Frankly CSR

I must admit, when I started this blog last August, I was a little apprehensive about commenting on what other companies and industries are doing (or not doing) in the area of CSR, since I was writing the blog as a representative of my employer, Lawson.  While Lawson has a long history of being active in its communities and maintains a very strong employee code of conduct, like most companies, Lawson’s formal CSR programs are still evolving.  My objective has been to evaluate and comment on CSR news, trends and activities without implying that Lawson has perfected its approach to CSR. 

With Lawson’s announcement last week of a new global community service program, I thought it was a good time to talk a little more about what Lawson is doing in the area of CSR.  The community service program I just mentioned is intended to encourage every Lawson employee to use up to eight hours of company-paid work time during a year to volunteer for a community service activity. The program is designed to support Lawson employees who currently do various types of community service and to help motivate other employees to volunteer their time in their communities.  With approximately 4,200 employees around the world, the goal is that individually and collectively Lawson employees can have a positive impact in their communities.  

Lawson’s plan is for the community service program to become part of a broader CSR initiative that is expected to include a formal environmental program and sustainability reporting.  Lawson is already a stakeholder in the Global Reporting Initiative (GRI).  Over the last year we have become active in several of GRI’s sector activities for Lawson focus markets such as food processing and apparel and footwear.  As part of our GRI membership, we are in the process of formulating our own sustainability reporting approach. 

If you have followed my blog you also know Lawson has been focused on how it can help customers better manage their CSR programs using Lawson products (see posts from September 24, October 4, October 18, March 17).  It’s an area that is gaining momentum. 

Borrowing an old Nike advertising slogan, “there is no finish line.” This is particularly true when it comes to CSR. CSR is evolving and Lawson will continue to assess how it can make a difference.  

Jeff 

For many companies product safety is a fundamental component of their CSR efforts.  But in the last year or two no market has had to re-evaluate its product safety practices more than the food industry.  Increasing health concerns by consumers, new government regulations, growing (often global) supply chains and increasingly competitive markets have all been influencing factors. And, of course, recent incidents like those at Topps Meat, Cargill, Westland Meat and Menu Foods – to name just a few – have not helped the food industry. 

The Food Marketing Institute’s survey, “U.S. Grocery Shopper Trends 2007,” reported that consumer confidence in the safety of the food supply has dropped dramatically. Confidence had consistently hovered in the 80th percentile for years, but dropped to 66 percent, the lowest point since 1989. Consumer confidence in the safety of restaurant food is even lower, at 43 percent. 

So, how do we address the food safety issue? There are a number of possible solutions that can help companies.  Forbes.com provided a good overview in a recent article, “U.S. Food Safety: Solutions at a Glance.”  One of the solutions the article highlights is product traceability.  Generally speaking, this means food companies are able to track their products from “field-to-fork.”  The flow of raw materials and ingredients are tracked from producers to the manufacturer, and then the finished product is followed through the distribution process to the retailer. 

The Aberdeen Group, a research firm focused on business technology, also views traceability as a solution. Aberdeen’s December 2007 benchmark report, “Compliance and Traceability in Manufacturing,” recommends that companies “…implement technologies with core track and trace capabilities…” to achieve best-in-class performance. The report is based on a survey of 650 manufacturers (not limited to food) primarily in the United States.   

At least one food company had a vision to improve food safety using a traceability solution years ago.  Nutreco is an international animal and fish feed company with over 100 production and processing plants in more than 25 countries.  In 1999, Nutreco, already a customer, came to Lawson with the idea of proactively managing food safety throughout their supply chain. Our co-development effort resulted in a software solution called Lawson Trace Engine. Today it’s the technology that drives Nutreco’s NuTrace feed and food safety program.  This week Lawson announced a new global version of Trace Engine.  

Ultimately, traceability solutions create transparency in the food supply chain, which can only help with the consumer trust issues mentioned above.  And while it’s the “socially responsible” thing for companies to do, it’s also good business.  Consumer trust can improve brand loyalty and customer satisfaction and drive revenue.  A possible alternative is the Topps Meat story I noted above.  In part because it had no tracking capabilities, Topps was required to recall a full year’s worth of product and is now out of business. 

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

As I mentioned in my previous posting, I’m in Australia for The Green CIO conference, as well as a three-day Lawson user group meeting for customers in Australia and New Zealand. 

The Green CIO conference was a very interesting event.  It included about 200 companies, media outlets, and vendors. The conference had a heavy focus on the environmental impact of hardware (mainly servers) and data centers. That isn’t surprising given that IT represents 2 percent of all electricity consumption in the United States; half of that is from data centers.  

Two presenters mentioned that IT’s environmental footprint is equal to that of the commercial aviation industry.  Of course, IT doesn’t have the same public relations issues as the commercial aviation industry because our environmental impact is a lot less visible to people.  

Reducing the energy consumption of hardware was cited as the “low-hanging fruit” of reducing IT’s environmental impact. That’s probably true, and I would never discourage organizations addressing that issue, but I hope they are also looking more broadly at the role IT can play around CSR. I tried to communicate that message in my presentation. The feedback I received from the conference organizers and participants was very positive, but let me know what you think. 

As I mentioned earlier, I also attended the Lawson Australia-New Zealand user group event. At the event, I delivered a speech very similar to my Green CIO conference presentation.  The roughly 150 participants were a mix of about 50 percent IT leaders and 50 percent business-line leaders. The feedback from participants was two-fold:

1) CSR is moving up on their priority list and is starting to (or already has) get the attention of their senior leadership.

2) They appreciated the insight on how business software can be used as a tool to help manage CSR programs. 

I’m not looking for sympathy, after all I am in beautiful Australia, but during my week in Sydney and on the Gold Coast it’s done nothing but rain. 

G’day mate! 

Jeff

I’m at The Green CIO conference, presented by CIO Magazine Australia, in Sydney this week. This is an innovative conference that Lawson became involved with as soon as we heard about it. The conference places a sustainability focus on a broad range of information technology topics, including IT strategy, hardware, software, data centers, and change management. I’ll be speaking on the role that business software can play in helping companies manage their CSR programs.

I’m not surprised this type of conference is taking place in Australia. From what I can tell based on a survey of Lawson’s Australian customers and by reading business publications from the region, Australian businesses seem to be ahead of the curve when it comes to CSR. For example, telecommunications and IT provider, Telstra has issued an Annual CSR Report since 2003 that rivals those produced by an investor relations team. It details the company’s social activity in relation to its customers, employees, communities, and marketplace. It’s a bit long, but worth the read.

I’m excited about the opportunity to interact with a group IT professionals who are thinking about sustainability. I’m sure it will be a great learning experience. I’ll report back on the conference next week.

Jeff

What do Coca-Cola, Microsoft, IBM, General Electric and Nokia all have in common?  If you said they are all among the top five global brands, you are correct.  If you said they all publish sustainability reports using the Global Reporting Initiative’s (GRI) Sustainability Guidelines, you are also correct.

GreenBiz last week reported on a recent study by GRI that looked at the world’s top 100 brands, as ranked by Interbrand, and found 80 percent of the top 15 global brands publish sustainability reports using metrics developed by GRI. All of the top five brands mentioned above are included. This research adds to the rapidly growing list of reports I’ve seen connecting sustainability reporting and strong performance in the areas of brand, revenue, profitability and other key business measures.

This type of report will often elicit comments from observers such as, “Large, profitable companies can afford to undertake CSR initiatives and publish sustainability reports. That just isn’t practical for the rest of us.”  This implies that CSR became important only after the company became a global leader or as sustainability becomes more in vogue.  In almost all cases, that view is misguided.  

I know CSR has been a long-held core value for IBM. At Lawson’s Executive Forum (a conference for executives from our customer organizations) last March, we focused on the topic of CSR. We were fortunate to have IBM Vice President of Global Community Initiatives Paula Baker on hand to discuss the company’s CSR program. It’s a very impressive story. I would also point you to the March/April 2007 edition of CRO magazine, which had a cover story on IBM. Now, in the interest of full disclosure, I should note that IBM is one of Lawson’s strategic partners but the reason I’m highlighting IBM is its commitment to sustainability.

It’s also important to note that sustainability reports are just a means of communicating with stakeholders. It’s the actual sustainability practices that ultimately have an impact.  While reporting can certainly help companies create a “green halo,” stakeholders will quickly see through reports that are not based on solid sustainability activities.

Jeff

Welcome to Frankly CSR.  Clever name, don’t you think?  Well, I can say the name accurately reflects my purpose for writing a blog:  I want to create a forum to share candid, relevant information and ideas on Corporate Social Responsibility (CSR).  It’s a concept that has been around for decades. However, a heightened interest in the role of business in society has resulted in organizations in all industries and regions of the world reevaluating how they impact their stakeholders. Closer to home, it’s become an area of focus for my company, Lawson Software, and a personal passion of mine. What should you expect? Fairly frequent postings. I’ll share my ideas and questions, comment on news items and provide links to other CSR sites. I’m a software guy, so my natural leaning is toward how information technology can play a role. I’m sure that will come across in my postings.  I hope you’ll be a frequent reader, and I welcome your comments.   Jeff