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While the threat of being tried for piracy no longer hangs over them, the Greenpeace activists (28 members and two freelance journalists) detained currently in Murmansk are – at the time of writing – still facing the serious charge of hooliganism. If found guilty, they could be sent to prison for up to seven years (though under Russian law punishment could also be limited to a fine). The 30 were detained following a protest against the Gazprom Arctic drilling platform Prirazlomnaya back in September.

There is no doubt that NGOs have become a significant force within the business world today. Long gone are the days when simply pointing out how certain companies are doing wrong/destroying the planet would suffice. However, like big business, NGOs have to exercise their power responsibly and be held accountable. And when working collaboratively, there needs to be mutual accountability.

At the In Good Company with FSC conference in Denmark recently, Daniel Mittler, political director of Greenpeace International admitted they often target companies with CSR policies. According to Mittler: “We do a lot of research and then we consider if we can actually influence the company… Mostly, our corporate collaborations are the result of a controversy.”

No surprise there. Mittler went on to explain: “Even though we collaborate with a company on one issue, we still run campaigns against them, if we do not agree with them on other issues. It is like a marriage. Even though we disagree with someone, we can still talk about it. And often it is the people we collaborate with, that is the easiest to talk with about other issues.”

The marriage theme continued at the event. Edward Krasny, manager of Sustainable Forestry Programs at Kimberly-Clark has been “married” to Greenpeace for some years. After a period of several years of effort, he noted: “It took time but we managed to build trust and to be open with one another.”

Sudhanshu Sarronwala, executive director, marketing and communications at WWF International, spoke about collaborations with major companies, including The Coca-Cola Company. “Corporations can often be part of the problem and part of the solution. We can include them in the solution or not. But if we do, it can influence an entire sector and have great impact,” said Sarronwala.

“Our principles are that there needs to be a strategic fit with companies that we collaborate with. And it is important that both organizations are independent and have their own opinions and can agree to disagree. There needs to be mutual accountability,” he added.

Since 2007, WWF and Coca-Cola have worked together to conserve and protect fresh water around the world. Theo van Uffelen, marketing director, Marketing the Category Europe at Coca-Cola said: “You don’t always get things right the first time. For me it is not so much about being too close but about preserving integrity in a relationship. That is why you need critical voices and inputs as an organization.”

Tass Mavrogordato, ceo of inmidtown, a Business Improvement District, explains how the organisation contributes to the sustainable business model 

At inmidtown we’re striving to make the area between the City and the West End, London’s most sustainable commercial district. In 2012-2013, we helped businesses in the area save over 918 tonnes of Co2, and 1,218 tonnes of waste was diverted from landfill.

Businesses in urban environments face a host of sustainability challenges, but through our industry leading initiatives, we’re helping our members navigate these to achieve competitive advantage. Becoming the world’s first capital city commercial district to eliminate the waste it sends to landfill is just one example of that. In practice, our Zero to Landfill scheme means ensuring every waste stream – from glass bottles to confidential files, food waste to redundant electrical equipment – leads to a sustainable outcome. For instance, general waste is converted into energy and returned to the National Grid network, while white paper is recycled into stationery items, which are delivered back to member businesses. Wherever possible we look to create closed loop processes, for example food waste is broken down and used for compost in the area’s green spaces.

Through our sustainability services, members can show the cost and carbon impact such initiatives are having on their operations, and how that’s benefitting the local environment.

The hyper-local nature of our carbon saving initiatives also make them more effective than typical service providers, which tend to cover a greater geographic area. A good example of this in action is inmidtown’s procurement and recycling services where one truck services multiple businesses within the area. Through this service 33% of our businesses make cost and carbon savings, while also reducing air pollution in the wider area.
So that everyone can see the impact businesses in the area are having on achieving a greener London, as set out in The London Plan’s vision for sustainable development, we track these savings through a real-time Carbon Counter on the inmidtown website. Individual businesses can see their own contribution to the collective achievement too, through a quarterly report which provides individual calculations around cost and carbon savings.

In addition to the ethical impact of these initiatives, businesses that have access to them are experiencing improved employee engagement and workforce productivity, alongside meaningful and real-time results.
This is especially true of the businesses we’re working with to help design and create ‘green roofs’ – helping businesses make use of the vast amount of rooftop and above-street space which can be used to reduce energy use, and even grow food for staff and other local people in the area, another great example of a closed loop economy in the making!

At inmidtown we’ve received a high level of member engagement because our businesses gain competitive advantage from the services we provide. The ease with which businesses can be actively sustainable in the area, with truly quantifiable results, is a key driver for why Midtown is becoming London’s commercial district of choice.
 

Risk management is a cornerstone of running a good, responsible business, writes BITC's Stephen Gee. Investors want to know the level of risk they are committing to and wider stakeholders want to know that the company is being managed responsibly so as to continue to pay wages, taxes, make a positive contribution to society and operate within environmental limits. Some businesses thrive on risk taking, whilst others are more risk averse. What all good businesses should have, however, is an effective process for identifying and managing risk.

CR practitioners should drive change and continuous improvement in a business, and getting issues onto the company’s risk register can be a powerful way to do this.

To start with, CR practitioners need to ensure that all appropriate risks are captured by the company’s risk management system. Looking through a ‘CR lens’ can help identify risks that may not be on the radar of the people traditionally involved in the risk management process.

These could relate to:
• How materials are sourced
• How products are marketed, sold and used by the consumer
• The health, wellbeing, diversity and skills of the workforce
• The environmental impacts of a company’s value chain
• The health and resilience of communities affected by the organisation’s operations

In the absence of a knowledgeable practitioner these potential risks may remain unidentified or misunderstood by the core business.

It’s widely known that risk management has strong links to organisational reputation and the level of trust that customers and consumers have in the business. In this context, it is easy to see how acting well or badly on any of the issues above can enhance or tarnish an organisation’s reputation and directly impact trust. Studies show that consumers are more likely to buy from companies they trust and their expectations of business to behave in a responsible and sustainable way are increasing*.

Despite this, trust in business to achieve this is falling.

When bad news travels fast and events can be broadcast on a global scale within minutes, these areas of CR risk must be managed and acted upon appropriately and transparently. The task of risk management is not to remove all risks but to manage the likelihood of the risk occurring and the potential impact. Social, environmental and ethical risks should not sit in a different risk register or be managed any differently to traditional financial risk. If this isn’t happening in your organisation, then here are the key steps to achieve it.

1. Identify the risk
In order to identify CR risks, Business in the Community recommends the following framework which can be based on these four areas of categorisation: community, marketplace, workplace and environment.
It’s important to remember that identifying risks is not a purely internal exercise; looking outside of the organisation is also critical. External influencing factors on risk could include:
• Political – changes in government and policy
• Governance – are there checks and balances in place and enough independence to challenge bad practice?
• Societal trends – such as an ageing population, trends towards healthy eating and expectations of greater transparency.

To fully understand the external risks, benchmarking tools and stakeholder engagement are key methods that should be used.

2. Evaluate the risk
To understand the context of a risk is important, and for this you should talk to issue owners to understand ‘what is normal’ and why. Bear in mind that history has shown that whole sectors can shift their perception of ‘normal’ to something that is increasingly risky; banking and oil exploration to name but two.
To assess the likelihood and impact you need to be able to describe the risk clearly and assess the potential impact on the business against relevant business criteria, such as impact on market share, customer loyalty or organisation reputation. To prioritise the identified risks, final evaluation should be based on “likelihood” and “severity of impact”.

3. Identify Responses
Based on steps one and two you first need to decide whether or not to act on the risk. Are there social, environmental or ethical dimensions that place a responsibility on the business to address a risk?
Draw up a ‘long-list’ of potential responses and actions and think creatively about all the options available.

4. Agree action
Your available resource and capacity will have to be taken into account. Some of the risks may appear to be beyond your control (for example, climate change), but you should still do what is proportionate for your business – it may damage your reputation not to.

5. Plan and resource your response to the risk
At this point, the risks have been analysed and responses selected so it is now a management exercise. Your goal now should be to embed these specific ‘CR risks’ into the organisation’s central risk management system.

6. Monitor and evaluate
Regularly monitor and re-evaluate the risk. The context, likelihood or impact may all change at any point. Equally, you need to check that the responses that you selected are having the desired effect.

Stephen Gee is a Senior Business Support Manager at Business in the Community, the responsible business charity.

Click here for more information.   

London’s Lord Mayor Roger Gifford hailed this year’s winners of the annual Dragon Awards for their commitment to providing job prospects to people whose skills would otherwise remain lost to the capital. “There is a wealth of lost talent in London,” he said. “We can be cleverer in engaging that raw talent.”

And winning entries are doing just that, providing training to a total of 619 ‘lost apprentices’ so far in 2013.
Established 26 years ago, the Dragon Awards are the longest running awards that recognise excellence in corporate community engagement programmes. Overall, this year’s Dragon Award nominees have volunteered almost 1 million hours to local communities through their CSR programmes – worth over £17m.

The Economic Regeneration award went to Purdy, a medium sized engineering company which helps disadvantaged young people into careers in the industry, running work placements and apprenticeships to train local people – bucking an industry trend of subcontracting and poor investment in apprentices. The company is also seeking to recruit more women into the construction industry, encouraging girls to become apply to become apprentices.

The Andaz Liverpool Street Hotel was awarded the Social Inclusion award for its partnership with east London charity Providence Row, which has been working with London’s homeless for over 150 years.

What began as donations of towels and toiletries in 2009 has now grown to workshops in its hotel kitchens and work placements with a formal recruitment process, providing real-world employment experience for the trainees.
Since November 2011, 24 out of 31 people completed the scheme; five have moved into paid employment; four have moved into accredited training and six have moved into further volunteering.

Islington-based K&M McLoughlin Decorating received the Heart of the City award for its five week pre-apprenticeship ‘employability’ programme, which gives locals aged 16-24 practical skills and training to help them into the industry.

Since the programme started in October last year, 131 young people have completed the course. Out of that, 71 have been deemed employable and 64 have made it into further employment (21 as apprentices).

The Social Inclusion award went to ZenithOptimedia for its partnership with Camden’s Castlehaven Community Association – a community centre based in one of the highest crime spots in the UK. ZenithOptimedia employees are given time off each year to volunteer – and this year 48% signed up to help out. The support they offer ranges from events throughout the year, such as tea dances for the elderly and digital training for the youth members.

The Education Award went to Lloyds Banking Group for its Lloyds Scholars Programme, which offers 120 scholarships a year across eight universities.

The scholars volunteer 100 hours a year in their local community, supporting disadvantaged groups and other community projects, which goes to build their skills. The idea is to support talented students who may not have had the opportunities some of their peers have had to build up an attractive CV whilst at university.

The Community Partners award went to Pilotlight, a capacity building charity, exists to bring senior business people – the majority of whom have never volunteered before – together with small, grassroots charities, to coach them in the skills they need to survive and thrive.

The charities Pilotlight works with improve their ability to reach people, tackle problems and change their communities.

Three years ago Pilotlight devised a Graduate Programme to leverage the talent of future business leaders. RBS graduates are challenged to come up with creative, practical and innovative solutions to ‘real world’ issues faced by the partner charities. To date 16 charities and 126 RBS graduates have taken part, giving 6,300 hours of their time to the third sector.

Finally, the Lord Mayor’s Award went to Lloyd’s of London for its ‘Aim 2 Attain’ programme which arose out of government cuts to funding students from disadvantaged backgrounds to go to university.

A series of CV workshops and mentoring is offered to students to help them achieve their potential, and a bursary is offered to fund three students through university a year.

The scheme is focused on the Tower Hamlets area – 80% of those who are going to university from Tower Hamlets stay in London due to financial pressures. 

The term ‘sustainable’ in the fashion world is a little like the word ‘natural’ in the beauty biz. It seems to mean different things to different brands. Different companies have different goals. Brands like Loomstate in the US focus on the use of organic cotton; Fruit of the Loom has its emphasis currently on its carbon footprint while at luxury basics brand Everlane worker’s rights is top of the agenda. What they all have in common, of course, is a spotlight on their supply chain.

And supply chain and the security of the supply chain are the top issues being discussed at boardroom level. Indeed, there is an increased demand for transparency in the supply chain from retailers and consumers following the Rana Plaza disaster earlier this year, in which 1,200 people lost their lives. A combination of corruption, ignorance and low working standards were the major cause of this particular disaster, but they are still commonplace.

As a result, retailers are increasingly looking to establish partnerships with their suppliers that promote sustainability and ethical working practices. At present, large retailers can easily exceed 100,000 plus suppliers, and therefore a scalable approach is required.

Jo Webb, the head of stakeholder relations for Sedex and member of the UN Global Compact Supply Chain Sustainability Advisory Group, explained at a recent Responsible Trade Worldwide event in Birmingham, ‘Achieving Supply Chain Transparency: From Compliance to Engagement’: “Risks increase further down the supply chain – whilst at the same time the capacity to address those risks decreases – it is the iceberg of non-compliances lurking beneath the surface.”

“Focusing on first-tier suppliers only is not enough. Collaboration is key. Some of the chronic supply chain issues we are seeing are endemic and no one company can solve them on their own. Duplication is still prevalent. However, if companies can treat sustainability as non-competitive issues and work together to drive convergence then more time and effort could be spent on addressing issues rather on commissioning constant audits to differing requirements,” she continued.

Major retailers are now taking action, identifying the challenges with their suppliers so that they can tackle them together, and offering greater equality to workers by encouraging open conversations at all levels.

Louise Herring, Ethical Trading Manager of Sainsbury’s, said at the same event: “We have been working with our suppliers to identify the root causes of labour issues as part of our 20/20 strategy. One example is women’s education and access to reproductive health which can be a major barrier in some developing nations. At supplier-level, our training programmes are helping women workers to understand the options available to them so that they can pursue a career and improve their standard of living”.

And yet the tragedies just keep on coming. There were more calls just last month for more probing examination of supply chains, a concerted effort on safety, and attention to employees’ voices, in the wake of another Bangladeshi garment factory catastrophe.

Nine or 10 people – reports vary – were killed and about 50 injured in last month’s fire at the Aswad Composite Mills fabric works in Gazipur near Dakha. A machine is said to have exploded, and the employees killed were thought to have been working overtime.

Officials were quoted as saying the fire spread because of water shortages and the absence of nearby fire stations. The government is investigating.

Although dozens of international retailers agreed after the Rana Plaza collapse to inspect Bangladeshi factories regularly, a lack of checks on supply chains was emphasised by Labour Behind the Label, a UK-based group campaigning for garment workers’ rights.

Policy officer Samantha Maher said: “The fire highlights how much there is to do to protect workers in the industry.”
She insisted that companies should trace suppliers through their chains to “make conditions visible to the end customer”. She said some retailers claimed not to know about Aswad, “but they should know”.

Full transparency will be achieved only when the industry and governments take combined action, said Rebecca Taylor, head of research and business development at Responsible Trade Worldwide, a UK organisation offering ethical practice advice.

She believed the employees themselves must be involved. “We’ll identify the fundamental issues when we engage the people who live and breathe the reality day to day,” she said.

She believed consumers were now developing awareness of garment trade conditions, which might spur retailers to act.

However, some of the large store groups that source fabric from Aswad are promising action.

Next said: “Once the [fire] cause is known, as routine Next will review its procedures, including the extent to which it needs to look further down the supply chain.”

Asda said it was trying to help the factory owners however it could. An Asda spokeswoman said: “As part of the Walmart family we have a safety programme that rigorously inspects the factories that make our garments and other products.

“Typically that programme does not extend to the facilities that make materials like fabric for those garment factories.

“Given the situation in Bangladesh, we, along with Walmart, believe the government of Bangladesh and the industry should consider whether to extend factory safety programmes to this next level of production.”

Earlier this year Walmart gave $600,000 (£375,000, €442,000) to a project to empower workers to have a say on factory conditions.

The Irish chain Primark, estimated to be Britain’s second largest clothes retailer, finished dealing with Aswad in March, accusing it of refusing to stop violations of its code of conduct.

The Canadian retailer Hudson’s Bay halted business with Aswad in April but did not give any reasons.  

Compensation claims

Nine clothing companies are holding talks to determine compensation for the injured and the families of those killed when the Rana Plaza complex housing garment factories in the Bangladeshi capital Dhaka collapsed in April.

Altogether 1,133 workers were killed and more than 2,500 hurt in the tragedy at Rana Plaza, from which factories supplied dozens of garment retailers.

At the first meeting of customer companies a compensation scheme was submitted by the Clean Clothes Campaign, which lobbies for garment workers’ conditions, the international trade union group IndustriAll, and the Worker Rights Consortium, an independent monitoring body.

The three groups proposed compensation of $74.5m (£46.7m, €55m). The brands and retailers failed to reach agreement but are continuing discussions.

The Irish retailer Primark, meanwhile, has paid compensation and three months’ salary to affected families for emergency relief, and has offered its Bangladesh banking network to deliver any funds contributed for immediate needs.

Additionally, Primark is working on a scheme under which victims would receive long-term compensation.
Monika Kemperle, IndustriAll’s assistant general secretary, said: “Consumers will be shocked that almost a half-year has passed since the Rana Plaza disaster with only one brand so far providing any compensation.”

Kamrul Anam, of IndustriAll’s Bangladesh council, said: “Please, all brands and retailers, match that three months’ salary.”

The anti-poverty charity War on Want has urged the Matalan model Abbey Clancy, a participant in the popular UK television programme Strictly Come Dancing, and the Mango model Miranda Kerr to back its call for relief for the victims – both fashion companies sourced goods from Rana Plaza factories.

Only C&A and Karl Rieker attended earlier discussions on compensation for victims of last November’s Tazreen factory fire in Dhaka, in which about 120 workers were killed and more than 200 hurt. Both promised compensation.

Kemperle complained: “The disregard of the absent brands for the plight of workers in Bangladesh whose lives have been destroyed by the avoidable accidents at Tazreen and Rana Plaza is shocking in the extreme.”

The Clean Clothes Campaign says it will continue the pressure on those companies.

Besides Primark, the Rana Plaza meeting was attended by Bon Marché, Camaieu, El Corte Inglés, Kik, Loblaw, Mascot, Matalan and Store Twenty One.

Other invited companies failed to attend: Adler, Auchan, Benetton, C&A, Carrefour, Cato Corp, The Children’s Place, Dressbarn, Essenza, Gueldenpfennig, Iconix Brand, Inditex, JC Penney, Kids Fashion Group, LPP, Mango, Manifattura Corona, NKD, Premier Clothing, PWT Group (Texman) and Walmart.

Twelve invited companies missed the Tazreen meeting: Delta Apparel, Dickies, Disney, El Corte Inglés, Edinburgh Woollen Mill, Kik, Li & Fung, Piazza Italia, Sean John, Sears, Teddy Smith and Walmart.

In Pakistan bereaved families and injured survivors of a fire at the Ali Enterprises garment factory in September 2012 are also awaiting a full settlement. Investigators found blocked exits and barred windows contributed to the 250-plus death toll, even though a fire safety certificate had been issued a few weeks earlier.

The German retailer Kik, the only known buyer of Ali garments, agreed in December to pay $1m in emergency relief, most of which has distributed. Final long-term compensation will be negotiated with stakeholders but the social auditing organisations have snubbed the labour rights groups.

Samantha Maher, policy officer of Labour behind the Label, which campaigns for employees’ rights, said: “The death of hundreds… has highlighted, in the most tragic way, that audits do not protect workers’ rights.”  

A month in SRI with Roger Aitken...

Nestlé’s former ceo Peter Brabeck-Letmathe once sparked controversy after declaring that access to water was “not a public right”.

This year current Nestlé ceo Paul Bulcke stated that future water scarcity represented a great threat to the food industry. And, with 2.5bn people globally today having inadequate water supplies according to the World Health Organisation, the role of the World Bank as regards water improvements globally would seem pivotal.

Against this backdrop the bank came in for renewed criticism this October from Corporate Accountability International (CAI), a Boston-based advocacy group. It ramped up calls for the World Bank to stop investing in water firms.

CAI’s move followed a 64-page report it published in April 2012 titled ‘Shutting the Spigot on Private Water: The Case for the World Bank to Divest’, in which it presented case studies on Manila, Ghana and the Asia Water Fund, and urged the bank to divest all equity positions in private water corporations.

In a letter this September to World Bank President Jim Yong Kim the group argued the bank’s reputation and assets were “being gambled” and millions of lives “imperilled”.

The evidence appears compelling. According to the World Bank itself, 34% of all private water contracts it entered into between 2000 and 2010 – from Argentina to Vietnam – have failed or are in deep distress. As a loose proxy for the sector, MSCI Global Sustainable Water Index, posted a return of +24.45% for 2012 versus +16.54% for MSCI World.

These investments are nevertheless sizeable. The World Bank’s investment arm International Finance Corporation (IFC) invested a total of around $4bn in public sector water improvements during the 2011 fiscal year – far exceeding its $96m financing of private water sector ventures (c.7% of the bank’s total investment portfolio that year of c.$57bn). Ideologically the IFC stresses it is “not pressing one ownership” over the other.

In the case of Manila in the Philippines the IFC advised the city in 1997 to privatise its water system into two franchises – Manila Water, supplying the eastern side of the city, and Maynilad handling the western side. In Manila Water’s case IFC loaned it $110m and bought a $15m equity stake a year prior to an anticipated stock market float in 2005.

But the CAI asserted that 15 years later hundreds of communities remain without connections while water rates have risen fivefold. The IFC disagreed arguing that its equity stake in Manila Water was designed to “catalyse” other private investors. Certainly it helped the bank net a cool $62m in advisory fees. Equally one might question why two corporates behind these entities were created as joint ventures under local Filipino elites.

It’s a far cry from IFC’s initial 1956 Articles of Association categorically prohibiting equity investments to avoid the appearance of ‘self-dealing’. In reality around a quarter of the World Bank’s funding today goes directly to the private sector. In this context the bank might consider rebalancing its water investments and skew its portfolio more towards public sector to assuage critics.  

Sandra Seru, head of strategy & reporting, sustainability & responsibility at Diageo tells Ethical Performance how the drinks group is tackling the social problem of alcohol misuse as well as the corporate issue of water stewardship

Sustainability impacts broadly on a business, how wide is your remit?

Our Sustainability & Responsibility Strategy is broad, covering what we’ve determined to be the most material social and environmental impacts of our full value chain.

This year, we refreshed our strategic priorities by speaking with stakeholders around the world about what was important to them, and determining which issues were most integral to the success of our company.  Many of the broad topics raised were not surprising.  For example the role of alcohol in society continued to be our most material issue and water stewardship surfaced as the most important environmental issue for us as a beverage company. We also reconfirmed other environmental, socio-economic development, people and governance issues that are foundational to our programme.

But one key finding related to this question of scope was the importance of working in more depth on these social and environmental priorities in our value chain. Many stakeholders identified the importance of examining our supplier impacts at the farm level. Others saw female empowerment initiatives in the wider industry as important to support. So our strategy with our business partners will increasingly focus on these areas.

Alcohol misuse is a key CSR area for Diageo, tells us about some of the group’s initiatives in this area.

Tackling alcohol misuse is the single most important social issue our industry has to address. We support over 300 programmes across more than 40 markets to prevent excessive drinking, drink driving, underage drinking and forms of misuse. Our focus is on evidence based programming and partnerships. For example, we support the training of doctors and other health workers in screening and brief intervention, a simple but proven approach supported by the World Health Organization (WHO). We are also using innovative social media and technology to reach consumers and are partnering with retailers to curb underage purchases.

To widen our reach, we also created DRINKiQ (see www.drinkiq.com), a comprehensive online resource in nine languages that we promote on all of our product labels. On DRINKiQ, parents, educators, retailers or anybody interested can learn about the effects of alcohol and find helpful resources to curb misuse. Also, more than 15,000 people have been actively trained with DRINKiQ curriculum, including hospitality industry trainers, students, traffic police, bus drivers, members of the lifestyle media and sports clubs.

Last October, we collaborated with 12 other global producers of beer, wine and distilled spirits to develop a set of ‘CEO Commitments. ’ These commitments focus on five issues: (1) reducing underage drinking, (2) strengthening and expanding marketing codes of practice, (3) providing consumer information and responsible product innovation, (4) reducing drink driving and (5) enlisting the support of retailers to reduce harmful drinking.

The CEO Commitmentswill be implemented over five years from 2013, and all participating companies will report progress annually, which will be audited by a third party. This is a particularly exciting development that will scale up the impact of the industry’s support of the WHO’s global strategy to reduce the harmful use of alcohol.

How does Diageo’s commitment to provide access to clean drinking water tie in with its activities?

Currently about 30% of our production worldwide, including 50% of our African operations, are located in areas considered water stressed. This means annual water supplies drop below 1,700m³per person at some point in the year.  As a beverage company that uses water as a key ingredient, this of course is a critical business issue, but it’s also a vital challenge for our local communities and ecosystems that we all rely on.

For this reason, water stewardship is a core focus in our Sustainability & Responsibility strategy. This includes rigorous water efficiency initiatives that we manage through global targets. So far we have reduced water wasted at water-stressed sites by more than 20% since 2007. Our operations in Africa have improved their water efficiency by 32% since 2007 – achieving our 2015 target two years early.

Our strategy, a holistic approach across our value chain, also includes active community work through our Water of Life programme that provides communities with access to clean drinking water and infrastructure. We aim to reach one million people a year in Africa through these programmes and are currently running 200 projects across 16 countries.

Finally, our work on water also includes advocacy and partnership with other businesses and local stakeholders. We believe about 90% of our total water footprint falls outside of our operations in the agricultural process of growing the natural resources we use. This makes working with our agricultural suppliers very important, particularly through our local sourcing programme, in addition to other partnerships to address water stewardship in priority watersheds.

Similarly, how does signing the Women’s Empowerment Principles fit?

Recognising that women make up a large part of the hospitality industry as well as our consumers, employee base and suppliers, Diageo has been promoting female empowerment for a long time. With 40% of our board of directors comprised of women, we received the Opportunity Now Female FTSE 100 award, given to the FTSE 100 company with the highest female representation on its board. For the fifth year in a row, we’ve been named in Working Mother magazine’s ‘100 best companies’ for women to work for and this year was included in the US National Association of Female Executives’ ‘Top 50’ list. And last year, we launched an exciting initiative to invest £6.4 million to empower 2 million women in 17 countries in Asia Pacific by 2017. This is a very large community investment programme for the region.

We know there is still more we and the alcohol industry can do to consider the unique needs of women. Stakeholders have suggested that we expand our educational programming around Foetal Alcohol Syndrome and other impacts of alcohol, efforts to empower female small scale farmers who represent just 5% of landowners in North Africa and West Asia, or trainings for women working in the hospitality industry that face risks men may not.

We are committed to these kinds of programmes not only for the women in our business, but to support the positive impact of the industry at large. This is why we think signing the UN Women’s Empowerment Principles was a natural fit for us.  We hope other companies in our industry and supply chain will also sign on

What would you say are the main highlights of the report?

This year’s report unveils our refreshed strategic priorities and the steps we took to get there.

It also highlights performance against targets in every element of the strategy. For example, despite an increase in production, we used nearly 1 million cubic metres less water this year – equivalent to the annual domestic needs of 50,000 people. This was coupled with our work in Africa to provide access to clean drinking water to approximately one million people. We reduced our carbon by 4% in the past year and the waste we send to landfill by more then 50%.

We also trained over 25,000 people through our Learning for Life programmes in Latin America and the Caribbean to support people in getting employment.

This year we are also especially proud of our indices rankings.  Diageo was ranked the best performing beverage company for climate change strategy, emissions disclosure and performance by CDP and also achieved the highest score in the beverage sector for environmental operational efficiency in the Dow Jones Sustainability Indices.

What have been the main changes you’ve seen in CSR reporting?

The field of CSR reporting has changed drastically since Diageo released its first GRI report in 2003. Back then, with only 200 other reports, it was impressive to just comply with GRI.  Now in a crowded field, companies are trying to distinguish themselves with longer and longer GRI reports. But interestingly, there has been a pushback by stakeholders unable to find the information they need. I know I feel frustrated sometimes when I’m reading CSR reports. It’s almost a lack of transparency through over-disclosing.

We’ve done our best to easily sign post all the critical information, including the GRI indicators and performance against targets, to balance comprehensive reporting with a user friendly style. We will be making more improvements following our strategic refresh this year which helped us further prioritize our material impacts.

What is your experience of the GRI reporting process and views of the guideline upgrade (G4 guidelines)?

The GRI is the best tool we have to try to make sustainability reports material, consistent and comparable, and GRI’s multi-stakeholder process helped ensure a variety of stakeholders had a voice in establishing G4. Many of the improvements, such as building out the materiality process, will help ensure people report consistently on the most important issues.

However, I still fear the changes won’t resolve some of the problems that non-financial reporting faces particularly around accuracy (many reports aren’t assured) and around comparability (the process for defining materiality and scope could still drastically differ across companies in the same industry).

What are the main challenges in CSR & sustainability today?

One of the biggest challenges that many consumer companies face is making a tangible business case for their sustainability initiatives. While some benefits are very straight forward (for example cost efficiencies through environmental efficiencies) others have intangible returns that are less understood across the company.

The holy grail for consumer companies continues to be attracting the mainstream shopper to ethical products. Despite optimism for decades, there is still a large ‘green gap’ between what consumers say they will do versus what they actually buy. Certainly consumer companies that are able to attract mainstream consumers to ethically made products will have more leverage in progressing their social and environmental agendas.

However, a different challenge actually stems from the promise of competitive advantage. Multi-stakeholder and industry partnerships are essential in making a real dent in many global challenges - be them climate change or socio-economic development or alcohol misuse – yet companies, particularly in the same industry, often act unilaterally on  their social and environmental solutions for fear it would give up their competitive advantage. This lack of collaboration if not addressed will ultimately diminish the potential impact the CSR field can have. Collaborative efforts such as the CEO Commitments are a welcome way forward to get the scale we need to make a difference.

Some say the CSR debate has plateaued, do you agree?

The field has changed drastically since I first got started when we were just defining what CSR and sustainable development meant to multinationals. Now you would be hard pressed to find a large company without a CSR department running multiple  programmes around the world.

While the quantity of CSR programmes has not slowed, it is true that many of the opportunities identified by CSR professionals years ago have still not been captured. Large companies still haven’t significantly attracted mainstream consumers or investors through their sustainability activities and very few have embedded S&R to the point of integrated reporting. Meanwhile social and environmental problems, such as climate change, water scarcity and economic inequality, are actually getting worse.

Interestingly one study by marketing agency Futures company said many consumers are developing a fatigue from the endless CSR information companies are putting out. Perhaps the best way to energize people, and get creative solutions to complex problems, is to focus on fewer things but do them with scale.

How do you see the evolution and future of CSR?

While CSR is, and needs to be, so much more than compliance with laws, it is interesting to see how some governments might be losing their patience with the pace of progress from voluntary initiatives. We are seeing governments increase regulation, particularly around reporting. For example, in the US, the Dodd Frank Act and California Transparency in Supply Chains Act ask companies to report on practices in their supply chain. In Europe, the European Commission is calling for greater accountability and proposing mandatory integrated reporting. The same is true in emerging markets as well with sustainability reporting requirements in countries such as Brazil and South Africa.  In other emerging markets, governments have passed additional and unprecedented legislation. For example, India is requiring large companies to dedicate 2% of their profits to CSR activities             .

While this regulation will change some behaviour, the biggest chance we have for the private sector to use its creativity and scale to address social and environmental problems is when it sees the commercial imperative to do so. With population growth putting increasing stresses on the security of natural raw materials and local communities, much of the business case is already there. However, I feel this will only get larger as multinationals rely more on markets that are disproportionately impacted by issues like climate change or income equality for their financial growth.

Guinness Alternative Energy C, a £3.72m fund, came top amongst UK Registered funds over the past year to 30 September 2013 with an improving cumulative +77.63% return, but lagged with a -21.90%/150th sector ranking over the past 3 years and -38.36% over past five. The £34.1m KBI Institutional Alternative Energy A EUR fund again scooped the runners-up spot for the past year (+37.02%), up from -10.71% (145th) over 3 years and -30.48% over past five thus tainting matters for longer-term holders. Premier Ethical A Inc., a £60.77m fund, has been a consistent performer here over both the last one and three years – ranking fifth each time with +32.72% and +48.42%, respectively and ranking 19th/+70.22% over five. SUNARES again ranked bottom in this sector posting a deteriorating -38.27% over the last 12 months.

In US Mutual funds sector, the $21.88m Guinness Atkinson Alternative Energy fund continued its top ranking with a more robust +67.64% past one-year cumulative return, yet lies in negative territory over three and five years at -26.33% (199th) and -51.68% (185th), respectively. The $187.64m Eventide Gilead N fund dropped one place to third this time round for the past year on an improving +55.71% and ranked No.1 on five years with a massive +162.67%. Timothy Plan Defensive Strategies A fund took the sector’s wooden spoon again over the past 12 months (-8.09%).



LSF Asian Solar & Wind A1 fund took the yellow jersey within the European funds sector over the past year an improving +141.54%, but still ranks a lowly 1,020th (-34.27%) over the past three-year horizon. MAP Clean Technology Fund I came second for the last year (+97.74%), followed by Guinness Alternative Energy A fund’s +70.18% versus -22.69%/1,012th over past three years. Öko-Aktienfonds was fifth (+39.18%) against a 714th ranking (+10.1%) over past three. While Triodos Vastgoedfunds bottom ranked it saw slight improvement for the past year at -41.25%.

Among UK Insurance funds Skandia/Allianz Global Eco Trends Life fund took top spoils over the past year with a +30.00% return, followed by Canlife/Allianz Global Eco Trends 4 Life fund. L&G/Life Neptune Green Planet fund lagged the entire sector with -2.91% over one year and -31.33% over three. 



For the UK Individual Pension funds sector Skandia Ethical Portfolio Pension fund came out top with +33.57% over the last 12 months.
There was no change at the bottom for ReAssure NM Deposit Pension fund. 

Submitted by Guest Contributor

By Dr. Kevin Dooley

“Dematerialization” may sound pretty nerdy, but it’s a powerful strategy that many manufacturers are now pursuing to improve their triple-bottom line. Through product and process design and innovation, manufacturers and their suppliers are figuring out how to do more with less, using strategies such as de-weighting, use of recycled material, and design for durability, re-use and recycling.

The Sustainability Consortium® (TSC®) is an organization of diverse global participants that work collaboratively to build a scientific foundation that drives innovation to improve consumer product sustainability. TSC has recently completed work covering a number of manufactured good categories, or “General Merchandise” products, including bicycles, hand tools, small batteries, small appliances and items such as storage products, furniture and home, lawn and garden products made of plastics or metals.

Identifying ESG Opportunities

TSC’s approach identifies the environmental and social issues and opportunities that exist across a consumer product’s whole life cycle, from mining or farming to disposal or recycling. In the life cycle of manufactured durable goods, we find that one improvement opportunity is common – companies should design products and processes that use less material, and use less energy-intensive material.

The United Nations Environmental Program (UNEP, 2011) defines dematerialization as “…decreasing the material requirements of whole economies. It requires (a) reducing the material intensity of products and services, i.e. by increasing material efficiency, and (b) especially reducing the use of primary material resources (such as ores, coal, minerals, metals, etc.) by improving recycling and re-use of secondary materials (i.e. shifting to a circular economy).”

The reason why dematerialization is such a strong lever for sustainability improvement is because it affects many different environmental impacts. If we use less material to make products or packaging, then we are extracting fewer non-renewable resources from the earth. According to the United Nations, we will need “two earths” worth of resources to sustain the world population by 2030. Companies have already experienced how material shortages can impacts product availability, and many use material availability forecasts as part of their strategic planning.

Creating a “Waste Not, Want Not” Mentality through Recycling

Recycling is another way in which we can use less material. By making products that have recycled content in their materials, we need less virgin raw material, which preserves non-renewable resources. By making products recyclable, we create a supply of material than can displace the need for virgin raw material. The “cradle to cradle” strategy advocates for a closed loop economy in which materials are extracted from products at the end of their life and used as raw material for new products. As a variation on this idea, companies and experts have begun to look at how to recycle already-disposed products, mining useful materials from garbage landfills.

The energy required to extract, process and assemble the materials and components that make up the product leads to greenhouse gas emissions, and typically depletion of non-renewable resources. By using less material, less extraction and processing is required—thus reducing emissions. It is also sometimes feasible to exchange one material for a less energy-intensive alternative that provides similar functionality.

Often the strategy that can lead to the greatest reduction of negative impacts is to extend the life of a product. If, for example, the useful life of a product can be extended from two to four years, then impacts associated with making the product are cut in half. While many premium products promote their durability, it’s usually the case that a product is disposed of before its actual functional life is over, so we must create technological and market mechanisms for upgrading, refurbishing and re-using products.

Moving from Product-based to Service-based… and from Responsibility to Opportunity

Dematerialization can take place at a much larger scale as we move from a product-based to a service-based economy. If instead of a consumer owning a product they lease it, a manufacturer is incentivized to design products that are durable, maintainable, upgradeable and re-usable. We already see leasing-based systems take hold in products such as automobiles and office equipment, and as resource availability becomes more acute and infrastructure matures, it will become more economical for manufacturers to lease than to sell product.

To make strides on a closed-loop economy, we’ll need change on several fronts. First, product designers and engineers need to be trained and educated to consider end-of-life and re-use issues. Designers focus their creativity on what their stakeholders deem is important at the time. The main reason we don’t have more sustainable products, or products that have better end-of-life attributes, is because these considerations are all relatively new to designers and their profession. As concepts, methods and tools for designing for material efficiency become standardized and part of the discipline’s vocational training, designers will naturally consider these issues in their creative process.

Second, we need the infrastructure, investments and incentives to create the market drivers and systems for development of scale and efficiency. The idea of a dematerialized society is great on paper, but without viable business models and competent operations, it doesn’t happen. As evidence as to where we now are, the term used to refer to a manufacturer’s role in their product’s end of life is called “extended producer responsibility.” Leading companies recognize that in the long-term, this needs to change to “extended producer opportunity.”

Third, we need collaboration across industry sectors, supply chain actors, and governments and NGOs to develop necessary standards and guidelines. If we just look at recycling, individual municipalities, counties, states, countries, and regions create their own laws, causing a manufacturer with a global supply chain and consumer lost cost, time, and confusion—and missed opportunities. For example, the current plastic recycling codes are difficult for consumers to understand because what is and is not recyclable changes by region. If all regions had the same capabilities, then communication to consumers about recyclability could be simpler and more direct.

In any given instance, dematerialization cannot be considered in a vacuum. For example, material used for packaging adds to product safety and reduces product waste, so dematerialization objectives always have to be balanced with other environmental, social, and economic considerations. The general approach though—use less material, extend the useful life of material, and use less energy-intensive material—is a powerful sustainability principle for any manufacturing organization.

About the Author:

Chief Research Officer. Dr. Kevin Dooley is a Professor of Supply Chain Management and a Dean's Council of 100 Distinguished Scholars in the WP Carey School of Business at Arizona State University. He is Academic Director of The Sustainability Consortium, developing science and tools to improve the sustainability of consumer goods. Dr. Dooley is a world-known expert in the application of complexity science to help organizations improve. He has published over 100 research articles and co-authored an award-winning book, “Organizational Change and Innovation Processes”. He is on several journal editorial boards including Journal of Supply Chain Management and Journal of Business Logistics. He has been awarded two patents on Centering Resonance Analysis, a novel form of network text analysis, and is co-founder and CEO of Crawdad Technologies, LLC, a provider of text analysis software for academics of Business at Arizona State University.

About The Sustainability Consortium:

The Sustainability Consortium (TSC) is an organization of diverse global participants that work collaboratively to build a scientific foundation that drives innovation to improve consumer product sustainability. TSC develops transparent methodologies, tools, and strategies to drive a new generation of products and supply networks that address environmental, social, and economic imperatives.

The Sustainability Consortium advocates for a credible, scalable, and transparent process and system. The organization boasts over 90 members from all corners of business employing over 57 million people and whose combined revenues total over $1.5 trillion. The Sustainability Consortium is jointly administered by Arizona State University and University of Arkansas with additional operations at Wageningen University in The Netherlands and Nanjing University in China.

Learn more at www.sustainabilityconsortium.org.

South Korean electronics giant Samsung has won the inaugural eCycling Leadership Award from the Consumer Electronics Association (CEA) in the US its recycling efforts in the electronics industry.

Samsung collected and responsibly recycled more than 92.5m pounds of e-waste in 2012 and more than 300m pounds of e-waste since its Samsung Recycling Direct programme began in 2008.

CEA’s eCycling Leadership Initiative aims to promote awareness of electronics recycling opportunities nationwide while increasing the amount of electronics responsibly recycled.

Samsung was the first electronics manufacturer to become an e-Stewards Enterprise, which means the company only works with recycling vendors that meet strict social and environmental requirements. E-Stewards certified recyclers do not incinerate, send waste to landfills, or export toxic waste to developing countries, according to the E-Stewards restrictions on processing materials of concern.