1. How to Embed Ethics and Values with a Corporate Responsibility approachToby Webb, Founder, Ethical Corporation & Stakeholder Intelligencewww.ethicalcorp.com / toby.webb@ethicalcorp.com /tobywebb.blogspot.comOctober 2012

2. About my work in this field of ethics and CSR Founded Ethical Corporation in 2001: EC researches corporatebest practice in ethics, sustainability and corporateresponsibility world-wide. 3000 corporate customers per year Founded and Chaired the UK Working Group on CorporateResponsibility 2006-08. Co-authored UK CSR Policy for PrimeMinister David Cameron Lecturer on Corporate Responsibility at Birkbeck College,University of London, where I am studying my PhD Also run Stakeholder Intelligence, a company providingcompany and market specific research, training and criticalfriend advisory to large companies around the world 3. The key messages of the presentation Transparency is the first step towards sustainability Engagement with stakeholders is now key to businessinnovation: New ideas dont often come from the boardroom Transparency, reporting and compliance programmes onlytake you so far: You can be transparent with a poor corporateculture (HSBC) A poor corporate culture will inevitably lead to ethicalbreaches (Enron, Tyco, WorldCom, Banking Crisis, Coalgate) 4. The key messages of the presentation A strong corporate culture will lead to fewer ethicalproblems, and enable you to cut costs and seize opportunitiesto motivate talent and develop new products and services A better or good corporate culture is only created one way:Holistically: Personality aint enough, today you cant leaveanything out Corporate responsibility or sustainability/CSR is the key tothis: The only way to tackle responsibility diffusion in largeorganisations and manage risk is to embark on aCSR/Corporate Responsibility culture change in your business 5. Ethical Corporation survey: key resultsDo you believe companies in general understand what is generallynecessary to embed CR in their business? (Sample: 99 Senior Managers) 6. Ethical Corporation survey: key results Which of the following statements apply to your company in its CR processes? (select all that apply) 7. Embedding activities Which three of the following CR embedding activities do you believe your company has most successfully addressed to date? 8. Embedding activitiesEthics/CSR Goals and targets: what, when, how and why Objectives, goals, targets, milestones: What is the differencefor you and your company? How could you ensure your lower-level targets service your higher- level objectives? Build your own: Would you prefer to use external tools orframeworks to define goals and targets, or create your own? The long and short-term: What would help you in matchingtargets and timelines appropriately? 9. Embedding activitiesEthics/CSR Goals and targets: what, when, how and why Benchmarking: Are you aware of what others do, and howcan you know what makes a good target in your case? Whatrole is there for ongoing performance comparisons? Going off-piste: How can you prepare for when results are notas planned? What about when the targets (or even theobjectives) seem mistaken??Remember: No business plan survives first contact with themarket 10. Embedding activitiesDeveloping a CR road map - Six-phase approach Phase 1: INSIGHT - consisting of stakeholder views, a scienceor fact-based understanding of the issues, and a benchmarkof competitors and peers. Phase 2: Making a public commitment in terms of theheadline goal perhaps reducing carbon by 30%, forexample but also in more qualitative terms where you needto. Phase 3: Now that an overall target has been established,requires a baseline that says where you are now. Even forqualitative targets, you need to be able to say what the statusis.. 11. Embedding activitiesDeveloping an ethics/CSR road map - Six-phase approach Phase 4: Allocating responsibility for action, you need to getthe business to own the baseline, own the target and own theachievement of the goal. Phase 5: Public reporting of progress including annualreports. This is where you revisit what you said youd do, andwork to create the sense of continuity and recommitment. Phase 6: Transparently revisit and challenge the original goal. 12. Case Studies GE EcomaginationReimagining the business & corporate culture through sustainabilityHow CR added valueIn the five-year period following the inception of Ecomagination inMay 2005, the company met or exceeded its goals by: More than doubling its annual investment in clean R&D to $1.8bn in2010. Generating $18bn in revenues from Ecomagination products. Reducing operational GHG emissions by 24% and energy intensityby 33%. Reducing water use by 22%. Cutting GEs annual energy costs by $130m. 13. Case Studies Marks & Spencer Plan AM&S imbues sustainability and ethics throughout the businessKeeping the team on the side: Ownership and management: Giving business units ownership oftheir budgets gives them the incentive to manage them well. Finance team: Engage the finance team to provide a much betterunder- standing of the finances in specific areas of the business,supported by a rigorous process and methodology. Green lens: Looking at the business through a different green lensmeans people spot new opportunities to reduce impacts and costsby less obvious means. Innovation: Innovation is proactively supported via a centralinnovation fund to back initiatives too risky or long-term forbusiness unit expenditure. 14. Case Studies Marks & Spencer Plan A Cross business: The business case needs to be addressed across theentire organisation, which may mean short-term trade-offs with abigger long-term benefit. Value chain: There are potentially much bigger benefits outside theorganisation in the wider value chain, including many win/winopportunities for the company, suppliers and customers. Not all benefits are about money: Aspects such as staff motivationand wellbeing, brand enhancement, supply chain resilience andpartnership sometimes cannot or should not be monetised. New revenue: Sustainability is not just about making a businessmore efficient; its also about creating new revenue streams frommore sustainable products and services. 15. Case Studies Petrobras CR post-crisisRe-establishing trust through corporate responsibility Petrobras is the Brazillian state oil company. Brazils largestcompany. In 2012 it enjoys a reasonable reputation, but Turning point: In 2000, the company endured a series ofindustrial accidents and disasters. Pegaso Plan: A programme for Excellence in Environmental andOperational Safety Management US$1.4bn investment 16. Case Studies Petrobras CR post-crisisCore objectives of Pegaso plan: Rebuild trust Redeploy investments in equipment, procedures and management New senior EHS director reporting directly to the CEO All results and assessments began to be reported in IR meetings Emphasised internal comms to convey principles, empowered employeesCrisis comms: Ensured its focus includes not only stopping the cause of theproblem, but also making sure the company gets out into the communityimmediately to get any needed cleanup under way. 17. Embedding Ethics and CR in Governance Clarify formal and explicit CR roles and responsibilities at board level, such as a CR champion on the board or a board-level committee. Articulate the companys CR strategy clearly, reflecting board responsibilities and accountabilities. Put it in the mission! Encourage frank exchange and engagement at senior levels. Avoid delegation of critical decision-making that senior leaders need to make for themselves. Join-up high-level communications, linking to the companys CR goals, objectives and strategy. 18. Embedding Ethics and CR in the value chain Identify value chain impacts using your materialityprocess, including any significant unknowns. Check the status of CR expectations shared withsuppliers and customers, and work to ensure there isa shared understanding across partners about CRgoals and responsibilities. Seek high-level support for supply chain initiatives, toinclude but also go beyond buyers. 19. Embedding Ethics and CR in the value chain Find ways to inspire supply chain partners to helpcraft and meet expectations, and surpass currentgood practice from awards to more favourablecontract terms, these incentives are likely to yieldexcellent results. Give feedback to your supply chain partners, and helpthem with training, tools and support. Let colleagues know about the added value from yourefforts to engage the value chain in CR. 20. Embedding Ethics and CR in HR Review the skills and personal qualities needed in different staff roles to achieve your Ethics and CR objectives: Its not just about Codes of Conduct, and the big stick. Speak to HR colleagues early on to discuss how they might help with developing and communicating Ethics and CR expectations, initiatives and culture throughout the organisation. Differentiate your CR efforts for new hires and existing employees. Document and communicate any added value your company has experienced from your efforts to engage people via HR, both risk reduction and expanded opportunities. 21. Conclusions and Recommendations Champions are critical; cheerleaders even more so: Beware the temptation tooutsource responsibility for CR issues solely to issue experts Play with a full deck of cards: Its no good identifying your most importantsustainability issues if you find your peers and superiors arent interested inaddressing them. Dont try to eat the elephant all at once: A bite at a time. Your road map is aninvaluable tool. Share stories and skills: Find ways to enable peer-to- peer learning, sharing andmentoring in your company. Avoid the complacency trap: Ethics/CR isnt something that can be done and lefton a shelf its a continual part of risk management and market creation. 22. Further reading and contact How to Embed Sustainability and Corporate Responsibilityin Management Processes 2012 report. Available from:www.ethicalcorp.com/reports (much more in the report than in thispresentation: Step by step and function by function guidebook to success)Also see: Tobywebb.blogspot.com www.slideshare.net/tobiaswebb www.stakeholderintel.comAND: 8000 articles to search and use at www.ethicalcorp.com