ethical corporation report summary - industry initiatives in csr

GUIDE TO INDUSTRY INITIATIVES INCORPORATE SOCIAL RESPONSIBILITY

Your guide to selecting the rightmultistakeholder initiative foryour company

EXECUTIVE SUMMARYThe full report is available at www.ethicalcorp.com/initiatives

May 2009© Ethical Corporation

www.ethicalcorp.com/initiatives

GUIDETO

INDUSTRYINITIATIVESIN

CSR

Table of contents

2

About this report and about us ................................................................6

Acknowledgements ....................................................................................7

Executive summary ....................................................................................8

List of acronyms ........................................................................................11

Definition of symbols ................................................................................12

Characteristics of initiatives ....................................................................14

Introduction ................................................................................................15

SECTION 1: WHY INDUSTRY-BASED CSR INITIATIVESCAN BE IN YOUR COMPANY’S BEST INTEREST..................161.1 Overview ..........................................................................................16

Box 1: Why do companies join an initiative? ................................17

1.2 Characteristics of initiatives ..........................................................18

1.3 Benefits of initiatives ....................................................................19

1.4 Creating roles and responsibilities for different partners ........20

Figure 1: The ICI approach ............................................................20

1.5 Background to the initiative movement ....................................21

1.6 Drivers ..............................................................................................22

SECTION 2: IMPACT, EFFECTIVENESS AND PROFITFROM INITIATIVE PRODUCTS AND SERVICES ....................23

2.1 Evaluating and selecting an initiative that is right for your

company and judging the merits of alternative initiatives ....23

2.2 Formation and design ....................................................................23

2.3 Scale ................................................................................................23

2.4 Effectiveness and impact ..............................................................24

2.5 Resources for sustaining initiatives..............................................25

2.6 Calculating costs ............................................................................26

2.7 The opportunity ..............................................................................26

2.8 13 challenges faced by initiatives and their

corporate members................................................................................28

SECTION 3: FORECASTING THE FUTURE OF INITIATIVESFOR CORPORATE GOOD ................................................................33

3.1 Initiative trends among market leaders ....................................33

3.2 Industry initiatives in the future..................................................36

Box 2: The role of civil society groups within industry-based

initiatives ........................................................................................36

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SECTION 4: PROFILES OF LEADING ANDEMERGING INITIATIVES ..................................................................38

4.1 Agriculture ......................................................................................38

4.1.1 Better Cotton Initiative ..........................................................39

Box 3: Focusing on root causes ....................................................40

4.1.2 Better Sugarcane Initiative ....................................................42

4.1.3 Common Code for the Coffee Community Association ......44

4.1.4 Ethical Tea Partnership ..........................................................47

Box 4: Adapting monitoring ..........................................................48

4.1.5 Forest Stewardship Council ..................................................50

4.1.6 International Cocoa Initiative ................................................52

4.1.7 Round Table on Responsible Soy ........................................54

4.1.8 Roundtable on Sustainable Palm Oil ....................................56

4.1.9 UTZ CERTIFIED Good Inside ................................................58

Case study – Sara Lee ..........................................................................62

Company overview ........................................................................62

Sara Lee’s CSR initiatives ..............................................................62

Benefits of the 4C Association ......................................................63

UTZ CERTIFIED Good Inside ........................................................63

Figure 2: Growth curve of an initiative ..........................................64

Ethical Tea Partnership ..................................................................64

Resources and staffing....................................................................64

Communicating to stakeholders ..................................................65

4.2 Mining and natural resources ......................................................65

4.2.1 Marine Stewardship Council ................................................66

4.2.2 Initiative for Responsible Mining Assurance ........................68

4.2.3 International Council on Mining and Metals ........................69

4.2.4 Extractive Industries Transparency Initiative ........................71

4.2.5 Voluntary Principles on Security and Human Rights ..........73

Box 5: Steps towards adopting the VPs ........................................75

Case study – Anglo American ..............................................................76


The Anglo American brand ..........................................................76

Anglo American’s CSR initiatives ..................................................76

Anglo American’s involvement in the ICMM ................................76

Anglo American’s involvement in the EITI ....................................77

Anglo American’s involvement in the VPs ....................................77

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Resources and staffing for initiative management........................77

Initiative challenges for Anglo American ......................................78

4.3 Manufacturing ................................................................................78

4.3.1 Automotive Industry Action Group ......................................79

4.3.2 Responsible Jewellery Council..............................................81

4.3.3 Electronics Industry Citizenship Coalition ............................84

4.3.4 Fair Labor Association ..........................................................86

4.3.5 International Council of Toy Industries CARE Process ........88

4.3.6 World Federation of the Sporting Goods Industry ..............90

4.3.7 Worldwide Responsible Accredited Production ..................91

Case study – Gap Inc. ..........................................................................93


Gap Inc.’s CSR initiatives ................................................................93

Gap Inc.’s path to joining initiatives ..............................................93

Assessing the value of initiatives....................................................94

Gap Inc.’s involvement with the SAI ..............................................94

Gap Inc.’s involvement in the ETI ..................................................95

Gap Inc.’s involvement in the BCI ..................................................96

Gap Inc.’s involvement with the BLIHR ..........................................96

Gap Inc.’s involvement in the Ceres network ................................97

Additional lessons from Gap Inc. on getting the most

from initiatives ................................................................................97

The necessity for additional research ............................................98

Resources and staffing for initiative management........................98

Initiative challenges for Gap Inc. ..................................................98

Gap Inc.’s interpretation of the future of initiatives ......................99

4.4 Services ............................................................................................99

4.4.1 International Tourism Partnership ......................................100

4.4.2 The Equator Principles ........................................................101

4.4.3 Logistics and Transportation Corporate

Citizenship Initiative ............................................................104

4.4.4 Media CSR Forum ................................................................105

Case study – ABN Amro ....................................................................107

Company overview ......................................................................107

ABN Amro’s CSR initiatives ..........................................................107

ABN Amro adopts the EPs ..........................................................107

ABN Amro’s ESE ethical screening strategy ................................108

Figure 3: The policy development process ................................108

4

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5

TABLE OF CONTENTS

Training and staffing for initiative management ........................109

Internal ABN Amro strategy ........................................................109

Initiative challenges for ABN Amro..............................................110

ABN Amro’s advantages in implementing the EPs ....................110

Figure 4: Initiatives can occur within a continuum ......................110

4.5 Retail ..............................................................................................110

4.5.1 Business Social Compliance Initiative ................................111

4.5.2 Global Social Compliance Programme ..............................112

4.6 Cross-industry................................................................................114

4.6.1 Ethical Trading Initiative ......................................................114

4.6.2 Global Reporting Initiative ..................................................116

4.6.3 Social Accountability International ....................................118

4.6.4 Fairtrade ..............................................................................121

Case study – Chiquita ........................................................................124

Company overview ......................................................................124

Chiquita’s CSR initiatives ..............................................................124

Chiquita’s involvement in SA8000 ................................................124

Chiquita’s involvement in the ETI ................................................125

CSR training ..................................................................................125

Resources and staffing for initiatives ..........................................125

Initiative benefits for Chiquita......................................................126

Initiative challenges for Chiquita ................................................126

Evolution of Chiquita’s CSR initiatives ........................................126

SECTION 5: CRITICAL ANALYSIS OF INITIATIVES ............127

Footnotes..................................................................................................129

Sources ......................................................................................................131

APPENDICES: KEY MEMBERS IN EACH INITIATIVE ........133

Appendix A: Agricultural initiative members ....................................133

Appendix B: Natural resources and mining initiative members........138

Appendix C: Manufactured products initiative members..................140

Appendix D: Retail initiative members ..............................................143

Appendix E: Service industry initiative members ..............................144

Appendix F: Cross-industry initiative members ................................146

GUIDETO


CSR

ABOUT THE REPORTCorporate social responsibility (CSR) has produced a new breed of

organisations. Industry-based CSR initiatives are growing rapidly,

in number and in membership.

These initiatives emerged from the collaboration between various

stakeholders interested in CSR for a given sector. These initiatives are

usually managed by an organisation with a network structure that serves

its member companies, while relying on their involvement.

The research presented here is based on an analysis of 30 initiatives,

lessons from 19 multinational corporations, as well as detailed studies on

five multinational corporations.

This report is for you if you want to know:

• How will my company benefit from a joining an initiative?

• Are initiatives considered to be good CSR?

• How do I distinguish between a well-run initiative and a poorly-run

initiative?

• What should I consider when selecting which initiative to join?

• Which initiative does my competition support? What challenges have

they faced, and what benefits have they received?

ABOUT USEthical Corporation is a practical CSR think tank.

Ethical Corporation produces robust and accessible business intelligence

reports for business executives. Reports are based on in-depth research

with leading multinational companies. This research also supports Ethical

Corporation training workshops and commentary services.

Ethical Corporation's research focuses on cutting edge ethical business

management issues.

About this report and about us

6

GUIDETO


CSR

Ethical Corporation is grateful to Deborah Leipziger for leading this

research. Deborah is a consultant, author and expert in the field of

corporate social responsibility. Likewise, we are grateful to Jennifer

Bauser for her research assistance.

Corporate executives and other representatives from the following

companies have collaborated with our researchers, sharing their lessons

and insights on implementing initiatives: ABN Amro, Anglo American,

Bacardi, Chiquita, Ford, Gap Inc., H&M, HP, IKEA, Sara Lee, Shell,

Starbucks, TNT, Vancity, Volvo and Wal-Mart.

Ethical Corporation appreciates the information shared by all 31

initiatives discussed in this report. Substantial contributions were

provided by: the Better Sugarcane Initiative, the Voluntary Principles on

Security and Human Rights, the 4C Association, the Electronics Industry

Citizenship Coalition and the International Cocoa Initiative. The research

has also been supported by representatives from various civil society

organisations including: CAFOD (Catholic Agency for International

Development), Oxfam America, Business for Social Responsibility, and

academics from the Kennedy School of Government at Harvard Univer-

sity, and Warwick Business School.

Acknowledgements

7

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CSR

The rise of industry-based initiatives in CSR is one of the major transfor-

mations in the landscape of corporate social responsibility. Over the past

three years, initiatives have grown in number and their membership has

continued to expand, as has their reach.

Momentum is growing in developing countries around sustainability

issues, and industry-based initiatives provide an architecture that allows

for consultation between developed and developing countries and

between the private and public sectors. Even within sectors, many of

these coalitions allow for consultation between producers, buyers and

retailers. Initiative organisations are intermediaries, bringing players to a

table that is growing to address myriad issues, from environmental, to

social, financial, ethical and anti-trust matters.

Initiatives offer the possibility to create blueprints for change, allocating

responsibilities among key actors, including governments, civil society

and the private sector. Initiatives provide an interesting view into the

field of CSR writ large; they are microcosms of CSR, where new trends

and ideas are incubated and take root.

Initiatives can be useful in establishing collective to-do lists for global

society and identifying comparative advantages of individual companies

in the realm of corporate citizenship. Initiatives can define roles for

individual companies and distribute CSR activities by working in partner-

ship. For an industry-based initiative to be successful, it must define roles

for each partner, so they work with one another.

Executive summary

8

GUIDETO


CSR

Companies form and join industry initiatives for several reasons.

A few of the reasons identified in the report are:

1. Organisations that manage industry initiatives provide a forum for

dialogue on difficult and sensitive topics.

2. Economies of scale in CSR: industry-based initiatives develop and

share common tools that are time-consuming to create.

3. Stakeholder engagement is easier and more time-effective in groups.

4. Initiatives can provide access to public funding for structural changes

within the industry, within supply chains or regions.

5. CSR organisations serve as portals to disseminate information on

CSR issues that are critical to a specific industry in a coordinated

manner.

6. Initiatives develop common systems for monitoring, verification,

certification and reporting.

7. Initiatives build consumer confidence and manage reputation risk

better than a single company can on its own.

Some initiatives are simply a code or set of principles that serve as a

rough guide for corporate policy and overall business strategy. Others

include a network of organisations that work in partnership; still others

have evolved certification systems.

While initiatives have many common characteristics and constraints, they

also vary dramatically from each other. It is important to distinguish

between initiatives that are developed through a multistakeholder

consensus and those that are not. Whether or not they are multistake-

holder in design affects expectations and the degree of legitimacy with

which they are regarded. Initiatives that are not multistakeholder are able

to move more quickly than those that adopt multistakeholder gover-

nance systems.

9

EXECUTIVE SUMMARY

GUIDETO


CSR

The organisational structures of initiatives share many common

elements. For example, they usually:

» include a wide range of corporate members;

» adopt mechanisms for including perspectives from civil society;

» strive to develop a coherent approach to promote corporate

responsibility;

» include a work plan; and

» create tools, including some or all of the following:

• codes of conduct;

• protocols for monitoring and/or auditing;

• indicators;

• verification and/or certification; and

• reporting mechanisms.

10

GUIDETO


CSR

List of acronyms

11

Common Code for the Coffee Community Association

Automotive Industry Action Group

Better Cotton Initiative

BLIHR: Business Leaders Initiative on Human Rights

Business Social Compliance Initiative

Better Sugarcane Initiative

International Council of Toy Industries CARE Process

Coalition for Environmentally Responsible Economies

corporate social responsibility

European Coffee Federation

Electronics Industry Citizenship Coalition

Extractive Industries Transparency Initiative

Equator Principles

Ethical Trading Initiative

Ethical Tea Partnership

Fair Labor Association

Fairtrade Labelling Organizations International

Forest Stewardship Council

Global Reporting Initiative

Global Social Compliance Programme

International Cocoa Initiative

International Council on Mining and Metals

International Finance Corporation

International Labour Organisation

Initiative for Responsible Mining Assurance

International Tourism Partnership

Logistics and Transportation Corporate Citizenship Initiative

Marine Stewardship Council

Responsible Jewellery Council

Roundtable on Sustainable Palm Oil

Round Table on Responsible Soy

Social Accountability International

Social Accountability 8000

United Nations Environment Programme

UTZ CERTIFIED Good Inside

Voluntary Principles on Security and Human Rights

Worldwide Responsible Accredited Production

World Federation of the Sporting Goods Industry Model Code of Conduct

World Wide Fund for Nature (formerly the World Wildlife Fund)

4C ASSOCIATIONAIAGBCI

BLIHRBSCIBSI

CARECERES

CSRECFEICCEITIEPSETIETPFLAFLOFSCGRI

GSCPICI

ICMMIFCILO

IRMAITP

LTCCIMSCRJC

RSPORTRSSAI

SA8000UNEPUTZVPS

WRAPWFSGIMCC

WWF

Accreditation agencyA complimentary organisationaccredits certification and/or trainingbodies.

Auditing methodologyThe organisation has developed amethodology or technique for auditinga facility or process.

Code of conduct or practiceThe initiative has developed a set ofrules and guidelines to describe how acompany, or its employees or suppliersshould behave.

Comprehensive range of issuesThe organisation is working to addressa wide range of issues, rather than oneor two specific issues.

Global standardThe organisation has developed astandard which is followed by a verywide range of companies and industriesacross many countries.

Government involvementThe initiative counts on governmentparticipation.

GuidelinesThe organisation has developed areference for its members and othercompanies on how to conduct a processsuch as reporting.

Independent monitoringThe initiative conducts or recommendsothers to conduct evaluations of opera-tions or processes by an independentthird-party.

IndicatorsThe initiative has developedindicators, or measures that indicateperformance or change.

MembershipThe initiative invites participants tojoin the initiative as members, usuallyfor a fee.

Multi-commodityThis is an initiative that addressesseveral different commodities ratherthan just one.

MultistakeholderThis is an alliance that includesbalanced representation betweenseveral categories: business, NGOs andcivil society, labour, and mediating insti-tutions (such as government, academia,and the accounting world).

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GUIDETO


CSR

Definition of symbols

12

The following symbols are used throughout the report to help define the

characteristics of each initiative.

MEM

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GUIDETO


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13

DEFINITION OF SYMBOLS

PartnershipsAn initiative that promotes jointprojects between different stakehold-ers, such as NGO-corporate partner-ships or government partnerships.

PrinciplesA set of guidelines or policies to befollowed by all parts of the companyand/or its suppliers.

Product labelAn initiative that has developeda label or stamp to be placed on thegoods produced to indicate thatpolicies and procedures are in placeto address social and/or environmen-tal issues.

Public reportingThe initiative regularly reportsto the public about the social andenvironmental performance of itsmembers.

ReportingThe initiative had developed advicefor members on how and what toreport.

Shared databaseThe initiative maintains a jointdatabase of the suppliers ofits members so as to facilitateinformation sharing andcollaborative efforts.

Strategic philanthropyIncludes philanthropic contributionsby an initiative that promote aspecific long-term outcome.

Third party assuranceThe initiative features a mechanismfor attaining an independentevaluation that certain proceduresare being followed to ensure socialand/or environmental performance.

Third party certificationThird party written certificationthat a product or process meetsrequirements.

Total supply chainThe initiative addresses thevalue chain in its entirety,rather than just directsuppliers.

TraceabilityThe initiative is developingprocedures and mechanisms to traceproducts through the supply chain toensure that products and theircomponents can be traced throughthe supply chain.

Validation or verificationThe initiative has systems in placefor corroborating informationabout social and/or environmentalconditions in a factory, company orcountry.

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ethical corporation report summary - industry initiatives in csr

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