As my colleague Kim posted on, labor markets in Asia are waking up to Western-style demands, such as wage strikes and be better working conditions. Many large tech firms possess complicated lateral supply chains — processors built in Malaysia using chips built in South Korea with a workforce from Vietnam. But on the other hand these supply chains are hardly that competitive.  Foxconn Technology in Shenzen, China alone makes components for Apple, Dell and HP.

And there have been some supply chain monitoring tools, such as the NGO GoodGuide, that have cropped up focusing on B to C consumer willingness to pay preferences. GG rates products in three areas — health, environment and society.

However, it is the society data point that has much of the empty or weak data. This is simply because major brands do not use their sphere of influence to demand working standards from their suppliers, however far down the chain. Given that many of the major electronic companies source from the same suppliers, CSR partnerships promoting supply chain transparency could benefit people, planet and certainly corporate reputation. Why don’t Apple, Dell and HP collaborate on supply chain standards and transparency with the partners they have in common?

As more labor uprisings get publicized in developing economies and wages begin to rise, there is increasing inventive for major brands to get ahead of the media with solid supply chain monitoring capacity that aligns with their business models. This is an example of how CSR can be progressive and demonstrate leadership, innovation, value creation and yes, risk mitigation.

–>LHJ

Filed under: Competitive Advantage, Supply Chain, Technology ]]> http://iscsrsustainable.wordpress.com/2010/06/28/technology-and-supply-chains-can-transparency-influence-consumer-behavior/feed/ 0 iscsrsustainable 27fob-consumed-articleInline http://iscsrsustainable.wordpress.com/2010/06/26/measuring-impact-2/ http://iscsrsustainable.wordpress.com/2010/06/26/measuring-impact-2/#comments Sat, 26 Jun 2010 22:17:15 +0000 iscsrsustainable http://iscsrsustainable.wordpress.com/?p=92 ]]> I’m on a mission…but I keep failing!

For the last month I’ve had multiple meetings with CSR and private sector professionals implementing programs that should have some benefit to society, but we don’t know what that benefit is. The excuses for lack of measurement are diverse: no adequate methodology, high costs, no trust in the use of econometrics, the availability of simulated projections that paint a good picture of effectiveness today, and, the most frustrating one of all, fear of the results.

I understand. It is extremely hard to be pouring your efforts into a project and obtain a mathematical answer that states that your money is best spent elsewhere. It hurts! But as people working in field whose objective is to cause a difference and implement projects and policies that lead to positive outcomes, we have an obligation to society to check ourselves!

It is not easy to measure impacts when speaking of corporate social responsibility, but it is also not impossible.  Take large corporations like Nike, which implement a similar CSR policy across a wide range of manufacturing facilities.  Nike also happens to have pretty good internal and third-party audits to assess labor practices across its supply chain. It wouldn’t be the end of the world to implement one CSR program to solve a certain problem and make sure to collect indicators on factories who are receiving that program and on factories that are not (before and after the introduction of the program).  Having this full picture across time, of a number of factories without the program and factories with the program, would allow Nike to understand the effect of its CSR activity and decide whether to continue pouring money into it.

This becomes even easier for companies that own their facilities around the world. For example, a textile manufacturing company with facilities across Central America could investigate how the changes caused by allowing excessive overtime (even if legally allowed, like in Hondura’s 4×4 week) in one country influences workers’ health and safety and productivity indicators, such as work-related injuries, absenteeism, defect rates, and delivery times.  Manufacturing companies usually keep such indicators, even before they coordinated the changes in working hours, so it would be so easy to find out the effects of such changes on workers conditions at work and even on the company’s productivity.

Let’s hire econometricians and find out what effects we have in the world!!!

- Tamar

Among the interesting battles to observe in Web2.0 (or is it 3.0?) is the software competition for business in the Enterprise Carbon Accounting (ECA) market. Today the Environmental Leader is reporting that California start-up Hara Environment and Energy has just acquired the business of Hasbro, one of the word’s largest toy and game manufacturers. Hara, which has already won accounts from Apple to Safeway to Ruper Murdoch’s News Corporation (perhaps they should stop being a climate skeptic if they are going to measure their GHG emissions? just a thought), seems poised to make a strong push to control market share in North America.

ECA is a bit of a misnomer, as these software products can measure a great deal more than just carbon emissions, including waste and water data, as well as a whole slew of qualitative CSR initiative information for compliance or reporting objectives for indexes like the GRI or the DJSI.

Other software firms in the ring to control the CSR data management market are software giant SAP, Credit360 and Enablon. I wonder how long until Google and Microsoft will enter this market? Google has already taken a big step in sharing public carbon data in the US with its public data explorer. This UI is simple and anyone who can use Google Finance can begin comparing carbon data in seconds. The EL reports that $46 million of venture capital was invested in ECA in 2009. This seems like a number that will only grow.

The keys to controlling the ECA market are myriad, with product accessibility, training, QA, calculation auditing and support being paramount. Should a US energy bill ever pass with a price on carbon, I wonder which firm will be ready to service rapid demand with quality service?

–>LHJ

People and planet win (sorry utilities),  but will anyone listen? This may by something a corporation could try for a month.

–>LHJ

– BP’s CSR Strategy

Well, the price of oil hasn’t risen significantly since the spill, so I suppose BP only went 1 for 3 in the triple bottom line game.

I can’t help but wonder how BP’s Deepwater Horizon spill speaks to the need for some sort of government intervention in CSR markets.

Sure, government oil and gas regulators should have had the capacity to determine what risk mitigation procedures BP was missing and then more importantly, enforce them. But that’s in the hands of the Department of the Interior, which hopefully will get receive a wallop of accountability over the next several months. Members of Congress and other business leaders have already labeled President Obama as anti-business, but this is simply false. It is indeed private business job creation that will answer the question of whether or Obama gets a second term.

My inquiry then is what market failure occurred in the case of BP, and what can public policy do about it if anything? Governments had already begun looking into to whether or not there should be product and service standards for green labeling. I think some sort of policy is likely here, as per USDA Organic.

Should BP be allowed to employ a corporate moniker — “Beyond Petroleum” — that is just aspiration? I wonder how many SRI funds gave BP a generous rating just based on its marketing campaign. Probably more than you would expect.

–>LHJ

Perhaps other oil and gas companies should get serious  about integrating CSR into more of their riskier operations NOW? Given such a vast sphere of influence for multinational oil and gas production, there’s opportunity for risk assessment and value preservation at every level of the operation.

It would surely give any response to even a smaller accident more credibility, and more importantly, more capacity to solve a problem quickly.

–>LHJ

And finally, BP has halted paying any dividends for the remainder of 2010. These are solid actions which BP deserves some credit for. Actions do speak louder than words, but today marks IMHO the first significant step BP has taken to clean up its mess and move forward.

So with all this investment earmarked to fix a problem, how will BP measure the environmental restoration of the Gulf? Clearly there must be an honest, transparent and informative accounting system in place to track these grants. But more importantly, there’s significant opportunity for a forward-looking CSR strategy here.

It may sound cynical, or even raise the specter of a green-wash, but if BP wants to restore the public’s confidence–and we’re talking about a 10-year plan here–CSR metrics must play a role.

Some material KPIs off the top of my head to measure are:

• Square miles of fishing territory restored to pre-spill productivity
• % of affected fishing grounds restored
• Number of affected workers compensated
• % of affected workers that have returned to full-time work
• Amount of $ spent on restoring sustainable maritime enterprises

–>LHJ

“Rex W. Tillerson, chairman of ExxonMobil, testified that if companies follow proper well design, drilling, maintenance and training procedures accidents like Deepwater Horizon explosion on April 20 “should not occur,” implying that BP had failed to do so.”

John S. Watson, CEO of Chevron, echoed Tillerson’s implicit criticism of  BP saying that all Chevron employees should always feel comfortable blowing the whistle when unsafe extraction practices are observed.

It’s interesting that Exxon Mobile and Chevron would carefully criticize BP, but also maintain that the disaster was an anomaly and could never happen to them.

I wonder if the CSR and PR teams at these two firms coordinated on the talking points for these hearings? There’s certainly blood (well, oil actually) in the water with respect to BP’s strength and perhaps those hostile takeover rumors have legs.

This poses an interesting CSR question: How does CSR performance play a role in corporate mergers and acquisitions?

The UCB Theater in NYC has an interesting take on BP’s crisis response.

–>LHJ

“We’ve already launched the largest environmental response in history, and BP is committed to protecting the ecosystems and wildlife on the Gulf Coast,” said Chief Executive Tony Hayward.

Brown Pelicans

BP announced today that it had captured 14,800 barrels of oil, which is a significant spike in previous day’s work. Good work, team — you’re nearly 1% the way home. Perhaps BP should put all its energy into CLEANING the gulf and RESTORING its damaged economy as opposed to buffing its image?

Am I being too harsh? Maybe not.

How do us defenders of NGO-private partnerships in CSR respond? How is this NOT green-washing?

What say you Conservation International, Nature Conservancy and Environmental Defense? How does the President Obama’s tough talk this morning saying he would have fired Hayward affect BP’s relationships with these stalwarts of environmental advocacy?

If this spill is an anomaly and BP genuinely conducts rigorous environmental impact assessments with technical support (and beyond the requirements of the notoriously feeble federal government) from its NGO partners — a logical premise — then let’s SEE some formal response from the NGOs that go beyond PR.

We want to believe you. But where is the data?

So what can we infer from these developments? According to the New York Times in this article, this strike is just another sign that “in a recent and remarkable shift of labor dynamics, China’s huge migrant work force is gaining bargaining power. New pressure to raise pay and improve labor conditions, coming in part from the Chinese government, is likely to raise the cost of doing business in China and could induce some companies to consider shifting production elsewhere.”

So if this is the case, will this new dynamic shift production elsewhere in Asia and Latin America? And could this potentially, in the long-term, improve working conditions and wages worldwide?