The first Ethical Corporation Awards demonstrate that some companies have truly grasped the responsible business agenda
Excellent performance deserves recognition, and recognition can spur further excellence. This is the rationale for the new Ethical Corporation Awards, for the best examples of corporate social responsibility practice. The first round of winners was announced in May at Ethical Corporation’s responsible business summit.
Winners were selected in ten categories, by a judging panel headed by Brendan May, Ethical Corporation contributing editor, and founder of sustainability consultants the Robertsbridge Group. The panel selected the winners from nearly 150 entries, submitted from a wide variety of companies. The judges agreed that the wide range of entries showed how seriously some corporations are taking the responsibility agenda.
Top marks for clarity
For effective corporate responsibility, openness is the best policy. The Ethical Corporation Awards recognised two companies for their efforts towards more open communication. Timberland received the authentic communications gong for its frankness about the challenge posed by climate change, and the need for corporations to build climate mitigation into their strategies. The innovative reporting award went to food wholesaler Produce World for its transparency about its progress towards sustainability targets.
In the autumn of last year, Timberland went public with the “Don’t tell us it can’t be done” campaign, an awareness-raising initiative in advance of the December UN climate change summit in Copenhagen. The campaign’s aim was to build momentum for an effective climate deal at Copenhagen, with a petition promoted via Facebook, Twitter, YouTube and appearances on major television news shows by Timberland chief executive Jeff Swartz. Timberland also dispatched its own reporting team to Copenhagen to cover the UN conference.
Copenhagen fell flat, of course, with the political reality not matching the pre-summit hopes. Nevertheless, Timberland plans to keep up the pressure ahead of the next round of major climate conferences, in particular in Cancun, Mexico, at the end of this year.
Robin Giampa, Timberland’s director of corporate communications, says his company is “thrilled to be recognised” for the campaign, but “while we always appreciate recognition, it is our belief in responsibility as the right thing to do that drives us”.
Timberland also believes that the post-Copenhagen environmental depression can be overcome through leading by example in achieving environmental goals. The awards judges viewed the Timberland initiative as “genuine campaigning” with real impact.
Produce World secured its award with a web portal that gives access to details of its sustainability performance. The company is a leading supplier of fresh fruit and vegetables to UK supermarkets. Rather than relegating corporate responsibility to a section of its annual report, Produce World plots month by month its performance against a range of environmental indicators – and provides this information for the world to see. The company’s benchmarks cover, for example, the number of workplace accidents, the amount of packaging used and the proportion of waste sent to landfill.
Produce World human resources director David Frost says the portal is designed to “grow trust” with partners. The transparency initiative showed that Produce World was aligned with the values of its clients. Frost adds that he would “expect to see some of the more innovative organisations taking an interest” in the Produce World approach to sustainability reporting.
Partnership, rather than mere sponsorship, is also a hallmark of effective responsible business. The Ethical Corporation Awards recognised two companies in this respect: PepsiCo, winners of the sustainability technology award, and US hotel and travel firm Carlson, which won in the best collaboration category.
Pepsi’s award is recognition of a project developed in partnership with Punjabi rice farmers to introduce techniques that cut water use by 30% and greenhouse gas emissions by up to 70%. The Pepsi-backed method is known as direct seeding, meaning that rice can be planted directly in paddy fields, rather than going through a water-intensive nursery stage first.
Reducing water use in agriculture is especially important in India, where farmers use more than 80% of the country’s water resources (compared with about 45% in OECD countries, for example). The extensive PepsiCo project, covering 6,500 acres, has gained the approval of farmers, and “its success is leading to its growth throughout the country”, says Nicki Lyons, PepsiCo’s head of corporate communications for the UK and Ireland.
She adds that the company wants to ensure access to safe water through “world-class efficiency in operations”, applying new techniques to established practices. As well as the environmental benefits, the project has resulted in poverty alleviation and development benefits for India.
Carlson won its award for work with the US child protection code of conduct, an initiative aimed at tourism operators with the goal of protecting children from sexual exploitation. Carlson, which owns brands such as Radisson and operates in 150 countries, was the first major American firm to join the initiative, in 2004. Since then Carlson has worked to train its employees, in particular in hotel chains, to be aware of situations in which the exploitation of children might be taking place. The child protection code regards Carlson as one of its exemplary members.
Carlson is seriously addressing an important issue that is often perceived as a taboo in the travel sector and doing great work on an issue many firms in the industry both overlook and ignore.
Making money count
The sustainability commercialised award was taken by finance firm F&C Asset Management, which has a track record of socially responsible investment stretching back a quarter of a century. F&C now manages more than £3bn in ethically screened funds, the largest such portfolio in Europe.
These investments, spread across a number of funds, mean that F&C has screened a lot of companies over the years: some 6,500 during 2009 alone. F&C does not plan to rest on its laurels but intends to expand its ethical portfolio, in particular in emerging markets where firms are increasingly coming under scrutiny from investors.
Karina Litvack, F&C’s head of governance and sustainable investment, says applying environmental and social standards to investments is more relevant than ever. She says: “The current crisis has demonstrated the heavy price we all pay when these wider systemic issues are neglected in favour of an overly short-term focus.”
The discipline of social responsibility will continue to evolve if outstanding companies and individuals are there to push it forward. Fortunately, these companies and individuals exist. London-based Continental Clothing won the outstanding performance award, while the accolade for individual leader went to Andrew Witty, chief executive of GlaxoSmithKline.
Continental Clothing impressed the judges through the scale of its sustainability ambition. The company stripped back its production processes, examining in detail the points at which social and environmental damage could be caused by cotton farming and textile production. It then reduced these negative impacts wherever it could, building in environmental protection and enhanced labour standards, and reducing chemical use.
Continental worked for two years on this evaluation and planning project, and the end result was the EarthPositive range – clothing with a carbon footprint cut by 90%. The firm has been repaid with sales, with more than one million garments flying out the door, making the EarthPositive range Continental’s fastest seller. Ethical Corporation’s judges said they were “impressed by the sheer scale of the company’s sustainability ambition”. Continental had “found solutions where other people have just talked about problems”.
In a very different sector – pharmaceuticals – Andrew Witty has demonstrated his belief that multinational companies must treat society as well as they treat their shareholders. The firm he leads, GlaxoSmithKline, has taken steps to put this into practice, especially in the developing world. Witty has overseen a revision of GSK’s pricing policy in poorer countries, dramatically decreasing the prices of patented medicines there. The company is also supporting the development of health infrastructure in the world’s least-developed countries.
Crucially, Witty has made moves to open up GSK’s bank of intellectual property. In the fight against malaria, researchers have been given online access to 13,500 compounds from GSK’s library, to encourage further research and development. This degree of openness is a first for the pharmaceutical industry.
GlaxoSmithKline’s vice-president for corporate responsibility, Julia King, says the award for Witty is “an acknowledgement of leadership and challenging the norm”. Such leadership can encourage others to follow, leading to an “evolutionary process” in the sector, she adds. The Ethical Corporation judges said that Witty has “set a game-changing standard against which GlaxoSmithKline and the rest of the sector will be judged”.
By highlighting such standard-setting, Ethical Corporation hopes to make its own contribution to more sustainable business.
Although more companies are coming to understand that corporate responsibility and sustainable practices can generate long-term benefits, some remain stuck in old mindsets, unnecessarily wasting the world’s resources. But irresponsibility can be punished, with an ever-growing range of campaign groups ready to shine a spotlight on dubious behaviour.
Greenpeace has been a leading spotlight-shiner for years. It continues to do exemplary work, and the Ethical Corporation judges felt this should be rewarded with an effective campaigner award, specifically for Greenpeace’s work in combating deforestation.
Greenpeace has employed both persuasion and exposure in its anti-deforestation armoury. It has encouraged major beef and leather suppliers in Brazil to sign a no deforestation commitment. A bit further up the supply chain, firms such as Adidas, Clarks, Nike and Timberland work in cooperation with Greenpeace to effectively police their suppliers and ensure that they only buy leather for their products that is not linked to Amazon destruction.
Forests are also being illegally cleared in Asia. In 2009 Greenpeace published a report – Illegal Forest Clearance and RSPO Greenwash: case studies of Sinar Mas.
RSPO is the Roundtable on Sustainable Palm Oil and is supposed to be a sustainability watchdog for the palm oil industry. But Greenpeace showed how its member PT Smart, a subsidiary of the Indonesian conglomerate Sinar Mas (awarded greenwasher of the year), was involved in illegal rainforest clearance to make way for oil palm plantations.
The effectiveness of Greenpeace’s exposé was shown when Unilever, the world’s largest palm oil user, decided to stop buying from Sinar Mas. Since then Nestlé and Spanish utilities firm Abengoa have followed suit. Ethical Corporation’s judging panel said Greenpeace’s work had been a “highly effective intervention on the causes of deforestation that for many years have proved resistant to outside pressure”. The Greenpeace campaign had led to “rapid and major changes in business activity in the leather, beef and palm oil industries”, the judges said.
Greenwasher of the year
Sinar Mas gained the uncomfortable accolade of being elected Ethical Corporation’s first greenwasher of the year.
The judges said that Sinar Mas, one of Indonesia’s largest business groups, with interests in pulp and paper and financial services, as well as palm oil and other agricultural commodities, was “continuing to do environmental damage while professing to be sustainable”. Most recently, Sinar Mas appointed independent consultants, including Britain’s BSI Group, to look into the Greenpeace allegations against it. Their findings are eagerly awaited.
Ethical Corporation contacted Sinar Mas for a comment on receiving the greenwasher award, but no response was received.
Ray Anderson, Interface
Business case for sustainability delivered
By Ian Welsh
How to climb the responsible business mountain
Winner of Ethical Corporation’s lifetime achievement award, Ray Anderson was CEO and now chairman of US-based carpets and floor coverings giant Interface.
In the past 15 years, Anderson has steered Interface through a spectacular journey of corporate sustainability. While reducing greenhouse gas emissions by 90% since 1996, and getting 60% of the way to its goal of achieving complete sustainability, the company has significantly increased sales and profits.
Anderson took time to speak with Ethical Corporation’s Toby Webb at a recent sustainable business conference. He stressed that his and Interface’s conversion to sustainability began because their customers were asking what it was they were “doing about the environment”. It was, Anderson says, “in answering that question that we began to climb Mount Sustainability, and we haven’t stopped climbing yet”.
Something other company executives should note is that Anderson is completely clear there is no trade off in business between the environment and the economy. “It’s a myth that it’s either one or the other. We’ve learned very clearly that it can be both.”
“The most interesting question our lead designer ever asked was: ‘how would nature design a floor covering’,” Anderson says. From that single question came “the most successful product line in our history”.
One of the techniques the company has developed to help achieve the 90% emissions reduction has been to reuse and recycle the materials – many of which are petro-chemical heavy – in their products. “We’ve been mining landfill, so to speak, rather than mining the Earth,” Anderson says. In other words creating closed loop flows, diverting material that would have gone to landfill and instead using it to make new carpets and other products. “And as the price of oil and new materials go up, we will become more and more competitive.”
Anderson argues that the creation of a proper price for carbon is a crucial next step. He says that the cost of a barrel of oil does not reflect the subsidy it receives from tax payers through funding military protection in the Middle East, for example. “If we can level the playing field then new green energy sources will win hands down and will change the world as we know it,” he says.
It is strategies like these, Anderson hopes, that will demonstrate to governments, as well as other companies, the benefits of making sustainability central to long term goals.
Ethical Corporation Awards: the winners
Highly commended: SABMiller
Highly commended: British Land
Winner: Andrew Witty, GlaxoSmithKline
Highly commended: Kim Couponas, GoLite
Highly commended: Environmental Justice Foundation
Best collaboration (sponsored by Advance Aid)
Winner: Carlson and the UN Tourism Child Protection Code of Conduct
Highly commended: Marshall’s and Hadoti
Lifetime achievement award
Ray Anderson, chairman of InterfaceFLOR
Highly commended: L’Oréal
Highly commended: Novartis
Outstanding performance (sponsored by Accenture)
Winner: Continental Clothing
Highly commended: Marshalls
Greenwasher of the year
Winner: Sinar Mas