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* Governmental organisations;
* Local and regional governmental organisations;
* International governmental organisations;
* Journalists and media organisations;
* Key competitors;
* Local communities.

The level of support for sustainability measures from staff and executives
is demonstrated in a recent survey by the Center for Corporate Citizenship &
Sustainability. Their survey of companies cites the main drivers and benefits of
a sustainability agenda including:
Stakeholder importance is increasing:
Two major internal stakeholder groups are the board of directors and
employees as having the most influence on corporate citizenship and sus-
tainability issues.
Among purely or largely external stakeholder groups, there is a rate of signifi-
cance of influence on company citizenship and sustainability policies which
is recognised by the following percentage rations of significance:
Local communities 70%;
Customers and consumers 65%;
Shareholders 52%;
Governments 51%;
Financial institutions and investors 43%;
Non-governmental organisations (NGOs) 37%; and
Media 27%.
˜Recognise that feelings are facts ¦ Top performers know that what NGOs
[non-governmental organisations], employees, customers, communities, and
other stakeholders feel about a company™s environmental performance and
Chapter 3 “ Drivers and trends in sustainability risk management 53

reputation can be much more important than the reality™, according to the
authors of Green to Gold, Daniel Esty, Yale Center for Environmental Policy
and Law Director, and Andrew Winston, Director of the Center™s Corporate
Environmental Strategy project;
Increased demand for transparency: in addition to shareholders, a variety of
other groups are pressing companies to increase the disclosure of their social
and environmental performance:
Government regulators, financial analysts, employees, non-profit advocacy
organisations, labour unions, community organisations and the news media
are among the groups pressing companies to divulge greater amounts of
information on decision making, performance and targets; and
In addition, many customers, both individual consumers and business-to-
business customers, are including social and environmental performance
into purchasing decisions.
Increased stakeholder activism: many stakeholder groups are engaging com-
panies more directly, utilising a wide range of tools, techniques and tech-
nologies to bring their interests to companies™ attention. These activists are
also working to educate lawmakers, the media and the public about com-
panies that are “ or are not “ deemed to be accountable. Among the tactics
being used by stakeholder groups are public information campaigns, public
protests, boycotts and class-action lawsuits seeking action and redress for
perceived company misdeeds:
Shareholders and board members are pressuring firms to disclose green-
house gas emissions, set reduction targets and study how stricter regula-
tions could impact the bottom line. Environmentalists and shareholder
activists are no longer touting the benefits reductions will produce for the
environment, but are focusing their campaigns on the financial risks
involved by not reducing greenhouse gases. The resolutions on global
warming are part of a significant increase in shareholder actions aimed at
influencing large corporations; and
Increased shareholder engagement: company shareholders, both individ-
uals and institutions, have become increasingly vocal and aggressive in
pressing companies to be more accountable.
Improved relationships with stakeholders: companies are finding that if they
make an effort to be transparent, accountable for their actions and decisions
and engage with stakeholders, this can build trust among their stakeholders.
This also has the benefits of providing valuable insights into the commu-
nities in which they operate, and within society more broadly;
Lists are playing an increasing role in defining and driving corporate sustain-
ability and responsibility (CSR). For example, Business Ethics magazine has
released its eighth annual list of the ˜100 Best Corporate Citizens™; and
The growth of social and environmental reporting standards and guidelines
will continue:
The number of companies releasing corporate responsibility reports is on
an upward trend with non-US and European countries catching up quickly
with the depth of reporting by these regions. Corporate environmental
Part A “ Overview of Risk Management

reporting is now becoming compulsory in some European countries,
including Denmark and, more recently, France, and this is likely to spread,
via the European Commission, to the rest of the EU;
A variety of organisations and initiatives are attempting to standardise
social and environmental reporting procedures to let stakeholders more
easily compare companies across facilities, sectors and borders. For exam-
ple, the Global Reporting Initiative (GRI) was established to ˜help bring
together and harmonise the numerous initiatives on corporate environ-
mental reporting that have developed independently around the world,
shaping them into one set of coherent, consistent global standards™. The
number of companies now participating in this initiative, or reporting to
the standard, has reached the 1000 mark. It is now in its third incarnation
and is available in eight languages at: http://www.globalreporting.org/
Accountancy organisations like the ACCA, ICAEW and the US Financial
Accounting Board propose companies include more non-financial infor-
mation in their annual reports, including information on employee turnover,
measures of customer loyalty, the numbers of defective products and eth-
ical issues.

A brief overview of some of the main trends affecting organisations from spe-
cific stakeholder groups is set out below.

A Academic and research organisations
Business schools are adjusting to change:
Ethical Corporation and European Academy of Business in Society (EABIS)
have produced a report (Corporate Responsibility and Education 2006) which
shows that:
More than half of the world™s leading business schools now feature corpor-
ate responsibility-related courses as part of their compulsory syllabuses.
www.ethicalcorp.com/cre/. In Europe this figure rises to two-thirds of
courses; and
Around a third of MBA and masters degree courses and 9% of undergradu-
ate programmes ran dedicated CSR courses in 2003.
The overwhelming majority of today™s MBA students believe that businesses
should work toward the betterment of society, and managers should take into
account social and environmental impacts when making business decisions.
Also corporate social responsibility should be integrated into core curricula
in MBA programmes, according to a new survey by Liz Maw, executive dir-
ector of Net Impact, the non-profit association that conducted the survey.
Among the findings:
81% agreed with a statement that businesses should work toward the bet-
terment of society, although only 18% believed most corporations are cur-
rently working toward that goal;
Chapter 3 “ Drivers and trends in sustainability risk management 55

78% agreed that the subject of corporate social responsibility should be
integrated into the MBA core curriculum, and 60% said they believed CSR
makes good business sense and leads to profits;
79% indicated they would seek employment that is socially responsible in
the course of their careers, and 59% said they would do so immediately
following business school; and
89% said business professionals should take social and environmental
impacts into account when making business decisions.

Corporate research partnerships will increase and offer larger rewards:
With government research bodies “ a two-year collaborative study conducted
by members of the Truck Manufacturers Association (TMA) and the U.S.
Department of Energy (DOE) estimates that if companies adopt their new
aerodynamic technologies on trailer truck design this would save America
nearly one billion gallons of fuel annually; and
With design and research bodies “ Wal-Mart is using the National Renewable
Energy Laboratory and the Oak Ridge National Laboratory to monitor its
experimental green stores in the US.

B Business partners, suppliers and trade bodies
Organisations are improving their procedures for increasing the engagement
processes with their supply chains. For example:
US Retailer Wal-Mart Stores Inc. is sending engineers into its chain of
suppliers to find ways to help it reduce greenhouse gas emissions. Whereas
Wal-Mart emits about 19.5 million tonnes of carbon dioxide equivalent
per year, its suppliers generate about 200 million tonnes. The initial results
have appeared staggering, at only the first factory they helped cut electricity
bills by 60% by installing readily available low emissions lighting and

C Customers and consumers
Changing consumer attitudes: there is a growing awareness from consumers on
the availability and benefits of new environmental technologies and products.
Recent research findings highlight the changing attitudes of consumers:
According to a recent survey by Ipsos MORI, 82% of consumers want com-
panies to make more effort to demonstrate the social, environmental and fair
trade activities they are engaged in;
The Co-operative Bank reports that UK ethical consumerism last year was
worth £29.3 billion and exceeded the sales of ˜over-the-counter™ beer and cig-
arettes. This represents an increase of 11% from 2004 to 2005 compared to a
1.4% increase in general household expenditure;
Part A “ Overview of Risk Management

A combined US National Consumers League and Fleischman-Hillard
International Communications report Rethinking Corporate Social Responsi-
bility found that:
76% of the American public polled believe that their purchasing decisions
are affected by how a company treats its employees;
58% of US public say that they or people like them can find out more infor-
mation on the internet about companies™ records on sustainability issues
than a few years ago; and
41% of those that frequently use the internet say they have sent an email to
a company about its products or services and 38% to an official body about
an issue. www.csrreports.com/FINAL_Full_Report.pdf
An Environic Millennium Survey of 250 00 individuals internationally indi-
cates that public expectations of large companies acting in a reasonable way
are both high and universal:
79% felt companies should be ˜completely responsible™ for protecting the
health and safety of workers;
73% for protecting the environment; and
72% for avoiding child labour.
A survey conducted in 2005 by POLLARA, one of Canada™s largest marketing
research firms, found 88% of Canadians would spend more on consumer
electronics that were energy efficient, less wasteful, or made of recycled
materials. Almost all respondents (96%) stated they prefer products that can
be recycled or are manufactured using environmentally friendly processes.
Reported in GLOBE-Net, 20 November 2006.

D Direct actions groups and NGOs
Cultural dissent as a risk is always with us: the modern global protest culture
has a long history and is a continually evolving and growing aspect of public
participation. It migrated from the anti-slavery movement of the 1810s and
before, to peace groups at international conferences (Vienna, Geneva) in the
1800s“1900s, to environmental and social justice groups of the 20th and 21st
centuries. Over the last century the following examples occurred:
1920s“1940s Gandhi “ peaceful resistance
1949“1996 Anti-nuclear campaigns led to Comprehensive Test Ban Treaty
1950s Emergence of anti-establishment movements
1963 King ˜I Have a Dream™
1965“1973 Anti-Vietnam War
1980s Anti-apartheid
1989 Tiananmen Square
1990s Anti-globalisation facilitated by the internet
1993 Transparency International founded
1999 WTO Seattle
2001 OAS Quebec City
2001 G8 Genoa
2001 G20 Ottawa
Chapter 3 “ Drivers and trends in sustainability risk management 57

Engaging stakeholders, including NGOs, direct action groups, activists and
international NGOs (INGOs), can help companies to tailor product and service
delivery to meet regional needs, reduce negative media coverage, or enhance
existing market presence. For example:
Nike has partnered with an NGO to help design and implement the com-
pany™s factory monitoring and community involvement programmes world-
wide. The partnership helped Nike gain an awareness of local and global
community issues, provided technical expertise in factory monitoring, and
showed Nike how the monitoring could be done collaboratively.

E Employees
Employee attraction, retention and motivation levels are all critical to organisa-
tional success. Therefore, understanding the new trends that influence these
groups of stakeholders™ perceptions is important. A survey on employee recog-
nition of corporate responsibility issues by US-based community network
Care2 polling nearly 1600 employees found that:
73% of workers said it was ˜very important™ to work for a company they
believe is ˜socially responsible™;
35% report they have left a company because they believe it was not socially
48% of employees would work for less income if the company is socially
40% would work longer hours on the same basis; and
The competition for high calibre employees is increasing as the number of
jobs at organisations viewed to be socially responsible is exponentially
It is also relevant that the treatment of one group of stakeholders affects the per-
ception of the organisation by other groups of stakeholders as well. This is
demonstrated by the findings of the University of South Africa™s research from
their Centre for Corporate Citizenship (in partnership with the Bureau of
Market Research www.unisa.co.za), which were that:
40% of consumers that were participants said that social responsibility will
enhance employees™ respect for the company, while almost 60% believed
that public commitments to socially responsible activities will enhance the
employees™ respect for their place of work.


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