Why do/ should companies care about sustainability
Why do they report sustainability aspects
- Increasing pressure on companies to be sustainable
to report transparently on their sustainability performance!
Increasing regulatory requirements for reporting sustainability aspects
Society and media publicly denounce real (or supposed ) grievances
Increasing use of environmental management systems , sustainability standards , reporting guidelines , labels
Increasing initiatives on life cycle based analysis of products/organisations with potential influence on policy (e. EU PEF/OEF)
Companies and their role for sustainability
- 2015: Sustainable Development Goals (SDGs
– Goal 12: Ensure sustainable consumption & production patterns - Target 12.6: Encourage companies, especially large and transnational companies, to adopt
sustainable practices and to integrate sustainability information into their reporting cycle
Why is the life cycle perspective relevant for companies
- Environmental impacts , social impacts and costs often occur in early stages of the supply chain
Activities and products in the supply chain have a significant influence on environment and society and thus on sustainable development!
What is Corporate Social Responsibility (CSR)
- CSR is a concept whereby “companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders”
- Goal is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on
– Environment (e.g. pollution prevention, resource efficiency)
– Consumers
– Employees (e.g. training, human rights, equality, health)
– Communities (e.g. community development)
– Stakeholders etc.
Benefits of CSR
For enterprises…
Encourage more informed decision making processes
Improve the organization’s risk management practices , safety and health of workers & the organization’s competitiveness
Achieving savings associated with increased productivity & resource efficiency, lower
energy & water consumption, decreased waste, recovery of valuable by products
– Enhance reputation of the organization, employee loyalty, foster public trust
→ support an organization’s social licence to operate
For the society/economy…
More sustainable and innovative companies
A more sustainable economic system
European
Commission (EC) Strategy on CSR
- Today, >thousands of companies produce sustainability reports voluntarily)
- From 2017 on… sustainability/ CSR reports become mandatory for companies in the EU
Applies to publicly traded companies with >500 employees
Must report on environmental, social and employee related , human rights, anti corruption and bribery matters
ISO 26000 (2010)
Standard ISO 26000: 2010
Social responsibility
Recognized international standard for CSR (but with no formal act of legislation)
- Provides guidance on how businesses & organizations can operate in a socially responsible way
– Helps clarify what social responsibility is & helps to translate principles into actions
– Shares best practices, globally & addresses all types of organizations
Social responsibility (SR) core subjects (Clause 6)
- 7 core subjects should be addressed to define the scope of a company´s social responsibility & to identify relevant issues &set its priorities
Economic aspects & aspects relating to gender, health and safety & the value chain, are dealt with throughout these core subjects (where appropriate)
Global reporting Initiative (GRI)
- International, independent organization
- Helps businesses, governments etc. to understand and
communicate the impact of business on critical
sustainability issues , such as climate change or human rights - Produce standards for sustainability reporting, the GRI standards
(created through an internat. multi stakeholder, consensus based process) - Have strategic partnerships with international organizations, UN Global Compact, UNEP, ISO
Summary CSR
CSR ( reports ) increase transparency can support the shift to more sustainable companies but also bare the risk of greenwashing
- CSR concept: companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders”
– Covers at least: human rights, labour and employment practices, combating bribery and corruption and environmental issues)
– Involves many assessment and management tools (e.g. LCA)
– Gains increasing importance (e.g. becomes mandatory in the EU in 2017)
– Lots of guidance is available (e.g. GRI for but implementation varies significantly , e.g. because
*it is voluntary & flexible - data is missing /not available for the whole supply chain
Sustainability rating of companies
- Factors
- Weighting
- Criteria
- Data collection
- Transparency
Sustainability rating of companies - Examples
- Dow Jones Sustainability Indices:
Benchmark for sustainability, tracks the stock
performance of the world’s leading companies
in terms of sustainability criteria
–> Economic, Environmental, Social - FTSE4Good Index Series:
Ethical, benchmark indexes, measuring the
performance of countries with ESG practises
–> Governance, Environmental, Social - Morningstar Sustainability Rating for Investment Funds
Rating for organisations with regard to
environmental, social and governance chances and risks - Corporate Sustainability Index (ISE):
Comparative analysis of the corporate
sustainability performance of companies listed on B3
–> General, Nature of Product, Corporate Governance, Economic and financial, Environmental, Social, Climate Change
Corporate Sustainability Assessment
= is an assessment of the company’s sustainability performance. It results in a total ESG score
Criteria Definition:
General criteria 50%
- Industry specific criteria 50%
Environmental Dimension:
* Environmental Reporting
* Industry Specific Criteria (e.g. eco design, product labelling)
Social Dimension
* Social Reporting
* Human Capital
Development
* Labour Practice Indicators
* Industry Specific Criteria (e.g. community programs)
Economic Dimension
* Risk and Crisis Management
*Corporate Governance
* Codes of conduct
* Industry Specific Criteria (R&D spending)
Weighting
* Dimensions: consists of 6-10 criteria
* Criterion: 2-10 questions
Question score
Total sustainability score
𝑇𝑜𝑡𝑎𝑙𝑠𝑐𝑜𝑟𝑒=Σ(𝑄𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠𝑐𝑜𝑟𝑒𝑠𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑∗𝑄𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑤𝑒𝑖𝑔ℎ𝑡∗𝐶𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛𝑤𝑒𝑖𝑔ℎ𝑡)
Method: assess value, text, documents –> weighted data points (100 questions) –> ave. 23 critera scores (weighted question scores) -> 3 dimension scores (ESG, weighted criteria score) -> 1 ESD-Scroe (Sum of weighted dimension scores)
Sustainability rating systems: potential benefits
- Setting organizations and projects’ triple bottom line
- Increased transparency
- Performance benchmarking & continuous improvement
(impact reduction, risk/opportunity management, innovation, sustainability targets) - Engagement of employees and stakeholders
- Obtaining feedback on performance
- Companies as pioneers and leaders of the way
- Reputational benefits
Sustainability rating systems: potential threats
- Different understanding of the word ‘sustainability’
link of the used indicators (e.g. leadership diversity, safety, productivity, innovation, capacity) is not always clear - Not enough transparency, i.e. not all methods for the rating calculation are disclosed
- Risk of ‘greenwashing’
- Reporting becomes too burdensome value chain assessments are too complex
- Capital markets need condensed information to understand sustainability reporting
Who is a stakeholder?
- Any person, group or organisation who:
– can be positively or negatively impacted by, or
cause an impact on the actions or activities proposed - Actors (any individual, group, or institution)
– who have a vested interest in the natural resources of the project area and/or
– who potentially will be affected by project activities / policy/ plan and have
something to gain or to loose, if conditions change or stay the same. - The “stake” that each of these different
individuals or groups has in a project or
investment will vary…
What is stakeholder analysis?
…a process of systematically gathering and analysing qualitative information
…to determine whose interests should be taken into account when developing and/ or implementing a policy, program or a project.
Advantages
Participation as the new paradigm
Effectiveness
Sustainability
Empowerment
Disadvantages:
Additional resources are needed
Conflicts may arise
Competency is required
Why do we consider Stakeholders?
- Allow SH to voice their views
- Help to give a voice to marginalized & minority groups
- Use SH opinions to shape the project in an early stage
- Allow SH to assist
- Ensure that SH trust the team
- Enable dialogue, ensure parties are sufficiently prepared and briefed
- Create feeling of belonging through shared vision/ objectives
Why and when is a Stakeholder based approach needed?
- Crucial part of situation analysis while planning a project / programme (esp. when it ´ s socially, politically controversial)
The 4 “Essentials”
- Identify
- Analyse
- Engage/Involve
- Manage
Examples
* In matters of health , safety, local impacts of activities (e.g. health and education reforms, natural resource planning processes)
* Issues with social, economic , cultural or ethical implications
Stakeholder identification - How to get information?
Compile / review existing information related to the planned activity
Information by staff of key agencies, from written records and population data
Stakeholder self selection by announcements at meetings or media
Information from other stakeholder
Key questions
* Who are the potential beneficiaries?
* Who will be adversely affected?
* Who is likely to be voiceless?
* Who has existing rights?
* Who is responsible for the intended plans?
* Who has the money, skills, or key information?
* Who is likely to mobilize resistance?
* Whose behavior has to change for success to be reached?
Stakeholder identification : list of usual stakeholders
- Company owners, shareholders, investors
- Banks and creditors
- International/national donors
- Partners and suppliers
- Buyers, customers, users
- Workers, employers and labour unions
- Competitors
- Media
- Policy (legislators, governors)
- Public institutions (ministry of health, social security agency, ministry of finance)
- Administration (local, regional, national and international)
- Commercial/ private for profit, non profit (nongovernmental organizations (NGOs), foundations)
- Civil society
Stakeholder characterization
Steps/data collection…
* Reports , newspapers,
* Country studies
* Brainstorming with SH
* Interviews with SH/ Questionnaires
- Influence, Interest/Positions, Resources, Stage, Network, Engagement level, communication ,Strenghts…
SH Analysis - Identification/ characterization ‒ results
What to do with all the data you´ ve collected by now???
- Summarize your data in Stakeholder maps, tables, charts, matrices and especially highlighting following attributes:
Interest, group, position on the project, influence,….
Stakeholder Matrix: Power & Interest
- Classify the SH by their power over your work and the interest in your work
Map them on a Power/Interest grid
