Environmental Stewardship Strategy Overview and Resource for Corporate Leaders A report by the UN Global Compact and Duke University UN Global Compact Contacts: Gavin Power Lila Karbassi Tel: + 1 917 367 3648 Email:globalcompact@un.org www.unglobalcompact.org Duke University Contact: Deborah Rigling Gallagher Tel: +1 919 613-8138 Email:deb.gallagher@duke.edu www.env.duke.edu/people/faculty/gallagher.html The Environmental Stewardship Working Group was overseen by UN Global Compact Board Members Mr. Chad Holliday and Ms. Habiba Al Marashi, with support from Mr. Gavin Power and Ms. Lila Karbassi of the UN Global Compact Office. The Global Compact would like to thank Mr. Daniel Vermeer from Duke University for his critical contribution to the development of the En- vironmental Stewardship Strategy. Our sincere appreciation also goes to the following graduate students for their outstanding work on the project: Ms. Elizabeth Boomgard, Ms. Hua Fan, Mr. David Gordon, Mr. Matthew Jentgen, Mr. Martin Romero-Wolf. The development of the Environmental Stewardship Cd-Rom and website resources was made possible thanks to the dedication of Mr. Unni Nair and with the generous support of Infosys. The online version of the Environmental Stewardship Strategy is hosted on the following website: www.nicholasinstitute.duke.edu/globalcompact Disclaimer The inclusion of company examples in this publication is intended strictly for learning purposes and does not constitute an endorsement of the individual companies by the United Nations Global Compact Office or Duke University. The material in this publication may be quoted and used provided there is proper attribution. Copyright The material in this publication is copyrighted. The UN Global Compact encourages the dis- semination of the content for educational purposes. Content from this publication may be used freely without prior permission, provided that clear attribution is given to UN Global Compact and Duke University and that content is not used for commercial purposes. © 2010, UN Global Compact and Duke University Designer: Nilou Safavieh Printer: United Nations, New York 3 UN Global Compact Environmental Stewardship Working Group Baosteel China Minmetals Cosco Deutsche Telekom Dow Chemical Dupont Ericsson Eskom Fuji Xerox Holcim Infosys Intel Nokia Novartis Novo Nordisk Ricoh SAP Swiss Re System Capital Management Tata Titan Cement Vestas Westpac 4 Environmental Stewardship Strategy 5 Contents Welcome Message from the UN Global Compact 6 Welcome Message from Duke University 7 Executive Summary 8 Overview of the Environmental Stewardship Strategy 9 Research Process 9 • Principle 7: A Precautionary Approach to Environmental Challenges 10 • Principle 8: Promoting Greater Environmental Responsibility 11 • Principle 9: Development and Diffusion of Environmentally Friendly Technologies 11 Strategic Connection with Ongoing UNGC initiatives 12 • Caring for Climate 12 • CEO Water Mandate 13 UNGC Sustainability Management Model as Foundation 13 Environmental Stewardship Resource Overview 14 Environmental Stewardship Resource Components 16 • Step 1: Recommit 16 • Step 2: Assess 17 • Step 3: Declare 18 • Step 4: Engage 20 • Step 5: Perform 21 • Step 6: Evaluate 25 • Step 7: Anticipate 26 • Step 8: Disseminate 28 Next steps for Environmental Stewardship Resource: Development and Deployment 30 6 Environmental Stewardship Strategy Welcome Message from the UN Global Compact It is with great excitement that we release this Environmental Stewardship Strategy for the 21st Century. While corporate environmental and sustainability management have made great strides in recent years, it is also clear that a new level of management – or stewardship – will be required in the coming years and decades. The environmental challenges we face be they related to climate change, water issues or biodiversity – are growing in scale and complexity. At the same time, we are beginning to better understand the deep connections among differ- ent environmental issues, as well as their links to social and development priorities. For business organizations operating in this context, particularly those wishing to be in a leadership position, a new level of environmental management will be required. Grounded in the three core environmental principles of the UN Global Compact, and leverag- ing key initiatives such as Caring for Climate and the CEO Water Mandate, this Environmen- tal Stewardship Strategy represents a new paradigm that outlines – outlining a holistic and comprehensive approach to environmental management and stewardship. The Environmental Stewardship Strategy is designed for corporate leaders – including Chief Executive Officers and other C-Suite Executives, Board Members, and the senior-most Sustain- ability and Environmental Officers. The reason for this is straightforward. To be truly effec- tive, the ultimate oversight of any serious strategy must be “owned” by those at the pinnacle of the organization. We wish to thank Duke University for their partnership in the development of this important initiative, as well as to acknowledge the many corporate and other contributors and advisers. Together, let us usher in a new era of Environmental Stewardship. Sincerely, Georg Kell Executive Director UN Global Compact 7 Welcome Message from Duke University Duke University believes that the important problems of the contemporary world exceed the scope of any single discipline. For example, dealing with global climate issues requires a mix of expertise including physical and biological sciences, engineering, business, policy and law. While Duke embraces the essential aspects of specialized research, teaching and learning, the university puts its special strengths in collaboration and connection of knowledge to work in addressing real-world problems. This collaboration between Duke University, the United Nations Global Compact and our Environmental Stewardship working group partners highlights the power of cross disciplin- ary and cross institutional collaboration to address critical problems. From Duke, this effort brings together faculty, staff and students from the Nicholas School of the Environment, the Nicholas Institute for Environmental Policy Solutions, the Corporate Sustainability Initiative, and the Fuqua School of Business. Signatories and members of the United Nations Global Compact have an opportunity to be world leaders in Environmental Stewardship. Our engagement in this collaboration is moti- vated by our belief that the information and communication platforms in this resource will assist CEOS and Boards of Directors in confronting key global environmental issues. Progress on climate change, emissions and waste management, resource consumption, water conserva- tion, biodiversity protection and ecosystem services will be made as corporate leaders use this forward-thinking resource to engage in dialogue and share common insights and experiences. Deborah Rigling Gallagher Executive Director, Duke University Environmental Leadership Program 8 Environmental Stewardship Strategy Executive Summary Environmental issues – be they related new Management Model, which sets out a to climate change, water scarcity or other dynamic program for sustainability imple- ecological challenges – are growing in scale mentation based on the tenet of continuous and complexity. What is also increasingly improvement. clear is that traditional corporate environ- Utilizing this Management Model, the mental management approaches – based Environmental Stewardship Strategy out- largely on compliance and narrow risk as- lines and describes a comprehensive new-era sessments – will not be sufficient to success- approach to environment management based fully navigate and address these 21st century on four pillars: challenges. In order to assist companies in preparing • Leaders EMBED Environmental Steward- for this increasingly challenging landscape, ship into all facets of the organization and to give further expression to the UN Global Compact’s three core environmental • They BALANCE short-term targets and principles, the UN Global Compact Office long-term goals that are both critical to brought together a group of committed performance and Environmental Steward- participants and – in partnership with Duke ship University – developed a next-generation En- vironmental Stewardship Strategy and related • They DIFFUSE best practices throughout Resource. This took the form of a website* and value chains and business networks by col- CD-ROM. laborating and engaging stakeholders This Environmental Stewardship Strat- egy is designed to help companies – at the • They TRANSLATE best practices into highest levels of the organization – develop processes and practices that are applicable a truly holistic and comprehensive strategy. in the diverse geographies in which they And, importantly, it recognizes the grow- operate ing linkages among various environmental issues as well as their connections to social In order to remain relevant and effective, and development priorities. As well, this En- this Environmental Stewardship Strategy vironmental Stewardship Strategy incorpo- and the related website resource have been rates and leverages the UN Global Compact’s designed as organic in nature – that is, to be Caring for Climate and CEO Water Mandate improved upon over time. In this spirit, this initiatives. website resource incorporates platforms and This website resource has been created to functions to evolve and augment the content assist the top leadership of companies – in- over time. cluding Chief Executive Officers, Executives, Board Directors, and senior Sustainability Finally, the Environmental Stewardship and Environmental Executives – as they Strategy is offered not just to UN Global Com- formulate a new level of environmental man- pact participants but to the business commu- agement in order to achieve higher levels of nity at large – as a public good. sustainable performance – for the benefit of the business and planet. The Environmental Stewardship Strategy is grounded in the UN Global Compact’s *www. nicholasinstitute.duke.edu/globalcompact 9 Overview of the Environmental Stewardship Strategy Research Process ful management of its relationship with the The consensus in the Environmental Stewardship is defined as the environment. global business com- comprehensive understanding and effective The consensus in the global business com- munity is that environ- management of critical environmental risks munity is that environmental stewardship and opportunities related to climate change, is extremely important to business; yet, only mental stewardship is emissions, waste management, resource con- a small portion of companies on the global extremely important sumption, water conservation, biodiversity market have taken strides in the direction of to business; yet, only a protection and ecosystem services. When true stewardship. participating companies of the United Na- Firms struggle to take action because small portion of com- tions Global Compact asked for a framework managers are not fully empowered to make panies on the global to help improve their approach to environ- meaningful changes to company strategy. market have taken mental management, the UN Global Com- Environmental initiatives are typically strides in the direction pact formed a Working Group on Environ- limited, one-off projects that are tangential mental Stewardship to explore this issue. to corporate strategy. Research suggests that of true stewardship. After assembling a list of most frequently companies classified as true Environmental used environmental management and sus- Stewards anchor their environmental strat- tainability practices, the Working Group — ­ a egy at the governance level of the company partnership between the UN Global Com- (e.g., the Board of Directors or similar entity). pact, twenty-three companies and Duke Uni- Chief Executive Officers and their Boards are versity — ­ embarked on an ambitious project the driving force behind effective, next-gen- to develop an Environmental Stewardship eration environmental leadership. Strategy for the twenty-first century. Executives and Boards that do not iden- Interviews with leading and learner firms, tify opportunities for value-creation or have academic research and focus group discus- organizations that support a project-approach sions with companies informed this Environ- to environmental management fail to address mental Stewardship Strategy. The strategy is the complexity of the environmental chal- defined in this guide but it exists in a living lenges that face their businesses. Management and breathing state on the Internet as the that designs strategy that enables organiza- Environmental Stewardship Resource [www. tions to become environmental stewards is nicholasinstitute.duke.edu/globalcompact]. better able to identify obstacles and oppor- The resource is informed by this research, tunities in the market, generate value for tested by practitioners and designed to help stakeholders, and gain a competitive market the leaders of any company – no matter its position. size or scope – generate value from success- Embed Balance Diffuse Translate Recommit Recommit Recommit Recommit Assess Assess Assess Assess Declare Declare Declare Declare Engage Engage Engage Engage Perform Perform Perform Perform Evaluate Evaluate Evaluate Evaluate Anticipate Anticipate Anticipate Anticipate Disseminate Disseminate Disseminate Disseminate Recommit Recommit Recommit Recommit 10 Environmental Stewardship Strategy The Environmental Careful observation of successful CEOs Commission on Environment and Develop- Stewardship Strategy and Boards illuminated four universal ment, laid a foundation for the Environment is designed as a ve- approaches to environmental stewardship Principles by highlighting that business across organizations: needed to change or people would face unac- hicle through which ceptable levels of environmental damage. At firms can implement • Leaders EMBED environmental steward- the core of the UN Global Compact is a belief the environmental ship into all facets of the organization that business should play an important role principles of the UN in improving the state of the environment • They BALANCE short-term targets and for future generations. Global Compact. long-term goals that are both critical The Environmental Stewardship Strat- to performance and environmental egy is designed as a vehicle through which stewardship firms can implement the environmental principles of the UN Global Compact. While • They DIFFUSE best practices throughout the principles offer guidance on topics like value chains and business networks by col- innovation, cooperation, education and self- laborating and engaging stakeholders regulation, the Strategy offers a framework for firms to help facilitate a recommitment • And, they TRANSLATE best practices into to and comprehensive implementation of processes and practices that are applicable the principles. in the diverse geographies in which they operate Principle 7: Taking a Leading companies do not just embed, bal- Precautionary Approach to ance, diffuse and translate a handful of Environmental Challenges environmental practices; instead they take a comprehensive, cyclical approach to man- agement. They implement all four strategies According to Principle 7, lack of scientific as they embark on an ongoing process to certainty regarding environmental chal- (re)commit to environmental goals, assess lenges should not be used as a reason for current performance, declare targets, engage postponing industrial responses designed to with cross-sector stakeholders, perform mitigate environmental damage. It is more against targets, evaluate performance, antici- cost-effective to take preventative action pate future challenges and disseminate best against environmental degradation than it is practices. These strategic environmental to fund the cleanup of those problems after stewardship practices, which originate in the fact. In addition, effective management the highest levels of successful companies, of the environment helps firms minimize encompass not only operating guidelines risks, which could limit fines or insurance to inform internal practices, but also the costs. development of overall corporate policies The Environmental Stewardship Strategy which explicate firms’ intentions in critical provides an eight-step process for firms to areas such as climate change, water resource explore how best to integrate a precaution- management and biodiversity protection. ary approach into their businesses. By focusing on how to embed, balance, diffuse and translate a precautionary approach, Strategic Connection with the the Strategy helps a company gain a better United Nations Global Compact’s understanding of where their initiatives Environmental Principles are successful and where they could learn The three environmental principles of the from other organizations. Additionally, the United Nations Global Compact emerged Anticipation step allows organizations to from the Earth Summit – the United Na- continuously re-explore precaution; at the tions Conference on Environment and Devel- end of each cycle, a firm can reexamine opment held in Rio de Janerio in 1992. The the environmental landscape and identify Earth Summit identified that the tactics and issues or opportunities that are not already strategies of industry can mitigate damage included in their approach. to the environment. In addition, the 1987 Brundtland Report, produced by the World 11 Principle 8: Promoting Greater Environmental Responsibility The planet is fragile. Since the Earth Sum- mit, the international community has acknowledged this as fact and encouraged business to alter current practices that cause harm to the earth. After 1992, the interna- tional community encouraged industry to introduce new codes of conduct and new ini- tiatives designed to integrate considerations of the environment in business planning and decision-making. Beyond social and environmental jus- tice, incentives now motivate corporate environmental responsibility. Cleaner and more efficient processes mean increased resource productivity, which translates to needing fewer raw material inputs and lower costs. More responsible companies are also benefiting from tax incentives or permit programs because they are more advanced than their peers. As well, employees and consumers are increasingly interested in doing business with responsible companies. The case for environmental responsibility is well established nearly two decades after Rio de Janerio. The challenge for companies in the twenty-first century is developing an environmentally responsible strategy that keeps them ahead of the pack, helping them maintain an advantageous position in the marketplace. It is not enough to simply check boxes, publish a sustainability report or reduce waste in factories. Companies must truly innovate in terms of how they manage their relationship with the environment. The Environmental Stewardship Strategy is a framework to help companies do exactly this. If followed correctly, the strategy en- ables firms to excel in 32 distinct ways. Principle 9: Development and Diffusion of Environmentally Friendly Technologies Environmentally friendly technologies protect the environment by minimizing pol- lution, material inputs and waste outputs. These technologies are not limited to ma- chines, but also include system approaches, management techniques and production pro- cesses. Improvements to manufacturing are 12 Environmental Stewardship Strategy as important as communication strategies Strategic Connection with Ongoing that build a sustainability-minded organiza- UNGC Initiatives tion. Embedding, diffusion and translation The Environmental Stewardship Strategy could each involve environmentally friendly complements existing UN Global Compact technology. The holistic Environmental Stew- initiatives that focus on the issues of climate ardship Strategy offers a concise and action- change and water management. A key com- able approach to technology diffusion that ponent of the strategy is the notion of “issue- can help firms share ideas within and across integration” that encourages companies to organizations. look at all environmental issues that face the Collectively, the three principles help company collectively. Successful firms have ground the strategy in purpose. Despite be- shown that looking at environmental issues ing designed to help individual companies as isolated concepts leads to insular strategies advance along the sustainability continuum, that leave environmental opportunities on the Environmental Stewardship Strategy also the table. The Environmental Stewardship helps to advance the discourse surrounding Strategy encourages continued involvement environmental issues in general. The recom- in initiatives like Caring for Climate and the mitment stage is vitally important to this CEO Water Mandate but builds on the success cause and the future offers no limit to the of these programs and encourages companies opportunities available to organizations that to add more issues to their strategy. effectively integrate the three environmental principles into their business operations. 13 Caring for Climate the increasing materiality and importance of water as a resource. Caring for Climate is a voluntary and com- The CEO Water Mandate recognizes that plementary action platform for UN Global the business sector, through the production Compact participants who seek to demon- of goods and services, impacts water resourc- strate leadership on the issue of climate es, both directly and through supply chains. change. It provides a framework for business Endorsing CEOs acknowledge that in order leaders to advance practical solutions and to operate in a more sustainable manner, help shape public policy as well as public at- and contribute to the vision of the UN Global titudes. Chief executive officers who sup- Compact and the realization of the Millenni- port the statement are prepared to set goals, um Development Goals, they have a responsi- develop and expand strategies and practices, bility to make water-resources management and to publicly disclose emissions as part a priority and to work with governments, UN of their existing disclosure commitment agencies, non-governmental organizations within the UN Global Compact framework, and other stakeholders to address this global that is, the Communication on Progress. water challenge. The CEO Water Mandate Caring for Climate is a unique initia- covers six areas: Direct Operations; Supply tive – a commitment to action by business Chain and Watershed Management; Col- and a call to governments, incorporat- lective Action; Public Policy; Community ing transparency. It offers an interface Engagement; and Transparency. Endorsers for business and governments at the global of the CEO Water Mandate recognize that level, with the potential of rapidly becom- through individual and collective action they ing the leading platform for pragmatic can contribute to the vision of the UN Global business solutions – transcending national Compact and the realization of the Millen- interests and responding to the global nature nium Development Goals. of the issue at stake. Moreover, the broad geographical spread of its supporters, involv- UNGC Sustainability Management ing both leading actors from developed and emerging economies, reinforces the Model as Foundation novel nature of this engagement platform. The Environmental Stewardship Strategy is Caring for Climate has on-going engage- complementary to the UN Global Compact’s ment opportunities including on low-carbon overall Sustainability Management Model. innovation and solutions as well as climate Both approaches are based on the idea of con- change and development. Caring for Climate tinuous improvement and suggest that the is endorsed by nearly 400 companies from 65 best path toward stewardship of any sustain- countries. ability agenda is an ongoing process. The Environmental Stewardship Strategy CEO Water Mandate rests on the unique Embed, Balance, Diffuse, Translate approach. Like the management Launched in July 2007, the CEO Water model, the stewardship strategy begins Mandate is a public-private initiative with Recommitment to the principles of the designed to assist companies in the UN Global Compact; yet recommitment is development, implementation and disclosure uniquely defined when it comes to environ- of water sustainability policies and practices. mental stewardship. Companies are encour- It is increasingly clear that lack of access aged to recommit across their enterprise to clean water and sanitation in many and value chains. Recommitment should be parts of the world causes great suffering in embedded in the organization structure, in humanitarian, social, environmental and its metrics and targets, throughout its value economic terms, and seriously undermines chain and within its local markets. With development goals. There is a growing every iteration of the improvement cycle, consensus that this emerging crisis presents the same EBDT process occurs. With it, a the private sector with a range of risks company – from its employees to sharehold- – and, in some instances, opportunities. ers – develops a deep connection to the prin- It is also recognized that current water- ciples and makes progress towards them. management practices are inadequate given 14 Environmental Stewardship Strategy Environmental Stewardship Resource (Website) Overview The Environmental Stewardship Strategy participants at the Leaders Summit on 24-25 has been designed to be a living, breathing June 2010. The CD-ROM and publication will approach to business in the twenty-first cen- help companies become acquainted with the tury. It is grounded in the best practices of functionality of the Resource. The Resource leader firms and will evolve as innovative ap- will “go live” in June and will be moderated proaches to sustainable business are identi- by Duke University in partnership with the fied and gain traction. The online version* of UN Global Compact Office. In addition to the strategy, the Environmental Stewardship the publication, there will be training tools Resource, will be housed at Duke Univer- online, including modules, directions for how sity’s Nicholas Institute for Environmental to upload, tips for maintaining content and Policy Solutions and will benefit from the strategies for maximizing the learning oppor- input and collaboration of corporate leaders tunities built into the platform. The wheel around the world. In this sense, it is an open- The home page features a continuous source strategy and resource – in keeping improvement wheel. This wheel illustrates identifies steps with the “public good” nature of the UN the approach that leader companies use that leaders take Global Compact. to Embed, Balance, Diffuse and Translate to implement the A CD-ROM with a static version of the Re- strategy throughout their enterprises. The strategy. source and a publication will be distributed to wheel identifies steps that leaders take to implement the strategy: Recommit, Assess, Declare, Engage, Perform, Evaluate, Antici- pate and Disseminate. When a user scrolls over each portion of the wheel, a pop-up box appears that explains the definition of the specific step. The user will find information about the Recommit development of the wheel in the “Overview” Assess tab. The Organizational and Issue Area Frame- work, shown below, which served as a starting point for development of the Environmental Stewardship Strategy, is described in this loca- tion of the resource. Disseminate Declare On the home page, the user will also see four boxes labeled “Embed”, “Balance”, “Diffuse” and “Translate”. When a user scrolls across each tab a pop up appears that explains what each means. If a user clicks on one of these tabs, they will be taken to Anticipate that specific page (e.g. “Embed”) where they Engage will see a listing of the eight components of the implementation wheel. Below the components is a detailed description of the approach, followed by featured case studies that illustrate how specific firms have suc- Evaluate Perform cessfully integrated the approach into their businesses. Over time, users will be encour- aged to add multimedia content, some of which will be profiled on the homepage. Below the header, the user will notice sev- eral navigation tabs. When a user scrolls over each of the tabs, a brief explanation of how *www. nicholasinstitute.duke.edu/globalcompact that particular tab works will pop up. 15 Organizational and Issue Area Framework Board Global Policy Statement: Vision & Mission, UNGC Principles C-Suite Compliance+ Issue and Area Public Policy Trend & Management Identification & Integration Advocacy, Global & Tracking Systems Climate, Energy & Renewables, Local Engagement, Intelligence, Meet and seek to Water, Ecosystems, Other Responsible Horizon Items exceed laws and resource use, Product Design & Lobbying regulations Use, Community Development Value Chain Implementation Direct Ops and Subsidiaries, Suppliers, Customers Transparency & Disclosure COP The user will click on the “Overview” tab through the “Resource” tab and will also be to learn about the origins of the Environ- available on the pages where they are most mental Stewardship Strategy initiative, its valuable to users. purpose, how it was developed and future Any registered user can contribute ac- directions. tively to conversations regarding the various Next, the user can roll over the “Using topics found on the site through the “Discus- This Resource” tab to learn about how the sions” tab. Here, they can post questions to website information may be used to enhance the group, make comments and share best their Environmental Stewardship Strategies practices. Non-registered users may view the both as a passive observer and as an actively activity on this portion of the site but cannot engaged registered user. A registered user contribute unless registering. will be able to add to discussions, upload Registered users can create profiles for content, share best practices and network themselves and their organizations through with other users. the “Networking” tab. On each profile, users The user can next view the tab called will be able to populate the following fields Strategy Appraisal which will show what to explain their type of expertise and organi- Embed, Balance, Diffuse and Translate can zation: “Areas of subject matter knowledge”, mean at their organization. As firms begin “How my organization plans on recommit- to implement the strategy and observations ting to the Global Compact,” “Invite Col- about how it works in their organizations laboration,” general information on location, emerge, users can contribute information type of business, industry and a “Contact” about their experiences on the “Discussions” button where other registered members can tab. In addition to profiling their own experi- send them messages through the system ence with strategy implementation, users without users having to disclose their email can dialogue with peers about challenges addresses. and opportunities related to any of the At the bottom of the site, users will find features of the approach. Registered users are links to the Caring for Climate and CEO especially encouraged to add attachments Water Mandate initiatives. (documents, photographs, reports, etc.) to We look forward to your contributions at the site. All attachments will be accessible nicholasinstitute.duke.edu/globalcompact 16 Environmental Stewardship Strategy Environmental Stewardship Resource Components Recommit: The richness of the resource is based on Over time, organizations will begin to ac- Leadership’s re- the fact that companies will be contribut- cumulate success stories from the thirty-two ing relevant, timely content as part of their aspects of the Environmental Stewardship commitment to recommitment to the UN Global Compact. Strategy. They will learn from the successes environmental From the homepage, the user will have ac- and failures of other firms who have recom- principles through cess to the content pertaining to “Embed,” mitted to the three environmental principles a Global Corporate “Balance,” “Diffuse” and “Translate.” of the Global Compact. Every user of the site Within each of these ideas pages, con- will benefit from this high-level collaborative Policy Statement. tent will exist that explains how organiza- learning platform. tions are engaging with the eight steps. For example, on the Embed page, users will have access to information about how an organi- Step 1: Recommit: zation is embedding its UN Global Compact Recommit is a Global Corporate Policy recommitment throughout its organization. Statement, which means that a company’s Additionally, this page will address how to leadership (e.g., CEO, leadership team, Board) embed the remaining steps (Assess, Declare, restates their commitment to the UN Global Engage, Perform, Evaluate, Anticipate and Compact environmental principles, and - Disseminate) within an organization. where relevant - the Caring for Climate and The following pages explain how each CEO Water Mandate initiatives. In addition step in the strategy can be integrated into the company’s leadership commits to ongoing your organization, its metrics, its value development of the UN Global Compact Envi- chain and the local markets in which it ronmental Stewardship Strategy; for example, operates. Every organization will inter- by providing online case studies of best prac- nalize these approaches in different ways tices and participating in member surveys. and every management team will need to Recommitted companies understand that the develop a process for setting priorities for UN Global Compact can be used as a learning implementing the different elements of the forum for like-minded businesses making strategy. information sharing mutually beneficial. The Three Principles of the UN Global Compact Embed Balance Diffuse Translate Recommit Recommit Recommit Recommit Assess Assess Assess Assess Declare Declare Declare Declare Engage Engage Engage Engage Perform Perform Perform Perform Evaluate Evaluate Evaluate Evaluate Anticipate Anticipate Anticipate Anticipate Disseminate Disseminate Disseminate Disseminate Recommit Recommit Recommit Recommit Caring for Climate CEO Water Mandate 17 Embed Recommitment water sustainability, poverty reduction, Assess: A continu- A recommitted company will apply the energy and food security. It must incorporate ous assessment of three UN Global Compact environmental sustainability goals and reflection on where stewardship strategies principles throughout their organization. Ac- one’s true environmental impact lies. Inte- cording to a company’s capability, it should gration involves incorporating assessment of for the identification support cost-effective measures to protect environmental stewardship efforts so that it of gaps in policies and the environmental and not use scientific fits alongside other forms of company assess- practices. uncertainties as an excuse to postpone its ment – like financial statements. actions to address environmental challenges. A recommitted company will take initiatives Embed Assessment to promote greater environmental responsi- Leading companies institutionalize core bility. concepts of environmental stewardship throughout the company hierarchy, from Balance Recommitment corporate level policies to actions governing A recommitted company does not only product disposal. For many, this will mean consider short-term shareholders’ financial operating “above the line” with regard to interests, but also takes into account longer global environmental standards. For many term environmental interests of other stake- more, it will mean finding ways to integrate holders, including local and international environmental reporting and assessment communities and future generations. within already-existing reporting frame- works and assessment structures. Compa- Diffuse Recommitment nies which integrate historically separate A recommitted company will share best benchmarks will find themselves leaders in practices across its value chain – with its environmental stewardship. direct operations, subsidiaries, suppliers, and customers as well as with peer companies Balance Assessment participating in the UN Global Compact. The Leaders develop assessments that balance company will discuss both positive and nega- short- and long-term needs of all stakehold- tive lessons learned from past experiences. ers. Balance means identifying gaps in long- term environmental goals. Such thinking Translate Recommitment provides companies with a greater level of A recommitted company will adapt its predictability and the space to act on envi- principles and best practices and share its ronmental promises. However, it is essential learning through engagement in UN Global that companies do not overpromise. Both Compact Local Networks. short- and long-term environmental strate- gies must be based on data-driven foresight. Companies must find ways to balance quick Step 2: Assess wins with long-term achievements. While Companies that are environmental lead- political and financial spheres may change ers continually assess their stewardship quickly, the environment does not. Mutually strategies to identify gaps in both policies beneficial partnerships help bolster such a and practices. Environmental stewardship balance. Government and non-profit partner- leaders share two main traits regarding ships may help create short-term success assessment. These are transparency and in- with long-term stability. tegration. Transparency relates to honesty in assessment. Honesty in assessment must go Diffuse Assessment beyond numbers; it must consider progress Leading companies assess their strategy to towards developing a full suite of environ- determine the environmental impact of mental stewardship strategies to address is- their operations and that of their suppliers, sues such as climate change, water resource subsidiaries and customers across the value protection, deforestation, toxic waste, loss of chain. For some organizations, a stewardship biodiversity and long-term damage to ecosys- strategy may focus most on assessment of tems. Increasingly, leaders recognize the role the impacts of raw materials incorporated in of business in addressing the impacts of envi- products; for others, an assessment focus on ronmental degradation and climate change consumer use is appropriate. Strategy assess- on development -- i.e. on peace and security, ment activities may point the way towards 18 Environmental Stewardship Strategy Nokia Case Example Effective Partnerships: Voluntary Initiatives In 2005, Nokia participated in a pilot program with the European Union (EU) called the Integrated Product Policy (IPP), which focused on the lifecycle impact of products. The program recognized the increasing complexity of value chains and the fact that a “one size fits all” approach to regulation may not be functional. Nokia committed to the voluntary ini- tiative to strengthen relations with EU authorities and show the potential success of volun- tary regulations in lieu of straight regulation. The project resulted in five initiatives to reduce the environmental impact of mobile phones. Nokia worked with the United Nations Environ- mental Programme on the Mobile Phone Partnership Initiative. The partnership began in 2005 under the auspices of the Basel Convention. Manufacturers and operators of mobile phones sought to develop environmentally sound end-of-life management policies. MPPI resulted in five guidelines regarding the management and shipment of electronic waste. The program not only complemented government initiatives, it promoted the benefits of public-private partnerships. Ethical and environmental elements are now included within Nokia’s supply chain management processes, including supplier selection and contracting, supplier assessments, relationship and performance management. Nokia conducts over 100 supplier assessments every year. Suppliers not meeting Nokia’s requirements must provide and commit to implementing Corrective Action Plans. Declare: development of strategic relationships with tion with strategic environmental steward- A statement of suppliers and customers to understand life- ship ambition and provides benchmarks for cycle impacts. Assessments may also assist the organization to aspire to far into both environmental companies in identifying partnership oppor- the short-term and the future. It is important goals related to tunities with common organizations work- to communicate these goals to all stakehold- every aspect of ing with common suppliers to standardize ers external to, within and across the organi- information dispersal and ease the burden zation. Stakeholder involvement is essential the organization. on the supply chain as more organizations to meeting short- and long-term goals. look towards the life-cycle of their services. Embed Declaration Translate Assessment A leading company’s environmental steward- Leading companies must understand where ship vision and strategy is communicated to they operate. They must undertake assess- all levels of the business. It is important to ments of their strategy that enable them craft a communication tool to both encom- to become familiar with the way in which pass a vision and inspire action throughout operations interact with local communities the organization. and how facilities, customers or suppliers affect local environmental issues. Companies Balance Declaration must assess whether policies and processes Environmental leaders declare short term mitigate or exacerbate local environmental goals that lead to long term gain. Strate- issues. Companies benefit from assessing the gies that incorporate transparent measure- multiple contexts in which they operate and ment systems will help stakeholders track their impacts on local market priorities. progress towards these goals. Measurement tools should highlight connections between short-term actions and long-term environ- Step 3: Declare ment goals. Short-term goals should allow Environmental Stewardship leaders develop the business to make incremental progress strategies that incorporate clear statements and lead to long-term gain. Long-term goals of environmental goals related to every as- should show ambition and dedication. pect of the organization. The declaration of Diffuse Declaration environmental goals inoculates the organiza- 19 Leaders inform stakeholders across the value chain about the components of the company’s environmental declaration. Fulfilling environ- System Capital Management mental stewardship goals requires participa- Case Example tion and cooperation across the entire value Realistic Progress: Leader in a Learner Context chain. Collaboration should begin with goal System Capital Management (SCM) is a financial and industrial holding sharing. Companies should go one step fur- company based in the Ukraine. The company implements a corporate ther to develop declarations that encourage environmental stewardship strategy and reports on its environmental compliance with stewardship goals along the performance through a sustainability report. While engaging in envi- value chain and across the industry. ronmental activities, the company recognizes that it is operating in “an economy which is undergoing transformation.” While the company acts Translate Declaration as a leader on environmental issues in Ukraine, the nation is following A leading company’s environmental declara- other markets. The company must strategize around environmental tion is applicable to groups involved in all legacy issues and previous underinvestment. SCM’s environmental areas of the business and in all locations. Cre- stewardship strategy looks forward to a transformation towards inter- ating an environment where all levels of the national standards. business understand and implement the dec- All units of SCM carry out their CSR a social responsibility mission laration may require empowering a change with these principles in mind: agent in each relevant location. Change agents 1. Commitment to the highest international standards must be aware of connections between their 2. Application of the best world practices communities and the environmental initia- 3. Implementation of realistic approaches based on social conditions tives at hand. Leaders should work with UN in Ukraine Global Compact Local Networks to develop 4. Practical benefits for the society appropriate declarations to ensure that they are effective at the community level. 20 Environmental Stewardship Strategy Engage: Public Step 4: Engage policy engagement Leading companies use public policy to es- tablish global standards, form public private Holcim Case Example to establish partnerships, inform the global climate Responsibility of an Industry standards, form change agenda and capitalize on opportuni- Leader partnerships, and ties. A leading environmental stewardship Within the Swiss concrete company Hol- inform the global strategy incorporates public policy engage- cim, a Sustainable Environmental Perfor- ment that builds coalitions to solve impor- mance (SEP) Committee drives environ- environmental tant issues, recognizes public policy effects mental strategy. The committee, chaired policy agenda. on industry and encourages innovation by the executive committee member to go beyond regulations. Engagement in for sustainable development, utilizes public policy allows corporations to perform company leaders across the world as responsibly in the global marketplace. a sounding board for new sustainable and environmental initiatives. Typically Embed Engagement when we have a new initiative or a new Environmental Stewardship leaders develop proposal, we take it first to the SEP com- a responsible lobbying strategy that promotes mittee,” said Ruksana Mirza of Holcim. environmental stewardship; assign individu- “We get input, they act as a sounding als within the organization specific roles and board. We get input from them, we take responsibilities to develop and monitor the it to the steering committee and finally strategy; oversee a clearly identified engage- to the executive committee for final ap- ment strategy for new and existing partner- proval.” Holcim also plays an important ships; and explore methods to expand their role within the industry and as part of engagement with the UN system, including the global community. Holcim was one through the UN Global Compact, the United of the founding members of the Cement Nations Environment Programme and rel- Sustainability Initiative (CSI) and an ear- evant UN agencies. ly member of the World Business Council on Sustainable Development (WBCSD). Balance Engagement Together with these organizations, Leader companies build responsible coali- Holcim developed an agenda for action tions that will contribute to short-term and that, said Mirza, “addressed all the key long-term success; evaluate opportunities to material issues for our industry including engage financial stakeholders to determine climate change, occupational health and goals and timeline for environmental results; safety, other atmospheric emissions,” and determine areas within the company and also developed an industry protocol where, in the long run, environmental goals (WBCSD-WRI Cement Protocol) for can surpass regulations. measuring CO2 emissions. Eskom Case Example non-performance. Eskom strives to “Eskom would have been a leader go beyond the national laws for water when it came to doing environmental Building from Proactive management and emissions. They assessments on new projects. But at Environmental Legislation typically exceed general requirements the same time, we were learning about Eskom is a largely state-owned South in water standards and attempt to environmental management systems African energy corporation. They have exceed the official standards for emis- from watching what was happening in benefited from progressive legislation sions at every operating site. other companies around the world. In enacted in the country. The National For Eskom, the role of leader and other cases, we might be a domestic Environmental Management Act in learner is often interchangeable. Dr. leader but a global learner.” South Africa created accountability Steve Lennon of the company said for environmental performance and 21 Westpac Case Example Active Policy and Stakeholder Engagement Westpac takes the lead in seeking responsible business partners. Alison Ewings of Westpac said: “In terms of our investment and lending decisions we look to part- ner with organisations that go beyond regulatory compliance and demonstrate best practice. Typically we would like to have as many as those in our portfolio and broader value chain as possible.” Westpac understands that environmental stewardship is vital for the future of global business and corporate responsibility, but also recognizes its positive economic impacts. Regulations play a significant role in shaping the future trends of environmental issues. Westpac is actively shaping those policies and is ready to capitalize on the opportunities. Since the early 1990’s the company has adopted the approach of trying to under- stand their relationship with the wider community through stakeholder engagement. Westpac has developed systems to take feedback from the external environment, including government, consumers and NGOs. The Board Sustainability Committee, Westpac Sustainability Council and the Community Consultative Council are exam- ples of the forums the company uses to collect and assess input from stakeholders. Through these systems the company has learned that they must focus on a broader set of issues which include climate change and environmental performance, sustain- able products and services, advocacy, outreach and thought leadership. Corporate Sustainability Focus Areas: 1. Going Mainstream - Making sustainability real for customers 2. People & Places - Working together to support our community 3. Treading lightly - Managing our environmental footprint 4. Climate Change - Developing products, services and relationships to transition to a low carbon society 5. Solid Foundations - Sustainable business practices through governance and risk management 6. Speaking Out - Advocating on behalf of sustainable business practices. Diffuse Engagement lobbying, advocacy, and engagement with UN Perform: Develop Environmental leaders encourage or require Global Compact Local Networks. internal management supplier participation in the UN Global Com- pact or other business voluntary initiatives systems and tools that support environmental stewardship. Step 5: Perform leading to consistent They should set clear standards for business Performance in environmental steward- environmental partnerships with the UN, governments, lo- ship is driven by developing and adopting performances. cal authorities and civil society. They should internal management systems and tools to furthermore participate in learning forums address the issues that the company has iden- and share knowledge and resources that will tified as material to their business, industry help participants across the company’s value sector and geographic location. chain to meet or exceed standards. Embed Performance Translate Engagement Leading companies ensure that senior Leading companies consider policy obstacles management is invested in each piece of the that constrain or prohibit environmental declared strategy and can effectively com- stewardship strategy in certain markets. They municate progress throughout the organiza- analyze tools and capabilities within their op- tion. They empower individuals within the erations that can lead to change in these areas organization with resources, decision rights and evaluate alternatives such as responsible and evaluation tools. A continuous focus on 22 Environmental Stewardship Strategy formalizing these programs throughout the corporate structure by integrating sustain- ability into the capacity-building and train- Dow Chemical Case ing programs and empowering sustainability Example champions throughout the organization Maintain a Customer Focus ensures that sustainability strategies cascade Recognizing the impact and scale of from the CEO and and leadership suite down the chemical industry, which produc- to the shop floor where they are implement- es between 90 percent and 95 percent ed. Leading companies do this by setting of products consumed globally, Dow aggressive targets at the corporate level and Chemical refocused its strategy to be- providing the right support and the proper come “one of the world’s best problem systems so that middle managers can figure solvers focusing on the world’s biggest out how to meet them. challenges which contain significant business opportunities that can be Balance Performance unlocked by sustainability and innova- Leading companies explore information tion.” In an internal assessment of management techniques that integrate finan- business operations, Dow determined cial and environmental results to illustrate that almost all of their sales fell under progress toward meeting short and long-term the following segments: energy, cli- expectations. Realistic assessments are criti- mate change, water, health, nutrition, cal. They allow for both financial and envi- transportation and infrastructure. Tak- ronmental adjustments. Many companies ing these issues and integrating them have realized their impacts come from the into its corporate strategy required use of their products as opposed to their cre- defining the core drivers of business ation. It is imperative to utilize a Life Cycle success in order to make sure they Assessment (LCA) approach to assess the im- stayed true to their mission and vision pacts of the products “from cradle to cradle.” while focusing future business oppor- Integrating risk management approaches and tunities on these issues. sustainability into annual strategic planning Dow Chemical thus defines the next processes also enables the identification of generation of change as focusing on key sustainability objectives and emerging sustainable chemistry to address trends to further drive performance. climate change, energy efficiency and conservation, product safety Diffuse Performance leadership, contribute to community Environmental leaders determine relevant development, health protection, management systems and processes for the environmental stewardship and the company’s value chain; They begin with an aggressive pursuit of scientific break- analysis of current operations and identify throughs. where information is lacking. They develop tools and work plans to address these informa- tion gaps and correct shortcomings through the implementation of certain tools: supplier/ customer scorecards, audits and/or clearly defined purchasing policies. Leaders deter- mine whether or not behavior change will be challenging; if so, they introduce value chain education to support supply partners in understanding both short- and long-term strategies. 23 Intel Case Example ■ Intel’s Ocotillo Campus is well- system, which reduces use of fresh positioned with advanced conservation potable water by millions of gallons Issue Integration: Water and strategies for optimizing recycling. each day. Overall water conserva- Community Development Cleaning silicon wafers during fabrica- tion performance is achieved through ■ Intel purchases fresh water from tion is one of the largest uses of water the following three key approaches: the city of Chandler, Arizona and uses in Intel’s factories. Recharge, Reclaim, Recycle. most of it to produce ultra-pure water ■ The strong partnership between Overall water conservation perfor- for its manufacturing processes. Intel and Chandler over the last mance is achieved through the follow- ■ Once used, this water is still suit- decade made it possible to implement ing three key approaches: Recharge, able for a number of on-site and off- a progressive water management Reclaim, Recycle. site reuse and recycling programs. 24 Environmental Stewardship Strategy Translate Performance Fuji Xerox Case Leader companies achieve compliance plus Example outcomes that meet and even exceed laws and regulations in each market in which Life-Cycle Approach the company operates. Leading companies Recognizing that used products are not go beyond the use of one certification stan- waste but valuable resources, Fuji- dard and often integrate different manage- Xerox set goals of “zero landfill,” “no ment system approaches and protocols to pollution” and “no illegal disposal” for elevate the standards of performance. For itself. In order to implement strategies example, leading companies use a combi- to achieve these goals, the company nation of ISO14000 certified Environmen- focused its efforts along two distinct tal Management Systems, the ISO26000 lines of action: guidelines for social responsibility, partici- 1. Mandating an integrated recycling pation in the UN Global Compact, includ- system ing production and the creation of annual 2. Developing energy-efficient products Communication on Progress (COPs). Leading that reduced CO2 emissions. environmental stewardship strategies also The policies that followed were a include tactics to disclose carbon footprints result of studying the life-cycle of in line with the Carbon Disclosure Project products: materials procurement, and report performance using the Global manufacturing, sales, delivery logistics Reporting Initiative protocol, among other and end-use. Insights were gained into programs and reporting frameworks. If poli- specific areas of the value chain where cies necessary to implement the company’s certain components could be rescued declaration are not yet in place, companies for re-use and others taken back for should engage in responsible lobbying in all recycling at the end of their life-cycle. applicable locales. 25 Step 6: Evaluate Evaluate: Environmental Stewardship leaders develop Develop internal and adopt internal management systems China Minmetals and tools to track, monitor, measure and Case Example management systems report environmental performance. Leaders Environmental Management and tools to track, use evaluation tools to pinpoint areas of the System monitor, measure and strategy which demand further improve- China Minmetals attaches great report environmental ment and to highlight areas in which suc- importance to the development of cessful tactics should be shared with other performance. environmental management systems. companies. The company’s (EMS), which incorpo- rates energy conservation and emission Embed Evaluation reduction and emphasizes the use of Leading companies embed an internal envi- assessments based on monitoring and ronmental management system throughout statistical analysis. the organization. Relevant data is collected High level goals have driven the fol- from all levels of the company and used to lowing parameters: evaluate overall environmental performance. 1. The EMS is driven by an organization- Performance data must be fully disclosed, al framework, which includes an energy with shortcomings acknowledged as exten- conservation and emission reduction sively as achievements. A company should steering committee. develop and use spreadsheets, scorecards 2. The EMS includes performance or other metrics tools to evaluate its perfor- measurement systems which incorpo- mance. Companies should use evaluation rate monitoring and dynamic, real-time tools to identify areas in which investments statistical analysis. in technology and training may be required. 3. The EMS assesses environmental performance through the use of tools Balance Evaluation such as standards and indices. Data Leading companies develop evaluations that from the EMS feed into a corporate encompass milestones that track short-term reward and accountability system. The EMS is the basis for significant achievement. Minmetals has been des- ignated one of ten “green companies” Tata Group by Fortune China. These achievements Case Example bolstered Minmetals’ commitment to its energy conservation and emission Climate Change Scoring work. The EMS has assisted the com- Framework pany in meeting its energy conservation Tata’s 1,000 point climate change scor- and emission reduction objectives for ing framework builds on the company’s over ten years. existing “Business Excellence” model to measure progress toward achieving en- vironmental goals. Instead of creating a new and separate model for assessing gains against longer term strategic direction. progress on climate change initiatives, A balanced view allows for a holistic evalua- this approach allows the company tion of progress and provides senior manage- to rate their performance based on ment with an opportunity to change course an evaluation format that is already or modify direction midstream. familiar to all employees. Creating such integration promotes innovative forms Diffuse Evaluation of environmental leadership. With a Leading companies evaluate progress across legacy of separating environmental per- the business value chain; they make use of formance from other forms of measure- the most current strategic tools to track envi- ment, this change may be challenging ronmental stewardship performance of each for some organizations to implement. key business unit and throughout product and service lifecycles. 26 Environmental Stewardship Strategy Anticipate: Translate Evaluation strategies, while building a more sustain- Influence and Environmental leaders compare the compa- able business for the long run. Tools such as anticipate future ny’s performance in relevant markets. They scenario planning may be used to inform market trends in they link regions, countries and markets the development of nimble environmental order to build a together to develop new and complementary stewardship strategies that remain effec- strategies. Efforts such as these should in- tive in the face of events such as natural more sustainable corporate connections between south-south disasters and local, national or global policy business. companies and participation in UN Global changes. Compact Local Networks. Learner and leader companies should share information across Embed Anticipation local markets to learn from each other. Environmental leaders develop effective trend-tracking methods and identify individ- uals throughout the organization to monitor Step 7: Anticipate developments. They encourage and empower Active public policy engagement allows cor- personnel to bring issues to the CEO and porations to influence and anticipate future leadership team from the “bottom-up” so market trends. Such engagement informs that important and relevant issues across the organizations of successful environmental organization are considered and evaluated. Dow Chemical Case Example Managing public policy priorities Dow sets priorities and evaluates new corporate public policy issues to ensure that re- sources are focused on addressing issues with the highest potential impact on the environ- ment. Dow’s Public Interest Strategy Board (PISB) provides management and oversight of these priority-setting efforts. The PISB is comprised of Dow senior leaders from a cross section of functions and business units. It is assisted by the Government Affairs and Public Policy Expertise Center. The PISB helps assure that critical priorities and issues are identi- fied and managed, executive sponsors arranged, appropriate teams resourced, assembled and critical goals and targets identified and achieved. 27 Tata Case Example Westpac Case Tracking future challenges Example All Tata companies scan sustainability Non-traditional value chain challenges and examine development management patterns in the external environment Westpac’s senior sustainability as part of the business learning envi- manager, Alison Ewings, describes ronment process. Based on information the company’s main environmental from scanning activities, alerts are sent impacts as indirect, saying that the to senior leadership, who determine company, “takes a more of a value how to make mid-course corrections chain approach rather than a life and interact with key stakeholders. cycle approach.” Such an approach is difficult to enact in a service envi- ronment, because, as the manager continues, “there is no widget to track from extraction through to the end of Balance Anticipation its useful life.” Thus, the company has Leading companies define what “long-term” had a value chain approach in place means to the company; they collaborate with for a number of years. Westpac’s ap- shareholders to determine and agree upon proach incorporates a detailed survey short-term and long-term environmental that is required of all high-risk suppli- goals and propose a call to action at share- ers. Recently the company moved to holder meetings to anticipate and share fu- a questionnnaire for all suppliers. A ture trends that the organization is expected subset of those questionnaire respons- to encounter. es are externally validated each year. The company reaches out to suppliers Diffuse Anticipation through a series of workshops, so that, Environmental Stewardship leaders inform as the senior sustainability manager participants across the company’s value explains, they may then “replicate it chain of future trends and challenges. They with their own suppliers.” The com- engage suppliers and customers in discussion pany also benchmarks how suppliers and analysis of factors that will influence within specific sectors perform against long-term success. Leaders institute mecha- each other. nisms to measure performance and put it in context of current and expected market trends. Translate Anticipation Leading companies anticipate impacts of company operations; they partner with local leaders to identify local trends and prepare for future challenges and develop means of communication to understand local expecta- tions. Their strategies should include tactics such as hosting conferences or meetings of key stakeholders in local markets or con- structing scenario planning analyses with local partners and stakeholders. 28 Environmental Stewardship Strategy Disseminate: Step 8: Disseminate Communicate Leading companies effectively communicate Holcim Case Example challenges, risk risks and results through different channels. All stakeholders including investors, employ- Leveraging Partnerships and and results to ees, external regulators, consumers and civil Industry Associations stakeholders society should be fully informed of environ- As part of the building and materials for greater mental stewardship strategy progress. Com- sector, Holcim has become a leader in municating progress leads to greater account- sustainability. The company focuses its accountability and sustainability strategy on addressing ability and transparency. When joining the UN transparency. Global Compact, companies make an explicit a variety of issues, including climate commitment to share progress made in an an- change, conservation of non-renewable nual Communication on Progress (COP). resources, recycling of secondary ma- terials and community engagement. In Embed Dissemination assessing the environmental footprint of Leading companies develop effective capac- its operations, Holcim identified biodiver- ity building and internal communication sity impact planning as a strategic tool programs that enable effective information to improve its operational approach to sharing and quick adoption of best practices. resource management and to contrib- This ensures that goals and objectives are ute to broader social and development clearly stated and communicated and sup- goals. As a way to fully understand its ports internal collaboration and faster adop- impacts, Holcim realized the importance tion of best practices across the organization. of establishing partnerships with expert institutions. In 2007, Conservation of Balance Dissemination Nature, which includes the sharing of It is important to balance internal com- good practices with other companies and munications with external reporting. Due conservation agencies. to the pervasiveness of social networks, internal information is more likely to leak out to the press; therefore leading companies have recognized that providing stakeholders with more robust, transparent and frequent information creates value through disclosure Diffuse Dissemination of risks and results. Leading companies share information about challenges, risks and best practices across the business value chain. They engage in forums such as industry associations and working groups to share best practices and drive Novo Nordisk Case Example results across their industries. Integration: External Reporting Translate Dissemination Novo Nordisk came to believe that standard financial reports capture Leading companies are in constant commu- less than 20 percent of corporate risks and value-creation potential. As nication with the local and global external of 2004, the company has integrated social and environmental reporting environment to understand new challenges, into its annual report. Such integration recognizes the interdependence develop corporate policies and internal of all of these issues and adds value to investors. Novo Nordisk provides mechanisms to address them and distribute three rationales for such a change: Integrated reporting provides a local outside knowledge across the organiza- more complete valuation tool for the risks of the company. tion. Partnering with NGOs is an effective It increases accountability towards all stakeholders. It assists manage- means to identify opportunities to confront ment in driving performance against Balanced Score Card objectives. issues and translate risks into opportunities while creating a channel to disseminate re- sults through credible partner organizations. 29 30 Environmental Stewardship Strategy Environmental Stewardship Resource: Next steps in Development and Deployment The Environmental Stewardship Resource is A goal of the resource is that over time UN meant to be scalable in terms of its design Global Compact members who access it and as well as in its volume of use. As more put its many elements to use will be in a po- executives take an active role in learning, sition to better formulate how to “Recommit contributing to discussions, sharing of best to the Global Compact.” As leader companies practices and collaborating, they can begin communicate their “next level” commitment to empower their employees to participate to the environmental principles of the UN as well. This tool enables a “virtual,” multi- Global Compact it will encourage others to stakeholder engagement process internally use its components to do the same. Users can throughout an organization, as well as a add content by creating a profile under the collaboration with external partners. It is the “Networking” tab. responsibility of executive leadership and The journey towards a better world has managers to ensure that employees integrate no defined endpoint but rather is an ongo- an environmental stewardship mindset into ing, collaborative effort of people striving their jobs. Active encouragement of the use towards a greater good. Being responsible of this resource will assist in such endeavors. stewards of the environment cannot be Further deployment of the Stewardship limited to a group of individuals, a business Resource should entail inviting strategic unit, company, industry, region or country. partners throughout the company’s value It must be an effort supported from the top chain to get involved. The resource will serve down where everyone is empowered to learn, as a repository of information on environ- participate in dialogue and network. With mental best practices and will help better the creation of the UN Global Compact Envi- define the management systems and process- ronmental Stewardship Resource, a crucial es that can be implemented to enhance sup- step has been taken towards bridging the gap plier cooperation. Additionally, as an open between available knowledge and organi- source resource that has been created as a zations seeking to use that knowledge to “public good” the Environmental Steward- develop critical solutions to pressing environ- ship Resource can evolve into an ideal tool to mental problems. benchmark practices among companies. About the United Nations Global Compact Launched in 2000, the United Nations Global Compact is a both a policy platform and a practical framework for companies that are committed to sustainability and responsible business practices. As a multi-stakeholder leadership initiative, it seeks to align business operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption and to catalyze actions in support of broader UN goals. With more than 8,000 participants in over 135 countries, it is the world’s largest voluntary corporate responsibility initiative. www.unglobalcompact.org About Duke University Duke University, a private research university located in Durham, North Carolina, USA, houses three undergraduate programs and professional schools in business, divinity, engineering, environment, law, medicine and public policy. Its more than 6000 undergradu- ates, 7000 professional and graduate students and 3000 faculty focus on realizing Duke’s signature strategy, “knowledge in service of society.” A culture of public engagement is interwoven with education and research across the institution. www.duke.edu. About Caring for Climate Caring for Climate is the UN Global Compact’s leadership initiative on climate change. Formed in July 2007, the platform provides a framework for business leaders to advance PHOTO CREDITS: practical solutions and help shape public policy. CEOs who support the initiative are pre- Cover © T. Balabaadkan Hard Rain pared to set goals, develop and expand strategies and practices, and to publicly disclose Picture Library, Unep emissions as part of their existing Communication on Progress commitment within the UN © Utsuka, Hard Rain Picture Global Compact framework. Caring for Climate is endorsed by nearly 400 companies from Library, Unep 65 countries. For more information including on how to endorse the initiative, please visit © Prosor, Hard Rain Picture the UN Global Compact website at: http://www.unglobalcompact.org/Issues/Environment/ Library, Unep Climate_Change/ Page 3 © Brill, Unep Page 4 © Hard Rain Picture Library, Unep About the CEO Water Mandate Page 11 © Curt Carnemark, World Launched by the UN Secretary-General in July 2007, the CEO Water Mandate is a private- Bank Photo Library public initiative of the UN Global Compact with a focus on developing corporate strategies Page 12 © Curt Carnemark, World and solutions to contribute positively to global water issues. Endorsing CEOs acknowledge Bank Photo Library that in order to operate in a more sustainable manner, and contribute to the vision of the Page 19 © Scott Wallace, World Bank UN Global Compact and the realization of the Millennium Development Goals, they have a Photo Library responsibility to make water resources management a priority, and to work with govern- Page 23 © M.Haneba, Unep ments, UN agencies, civil society, and other stakeholders to address this global water Page 24 © K.Shinde, Unep challenge. For more information including on how to endorse the initiative, please visit the Page 26 © F Charton, Unep UN Global Compact website at http://www.unglobalcompact.org/Issues/Environment/ Page 29 © Alejandro Lipszyc, World CEO_Water_Mandate/ Bank Photo Library The Ten Principles of the United Nations Global Compact Human rights Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2 make sure that they are not complicit in human rights abuses. Labour Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 the elimination of all forms of forced and compulsory labour; Principle 5 the effective abolition of child labour; and Principle 6 the elimination of discrimination in respect of employment and occupation. Environment Principle 7 Businesses are asked to support a precautionary approach to environmental challenges; Principle 8 undertake initiatives to promote greater environmental responsibility; and Principle 9 encourage the development and diffusion of environmentally friendly technologies. Anti-corruption Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery. Published by the UN Global Compact Office Contact: unglobalcompact@un.org June 2010 | 0.75M