th chapter looking at supplier capacity building models; e.g. TFT, TFF, etc… mechanisms that help suppliers reach new standards. What public/private partnership mechanisms are there. How can companies or groups of companies become proactive and support suppliers. Look at the "weakest link" principle and focus resources on strengthening, eg Russia - 3 big EU buyers - linking up to get to work on capacity building.
6. Further SCM
It was agreed that two more SCM would be useful; one in early June towards the end of the consultations and before write up, and another in early September as the study is being concluded.
7. Conclusions
Overall, in spite of some slippage mainly due to Andy Roby's overseas travel (Indonesia and Cameroon) the study should still be completed on time. All case study companies are lined up with first visits to be completed by the end of March. The Steering Committee has provided a number of valuable comments and was a useful learning experience for participants.
The CSR team would like to thank Steering Committee Members for their time and useful contributions and guidance.
8. Summary of Action Points
1. Ask Alan Knight (Kingfisher plc) if he would like to become involved in the study through the SCM (Action: FM and BA)
2. Develop stronger links between the study and other government CSR work by;
· sending out information on the TTF study to CSR leaders in government agencies (Action: AR, then BA)
· making a presentation to one of the interdepartmental meetings on CSR (Action: BA to set up, AR to present)
· making a presentation to the Forest Partnerships group (Morley group) (Action: AR through PB)
3. Use World Bank Indices on Country Policy and Institutional Assessment for the Country Risk Analysis chapter (Action: AR and FM)
4. Include training on supplier assessment as a policy recommendation to DEFRA for the CPET (Action: AR and FM)
5. Develop a chapter on how to develop and implement CSR policies within timber trade companies, particularly comparing big and small organisations (Action: AR and FM)
6. Develop a chapter on how traders can work proactively with suppliers to increase their performance on sourcing legal and sustainable timber (Action: AR and FM)
7. Fix next SCM in the first 2 weeks of June (Action: AR)
Andy Roby and Frank Miller
25th March 2003
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