Well to be honest, Kevin, I could have spoken on the interview for another 20 minutes.  I was torn between whether to list more of our US community investment initiatives like our digital inclusion partnership with One Economy or to speak more about the role of doing good through our products and services.  In the end I timed out on either.

Marketing is not about deciding what the company makes and telling your customers why they should buy it.  It’s about understanding your customers’ priorities and then working out how your core capabilities can help them address those priorities.   And I am seeing our customers increasingly reflect impact on society and environment in their core priorities.

For example, I mentioned P&G in the interview with Shama. P&G express their mission as to “provide branded products and services…that improve the lives of the world consumers”. Unilever wants to halve the environmental footprint of its products while helping 1 billion people to take action to improve their health and well being. And, our customer Philips wants to bring care that touches the lives of 500 million people by 2015.

Enlightened companies are no longer reticent to frame their corporate responsibility as part of their core mission, delivered both through their products and through their community investment.  And equally they are not shy to say it is beneficial for their business.

We can help them deliver that mission and I am not shy to say that’s good for our business too.    With our presence around the world we can help our customers get set up in developing economies where they can provide jobs, products and services to help build economies.   Our technologies can also help people do more with less to help reduce the cost of public services such as health care.  Our solutions help reduce the burden on the environment by reducing travel.    So from my marketer’s perspective, CSR is about both a foundation of community involvement and about helping our corporate customers to deliver business missions that help society and the environment.

In the 5^th episode of this video series, I focus on the sustainable shopper.  I joined Harriet Hentges, VP Corporate Responsibility and Sustainability at Ahold USA Inc., (owner of Giant), at a local Giant supermarket in Bethesda MD, to explore the potential for applications to help a shopper with a product decision at the point of purchase.

ICT in the Environment: The Sustainable Shopper from Kevin Moss on Vimeo.

ICT in the Environment: The Sustainable Shopper from Kevin Moss on Vimeo.

The mobile application we looked at, The Good Guide, provides information on the health, environmental and ethical attributes of a product.  The consumer can customize the application to provide an aggregate score for a product based on your own priorities. In theory, the application creates the potential for millions of consumers to make informed choices and give the companies that serve them the incentive needed to continually improve the sustainability attributes of products.

But I must admit to being skeptical about the concept of the consumer as the major driver for sustainability change. The application is enticing for a CR practitioner and it’s a delight to scan a product and see its credentials pop up on your screen.   But I don’t see myself walking around the supermarket scanning each product and interpreting the results before I buy it.

Instead, as you will see in the video, although I am an ICT guy, I think trusted labels, either on the shelf, or on the product itself, are going to be the way interested consumers make these decisions.

Now back at home on the other hand, I had a lot of fun scanning everything in the pantry and the laundry room and deciding if I would buy that product next time….

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice. That’s disappeared. Profits and efficiency have trumped generosity”

I disagree.  I would argue that not only is it in the best profit and efficiency interests of a company to put work where it is done best, it is absolutely consistent with generosity. From an ethical perspective the individual in the least affluent country deserves the job the just as much as the worker in the more affluent home country,  and the positive impact on economic development is crucial.

The necessary note of caution though is characterized by an anecdote from the article; during a time of great need by Apple, a Chinese component assembly plant took the following action

“[Near midnight] A foreman immediately roused 8,000 workers inside the company’s dormitories, according to an executive [of Apple]. Each employee was given a cup of tea, guided to a work station and within half an hour started a 12 hour shift fitting glass screens into beveled frames.”

What developed economy worker would want that job ? Even if they did, is it fair treatment of a worker ?    For the record, the supplier Foxconn, disputed the story later on the article, but either way, it makes the point that at the same time as we help support economic growth and grow markets in emerging and developing economies we need to get the balance right with protecting the rights of the workers.

Unnamed Apple executives are then quoted explaining that

 “it is a mistake to measure a company’s contribution simply by tallying its employees”  

 “Apple’s success has benefitted the economy by empowering entrepreneurs and creating jobs at companies like cellular providers….”. 

“We don’t have an obligation to solve America’s problem. Our only obligation is making the best product possible”

I think the right answer sits somewhere between.  Companies all have an impact on society through the people they employ and how they are paid and treated. But impact is also through suppliers and through  products and services.  Companies have an impact through taxes and through the wealth created in society from dividends and share value. Each of these contributions can and should be examined and managed individually with a financial, compliance and moral component. But it is the interaction between them and the holistic impact of them all by which we should judge how responsible a company is and what it contributes to society.

If you don’t have the hard copy, you can read the full article in the NYT here. It is lengthy, but it makes a good read.

Postscript Jan 24th – Since writing this post only yesterday, I came across this case study of BT working through the supply chain on ethical workplace practises with Pace PLC and Flextronix  in China and Singapore http://www.pace.com/universal/responsible-business/supply-chain/socially-responsible-partnership/

As I have written before on employee engagement, I see my role as to release enthusiasm, generate momentum and then harness people’s passion and energy – release rather than police. I need people to want to check in with me and hear what I have to say because I bring them value in their role.

So my preferred mode of operation is to be a catalyst, defined in dictionary.com as “a person or thing that precipitates an event or change”.  My objective is to effect change through sharing ideas and helping employees figure out how to apply those ideas to their particular situation for the benefit of the business and society.

From time to time though that isn’t enough and I find myself forced to become an irritant. An irritant is defined as  “a biological, chemical, or physical agent that stimulates a characteristic function or elicits a response.” Occasionally I find myself pushing a bit harder, probing or bringing an issue to a head to get the response I need.  That doesn’t always make me popular, it takes more energy, and an irritant can leave lingering a sore spot.

It is far more fulfilling, sustainable (pun intended), and enjoyable to be a catalyst, but when all else fails I fall back on irritant – hopefully not too often and hopefully bouncing back quickly to catalyst and providing some salve for the sore spot I might have left.

I would love to hear about how you think about your role in CR and sustainability?

To finish this short series I was looking for an alternative perspective on IR. I met Stathis Gould in New York at the CR Commit Forum 2011. Stathis works at the International Federation of Accountants on supporting professional accountants working in business, and is passionate about corporate responsibility.  He has also been pulling together the IFAC Accountants in Business response to the IIRC discussion paper available here. I enjoyed hearing his views from an managerial accountants’ perspective and we have met since to discuss integrated reporting from our different vantage points.   He kindly agreed to contribute his perspective in a blog post.  

The International Integrated Reporting Council (IIRC) has established prominence quickly following its formation in 2010, and the issuance of its discussion paper in September 2011, Towards Integrated Reporting, Communicating Value in the 21^st Century.

The pace of the IIRC’s development, and the thinking on integrated reporting (IR), is a testament to thewide variety of organizations and individuals that have driven this importantidea forward. The number of responses to the discussion paper (more than 200) demonstrates the interest, andcurrent frustrations with corporate reporting. But will IR provide a solution?

More than 50 companies are participating in the IIRC’s pilot programme, which will provide an enormous learning opportunity and should work through the implementation of theory into practice.However, challenges in implementing the vision for IR remain.

1. Should various reports and disclosures be brought together to form the integrated report? The integrated report is clearly not about gluing together pieces of information from various disclosures and reports. The integrated report isalso not intended to replace existing forms of disclosure; it is currently presented as an additional report. However, it will be important to compare the cost/benefit in various reporting scenarios, such asascertaining whether the principles of IRcan been applied in the preparation of the annual report and accounts.  Integrated reporting might not necessarily need to entail preparing a separateadditional report.

2. What is material and to whom? If the IIRC continue to follow an investor-centric approach, how will materiality be defined for investors(vis-à-vis wider stakeholders)? Furthermore, to achieve conciseness, relevance, and usefulness, anIR framework will need to help organizations practically address materiality to avoid disclosing too much and, therefore, creatingdisclosure clutter.

3. What does sustainable value creation mean, particularly in relation to the demands of investors? If it is the long-term that we (society) really care about, does IR provide adequate incentive to seriously change current short-termism? Decisions potentially impacting the welfare of future generations should require an assessment of costs and benefits beyond what some companies and investors currently consider long term.

4. What comes first: internal integration or IR? Arguably, organizations require guidance on the internal steps necessary to achieve high quality IR, which depends on integrated thinkingat various levels so that sustainability factors are integrated into governance, strategy, management, processes, and systems. Producing a polished integrated report and taking sustainable development seriously is not necessarily the same thing.

5. Does non-financial information attract an adequate level of oversight? Audit committees oversee financial reporting and disclosure, which gets boardroom attention.There also needs to be sufficient understanding and oversight applied to the management and reporting of significant ESG risks and disclosures, either through the audit committee or other means.

The next phase for the IIRC is the development of a proposed framework for IR, which will be released for consultation in 2012 or 2013.

The recent discussion paper from the International Integrated Reporting Committee  (IIRC) for which comments were due on December 14^th 2011 worries me. It starts with some statements with which I wholeheartedly agree…

“Integrated Reporting brings together material information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value.”

 “Integrated Reports will meet the needs of a broad range of stakeholders.”

 However this is immediately followed by this statement

 “Initially, however, the IIRC intends to focus the development of the Framework on the needs of investors (providers of debt and equity), consistent with the current duties of those charged with governance in many jurisdictions.”

I cannot but fear that with the long term objective of bringing two diverse practices together, the worst place to start is by making one subservient to the needs of the other. Despite many examples of where sustainable behavior is good for business there are still a wealth of sustainability issues which are currently, at best, of no interest to most shareholders. Building a framework that ignores this will set us back in the nascent field of sustainability reporting at exactly the time where we need to keep moving forward.

I think this was a run around, instead of over, the hurdle I described in the first post of this series. And it will come back to haunt us.  We should address the big issue from the get go. Personally, I would urge that the framework for integrated reporting starts by recognizing and describing the diverse range of stakeholders and diverse, sometimes hard to measure issues of CR and sustainability.

See also the CROA response to the IIRC discussion paper here.  Response to question 4(a) refers.

Does integrated reporting means a single report, or does it mean multiple reports ?

At BT, our annual sustainability report consists of a comprehensive online report of hundreds of pages of text and data supplemented by a summary PDF of about 20 pages.  Our Annual Report and Accounts (ARA) is an interactive PDF of text and data of about 180 pages.  Both our reports are externally audited.

Does integration mean combining all this into one report, or does it mean creating an integration between the content in each.

Interestingly,  during the sustainability report planning process last year,  one of the options considered was producing multiple sustainability reports to address the different sustainability needs of customers, employees and other stakeholders. Had we done it, that would have meant more reports, not less.

How should we integrate ?

We provide financial indicators for our CSR KPIs and include high level financial results in the sustainability report.    In the 2011 ARA, we had a four page CSR section as we have always done, and for the first time, we reported relevant CSR/sustainability information within the individual sections for each and every line of business and operating unit.  There is more we can do, but I consider we achieved the first steps of integration, though producing separate reports for separate stakeholder audiences.

I envisage an increasing interconnectivity between financial, ESG and other CSR information reported, that will be increasingly reflected in the overlap between the commentary in the reports.

I do feel that we need to resist the urge to make a decision on whether the end game is a single document or multiple documents. It would be valuable to experiment with a few different formats before deciding !

I think that by far the biggest challenge is going to be reconciling  the approach of the financial reporting community with the approach of the CSR/sustainability community.

The financial reporting community produces highly compliance-based reports. Compliance which in my view incentivizes a low risk, play it safe, measurement oriented, audit heavy approach. The material is laser focused on the shareholder audience interested primarily in near term measurable share value and returns.

The CSR/sustainability emphasis in contrast is on the long term, effecting change, on holistic impact (sometimes not as measurable).  The audience is multiple stakeholders interested in a broad range of topics.  Some topics are business related, but some not.  Some are consistent with delivering long, or even short term returns, but some are in conflict. 

How to reconcile these ?

I wrote an article for this month’s CR magazine on the trend I am seeing amongst CR practitioners to validate all sustainability programs within the framework of the CFO’s view of the world.   And that worries me.  The article, which came out online yesterday explores why I think this is a troubling trend.

Business looks to us to set the CR agenda.  And we need to talk the language of business.  But, far from falling into line with offering a single perspective, no matter how important it might be to operate using business tools and terms, CR and sustainability professionals should be there to provide alternative perspective.  In other words, we should be there to be a balancing force, not a subservient one.

To read the entire article, take a visit to the CR Magazine site.  To let me know what you think of my perspective, leave me a comment below.  I look forward to a lively debate.

In different ways, both indicate the need for an increasing maturity in our approach to corporate responsibility and sustainability as our programs take root and grow.    Initiatives that appear to be the right thing to do at a small scale, need to be revisited as they scale and the full implications become evident.

Marc identifies inaccuracies in the truisms that are bandied around about plastic bags (the 1 mile island of trash in the Pacific) , but also questions the underlying assumption of whether the  solution of reusable bags is actually more likely to be sustainable than recycling shopping bags.

In the Washington Post article, Simon Clark and Heather Walsh delve into philosophical differences in approach to Fair Trade products.  I read the article as a rift between the founders of the Fair Trade movement on the role of corporations in supporting farmers. Many companies I have written about before Nestle, Starbucks, Kraft, Cadbury  and Wal-Mart are mentioned.

To me, both articles indicate successful programs that have grown so well that broader impacts are becoming evident. Some of these are simply not possible to predict accurately until a program reaches scale. But that shouldn’t stop us trying. The lesson for us CR practitioners should be that when we launch something new, we need to think upfront about the potential outcomes as it scales. “What is this becomes really big ?” is the question we should ask ourselves to test true sustainability.