Frankly CSR

I participated in a CSR Web event last week hosted by Apparel magazine and sponsored by Lawson. The session focused on CSR issues and trends in the apparel industry, with the main focus on environmental or green programs. The other presenters included John Davies, vice president, Green Research at AMR Research, and Meirav Jones, global development and marketing director at Delta Galil Industries, a leading apparel company and Lawson customer. 

As I talked with Lawson customers while preparing my presentation content and worked with the other presenters, I was reminded how much every industry – and every company for that matter – needs to evaluate and understand what green means for them and where they can have the most significant impact. Certainly, the apparel industry faces challenges common to most industries, such as the consumption of water and energy during manufacturing processes. However, the apparel industry also has its own set of unique issues. During the session, Meirav Jones provided a very interesting statistic:  approximately 25 percent of an individual’s carbon footprint is associated with clothing.  One-third of that is related to washing and dying the clothing, the remainder is associated with producing the raw materials, the manufacturing process and transporting the clothing. With that in mind, it’s no surprise that some of the leading focus areas for the apparel industry include:

• Use of sustainable and recycled fibers, yarns and accessories – examples include organic cotton, bamboo, hemp and linen
• Reducing fabric dye cycles
• Reducing product packaging
• Use of non-toxic chemicals in fabrics production
• Development of fabrics that require shorter wash cycles and can be washed in cold water
• Bringing the supply chain – suppliers to manufacturer to customers – physically closer.

 During the event we asked the audience a question regarding the main driver behind their own organization’s environmental programs. When I have asked this question of other groups, the main driver has almost always been to comply with regulatory requirements or to strengthen their company’s brand or image. However, in this case, the leading reason was to create new business opportunities. It’s clear innovative apparel companies are learning that consumer demands are changing and their green programs can be good not only for the environment, but also for their bottom line. 

Jeff

We all want our views validated.  In the IT industry that often comes via analyst firms.  A year or so ago when Lawson began looking at the role IT in CSR, very few analysts were talking about it. That’s changing – quickly. Some recent examples include:

At its recent Symposium/ITxpo in Orlando, Green IT topped Gartner’s list of the top 10 technologies and trends that will be strategic for most organizations in next few years.  Gartner focused primarily on hardware and data centers.  Green IT occupied the top 10 list with more “traditional” IT topics like business process modeling, metadata and Web platforms.

Forrester recently released a report entitled, Creating a Green IT Action Plan. It’s essentially a “how to” guide CIOs can use to create and implement Green IT programs.  The report has a broader perspective than just hardware and data centers, looking at the role of the IT organization in an organization’s overall CSR initiative.

AMR Research has probably done more than any analyst firm around the area of CSR and sustainability.  AMR launched a green technology research service in 2006 and most recently initiated the Sustainability Peer Forum. Introduced in August 2007,  the forum brings together a variety of environmental and sustainability industry leaders to share and discuss best practices, lessons learned and business strategies that support their sustainability efforts. 

I’m excited about how this focus by analysts will help validate the topic and drive the CSR message to more organizations.  In particular, I hope it will get IT professionals thinking about how they can lead the way.

Jeff

In my last post, I promised to share some thoughts on how IT can help organizations manage their CSR programs. Over the past year, I’ve been leading a project at Lawson focused on how business software, more specifically ERP solutions, can help organizations manage their growing array of CSR programs. Rather than try to cover this topic all at once, I plan to spread it over a few posts. 

 Lawson  has developed a CSR Solution Framework  to help companies add additional structure and thus derive value from their CSR programs.  While some may call it too ERP-centric, based on our assessment of what problems organizations are trying to solve around CSR, it is an objective, comprehensive approach. This post will focus on the foundation layer: ERP applications. A 2007 global CSR study by AMR Research found organizations are getting limited value from their ERP systems in helping them manage their CSR programs; however, the same study indicated many of those same organizations are looking to their ERP vendor(s) for solutions for their CSR initiatives.   I think it is safe to say that today most organizations probably manage CSR activities through a collection of disconnected spreadsheets, applications and databases.  Because ERP systems are often integrated and enterprise-wide, they are a logical foundation for managing CSR programs.  ERP systems manage the transactions that flow through the enterprise and strive to establish “one version of the truth.” In addition to eliminating the disparate spreadsheets, databases and other information silos, using an existing ERP system to manage CSR programs also enables organizations to generate a clear picture of which programs are generating the greatest return on their investment. In addition, Lawson  conducted a mapping exercise between the Global Reporting Initiative Sustainability Reporting Guidelines, a commonly recognized and accepted reporting standard, and the data tracked in our ERP applications.  We found a very strong correlation.  For example, GRI’s social reporting category focuses on areas such as age, gender, minority group membership, wage rates, rates of injuries, etc. In the Lawson  system, all of this data is maintained in a central repository and can be cross-referenced by factors such as department, geographic location, level in the organization, salary, etc.  Next time I’ll discuss the internal control system. 

Best, Jeff

As I talk to analysts, editors and Lawson customers about CSR, I’m regularly asked, “Why is it so important for organizations to effectively manage their CSR programs?” My typical response goes back to the basics of business. In the end, after you strip away all the different motivational drivers, CSR is a business investment. And like any other business investment, organizations have a responsibility to their customers, employees, investors and board members to effectively manage their CSR programs.

Now, if the investment – time, money, people, etc. – was insignificant, skilled management probably wouldn’t be critical; however, for many organizations CSR activities represent a sizable investment. A 2007 global CSR study by AMR Research found:

• Approximately 70 percent of all organizations have CSR programs and a dedicated CSR budget.
• In 2006, 50 percent of organizations spent 1 – 5 percent of their IT budget to manage CSR programs.
• CSR spending is growing in all areas – social, environmental or green, responsible sourcing and philanthropy.

Organizations are increasingly establishing and publicizing more formal measurement programs around their CSR activities. Here are just three examples:

• Citigroup to spend $232M on Green Data Center - Estimates facility will save 11,000 tons of carbon dioxide emissions, and cut site energy use 75 percent
• Kaiser Opts to Report, Certify Emissions - Lowered emissions by more than 2 million pounds in 2007
• Coca-Cola Unveils 100% Recycling Goal, New Plant Plans Aims to recycle or reuse all of its plastic bottles in the U.S.

Professional management of CSR programs is becoming critical. Heck, we even have corporate responsibility officers now in some organizations. Of course, managers need tools, so over the next month or so I’m planning to share some thoughts on how my IT can help organizations manage their CSR programs.

I’ll be interested in getting your feedback.

Jeff