Winning with Integrity

Mallen BakerImpact on Society Director

“Business has never operated against a background in which there has been such immense potential.

Equally, however, it has never faced such rapid change, such intense competition, such uncertainty - and so many risks.”

Source: Chatham House Forum- Uncharted Waters 1998

Growing expectations on business

Business

CustomersGovernment

NGOs

Society

Employees

Shareholders

• Increased pressure from stakeholders ranked second most important issue facing business by 750 CEOs surveyed“Most Respected Companies Survey” Financial Times / PwC Dec 7th 1999

So … what’s it all about?

• Marketplace

• Environment

• Workplace

• Community

Impact on Society

The Issues

MarketplaceImpact on society of core productsand servicesIssues around buying and sellingSupply chainVulnerable customersCause related marketing

WorkplaceWorkforce diversityWork-life balancehealth and safetyhuman rightstraining and lifelong learning

EnvironmentEmissions to air, land and waterUse of natural resourcesEnvironmental riskTransport impactsImpact on environment of core products and services

CommunityImpact on local operations onthe communityBusiness investment in community

What can social responsibility do for you?

ImproveBuild

Protect

Competitivenessthe WorkforceReputation

Business Competitiveness

• Strengthened relationships with customers and suppliers

• The ability to recruit and retain key staff

• Efficient use of natural resources and energy and reduction of costs

Building the people

• Maximising the contribution and effectiveness of all your staff (managing diversity)

• Becoming an employer of choice, able to attract the best staff

• Providing continual development within a framework of respect for work-life balance to retain the staff you have

Protecting Reputation

• Managing the key stakeholder relationships that could affect the business

• Minimising risk of exposure to environmental accidents or human rights violations

• Developing a positive relationship with local communities

Customers - Millennium Poll on CSR

• 2 in 3 want companies to contribute to broader societal goals

• 1 in 2 paying attention to social behavior of companies

• 1 in 5 rewarded / punished corporate behaviour past year

Employees - attracting and holding on to the talent

• Between a quarter and a half of graduates say they will not consider working for companies that they believe to be unethical – such as tobacco and defence firms and some FMCG (fast-moving consumer goods) companies they perceive as exploiting cheap labour abroadSunday Times May 7th 2000

Employees - attracting and holding on to the talent 2

• A study conducted by McKinsey, “The War for Talent”, published in 1998 found that only 3% of companies responding believed they had enough talent to reach their objectives in five years. MORI research throughout the 1990s consistently found that the vast majority of people believed that a company that supports the community is a good company to work for.

• Bain & Co found that those companies that have the highest employee retention also have the greatest customer retention.

Reputation may be your biggest asset

• Intangibles can represent a large part of your market capitalisation (96% for Coca Cola, 83% for IBM)

• Last year, a poll of 25,000 citizens across 23 countries on 6 continents showed that perceptions of companies around the world are shaped more by corporate citizenship (56%) than either product quality (40%) or business fundamentals (34%).

• Enhanced reputation with consumers, employees (current & potential), business partners

• Admired companies seek alliances

• New insights / skills

• Neighbour of choice

• Goodwill banked - “benefit of the doubt”

Getting it right

Getting it right 2

• Staff productivity & retention - lower training costs

• money-saving: e.g. energy, waste disposal

• money-making: new markets, new products

• added-value to investment in brand & corporate reputation

Who does this well?

• ASDA, whose diversity policies have seen a decrease for five years in staff turnover and an increase in staff satisfaction

• BT, whose environmental improvements have saved 150m miles (£20m) through audio conferencing and has reduced CO2 emissions by 44% since 1991.

• Nat West, whose Corporate Community Investment programme on the arts showed 92% of volunteers gaining new skills

The best companies already do this in order to ...

• Reduce costs

• Protect and enhance corporate reputation

• Manage risk

• Keep the “licence to operate”