Avoiding Greenwash? Sustainability, reporting and materiality..

I’ve been thinking a bit about GRC lately, especially Governance and how it relates to corporate social responsiblity efforts. James Farrar has helped me a lot to understand the realities of CSR –  the dynamics of investors, society, corporate behaviour, standards, governments and NGOs. I’m learning lots, but I have much more to figure out.

Amit discusses sustainability, reporting on a McKinsey conference that he recently attended.

Another director of the Firm announced that McKinsey was currently serving 20 of the Fortune 100 around establishing or building out their corporate sustainability program.

This makes a lot of sense. The investor and broader society are demanding that companies take a more proactive approach towards issues such as global warming. Witness, for instance the recent announcement by Google, Intel and others on climate and technology –  the climate savers smart computing initiative or Steve Job’s long eulogy to the green apple.  (update: for more on green and technology see Chris Lochead on ZDNET)

A quick read of perspectives on responsible sourcing blog points to significant investment from companies such as Nike in CSR and CSR reporting.

Nike has been working on business integration in a big way. “Corporate responsibility is no longer a staff function at Nike. It’s a design function, a sourcing function, a consumer experience function, part of how we operate.”

Investors such  F&C, with over 102 Billion pounds under management, are demanding strong transparency in the extractive industries. This stuff is not just window dressing, I quote from the EITI (extractive industries transparency intitiative documentation.)

As institutional investors representing US$8.3 trillion we actively support the development of international mechanisms to address payments transparency, and encourage other investors to join us in this statement.

Some Investor fund heads such as Karina Litvack take a strong stance on ethical and goverance issues, see here on Walmart. So, investors are demanding clearer, more transparent and better information on sustainability measures. A couple of paragraphs in the annual report and some nice pictures won’t cut it. Research is thorough.  NGOs are quick to pounce on inconstitences. HBSC for instance, were embarassed   by Global Witness. 

Yet it is easy to apply the charge of window dressing or even hypocrisy at some CSR reporting efforts. The modern corporation is hardly the paragon of virtue, so some scepticism is in order.

This brings me to the issue of materiality.

A meaningful definition of ‘materiality’ must effectively identify information that, if omitted or misstated, would significantly misrepresent the organisation to its stakeholders, and thereby influence their conclusions, decisions and actions. (Zadek and Merme 2003)

If Corporate Social Responsibility reporting itself is to be sustainable, then surely it needs to become a lot more reliable, transparent and comparable from company to company and across industry. It will require greater standardisation if it is trully to impact behaviour. Will standards such as ISAE3000 and AA1000 will help drive stronger rigour into CSR reporting?

AA1000 Assurance Standard is a generally applicable standard for assessing, attesting to, and strengthening
the credibility and quality of an organisation’s sustainability reporting, and its underlying processes,
systems and competencies. It provides guidance on key elements of the assurance process.
(www.accountability.org.uk)

 I’ll transplant something that Jonathan wrote when discussing management dashboards,  I think it is equally relevant here.

Dashboards need a certification process for all of the data they contain: goals, initiatives, financial and non-financial metrics. With certification and auditing comes trust. With trust, comes use. With increased use, more impact.

In other words, Reporting is only useful if it impacts behaviour. Words are easy.

I don’t want auditors crawling all over sustainability, but I do want to know that the stuff in the annual report and elsewhere is relevant and material. I want to know who is serious and who is bs’ing me. I worry about greenwash.

I want to hear more about the GE’s of this world, who are driving real innovation around sustainability and developing new business models.

GE reported $12 billion in revenues from ecomagination products and services in 2006, on course to the goal of $20 billion in sales in 2010.

GE GHG emissions in 2006 from operations have been reduced by about 4 percent from the 2004 baseline. GHG and energy intensity have been reduced by 21 percent and 22 percent respectively compared to 2004. GE is committed to reduce its GHG emissions 1 percent by 2012, reduce the intensity of its GHG emissions 30% by 2008, and improve energy efficiency 30 percent by the end of 2012.

I want to see sustainablity innovations clearly documented, so that as an investor and as a citizen I can make informed choice. If AA1000 helps bring this about, then I’m all for it.

I also want to know when the GE’s of the world aren’t doing what their messaging tells me it is. (tip james) 

I’ve just ordered this book and this one too. Mark Crofton’s old School are doing  interesting research on sustainability.

Global capitalism is at a crossroads. During the last two decades of the 20th century, free trade produced mixed results at best. Wealthy and developed countries have grown richer, while the vast majority of nations and people in the world have been bypassed or damaged by this process. Furthermore, the underlying natural systems that support human economies – forests, fisheries, soils, ecosystems and climate – have continuously declined. Anti-globalization demonstrations have made it apparent that if corporate expansion is seen as coming at the expense of the poor and the environment, it will encounter vigorous resistance.

For global business, therefore, it has become increasingly clear that the historical separation between competitive strategy and social contribution must be eliminated. Rather than treating social and environmental issues as expensive luxuries, companies are increasingly fusing social mission with competitive strategy. Indeed, a form of “new capitalism” is emerging where environmental and social performance is embedded in the competitive strategy of the firm.

Sustainable global enterprise represents a new private-sector approach to achieving the goals of sustainable development – by creating profitable enterprises that simultaneously raise the quality of life for the world’s four billion poor and conserve the ecological integrity of the planet.

Lots to think about. Sustainability is not just about reporting. It isn’t just about Green either.

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HR-HCM folks, does this concern you?

Business Leaders Don’t See HR as Key to People Strategies 

While 60 percent of senior business executives consider people issues to be a significant factor in corporate strategy, relatively few of them look to their human resources teams for help on those issues, according to a study released Tuesday, May 29, by consulting firm Deloitte Touche Tohmatsu and The Economist Intelligence Unit.

The study found that 52 percent of companies don’t have a chief human resources officer or equivalent executive assigned to such people issues as developing a high-performance culture or meeting talent needs.

Deloitte and The Economist surveyed executives from 468 companies on several continents, including 104 HR leaders and 155 senior business executives.

Only 23 percent of corporate leaders see their HR departments as currently playing a crucial role in coming up with corporate strategy and having a significant impact on operating results. And although business experts increasingly recognize people as a key intangible portion of a company’s market value, 63 percent of executives rarely or never consult their HR team on mergers and acquisitions. Even when it comes to regulatory compliance, a traditional HR domain, 26 percent rarely or never check in with HR.

From Workforce magazine.

It is not the first time I’ve read this sort of study, but it concerns me a lot.  Yes, the sample isn’t huge, but the numbers are similar to stuff I’ve read before. It doesn’t seem to be getting any better. A couple of years ago there was a big huff about the “why we hate HR article”, but has much changed?  Should HR care?  At the end of last year I had the opportunity to listen to Dave Ulrich, a leading HR academic. Strong, inspiring stuff, but the Deloittes survey points to a more depressing reality.

I’ll be a little forward here and tag several HR-HCM related bloggers out there and see if we can’t get a series of posts going on this. I’m asking  Donald. Jim, Max, Laurie, Jason, SystematicHR,  Michael, Alice, Systematic, Karen, Michael, Debra, Gautam, Tom and the evilhrlady to get the ball rolling, but feel free to add more to the list. 

Fancy a podcast anyone?

 

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Bring back the Benz !!!!!

The little town where we live, Ladenburg, is Carl Benz’s home town. He started the business in Mannheim, but it was here he built a factory and home in 1904, and he lived in the town most of his life. If you are ever in the area, pop in and see the local museum. One of his first cars is there, and a fabulous collection, including a silver arrow and a new Formula One car. (the town is beautiful too)

First Garage in the World

Photo from WrldVoyagr The first Garage. In Ladenburg you will also find the first purpose built car garage. It was in Ladenburg that the German tradition of washing your car every Saturday began.

Benz Auto Museum, Ladenburg, 9

Thanks to miraculix1951, his photostream of Ladenburg is excellent.

Stuttgart was the home turf of Daimler, but not of Benz. The companies merged in 1926, but as the head office is now in Stuttgart, the Ladenburg-Mannheim side of the story tends to get the  short straw.

It is time to correct this travesity of industrial history once and for all.

With the disposal of Chrysler, it is time to add the name Benz back to Daimler.

My German readers may wish to read this article in the Mannheimer Morgen. It is great to see the SAP HR Director, Claus Heinrich supporting this. He is also chairman of the Rhein-Neckar Metropole.

“Für mich ist das keine Frage: Benz gehört dazu”, erklärte Heinrich: “Er ist Teil der Innovationsgeschichte unserer Region, auf die wir stolz sind und die auch nach Außen immer wieder dokumentiert werden muss”, unterstrich der Vorsitzende.

Vague translation: For me it is not a question. Benz belongs, it is a part of the innovation history of our region, of which we are proud. This history should be consistently communicated..

So, dear readers, I would like you to click here and tell the chaps in Stuttgart. NO DAIMLER WITHOUT BENZ. There have been 13,000 petitioners so far, but lets use the power of the blogsphere to really make them sit up and notice.  

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Bicycles, design, co-innovation and the future of software.

I’ve harped on about co-innovation and design before on this blog, but I’ll repeat my assertion that co-innovation and  design are vital for SAP’s long term success. 

 SAP recently announced the co-innovation lab, based in Palo Alto. Dan Farber was there (He seems to be everywhere)

It’s not exactly a keiretsu, but a compatible federation of companies that have a shared interest in building next-generation solutions, not just products, that integrate with SAP’s ERP and NetWeaver platform.

You can read the press release here.  Cisco, Netapp, HP, Intel, and  Questra have signed up I expect to see a lot more announcements from other software companies as this lab takes off.  This isn’t just window dressing, but a serious move to deeply embed co-innovation in the business. SAP needs to make it easier for other companies to build solutions with us, and this is a vital step in the right direction.

In my feed this morning I picked up on a gem, the institute of design strategy conference. Looks it was a great conference.  Despite being a Campagnolo fan, the presentation from the Shimano product manager, David Lawrence was fascinating.  Design led innovation is fundamentally impacting Shimano’s business, and the power of “outside in” is revolutionising their approach to a new market.  Any design thinker or cycling fan should have a look.   Shimano makes components, not the whole bike, yet their approach to the whole bike experience is eye-opening. It has lots of parallels for us software types too.

 (pity we cant see the slides, but you can see more about the coasting project on this site)

At the same event, Hasso Plattner talked about design led innovation at SAP. There are a couple of A1S hints for those that continue to eek them out, but it is great overview of the challenges in enterprise Software and he dips into SAP’s history, even back to the days of IMS.

The champion quote. “Software people have an erotic relationship to code”

Matthew Holloway, The head of the Design Services Team, talks about the challenges of applying design thinking at SAP.

If you’d like to understand the changes going on at SAP, I’d suggest you watch this. Matthew is an entertaining speaker, and he really knows design!

Have a look at what Martin had to say about a design led workshop.

Thanks to the conference organisers for videoing the publishing the presentations.  

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It almost makes me want to buy one.

The advertising campaign for the Passat running online is so good it almost makes me want to buy one. If you are male, between the ages of 35-50, prepare to cringe while laughing. 

Note to those with advertising budgets:  I’ve not really watched TV in the last year, but I’ve  spent at least 10 minutes on the VW site because of this ad. And here I am blogging about it. If you make me laugh I’m more likely to buy something from you.

 

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In defence of concrete

 Phil  Wainwright  recently picked up on a rather clever dig against ERP, putting up a picture of a concrete block, and equating it with ERP systems. 

At first I laughed and grimaced slightly.  I  thought about arguing about SOA  but then luckily I remembered a building architect friend of mine raving about concrete.

He eulogised about  how strong, elegant, durable, flexible, economical and beautiful it is.  It enables structures and forms that were previously unimaginable.  Construction costs are significantly lower because of concrete, and it comes in many forms.  Concrete is the backbone of modern construction, and it continues to evolve. 

(photo of the Humber bridge, courtesy of  Sunshine Hannan’s flickr)

 

Rush Hour on the Squinty Bridge

The Clyde Arc, also known as Squinty Bridge. (courtesy Colin Angus Mackay: his dayjob site is here.

True, concrete has spawned some monstrosities, but it produces structures and buildings that delight and revolutionise the way we live.

On the other hand putty: It fills hairline cracks.  Is great for children and artists or for taking imprints of keys in spy movies. It  is useful for keeping glass in place in old buildings, and has been used by Nick Park with great  success.   Also, unless you keep the lid on the jar it turns into a brittle blob. 

But software  architecture, like building architecture,  is more complex  this post makes out.  Stewart Brand’s pace layering deserves more attention.  Perhaps more on that another day.