Conflict-Free Diamonds May Still Be Flawed

Artisinal miners in Zimbabwe endure punishing conditions in search of the precious stones. (Photo courtesy Zimbabweland) Posted for media use

Artisinal miners in Zimbabwe endure punishing conditions in search of the precious stones. (Photo courtesy Zimbabweland) Posted for media use

NEW YORK, New York, September 12, 2017 (Maximpact.com News) – When it comes to gifts, it is said that the best things come in small packages, often in small turquoise packages from Tiffany & Co., the world-famous 180-year-old New York luxury jeweler.

In its seventh annual Sustainability Report, released late last month, Tiffany & Co. is detailing its progress in 2016 towards realizing its commitments to environmental and social responsibility, even as evidence surfaces that in Africa the conflict diamond trade still exists.

“Responsible behavior is an implicit part of the Tiffany brand promise. Along with artful design, great craftsmanship and gracious service, it is a critical dimension of our competitive advantage and defines the relationship with our customer,” writes Michael Kowalski, Tiffany’s chairman of the Board and interim chief executive officer in the 2016 Sustainability Report.

“We design and craft our jewelry and objects to stand the test of time. Clearly we owe the same commitment to the natural world that inspires our work and provides the precious materials we use,” writes Kowalski. “That is why we are absolutely committed to operating a rigorously controlled, transparent and ethical supply chain that can assure that promise of responsibility.”

The three big issues that define Tiffany’s move toward sustainability are:

  • ethical sourcing of diamonds, other precious stones and precious metals
  • protecting the planet from global warming
  • protecting public lands from destructive mining activities

Kowalski vigorously takes issue with President Donald Trump’s policies, declaring, “Even though the political landscape has changed, our approach to running a socially and environmentally responsible business has not.”

Containing Tiffany’s greenhouse gas emissions is a point of pride for the company, Kowalski writes, and Tiffany joined with many other companies in an appeal to the U.S. president not to abandon the Paris Agreement on climate, a policy Trump announced in June.

“We are backing this advocacy with a renewed focus on reducing impacts on climate change in our business and value chain,” Kowalski writes.

The iconic Tiffany blue gift box surrounded by jewels in the window of the Tiffany & Co. New York City store, Dec. 26, 2016 (Photo by Robert Fitzpatrick) Creative Commons license via Flickr

The iconic Tiffany blue gift box surrounded by jewels in the window of the Tiffany & Co. New York City store, Dec. 26, 2016 (Photo by Robert Fitzpatrick) Creative Commons license via Flickr

Tiffany also opposes the Trump administration’s proposed rollback of national monuments, announced in August, which Kowalski says will financially benefit the few “to the detriment of the many who value the extraordinary natural and cultural treasures these lands contain.”

Kowalski writes that Tiffany believes “the mining industry should embrace a new, thoughtful approach to public lands,” and supports “legislative reform that holds mines accountable for responsible closure and ensures the cleanup of abandoned mines.”

Tiffany also opposes mining in special places like Bristol Bay, Alaska, where the proposed giant Pebble Mine would extract copper, gold and molybdenum, threatening one of the world’s greatest remaining wild salmon fisheries.

All these are important issues, but the most crucial standard, the one that would cause the greatest harm if it is not met, is that of the ethical sourcing of diamonds to avoid trade in conflict diamonds, sometimes called blood diamonds.

These are defined as stones illegally traded to fund violence by rebel movements and their allies seeking to undermine legitimate governments, particularly in central and western Africa. Now the definition could be expanded to include human rights abuses.

In 2016, Tiffany counts among its achievements that the company sourced 100 percent of its rough diamonds either directly from a known mine or from a supplier with known mines.

Most Tiffany diamonds are dug from known mines in Botswana, Canada, Namibia, Russia, Sierra Leone and South Africa, according to the 2016 Sustainability Report.

Kowalski says Tiffany goes above and beyond the Kimberley Process to source its diamonds with even greater respect for the environment and human rights.

The Kimberley Process, by which diamonds are certified as ethically produced, began when Southern African diamond-producing states met in Kimberley, South Africa in May 2000 to discuss ways to stop the trade in conflict diamonds.

Later that year, the UN General Assembly adopted an international certification scheme for rough diamonds; the Kimberley Process Certification Scheme entered into force in 2003.

The Kimberley Process (KP) now has 54 participants, representing 81 countries, with the European Union and its Member States counting as a single participant. KP members account for roughly 99.8 percent of the global production of rough diamonds.

The World Diamond Council, representing the international diamond industry, and civil society organizations, such as Partnership-Africa Canada, also participate in the Kimberley Process.

Yet even as responsible companies like Tiffany try to polish their sparkling diamonds with ethical clarity, corruption and conflict in the diamond industry persists, according to a new report from Global Witness, a nonprofit organization based in London and Washington, DC.

The Global Witness report, “An Inside Job,” released September 11, states, “Powerful military and political elites and security forces have controlled and secretly exploited Zimbabwe’s once promising diamond sector, while concealing the scale of the loss to its people.”

Zimbabwe is a landlocked country in southern Africa, bordered by other diamond-producing countries – South Africa to the south and Botswana to the west. The Global Witness report examines five of the major mining companies that recently operated in Zimbabwe’s Marange diamond region.

Since 2010 Zimbabwe has officially exported over US$2.5 billion in diamonds, according to official figures from the Kimberley Process. But government reports show only around US$300 million of this as identified in public accounts.

“A find that offered such promise to the people of Zimbabwe has delivered only disappointment, primarily serving a secretive cabal of vested political and economic interests. There are clear indications of state complicity in the expropriation of these critical resources,” said Michael Gibb of Global Witness.

Mismanagement of the diamond sector has devastating consequences for Zimbabwe’s development and democracy. Not only have diamonds failed to benefit the Zimbabwean people, but evidence suggests that they have funded the state machinery consistently implicated in oppression. This casts serious doubt on President Robert Mugabe’s claim that private investors are solely to blame for billions of dollars of missing diamond revenues.

Global Witness’ key findings set forth in the report include:

  • Secret documents indicating that Zimbabwe’s feared spying agency, the Central Intelligence Organisation (CIO), is believed to have a stake in a Marange diamond mining company, Kusena Diamonds. This company’s diamonds have been traded in Antwerp and Dubai, circulating freely on international markets, despite the risk they may have funded human rights violations. This may continue, as the company is now merged into the new Zimbabwe Consolidated Diamond Company.
  • Zimbabwe’s military entered a partnership with a Chinese investor, to establish the diamond mining company called Anjin Mining. Evidence indicates Anjin’s diamonds were likely sold in Antwerp in violation of European Union sanctions against another of the company’s owners, linked to the Zimbabwean military.
  • Mbada Diamonds held the largest concession in Marange, yet the owner of a 25 percent stake in the company has remained a secret. Global Witness has found evidence to suggest that Robert Mhlanga, a retired member of Zimbabwe’s security forces, and an ally of the ruling party and the President, stands behind the hidden share.
  • The Diamond Mining Corporation was formed as joint venture by the Government of Zimbabwe with a private investor, despite evidence that the individuals behind the company were involved in extensive smuggling of Zimbabwean diamonds for years before obtaining a license.

The revelations come as Zimbabwe gears up for contentious presidential elections in 2018 to replace 93-year-old President Robert Mugabe, who has ruled Zimbabwe since 1980.

Global Witness says that institutions and agencies named in the new report “have played significant roles in subverting Zimbabwe’s democracy and perpetrating serious human rights abuses at key points the in country’s tumultuous political history.”

“Undisclosed stakes in the country’s diamond industry have provided an off-the-books source of funding for their activities, undermining essential public oversight and scrutiny. The diamonds at risk of funding these harms continue to be traded relatively freely” on international markets Global Witness claims.

“Zimbabwe’s diamonds perfectly illustrate the limitations of current efforts to disrupt the sale of diamonds funding human rights abuses and conflict,” said Gibb.

“Zimbabwe’s diamond sector needs root and branch reform, and diamond companies the world over must take responsibility for the hidden history of the resources they profit from,” he said.

“The Zimbabwean people deserve better. With nearly three quarters of the population living beneath the poverty line and an estimated four million people in need of food aid, the need has never been greater,” said Gibb.

Another nonprofit organization, The Diamond Development Initiative International (DDI), based in the United States and Canada, is lobbying for changes to the Kimberley Process.

The Diamond Development Initiative works to support the artisanal and small-scale mining sector by convening interested parties in processes and projects that help turn precious stones and minerals into a source of sustainable community development.

Every three years, the Kimberley Process undertakes to update its policies and procedures, and 2017 is a reform year. In response to a call for recommendations from the KP Chair, DDI submitted a proposal to include human rights in the certification requirements.

The definition of conflict diamonds at the time of the original negotiations in the early aughts centered on the use of diamonds by rebel armies for the purchase of weapons.

“Since then,” says DDI, “other forms of violence and human rights abuse have appeared in connection with diamond mining and production.

But attempts to add to the definition of conflict diamonds, says DDI, “have been frustrated within the Kimberley Process, leading to major internal divisions and to a serious devaluation of our reputation and credibility among consumers and in the world’s media.”

DDI strongly believes that “a clear application of core human rights standards throughout the rough diamond pipeline must become an essential part of the Kimberley Process mandate and identity.”

Ethical jewelers are trying to eliminate the conflict diamond trade by serving as role models for responsible behavior.

The Brilliant Earth chain of jewelry stores says jewelers offering conflict free diamonds “are limiting themselves to the Kimberley Process’s definition, which narrowly defines conflict diamonds as diamonds that finance rebel movements against recognized governments.”

“What this definition leaves out is large numbers of diamonds that are tainted by violence, human rights abuses, poverty, and environmental degradation,” says Brilliant Earth.

This chain claims to go above and beyond the current industry standards to offer diamonds that originate from pure, ethical sources as well as lab created and recycled diamonds, both eco-friendly alternatives.

Ethically sourced natural diamonds originate from mines that follow strict labor, trade, and environmental standards, says Brilliant Earth.

Tiffany executives say the company already goes above and beyond the human rights requirements of the Kimberley Process to source its diamonds and precious metals.

“Tiffany believes we have both a moral and a business imperative to do our part to sustain the natural environment and contribute to the communities where we operate,” said Anisa Kamadoli Costa, Tiffany’s chief sustainability officer.

“From speaking out about climate change to advocating for precious landscapes, seascapes and wildlife,” said Costa, “we’ll continue to use Tiffany’s brand influence to have a positive impact and help set the standard for the luxury jewelry industry.”


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Corporate Conscience Distinguishes Trailblazer CEOs

Travelers EDGE, which stands for Empowering Dreams for Graduation and Employment, has provided direct financial assistance to support hundreds of college and university students. (Photo by John Walker)

Travelers EDGE, which stands for Empowering Dreams for Graduation and Employment, has provided direct financial assistance to support hundreds of college and university students. (Photo by John Walker)

By Sunny Lewis

NEW YORK, New York, July 5, 2017 (Maximpact.com News) – Chief executive officers of hundreds of the world’s largest companies are finding that improving society is the path to energizing and reaching vital stakeholders as well as building more resilient markets.

When surveyed about the role of purpose at their companies, 64 percent of this group of CEOs agree that “purpose is a powerful motivator.”

The companies that have tapped into purpose as inspiration for their workforces are seeing the rewards, according to the survey by the business association CECP, The CEO Force for Good – 58 percent of companies with a clearly articulated and widely understood purpose see financial growth of more than 10 percent, and 85 percent of purpose-led companies increased revenue between 2013 and 2016.

Green Bronx Machine is a grantee of CECP member Newman's Own Foundation. Originally an after-school, alternative program for high school students, Green Bronx Machine has evolved into K-12+ model integrated into core curriculum. Students grow, eat and love their vegetables en route to spectacular academic performance.

Green Bronx Machine is a grantee of CECP member Newman’s Own Foundation. Originally an after-school, alternative program for high school students, Green Bronx Machine has evolved into K-12+ model integrated into core curriculum. Students grow, eat and love their vegetables en route to spectacular academic performance.

CEDP was founded in 1999 by the late actor and philanthropist Paul Newman (1926-2008) and other business leaders to create a better world through business.

Newman said at the time, “I helped to start CECP with the belief that corporations could be a force for good in society.”

Doing good and doing well proceed in tandem for these companies. Taken together, the more than 200 corporations represent $6.2 trillion in revenues, $18.4 billion in societal investment, 13 million employees, and have $15 trillion in assets under management.

CECP affiliation is by invitation only and is limited to multibillion dollar for-profit companies with a handful of smaller companies that embody the CECP mission.

Now, CECP has delved into its research base to develop insights designed to help guide other companies as they shape their own social strategies.

A new digest of data and insights, “Investing in Society,” is focused on best and most innovative practices drawn from CECP’s coalition.

It examines what actions companies are taking to identify and effectively meet stakeholder needs, and how a unified approach across all business units supports this effort.

Developed from CECP’s original research; findings from the 2017 Giving in Numbers Survey conducted in association with The Conference Board; and drawn from hundreds of monthly discussions with CECP CEOs, and conversations with experts and on-the-ground practitioners.

“CECP’s view is that the world’s leading corporations have emerged as a steadying presence and remain uniquely qualified to continue to drive progress, in spite of unpredictable global circumstances,” said Daryl Brewster, CEO, CECP.

“Investing in society serves as both inspirational and practical as companies seek to strengthen their societal investments and impacts,” Brewster said.

Brewster is far from alone in this belief. According to the 2017 Edelman Trust Barometer,  75 percent of the general population believe that companies can take actions to improve economic and social conditions in their communities, so now, more than ever, business will be expected to stand firm in their commitments.

This 75 percent result comes although the 2017 Edelman Trust Barometer also shows the largest-ever drop in trust across the institutions of government, business, media and NGOs.

CEO credibility dropped 12 points globally to an all-time low of 37 percent, plummeting in every country studied, while government leaders remain least credible.

Of the four institutions – government, business, media and NGOs – business is viewed as the only one that can make a difference. Three out of four respondents to the Edelman Trust Barometer survey agree a company can take actions to both increase profits and improve economic and social conditions in the community where it operates.

Among those who are uncertain about whether the system is working for them, it is business (58 percent) that they trust most.

Appreciation for steadiness appears to be spreading from Main Street to Wall Street. Top CEOs are relying on a long-term approach to set the context for short-term actions by prioritizing company health and value creation for all stakeholders, not just shareholders demanding strong quarterly returns, says CECP in its guidance for CEOs.

To help accelerate this movement, on September 19, CECP will host the second CEO Investor Forum, featuring CEOs presenting their companies’ long-term strategic plans, including operational and financial outlooks ranging three to five years or more.

They will address an audience of 200 long-term oriented institutional investors and pension funds, collectively representing $25 trillion in assets under management.

Cultivating volunteers for good causes among their employees, the most successful companies are allowing flexible schedules so their employees can volunteer based on their business’ skills and passions.

“Our dedication to being a strong corporate citizen and improving the communities where we live and work touches every part of our organization,” said Marlene Ibsen of CECP member Travelers Indemnity Company, vice president of community relations at Travelers and CEO and President of the Travelers Foundation. “We’re working to help our communities succeed, from company-sponsored programs like Travelers EDGE® to our passionate employees who logged nearly 118,000 hours of volunteer time in 2016.”

Finally, in a global take away message, the CECP report shows that despite global unrest no company can operate in isolation. CECP says, “All borders are blurred given supply chains and stakeholders. And all companies and countries need to work together to solve the global challenges at hand.”

In 2016, CECP’s Global Exchange continued to work with like-minded organizations in Europe, South America, Asia, and Africa to connect companies with collaborative opportunities to increase their global impact in solving the world’s most pressing problems, based on each region’s unique needs and cultures.

CECP found six approaches among corporations that give to social causes:

  • Direct Investments: The corporation acquires or merges with a social enterprise
  • Self-managed Funds: An entity is created inside the corporation that invests in business and social enterprise
  • Third-party Funds: Corporate funds are transferred to a fund which then deploys money to social enterprises
  • Strategic Alliances: Partnerships among companies create innovative market-based social benefits
  • Incubators & Accelerators: Companies deploy financial and non-financial assets to spur growth of small social enterprises
  • Corporate Foundations: Foundation funds are deployed to social enterprise, expected to be paid back

Data from the 2017 Giving in Numbers Survey show that, despite an uncertain sociopolitical environment, companies remain committed to increasing societal investments – median total giving increased in 2016.

But getting up in front of an audience is not the most effective practice for sustainable business leadership, said CECP corporate heads; only 17 percent endorsed it.

But companies are not staying silent. Another CECP poll found that 61 percent of companies are sticking to their public advocacy strategy, and more than 20 percent are advancing their support for social issues.

Since 2001, the Giving in Numbers Survey has collected data on corporate social strategy programs globally to provide professionals with the benchmarking and reporting tools to make data-driven decisions about social strategy.

With the release of “Investing in Society,” CECP’s research and data, as well as select reports from industry peers, will now be synthesized in a single presentation available to the public, with an even deeper dive supported by facts and figures available to affiliated companies.


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World’s Most Ethical Companies of 2017

3Mlab

One of the best parts of competing in the Discovery Education 3M Young Scientist Challenge is that students who make it to the finals get paired up with 3M scientists like Jeff Emslander, who loves science and mentoring kids. 2015 (Photo courtesy 3M) Posted for media use.

VIDEO: OPENING REMARKS by Ethisphere Chief Executive Officer, Timothy Erblich

By Sunny Lewis

NEW YORK, New York, March 14, 2017 (Maximpact.com News) – Under the banner “Good Ethics is Good Business,” the Ethisphere Institute Monday announced the 2017 list of World’s Most Ethical Companies ahead of its annual Global Ethics Summit, opening this week in New York City under a blanket of deep snow.

This year’s 124 honorees span five continents and hail from 19 countries, although the majority of them are based in the United States.

Fifty-two industry sectors are represented, from industrial manufacturing to beauty products. Among the 2017 list of honorees are 13 that have been on the list all of the 11 years it has been in existence, and eight that are recognized for the first-time.

To determine the World’s Most Ethical Companies, the Ethisphere Institute uses a proprietary rating system, the Ethics Quotient® framework, to assess an organization’s performance in an objective, consistent and standardized way.

Companies answer a list of 160 questions. The information collected provides a comprehensive sampling of definitive criteria of core competencies, rather than all aspects of corporate governance, risk, sustainability, compliance and ethics, the Institute says.

The information supplied by each participating company is weighted into five key categories: ethics and compliance program (35%), corporate citizenship and responsibility (20%), culture of ethics (20%), governance (15%) and leadership, innovation and reputation (10%).

After 11 years of selecting the World’s Most Ethical Companies, Ethisphere says its honorees have historically out-performed others financially, demonstrating the connection between good ethical practices and performance that is valued in the marketplace.

Ethisphere’s Chief Executive Officer Timothy Erblich said, “Over the last 11 years we have seen the shift in societal expectations, constant redefinition of laws and regulations and the geo-political climate. We have also seen how companies honored as the World’s Most Ethical respond to these challenges. They invest in their local communities around the world, embrace strategies of diversity and inclusion, and focus on long term-ism as a sustainable business advantage.

A sampling of comments from this year’s honorees shows the diversity of companies that nevertheless are united in their ethical values.

The 3M company, based in St. Paul, Minnesota, is on the list of World’s Most Ethical Companies for a fourth consecutive year. With 90,000 employees and offices around the world, 3M’s work covers 12 areas of expertise: automotive, commercial solutions, communications, consumer, design and construction, electronics, energy, health care, manufacturing, mining, oil and gas, safety and transportation.

At 3M, it’s not enough to just win in business – it matters how you do it,” said Kristen Ludgate, 3M’s vice president of associate general counsel and chief compliance officer. “Customers want to do business with companies they can trust, and achieving that trust requires the help of all employees. I’m proud to say our people live 3M’s Code of Conduct  every day by making ethical decisions and speaking up if they aren’t sure what to do.

For the 11th consecutive year, Starbucks has been named one of the World’s Most Ethical Companies. Starbucks is one of only 13 companies to have earned the honor all 11 years that Ethisphere has published its rankings. The famous coffee company is also the only winner in the Specialty Eateries category.

Said Matthew Swaya, Starbucks senior vice president, deputy general counsel and chief ethics and compliance officer, “World’s Most Ethical Companies honors our partners (employees) and their commitment to integrity in the work they do every day. It is the connection between our culture and the values and behaviors of our people that leads to receiving this recognition.

From Rueil-Malmaison, France, Schneider Electric, a multinational corporation specializing in energy management and automation, has been named to the Most Ethical list for the seventh year.

With more than 160,000 employees in some 100 countries, Schneider Electric products include: building and home automation, switches and sockets, industrial safety and control systems, electric power distribution, electrical grid automation, Smart Grid, power and cooling for data centers.

We are particularly proud of being honored for the seventh year by Ethisphere Institute, and moreover to be among the only two companies recognized in our category. It proves that Schneider Electric considers very thoroughly ethical challenges and address them with impact and efficiency, in line with our corporate values,” said Emmanuel Babeau, deputy chief executive officer in charge of finance and legal affairs and chairman of the company’s Ethics & Responsibility Committee. “In so doing, our customers may be sure that our ethical standards are the highest possible and that we care for planet and society.”

And from Tokyo, Japan, the Kao Corporation is a long-term honoree. The company specializes in beauty products, human health care, fabric and home care, and environmentally-friendly chemicals. Through its portfolio of over 20 brands such as Attack, Bioré, Goldwell, Jergens, John Frieda, Kanebo, Laurier, Merries and Molton Brown, Kao is part of the everyday lives of people in Asia, Oceania, North America and Europe.

Kao President and CEO Michitaka Sawada declared that integrity guides the activities of Kao’s 33,000 employees. “We are honored to be recognized as one of the World’s Most Ethical Companies for 11 consecutive years,” said Sawada. “For 130 years, we have upheld the value of integrity passed down from Kao’s founder. As a core value, we positioned integrity as the foundation of the Kao Group Mid-term Plan 2020, which started from this year.”

With a commitment to acting with integrity, a focus on ethical and responsible business practices, and a dedication to welcoming people to experience travel the way they want, New Jersey-based Wyndham Worldwide has been recognized as a 2017 World’s Most Ethical Company.

With 38,000 associates, Wyndham Worldwide is one of the largest global hospitality companies, offering hotels, vacation ownership, vacation exchange, holiday parks and managed home rentals – some 130,000 places to stay across more than 110 countries on six continents.

Ethical behavior is the lens through which we make decisions and anchor our commitment to each other, our partners, our customers, and our communities,” said Scott McLester, executive vice president and general counsel, Wyndham Worldwide. “From attracting global talent, to upholding the Count On Me! commitment and ethical business principles, we ensure our global network is comprised of good corporate citizens.

From its base in Scottsdale, Arizona, Ethisphere works with a Strategic Advisory Board that helps define how companies can assess and refine their approaches to and investments in actions and policies that influence business ethics in an ever-challenging global environment.

Ethisphere also works with a Methodology Advisory Panel made up of attorneys and government officials, professors and organization leaders who care about ethical and honest business practices. This panel reviews and refines the Ethics Quotient survey and World’s Most Ethical Companies Methodology to ensure they remain relevant.

Advisory Panel members are not involved in the honoree selection process, and all input and feedback provided to Ethisphere are reflective of each member’s personal viewpoint.

This year, for the first time, Ethisphere is offering “early insight” into the data from the World’s Most Ethical Companies. The insight is focused on key areas where the Institute saw important changes or interesting developments during this year’s WMEC process.

Best practices and insights from the 2017 honorees will be released in a series of infographics and research throughout the year.

The Institute’s associated membership group, the Business Ethics Leadership Alliance (BELA), is a forum for business ethics that includes more than 200 corporations, universities and institutions. BELA is dedicated to the development and advancement of members through increased efficiency, innovation, tools, mentoring, advice, and career opportunities. Ethisphere Magazine, which publishes the World’s Most Ethical Companies® Ranking, is the quarterly publication of the Institute.


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Featured Image: Ethisphere’s Chief Executive Officer Timothy Erblich, courtesy image from Ethisphere Institute.

The Wisdom of Sustainable Procurement

RougierWoodPanels

The French company Rougier Sylvaco Panneaux imports and markets a wide range of lumber, plywood and products for multiple uses: building, interior and exterior, carpentry, industry and transport. Engaged in an eco-responsible approach, the company says that more than half of its offerings are certified as sustainable. (Photo courtesy Rougier)

By Sunny Lewis

PARIS, France, March 7, 2017 (Maximpact.com News) – Sustainable procurement programs are more integral and widespread than ever before, but face a critical juncture as they scale to reach the next level of maturity, according to the results of the new EcoVadis/HEC Sustainable Procurement Barometer .

The 2017 Sustainable Procurement Barometer was conducted by EcoVadis, based in Paris, with offices in the United States, United Kingdom, Mauritius and Hong Kong, in cooperation with HEC Paris, or école des Hautes Etudes Commerciales de Paris, a business school specializing in education and research in management.

The new Barometer shows that 50 percent of sustainable procurement leaders experienced increased revenue from sustainability initiatives, a 33 percent increase over non-leaders, according to EcoVadis calculations.

Pierre-François Thaler, co-founder and co-CEO of EcoVadis (Photo courtesy Pierre-François Thaler via LinkedIn)

Pierre-François Thaler, co-founder and co-CEO of EcoVadis (Photo courtesy Pierre-François Thaler via LinkedIn)

Sustainable procurement is no longer a nice-to-have. It’s an integral business function responsible for protecting and improving brand reputation, driving revenue and mitigating business risk,” said Pierre-François Thaler, co-founder and co-CEO of EcoVadis, a platform for environmental, social and ethical performance ratings for global supply chains.

In order to scale up, the mature programs are investing in embedding sustainability into processes across their procurement organizations,” said Thaler from the New York office of EcoVadis.

One key outcome of this benchmark study is to help inform and inspire all organizations to accelerate their progress toward leadership, and realize the rewards and return on investment,” he explained.

EcoVadis is the first collaborative platform to provide sustainability ratings and performance improvement tools for global supply chains.

Socially responsible corporations can use EcoVadis’ CSR scorecards to help monitor their suppliers’ environmental, ethical, and social practices across 150 purchasing categories and 110 countries.

Over 150 companies such as Nestlé, GSK, Heineken, Michelin, Johnson & Johnson, Schneider Electric, L’Oréal, BASF, and Subway, and more than 30,000 of their trading partners use EcoVadis to reduce risk and drive sustainability and innovation.

First conducted more than 10 years ago, the Sustainable Procurement Barometer monitors the evolution of sustainable procurement practices in global procurement organizations.

It aims to provide an understanding of the landscape, including sector and geographical differences, industry strengths, improvement areas, new frontiers for innovation, and the potential levers for success in the future.

The EcoVadis/HEC research was compiled through a survey of 120 supply chain professionals around the world.

The Barometer shows that 97 percent of all the organizations surveyed place a high level of importance on sustainable procurement.

Thaler says this reflects continuation of the “upward trajectory” of previous years, illustrating how established the field has become in less than 10 years.

Forty-five percent of the responding organizations said their sustainable procurement program covers 75 percent or more of their spend volume today. Thaler calls that figure “a significant jump” from the 27 percent that reported on their sustainable procurement coverage in 2013.

Yet while supplier coverage has increased, the depth of visibility into corporate social responsibility supply chains remains “elusive,” Thaler observes.

Only 15 percent of organizations said they have complete supply chain visibility into the CSR and sustainability performance of both tier one and tier two suppliers.

And only six percent of responding companies reported full visibility into tier three suppliers and beyond.

This is the number one challenge today for sustainable procurement teams, Thaler says, commenting that, “It is often further down in supply chains where the most significant risks lie, and the need to scale up programs to increase the depth of program visibility to the ‘long tail’ of global supply chains has never been more urgent.

The EcoVadis/HEC study also found that organizations collecting sustainability data are actively using this intelligence to guide sourcing decisions.

“By making CSR data a key factor in the sourcing process, organizations are incentivizing suppliers to be more sustainable and act more responsibly across the board,” said Thaler. “The more procurement teams push to integrate sustainability in their daily roles and decisions, the greater – and faster – the trickle-down effect will be on a global scale.

In the previous survey conducted in 2013, the number one cited obstacle to more effective engagement and commitment to supply chain and procurement sustainability was a lack of executive and board support.

In 2017, that challenge doesn’t make it into the top three obstacles. “The C-suite appears to be finally on board with sustainable procurement initiatives,” said Thaler.

However, when you dive deeper into the data, an interesting picture starts to appear,” he said. “While executives are finally on board, procurement teams still report that a lack of internal resources holds them back.

In 2017, the two largest obstacles for sustainable procurement programs are a lack of internal resources and difficulty tracking supplier sustainability performance, according to companies surveyed for the Sustainable Procurement Barometer.

Supplier commitment, on the other hand, was not cited as a primary challenge. In fact, only 14 percent of suppliers reported that they were not incentivized by buyers to be sustainable and socially responsible.

With the right tools, executive support and supplier engagement, an organization can launch a sustainable procurement program and put a basic program in place, but it’s not enough,” Thaler explained. “To drive to full return on investment and value creation requires much higher coverage, and this means getting the rest of the organization to adopt sustainable procurement in their daily jobs – in procurement, supply chain, risk management and environmental health and safety.

This is an internal change management challenge,” Thaler said, “and it takes time.

For a complete look at sustainable procurement today – including analysis on business drivers, implementation challenges, program maturity and the supplier perspective, download the full 2017 Ecovadis/HEC Sustainable Procurement Barometer Report, “Scaling Up Sustainable Procurement: A New Phase of Expansion Must Begin.


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Maximpact’s consultant network has a wide range of CSR experts that can help your NGO or Non-Profit organization with your corporate social responsibility requirements and advancements . Contact us at info(@)maximpact.com and tell us what you need.

 

How to Make Employee Giving Simple with CSR Software

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By: Nita Kirby, Director of Client Solutions at CyberGrants

Whether it be child or animal welfare, medical advancements or worldwide atrocities, there is something out there that inspires action from you. Because there are so many causes to support, often a few that a majority of employees have some connection to, you would think the feeling of care would result in action. However, anyone who has been close to the creation or management of a corporate social responsibility program can agree that participation is quite often the leading challenge in success. Most of the time, the problem isn’t lack of empathy.

For example, one of the best places to discover new or donate to nonprofits is at the cash register of a grocery store. We’ve all, at least once, completed a shopping trip only to be prompted by the cashier to add a donation to the total. The presentation is simple. The process is easy, requires no more steps than the original task was going to take and can even add the bonus of exact change. Many charities collaborate with local stores to run these programs because of the simplicity, which almost always equates to great participation.

Integration with Payroll

Communication is one of the best contributions technology has made to business. That’s not just email and instant messenger either; it’s how communicative two different tools can be with each other and the new dynamic their integrations can bring to an old process. For example, your company may have been using the same payroll system for years with a little updating, but generally the same process.

CSR software takes that system and adds the dimension of easy employee giving. Similar to the grocery store, a payroll system that integrates with a CSR software will allow your workers to donate to your program as easily as they can check their pay stub. The employee will not have to learn a new program, process or remember new account information. Similar to the one tab offer of the cashier, employees have one login and all their financial and budget information is in one place. Tack on the fact that CSR software can maintain a record of all charitable donations to refer to in tax season.

One Stop Communications

A large challenge for CSR participation is communicating to employees that it’s even happening in the first place. While some employees are observant enough to notice the poster hanging in the breakroom, others would prefer to hear about company programs directly from their manager (38%). One report found 43% of surveyed employees preferred to learn about philanthropic opportunities through internal email or newsletters.

No one avenue works for all employees or all organizations. The first step is understanding your culture, but the next is covering more than one base. CSR software can make communicating a program or project in multiple ways easy while also helping management facilitate employee giving program discussion. Digital CSR tools can link to company calendars for reminders, integrate with the intranet and provide links for easy sharing via email or to be printed on tangible flyers. Employees can go from conversations with management right to the program where donations can be made with a click of a button.

On-Demand Access

Technology has also gotten a reputation for it’s never being “off,” and while that’s not always the best thing, there’s no denying its convenience. Hate them or love them, push notifications are one of the best reminders for an upcoming bill, calendar event or weather forecast. While not all are welcome, on average, people are excited to see those little pop ups that help avoid paying a late fee or missing a new deal at their favorite shop.

While it might not be the best plan to enact push notifications in your CSR communication plan, the lesson remains that people like gentle reminders with little pressure in places they feel they have the power to choose. Today’s CSR software can be accessed from any device including mobile, which grants employees the flexibility to participate wherever there is internet access. Again, the reason the consumer giving example mentioned before is so successful is it’s convenient to the patron. CSR software offers that convenience.

Technology and CSR software is responding to today’s workforce and that’s exactly why participation and opportunity has the potential to grow at amazing rates. The possibilities for better, more successful employee giving programs are only limited by a company’s understanding of its workforce’s culture and the priority the organization places on better communication and interaction.

What are some of the ways you think CSR software can improve employee giving? Share your thoughts with us in the comments below!

About Nita Kirby:

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Ms. Nita Kirby serves as Director of Client Strategy and oversees CyberGrants’ strategic service management with a majority of its corporate clients. In addition, Nita is responsible for ensuring the success of philanthropic programs for many of CyberGrants’ key customers and oversees process improvements for how the company manages its client’s programs and relationships. This effort includes detailed benchmarking, employee engagement methodologies and financial modeling. Nita serves on numerous non-profit and volunteer boards and continues to stay engaged with the local non-profits community. Nita has worked for one of largest non-profits in the US, where she provided extensive support to some of the largest employee giving programs in the country.
With a BS in Business Administration and vast experience in program development and administrative protocol, this experience has allowed Nita to incorporate best practice processes in each of her client engagements and focus on deliverables and client satisfaction. In addition, Nita is a Lean Six Sigma certified Green Belt providing her with expanded insight into how processes affect outcomes.

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Maximpact’s consultant network has a wide range of CSR experts that can help your NGO or Non-Profit organization with your corporate social responsibility requirements and advancements . Contact us at info(@)maximpact.com and tell us what you need.

 

Six CSR Strategies for Startups

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Silicon Valley Community Foundation Board of Directors. Back Row from left: Eduardo Rallo, Jayne Battey, Tom Stocky, Thurman V. White, Jr., Dan’l Lewin, Catherine A. Molnar, Erik Dryburgh Middle Row: Marie Oh Huber, Julie Miraglia Kwon, Rose Jacobs Gibson, Kate Mitchell, Lynn A. McGovern Seated left to right: David P. Lopez, Emmett D. Carson (CEO and President), C.S. Park (Chair), Samuel Johnson, Jr. (Vice Chair) Not Pictured: Carol Bartz, Robert A. Keller, Wade W. Loo, Anne F. Macdonald, Laura Miele (Photo courtesy SVCF) Posted for media use

By Sunny Lewis

MOUNTAIN VIEW, California, October 18, 2016 (Maximpact.com News) – Startups now have a new strategic guide to help them build a record of social responsibility, courtesy of the Silicon Valley Community Foundation. The philanthropic SVCF is located in Mountain View, where many of the world’s largest technology companies – Google, Symantec, Intuit – are also headquartered.

 In the course of its work of supporting companies and foundations to drive social impact locally and globally, the the foundation says it often is approached by startups asking how they can use their energy and vision for the social good.

To translate a company’s purpose into social responsibility practices, SVCF has compiled six strategies that startups can consider and published them in a new guide, “Starting with Purpose,” based on experiences and insights of startups and industry leaders.

Startups looking for guidance in creating a social responsibility plan – to give back to the community, engage employees in meaningful causes, and instill responsible business practices in operations – are encouraged to work with SVCF’s team of social responsibility experts.

Their Six Social Responsibility Strategies Are:

 1. Cultivate a Culture Committed to Social Change

 As startups have multiplied and flourished, so have stories of the “startup culture,” with flexible hours, unlimited free snacks and catered lunches, permission to bring dogs to work, and open-office seating adjacent to their CEO. This vision has become a stereotype, but the effort many startups put into cultivating a strong culture is substantial and can be productive.

SVCF says, “When a culture includes empathy and awareness of social impacts, it can be an extremely powerful tool for building a commitment to social responsibility.”

2. Connect with Local Communities

Be a good neighbor. Social responsibility need not mean attempting to solve national challenges or donating millions of dollars. It can mean rallying employees to support local businesses or opening a company’s doors to the community.

3. Donate or Discount Products or Services to Drive Social Change

Many businesses have products and services that can help support nonprofit organizations as effectively as cash donations can.

4. Lay the Groundwork for a Sustainable Supply Chain

Increasingly, consumers want to know where a product comes from; what environmental burden results from its manufacture; and under what working conditions the product is made.

Knowing the business practices of partners and suppliers – and deciding how to influence them – is an important consideration for any startup’s social responsibility strategy,” the foundation advises.

5. Translate Diversity Values into Practice

Diversity is part of social responsibility, and a commitment to diversity is not optional. Many startups believe diversity is a business imperative and necessary core value.

SVCF writes, “We include it here for two reasons: The startup struggle for diverse talent has been widely publicized and scrutinized; and many of the startups SVCF spoke to are working to balance competition for talent and diversity.

As startups work to develop or implement a diversity strategy, they should consider how to ensure diversity in their leadership, how to make diversity a priority and how to work with their communities to build a pipeline of talent,” the foundation advises.

6. Make a Public and Formal Commitment to Social Responsibility

While some companies bake a social commitment directly into their mission (think of TOMS’ one-for-one model), others layer on more formal public commitments or adhere to business structures to build momentum behind their social impact strategies. Companies can consider a formal commitment such as Pledge 1% or certification as a B Corp to direct their social responsibility program.

More details on these strategies are outlined in the guide, “Starting with Purpose.

In partnership with its individual and corporate donors, Silicon Valley Community Foundation awarded a total of $823 million to charities in 2015, benefiting thousands of people and causes in the Bay Area, across the United States and around the world.

SVCF made a total of 122,000 grants in 2015, including those awarded by individuals, families and companies through advised funds, and grants awarded through corporate matching gift programs.

SVCF received $1.2 billion in new gifts from individual and corporate donors in 2015, bringing its charitable assets under management to approximately $7.3 billion.

Said the foundation, “These results demonstrate the tremendous generosity of Silicon Valley philanthropists and their desire to make a positive difference in their local communities and around the world.”

For more information on how SVCF can assist startups, contact donate@siliconvalleycf.org

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Group from the startup Angelcam shows their security camera apps and cloud storage at ISC WEST, the largest security industry trade show in the United States, April 17, 2015 (Photo by Petr Ocasek) Creative Commons license via Flickr


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Update Online Consumer Protection Laws

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By Sunny Lewis

 PARIS, France, June 2, 2016 (Maximpact.com News) – OECD Countries should modernize their consumer protection laws to address new risks posed by online commerce, including “free” apps and peer-to-peer Internet transactions, according to new OECD guidelines for member countries and emerging economies in a new Recommendation. While not legally binding, it puts peer pressure on countries to conform.

Entitled, “Recommendation of the Council on Consumer Protection in E-commerce,” the guidelines cover business-to-consumer e-commerce. And they address issues arising from the relationship between consumers and the Internet platforms that enable consumer-to-consumer transactions.

Consumers have been playing a more active role, and an economy of sharing has emerged, the OECD acknowledges. Yet business to consumer e-commerce has not reached its full potential, still representing a relatively small share of overall retail sales.

“Well-tailored consumer protections can encourage e-commerce and provide the opportunity for the online marketplace, including the sharing economy, to prosper,” says the OECD, a unique forum where the governments of 34 democracies with market economies work with each other and with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development.

The Organization for Economic Cooperation and Development (OECD) provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies.

Today, OECD member countries account for 63 percent of world GDP, three-quarters of world trade, 95 percent of world official development assistance, over half of the world’s energy consumption, and 18 percent of the world’s population.

The OECD Recommendation on Consumer Protection in E-Commerce says people buying online are entitled to the same level of protection as with conventional transactions.

It calls on governments to work with business and consumer groups to determine legal changes that could improve consumer trust in e-commerce.

On June 21-23, government ministers and other stakeholders will gather at the Moon Palace Hotel in Cancún, Mexico to do just that.

The OECD Ministerial Meeting on the Digital Economy, titled “Innovation, Growth and Social Prosperity,” is intended to move the digital agenda forward in four policy areas that are key to the growth of the digital economy.

Internet openness is high on policy agendas; digital trust needs to be strengthened; global connectivity is reaching an unprecedented scale, while jobs and skills are being radically transformed.

The conference will be chaired by Mexico’s Minister of the Economy Ildefonso Guajardo Villarreal.

 One of the panels – on the connections between consumer trust and market growth – will feature Gerd Billen, state secretary at the German Federal Ministry of Justice and Consumer Protection; Welmer Ramos, Costa Rica’s Minister of Economy, Industry and Commerce; and Chairwoman of the U.S. Federal Trade Commission Edith Ramirez.

 This panel will explore the link between consumer trust and market growth, discussing how consumer policy can encourage e-commerce within and across borders. It will consider ways to promote the revised OECD 1999 E-commerce Recommendation and steps to encourage its implementation. It will also address a set of challenging consumer issues raised by emerging business models associated with the sharing economy.

New developments in e-commerce that are addressed by the Recommendation include:

  • Non-monetary transactions. Consumers increasingly acquire “free” goods and services in exchange for their personal data and these transactions are now explicitly included in the scope of the Recommendation. Governments and stakeholders are asked to consider ways to provide redress to consumers who have problem with such transactions.
  • Digital content products. Transactions involving digital content often come with technical or contractual access or usage limitations and many consumers have difficulty understanding their rights and obligations. New language has been added to clarify that consumers should be provided with clear information about such limitations, as well as on functionality and interoperability.
  • Active consumers. Current e-commerce business models increasingly blur the boundaries between consumers and businesses, with consumers playing a participatory role in product promotion and development, and entering into transactions with other consumers. As a result, the OECD has broadened the scope of its Recommendation, and it now encompasses business activities that facilitate consumer-to-consumer transactions. A new provision is added to ensure that consumer endorsements are truthful and transparent.
  • Mobile devices. The growing use of mobile devices for e-commerce brings a number of technical challenges to making information disclosures effective on small screens and can constrain record keeping by consumers. Two new provisions are included to highlight the need to account for the technological limitations or special characteristics of the device used.
  • Privacy and security risks. Consumer data is at the core of many e-commerce services and elevates privacy and security risks. The Recommendation recalls the need to address these risks consistent with other OECD instruments and includes two new provisions highlighting specific protections of particular importance for B2C e-commerce.
  • Payment protection. Recognizing that the level of payment protection can vary depending on the type of payment mechanism used, the Recommendation calls on governments and stakeholders to work together to develop minimum levels of consumer protection across payment mechanisms.
  • Product safety. In a number of countries, a range of unsafe products, which have been prohibited from sale or recalled from the offline retail market, are available in e-commerce. A new provision is added to the Recommendation to ensure that unsafe products are not offered to consumers online, and that businesses cooperate with the relevant authorities to address the problem.

In its Recommendation, the OECD suggests consumer protection laws should cover online apps and services offered for free in exchange for gaining access to the user’s personal data.

While many consumers are drawn to the convenience and choice of online commerce, many others remain wary due to concerns about privacy, payment security or legal recourse in case of a problem.

Other concerns include online product safety risks and doubts over whether consumer reviews are genuine.

While 75 percent of potential consumers in OECD countries access the Internet each day, a recent OECD report finds that just half of them made an online purchase in 2014. Those who did not buy cited security and privacy concerns as the main reasons holding them back.

In view of these facts, the OECD recommends that online businesses not misrepresent or hide terms and conditions likely to affect a decision to buy or try to conceal their identity or location.

Nor should they engage in deceptive practices related to the collection or use of personal data. They should take special care in marketing targeted at children or other vulnerable consumers, the OECD advises.

Provisions should be made to ensure consumers understand the terms and conditions relating to the acquisition and use of digital content like online music and movies – the fastest growing e-commerce category and often sold with legal or technical usage limitations.

Finally, the OECD recommends that consumers should also have access to easy-to-use mechanisms to resolve domestic and cross-border e-commerce disputes in a timely manner.


Marketing Key to Return on CSR Investment

Corporate social responsibility_CSR

By Sunny Lewis

AMES, Iowa, February 23, 2016 (Maximpact.com News) – The combination of skillful marketing and corporate social responsibility can yield a 3.5 percent gain in stock returns for a company’s shareholders, a new study by U.S. and Canadian researchers shows.

The study is useful because regardless of the positive effects for society of corporate social responsibility (CSR), there remains an extensive debate regarding its consequences for shareholders.

“A lot of firms question the benefit of corporate social responsibility activities, because they are often viewed as more of a cost. Firms may not always see the benefit because they have to make an investment,” said co-author Sachin Modi, an associate professor in Iowa State University’s College of Business.

“What we want to show is that if a firm is good and has some complimentary capabilities, it can gain a lot from CSR activities,” Modi said.

The researchers defined CSR as “discretionary firm activities aimed at enhancing societal well-being.”

The study, published in the “Journal of Marketing,” analyzed six different types of CSR – environment, products, diversity, corporate governance, employees and community to determine whether marketing of these efforts increased long-term firm value and stock price.

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Walmart employee moves bundled carboard packaging out of a store for shipment to a recycling facility. (Photo by Walmart Corporate)

Walmart’s company-wide goal is to create zero waste. Corrugated cardboard is bundled into bales and sent to paper mills to be recycled into new paper products. But do consumers buy more at Walmart as a result? Not if the company’s marketing doesn’t dramatize and promote its corporate social responsibility, the study finds.

Co-author Saurabh Mishra, an associate professor at McGill University with a PhD in Marketing, says there is a “direct and measurable link” between corporate social responsibility initiatives and financial performance.

The analysis conducted by Modi and Mishra utilized secondary information for a large sample of 1,725 firms for the years 2000-2009.

The findings demonstrate that the effects of overall CSR efforts on stock returns and risk are not significant on their own but only become significant in the presence of superior marketing capability.

Firms benefited from five of the six types of CSR efforts studied, with the exception of charitable giving and philanthropy.

Many companies engage in CSR activities, but do the shareholders benefit?

Will toy buyers associate these Hasbro My Little Pony characters Shining Armour and Princess Cadence with Hasbro's purchase of renewable energy and be more likely to buy them as a result? (Photo by Lass With Toys and Camera)

Will toy buyers associate these Hasbro My Little Pony characters Shining Armour and Princess Cadence with Hasbro’s purchase of renewable energy and be more likely to buy them as a result? (Photo by Lass With Toys and Camera)

Hasbro, Inc., the U.S. playtime giant, specializing in toys and games, television programming, motion pictures and digital gaming, last December announced the purchase of enough wind power to equal growing 164,767 trees for 10 years.

Hasbro’s renewable energy purchase qualifies the company for the U.S. Environmental Protection Agency’s Green Power Leadership Club, a distinction given to organizations that have significantly exceeded the U.S. EPA’s minimum purchase requirements.

“We are pleased to be among leading businesses partnering with the U.S. EPA as we continue on our sustainability journey,” said Brian Goldner, chairman, president, and CEO. “Hasbro’s decision to use green power is an important choice in advancing our energy conservation efforts in support of a low carbon economy.”

“Hasbro should be congratulated for its purchase of clean, renewable green power,” said James Critchfield, director of EPA’s Green Power Partnership. “Hasbro’s green power purchase and leadership is something its employees can feel empowered by, the community can stand behind, and its customers can take notice of.”

The purchase of renewable energy benefits the climate and the environment generally, but will the shareholders and customers take notice?

Modi said, “As firms pick what initiatives to get involved with for the community and for charitable giving, they might want to focus on those which are more easily verifiable by consumers. They don’t necessarily have to advertise it, consumers just come to know this firm does a lot for a particular charity.”

“It is very important to give from a community and charity standpoint. And it may be a more true form of giving, because it doesn’t always give the firm value in return,” he said.

The biggest payoff comes from letting shareholders know about a firm’s efforts to improve products, be environmentally friendly, create a diverse workplace and use sustainable resources.

But Modi says it’s important to note this return is not a guarantee for all firms. It depends on effectively communicating and executing a strong marketing strategy. A weak marketing department can translate to weaker returns or payoffs.

Firms must also recognize that some efforts to be more socially responsible can backfire. As an example, Modi asks the question, “Would you buy a recycled toothbrush?”

While most consumers are supportive of and applaud recycling efforts, this is a product few would be likely to buy.

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This Sun Chips bag says it’s compostable and a customer is giving the claim a personal test. (Photo by Alan Levine)

Fans of Sun Chips may also remember another example, when the company created a biodegradable bag for its chips.

It was a good move for the environment, but Modi says the bag made a loud crinkling sound at the slightest touch and irritated consumers complained about the noise.

Not all efforts will be a win-win, but that should not be a deterrent for firms, he said.

“Our hope is that firms see it is important to be socially responsible. It’s not a choice of one versus the other. Firms have to do multiple aspects of being socially responsible,” Modi said. “Different types of CSR will have different benefits for firms. Some will be more critical and some will give firms more bang for their buck.”

 


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Ushering in a new era of corporate accountability

PRESS RELEASE:

DAVOS, SWITZERLAND, January 22, 2016 – Ushering in a new era of corporate accountability, a group of leading corporations and health organizations is calling for the voluntary public reporting of workforce health metrics. The initiative of the Vitality Institute is led by a working group of representatives from more than a dozen organizations, including IBM, Johnson & Johnson, Merck, PepsiCo, Unilever and the Robert Wood Johnson Foundation.

The group met for more than a year to discuss and debate best practices for reporting workforce health metrics. The products of their meetings, a report and two health metrics scorecards, are being released in Davos, Switzerland, where business and political leaders from around the world are gathering at the annual meeting of the World Economic Forum.

“A healthy workforce is a more productive and profitable workforce, so the health of a company’s employees is extremely relevant to investors, shareholders and boards of directors,” said Derek Yach, chief health officer of Vitality and the chair of the Health Metrics Working Group. “Sadly, many companies have a better sense of the wear on their machinery than the health of their employees. It is time to give workforce health the high-profile visibility it needs.”

Evidence is mounting that workforce health is critical to the financial health of a corporation. This month’s Journal of Occupational and Environmental Medicine contains three studies that examine the stock prices of companies with high-performing employee wellness programs. All three studies found companies with high-performing employee wellness programs outperformed the Standard and Poor’s index by 7 percent to 16 percent per year.

“We need to raise the bar through enhanced transparency, encouraging companies to manage, measure, and report on health metrics; and boards of directors, investors, and shareholders also need to start asking the right questions with respect to health,” said Erika Karp, the founder and CEO of Cornerstone Capital.  Karp was not a member of the working group but is familiar with the report. “Health metrics reporting will enhance good governance as well as prospects for companies to operate profitably and sustainably over the long term.”

Yach added, “By engaging in health metrics reporting, companies benefit through improved understanding of their business models, better decision making, increased investor confidence, improved reputation, and greater stakeholder support.”

Vitality and the International Integrated Reporting Council (IIRC) will look to work together and with major reporting bodies to obtain consensus about how to incorporate health metrics into corporate reporting. In the meantime, investors, stockholders and boards of directors are asked to encourage companies to report workforce health metrics in their annual reports, integrated reports and 10-K reports.

The report and the scorecards can be found online at: www.thevitalityinstitute.org/healthreporting.

The Health Metrics Working Group consists of the following organizations and experts:

Organizations:

·         Allegacy Federal Credit Union

·         American Heart Association

·         Discovery

·         Edelman

·         Health Partners

·         Humana

·         IBM

·         Johnson & Johnson

·         Lendlease

·         Merck

·         Novo Nordisk

·         PepsiCo

·         Robert Wood Johnson Foundation

·         The Vitality Group

·         Unilever

Experts:

·         Laurie Bassi, McBassi & Co

·         Ian Duncan, University of California Santa Barbara

·         Ray Fabius, HealthNEXT

·         Ron Goetzel, Johns Hopkins University

·         Ron Loeppke, US Preventive Medicine

·         Daniel Malan, University of Stellenbosch

·         Eileen McNeely, Harvard University

·         Nico Pronk, Harvard University

About Vitality

The Vitality Group is a member of Discovery Ltd., a global financial services organization offering an incentive-based health and well-being program to employers as part of their benefits program. With a foundation based on actuarial science and behavioral economic theory, Vitality encourages changes in lifestyle that reduce health care costs, both in the short run and long term, by rewarding members for addressing their specific health issues. Vitality well-being programs serve companies in a wide range of sizes and industries, improving individuals’ health and wellbeing as well as employers’ bottom lines.

The Vitality Institute is an evidence-driven, action-oriented research organization dedicated to building a culture of well-being by promoting health and preventing chronic diseases. The Institute aims to unite leaders in the public and private sectors to transform evidence into action and build a culture of health. The Institute was founded in 2013 by the South African insurer, Discovery Limited, as part of its commitment to health promotion and well-being programs that advance social good.

World’s Business Leaders Buy In to Sustainability

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By Sunny Lewis

SAN FRANCISCO, California, November 18, 2015 (Maximpact News) – Best business practices, collaborative approaches to sustainable development and inspiring ways to build a better world were front and center as 1,000 business, government and civil society leaders gathered in San Francisco earlier this month for their annual Business for Social Responsibility Conference.

Now in its 23rd year, the BSR Conference is the world’s longest running sustainability event. As the world faces a warming climate, this year’s conference theme was “Resilient Business, Resilient World.”

The host organization, Business for Social Responsibility, BSR, is a global nonprofit with 250 member companies. From offices in Asia, Europe, and North America, BSR develops sustainable business strategies for its members through consulting, research, and cross-sector collaboration.

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“Resilience isn’t just about bouncing back, it’s about bouncing back better”

Philanthropist Judith Rodin told delegates, “Businesses should take proactive risks to build resilience.”

“Resilience isn’t just about bouncing back, it’s about bouncing back better,” said Rodin, who has been president of the Rockefeller Foundation, a position she has held since 2005.

University of California, Berkeley Professor Robert Reich, secretary of labor under President Bill Clinton from 1993 to 1997, gave what one participant called a “funny and inspiring” speech, and sold copies of his new book, “Saving Capitalism: For the Many, Not the Few.”

The young leaders of Silicon Valley spoke, as did the CEOs of Campbell Soup, AXA, and Cummins Inc. Videos of conference speakers are online here.

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The annual BSR/GlobeScan State of Sustainable Business Survey conducted just ahead of the conference, found that companies today are integrating sustainability more completely into their businesses, as more leaders become convinced of the benefits of sustainability.

Now in its seventh year, the survey aims to identify common perceptions and practices of corporate sustainability professionals.

In total, 440 sustainability professionals from 196 large and influential multinational companies provided their insights for this research by responding to the survey.

The survey found that “growing engagement from leadership means that corporate sustainability is increasingly driven by internal factors, rather than external events,” BSR reports.

A majority of BSR members who responded to the survey perceive “their companies consider inclusive growth a fairly high priority and feel it is driven by market opportunities.”

The first question in the survey elicited some strong responses.

It asked, “In a few words, please complete the following sentence:’The state of sustainable business is …’

One respondent wrote, “… evolving. As the corporate sector finds value in sustainable practices, you begin to see more creativity and widespread adoption.”

Another respondent wrote, ” … becoming more the norm and is becoming integrated into overall business strategy.”

A third wrote simply, ” … a business imperative.”

Human rights remains a top priority for respondent business leaders, while climate change and improving access to basic needs are increasingly important to business, the survey showed.

Professionals outside of North America are more likely incorporate the upcoming international climate agreement into their businesses, the respondents told BSR.

However, there is global support for a universal commitment to decarbonization at the upcoming United Nations climate conference set for Paris November 30 through December 11.

The 17 Sustainable Development Goals (SDGs) approved by the UN General Assembly in September were frequently mentioned as an important external development that will drive corporate sustainability efforts.

When asked directly whether their company intended to use the SDGs to set corporate targets, professionals from almost one in three companies indicated that they probably would.

When asked what was “the most significant development or event that has driven progress in your company’s sustainability efforts” over the last 12 months, 30 percent of respondents said “Re-evaluation of corporate responsibility framework and milestones against which progress can be measured.”

One third of respondents said their companies are implementing circular economy principles, largely through design and production.

Sustainability is reported to be at least fairly well-integrated in almost seven out of every 10 companies surveyed.

The majority of companies organize sustainability under executive teams, and more than one in five embed it into compensation.

The employees responsible for sustainability most commonly report to the CEO’s office or through corporate affairs, but theirs is rarely a large department. Almost half (49%) of the respondent companies employ 10 or fewer people in their sustainability function.

In almost four out of ten (37%) of the companies surveyed, respondents said they believe sustainability is a top-five priority for their CEO.

Satisfying customers and consumers motivates corporate sustainability efforts the survey found, while market-growth opportunities and enhancement of the company’s reputation are also important drivers of sustainability efforts.


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Main image: BSR President and CEO Aron Cramer (Screengrab from video courtesy BSR)
Image 01: Judith Rodin, president of the Rockefeller Foundation speaks her mind at the 2015 BSR conferenc. (Screengrab from video courtesy BSR)
Image 2: Robert Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, has authored 14 books. (Photo courtesy BSR)

SOCAP15: Bigger Than Ever & Leading the Conversation About Money and Meaning

SOCAP15

Tomorrow sees the start of, SOCAP, the leading conference on social enterprise and impact investing, where an expected 2,500 attendees will be part of the biggest SOCAP yet, taking place October 6-9 at Fort Mason Center, San Francisco, CA.

SOCAP15 will feature more than 140 sessions for learning, connecting, and meeting peers and potential partners, as well as uniting global innovators in business, finance, tech, international development, philanthropy, and more.

Maximpact‘s social media team will be attending this years SOCAP15 and live tweeting on key events throughout each day, follow us at @Maximpactdotcom for these updates.  For more tweets on SOCAP15 follow @SOCAPmarkets and keep up with the action via the hashtag #SOCAP15

It’s not to late to join us at SOCAP15

Conference Schedule, Gratitude Awards Finalists, and Tips for SOCAP15

In addition to the main stage speakers that have been announced, over 400 changemakers, social entrepreneurs, impact investors, and related thought leaders will share their perspectives and invite collaboration with the broader SOCAP community to build the market at the intersection of money and meaning at SOCAP15.

SOCAP15 Schedule

For the list of speakers and attendees, check out the full schedule for SOCAP15, now available on the conference app, Pathable. Conference attendees can join the SOCAP Pathable community to schedule meetings, explore the conference schedule, participate in discussions, and continue to build on conversations and collaborations that start at SOCAP15.

Panel Preview

Here’s a sampling of some of this year’s most anticipated SOCAP15 panels, across the content themes of Impact Investing, Meaning, Divest/Invest, Financial Inclusion, Neighborhood Economics, 21st Century Talent, Living in the Future, and Sustainable Supply Chain:

At the Tipping Point: Risks and Opportunities of Impact Investing Going Mainstream

Speakers: David Chen, Equilibrium Capital; Abigail Noble, The ImPact; Wayne Silby, Calvert Social Investment Fund; Jackie VanderBrug, US Trust; Mark Newberg, Womble Carlyle Sandridge & Rice, LLP

Impact Investing in 2015: a Panoramic View of the Field

Speakers: Cathy Clark, Director CASE i3 at Duke University; Fran Seegull, Chief Investment Officer ImpactAssets

Neighborhood Economics: a Whole Portfolio

Speakers: Ross Baird, Village Capital; Bryce Butler, Access Ventures; Dr. Ann DeRosa PhD, Chilton Capital Management; Kevin Jones, SOCAP

Building Financial Capability

Speakers: Timothy Flacke, D2D Fund; Daniel Rogers, Moneythink; Ben Mangan, Center for Social Sector Leadership at Berkeley; Shalu Umpathy, IDEO.org

Exploring Segmentation: Breaking Down Impact Investing to Build it Up

Christina Leijonhufvud, Tideline; Lauren Booker Allen, Omidyar Network; Debra Wetherby, Wetherby Asset Management; Clara Miller, Heron Foundation; Gil Crawford, Microvest

How Environmental Investments are Generating Social Outcomes

Speakers: Taryn Goodman, NatureVest; Craig Wichner, Farmland LP; Bettina von Hagen, Ecotrust; Debra Schwartz, MacArthur Foundation

The Results are In: Impact Funds are Outperforming

Speakers: Maya Chorengel, Elevar Equity; Dave Kirkpatrick, SJF Ventures; Jessica Matthews, Cambridge Associates; Nancy Pfund, DBL; Wes Selke, Better Ventures

Funding Fair Trade: Gaps and Opportunities in the Supply Chain

Kate Danaher, RSF Social Finance; Les Szabo, Dr. Bronner’s; Scott Leonard, Indigenous Designs; Benjamin Schmerler, Root Capital; Chris Mann, Guayaki Yerba Mate.

Gratitude Awards Finalists Announced

Nine finalists for the 2015 Gratitude Awards were selected from over 550 applications representing 30+ countries around the world in the categories of Community Development, Education, Sustainability and Environment. Of these, four Gratitude Award winners will be announced live on the mainstage at SOCAP15.

The 2015 Gratitude Awards finalists:

CareNx Innovations

CityTaps

Vendedy

Library for All

The Reset Foundation

ZanaAfrica

CASSA

Carbon Analytics

Waste Ventures

Tips for Getting the Most out of SOCAP

The SOCAP15 team spoke to Minhaj Chowdhury, the co-founder and CEO of DrinkWell, about how he works to overcome challenges in social impact work. Chowdhury was a 2014 Echoing Green Global Fellow, a 2014 Gratitude Award recipient, and was named one of Forbes Magazine’s 30 Under 30 Social Entrepreneurs for 2015. His venture, DrinkWell, works to solve the global crisis of arsenic-contaminated water by supplying filtration technology and business tools to a network of entrepreneurs who sell arsenic-free water within their local communities.

Read Chowdhury’s tips on how to get the most out of SOCAP as an entrepreneur.

Sponsors & Partners

Each year, SOCAP welcomes new sponsorship from a variety of institutions who believe that business and investment can have a positive impact on social and environmental challenges. This year, they are excited to work with a record number of sponsors and partners in what will be the biggest SOCAP yet. SOCAP15 would not be possible without the financial and in-kind support of these wonderful partner organizations.


Images: courtesy of from SOCAP15 website

Global Supply Chains: It’s Time to Decide on the Way Forward

Guest contributor Dr. Maximilian Martin

As we start using our new holiday gifts this year, it is too easy to ignore the miraculous supply networks that allow us to enjoy the products of human labor and ingenuity around the world. Sustainability is increasingly viewed as a strategy for enduring in a world of scarce resources and unlimited needs; but we seem to be locked in an endless cycle of merely reacting to deep-seated economic and social problems. It is now time to decide on the way forward: do we want to make supply chain upgrading happen across the board and reap the benefits, or continue using half measures and band aids?

Perhaps more so than other industries creating value through global supply chains, the textile and garment industry illustrates the crossroads we are at. A three trillion dollar industry that encompasses the manufacturing and selling of textiles and garments, apparel has long been considered a source of economic progress around the world and has historically served as a catalyst for national development and industrialization. The inverse of this growth and the accelerating production of fashion has been a broadening and deepening track record of poor working conditions and heavy pollution. The collapse of the Rana Plaza factory in April 2013 in the Bangladeshi capital Dhaka jolted to life widespread and increasingly prolonged scrutiny of the industry. It has brought to the forefront longstanding questions over how to bridge the gap between economic viability and social and environmental performance. To the credit of many buyers involved, attempts to address the social and environmental issues plaguing the apparel industry in Bangladesh (and elsewhere) are being made; the European buyer-funded Bangladesh Accord on Fire and Building Safety and the US buyer led Alliance for Bangladesh Worker Safety are just two of the high profile efforts underway. But the New York Times also just published a piece reporting how clothing companies like Mango have declined to contribute to a landmark $40 million compensation fund for victims of Rana Plaza disaster. And as we are just entering the New Year, in Cambodia, where apparel is the country’s most important industry, a special military unit in riot gear dissolved a garment worker demonstration for higher wages on January 2, 2014, using force.

How can we graduate to a new normal where next level sustainable value creation is the standard state of affairs? To help address this need, Impact Economy; a global impact investment and strategy firm; has just issued my report, Creating Sustainable Apparel Value Chains, so industry stakeholders can begin to build a common way forward. The key insight is this: systems created this situation, and a systemic solution is now needed to address it. The good news is: there is ample value creation potential. A redesign of production processes paired with better infrastructure and training can save up to 20 percent of chemical inputs, up to 40 percent of energy, and up to 50 percent of water. Building humane working conditions, an improved environmental footprint and staying competitive need not be at odds.

The report offers a framework that links greater resource productivity with an ambitious agenda to improve working conditions and environmental footprints. This framework includes four key levers that need to be pulled in order to achieve industry transformation, including: (1) fostering total resource productivity and transparency across the supply chain; (2) upgrading the industry infrastructure by (impact) investing; (3) improving working conditions with a new level of ambition; and (4) studying and replicating the best practices of leading producers.

Of course, no one actor or lever is a panacea unto itself. But the framework presented in the report offers a more comprehensive way to consider the issues influencing the development of the industry, and to design effective responses to them. And the apparel industry is far from unique. Fragmented approaches to industry transformation, which otherwise prevent a fundamental and systemic shift to sustainability, are widespread.

Take the commodities industry. In 2012, the value of the global metals and mining industry approached $1 trillion. In 53 mining countries, three-quarters of whom are low or middle income, extractive industries are a cornerstone for millions of people. They often face a unique set of social challenges due to the high impact nature and close proximity to environmentally sensitive areas. Geostrategic tensions result from attempts by the world’s main powers to guarantee their preferential long-term access to vital commodities.

The electronics industry is no different. Covering everything from computers, mobile phones, and televisions to name just a few consumer products, the global electronics market is set to reach $1.4 trillion by 2015, according to Global Industry Analysts, Inc. Yet again, electronic waste due to the use of toxic chemicals and difficulty of recycling is a growing issue.

Growing trends such as green growth and energy efficiency, the rise of the LOHAS (“Lifestyles of Health and Sustainability”) consumer, and rising demand for affordable products and services at the base of the pyramid (BoP) will only serve to emphasize the need to determine how global supply chains can be harnessed to drive inclusive value creation; in all industries, and for stakeholders and investors alike.

As we go about using our electronics and fashion gifts in the New Year, let us not forget that the opportunity for sustainability has the potential to be great. But Rana Plaza type disasters won’t be avoided, and the impact of progress will increasingly worsen unless we attempt a bolder strategy. To achieve industry transformation, we need to step up the game. It is now time to decide on the way forward.

___

Maximilian Martin, Ph.D. is the founder and global managing director of Impact Economy. Before creating the brand Impact Economy and founding the firm, he served as founding global head and managing director of UBS Philanthropy Services. Dr.Martin also created the first university course on social entrepreneurship in Europe. His work, and more than one hundred articles and position papers, have helped define the trajectory of market-based solutions and the impact revolution in finance, business and philanthropy. He was invited to write the primer on the status of impact investing for G8 policymakers in 2013, which considered the potential and development options for this new USD 36 billion branch of the financial industry.

Maximilian Martin_impact economy

[Image credit: 123RF, Impact Economy]

Sustainable Luxury Heroines

Guest contribution by Milena Cvijanovich

Women are undoubtedly the leaders of the fabulously successful new Sustainable Luxury business model. They show us through their amazing results how cool, glamorous, sophisticated AND essentially powerful Luxury can be when it has the mission to respect our planet and life of its inhabitants.

High-profile individuals such as Livia Firth with her Green Carpet Challenge and Francine LeFrak, founder of Same Sky, help break the vicious circle of poverty, discrimination and marginalization through beautiful objects handcrafted by women for a market which can afford to help this change. Unsung heroines such as social entrepreneurs Adriana Marina of Animan; and Aissa Dione, a Senegalese textile designer, are further shining examples of the beauty of this new-found synergy. These businesswomen have brought hope and pride back to their own struggling communities with the highly successful manufacture of exquisite textile and other heritage crafts sold to top designers worldwide.

I’ve collected just a very small sampling of these inspiring women and their contribution to the powerful duo-luxury and women’s empowerment.

Livia Firth, wife of actor Collin Firth, seduced the fashion industry, taking clever advantage of her A-list status to launch the Green Carpet Challenge. Throwing the gauntlet to celeb sand designers to take on eco textiles, she got stellar results: Gucci’s new zero-deforestation handbag line, Valentino’s haute couture eco gowns worn at the Oscars, Mette-Marit, crown princess of Norway’s sustainable Pucci dress at a royal wedding. Eco Age, Livia’s venture, is sky-rocketing with star-studded partnerships. As Livia says, “No one has to wear hemp and sandals” to show eco-awareness. With a wink she makes me feel her soft black dress whispering, “Hemp – by Valentino.”

Francine Le Frak has been a philanthropist practically since her childhood. Well-known in the entertainment industry, she is an award-winning theatrical, television and movie producer and has been recognized as a social issue film producer. In 2008, Francine founded Same Sky, a socially-conscious jewelry venture. The company began in Rwanda to give women who had survived the Rwandan genocide a new chance in life. “My vision for Same Sky is to continue partnering with other like-minded companies in order to build a marketplace for products that are handmade, possess authenticity and support artisan communities around the globe. Ultimately we want to spread the idea that shopping can change the world.”

“The beauty of having a successful business is it gives you a wonderful economic platform from which to do good.” Connie Duckworth, retired Partner and Managing Director of GoldmanSachs, transforms the lives of Afghan women through Arzu Studio Hope, a highly successful social enterprise offering stunning bespoke carpets. Working with renowned designers including Zaha Hadid and Michael Graves, Connie celebrates the art of weaving while bringing education and economic independence to women in a struggling,war-torn country.

While the traditional textile industry was disappearing in Senegal with the influx of foreign products, textile designer Aissa Dione came along, an Amazon in shining armor, and launched in 1992 a company specialized in high-end weaving employing over a hundred people. Attracting international designers such as Jacques Grange, Peter Marino and Christian Liaigre with her exquisite furniture textiles, Aissa is perpetuating the skills of traditional Mandjaque weavers and the processing of local African cottons and natural dyes. Aissa’s graphic transformation of traditional patterns into fusion designs for the Western luxury market has brought economic transformation to her impoverished region.

Sustainable Luxury drives positive change through financially viable, culturally enriching and environmentally respectful business opportunities, empowering women from all corners of the globe to connect at all levels and create profitable (and memorable) ventures.

About Milena Cvijanovich:

Serbo-swiss architect Milena Cvijanovich holds a Masters in Architecture from Carnegie Mellon University in the USA. Founder of MCM Designstudio, an international architecture, design and sustainability consulting firm based in Switzerland, Milena lectures on sustainability and the luxury design world and is active in impact investment and gender equality projects. She is also the founder of the Ethnosphere trademark label to be launched end 2013 with the mission to drive change through design.

[Image credit: 123RF]

The IPCC Summary Report on Climate Change: What it Means for Impact Investing

By Marta Maretich

On 27 September 2013, the United Nations Intergovernmental Panel on Climate Change (IPCC) published the first of three volumes of its fifth Assessment Report (AR5). The long-awaited report summary emerged amid a flurry of media coverage and a volley of commentary, both pro and contra. Its main conclusions were clear, however: climate change is real, its effects are already measurable, and it is being caused by human activity.

AR5 Summary Highlights

– Human influence on the climate system is clear. This is evident in most regions of the globe.

– Warming in the climate system is unequivocal.

– Global surface temperature change for the end of the 21st century is projected to be likely to exceed 1.5°C relative to 1850 to 1900 in all but the lowest scenario considered, and likely to exceed 2ºC for the two high scenarios

– Projections of climate change are based on a new set of four scenarios of future greenhouse gas concentrations and aerosols, spanning a wide range of possible futures. The Working Group I report assessed global and regional-scale climate change for the early, mid-, and later 21st century.

Source: the UK government

The summary report has sparked controversy worldwide.

Some rushed to embrace the findings while others immediately set out to disprove the science and question the motives behind it. The world’s reaction is a measure of how emotive; and divisive; the issue of anthropogenic (human-caused) climate change has become for governments, businesses and individuals in the years since the first IPCC report in 1990. With passionate feelings on both sides, the controversy is set to continue.

Challenging times for believers

The report’s publication follows a rough period for those who believe that climate change poses a threat to life on earth. In 2001, the US, under the administration of George W. Bush, rejected the Kyoto agreement on global warming. Flaws in the AR4, IPCC’s 2007 report; among them the apparent claim that Himalayan glaciers would disappear by 2035; drew intense fire from critics and distracted attention away from AR4’s core findings. They provided more fuel for the so-called climate change deniers; those who hold that global warming is a hoax or a conspiracy to slow progress.

From 2008, the economic crisis prompted world leaders to put economic growth ahead of environmental protection, with many governments backing away from previous emission-lowering commitments. The worldwide carbon market, including the EU’s cap-and-trade scheme, essentially collapsed in 2012, leaving questions about its efficacy as a means to control emissions.

Against this background the summary report comes as a wakeup call from the most respected source of climate science the world has. The new report has been widely accepted as the most convincing body of evidence of climate change and the human role in it so far. For impact investors, it could have profound importance on many levels.

What does it mean for the impact investing sector?

It’s fairly safe to say that most of those involved in the impact investing sector are already convinced of the reality of climate change. Many already focus their investing activity on areas relating to climate change such as agriculture and agribusiness, food security, forestry, land and water use, waste management and reduction, clean and renewable energy, energy efficiency and cleantech. For this reason, it’s likely that impact intermediaries, impact investing funds and social entrepreneurs will take the IPCC report as a renewed call to action.


However, the new IPCC report will change the impact investing landscape for everyone. Impact investors will see the effects of changes in government policy, the attitude of big business and international public opinion.
What will be some of the main currents affecting our impact investing strategies?

Governments respond with policy

The release of the summary report was a huge event, but it’s only the tip of the iceberg when it comes to the IPCC findings. The 19th annual meeting of the UN Climate Change Convention will be held in Warsaw from 11-22 November. At this meeting, the IPCC will deliver further scientific evidence to diplomats in order to facilitate policy decisions. A new legal commitment with respect to carbon emission will then be drawn up, replacing the 1994 accord. This is scheduled to take effect by 2015.

In preparation for these events, governments across the world are already formulating their policy stances. There are questions about how individual governments will react in the face of the new evidence. Climate change remains highly controversial in some developed countries, notably the US and Australia where it has become an issue that divides the political left and right. India, China and other rapidly industrializing countries are also wary: they have so far been unprepared to agree emissions cuts unless more developed countries do the same. Meanwhile island nations like Tuvalu, and South Asian countries like Bangladesh, both highly vulnerable to the effects of climate change, argue for a robust international response.

For impact investors, one thing is certain: there will be a new legal framework guiding climate change policy worldwide in 2015. Whatever the shape of this framework, it will change the investing landscape in many countries and have far-reaching effects for impact investors in many parts of the world. Much will depend on the structure and extent of the new laws, which will be hotly debated by governments. Regardless of the outcome, things will change for impact investors. The direct effects will be felt through the policies, programs and incentives governments create in response.

Where governments take a lead

In places where government policy supports pro-climate investing there are likely to be more opportunities for collaborative investments working across government agencies, impact intermediaries, impact funds and private investors.

Collaborative cross-sectoral arrangements are already a characteristic of the impact investing world. In the UK, Sustainable Development Capital was awarded £50 million by the UK government’s Department of Business, Innovation and Skills to invest in energy efficiency infrastructure projects. Big Society Capital, an independent fund created by the government, invests in many climate-friendly initiatives, especially in cleantech, energy efficiency, and sustainable energy for disadvantaged communities in Britain.

The UK provides what is probably the best current example of a dynamic government-lead approach to market-based social investing. As other governments take action to meet new policy commitments, they will be looking for solutions and partners.

Seasoned impact intermediaries and funds; of which there are a growing number; can bring specialist skills and knowledge to collaborative cross-sectoral arrangements for financing impactful businesses. They are also in position to benefit from government subsidies and tax incentives focused on meeting carbon reduction targets. For these reasons, the ability to work for and with government could prove essential for impact investors and the businesses they finance.

..and where they don’t

Where government leadership is lacking; and incentives such as tax breaks, subsidies and government co-investment are not forthcoming; global development agencies, philanthropic organizations, activists and impact investors will have to take the initiative in catalyzing the response to climate change. This may not be a bad thing: some commentators believe that private action, not government intervention, will be the key front in the fight against human-caused climate change. There’s already evidence that governments have been scaling back their commitments to climate change action and pushing responsibility onto NGOs and private companies, while private investors have been picking up the slack.

Many organizations and activists have been operating this way for decades and will continue to do so regardless of what governments do in response to the IPCC findings. The US provides many examples. The same country that rejected the Kyoto Protocol; and produced some of the most virulent and well-funded examples of climate change denial; has also given the world some of the most progressive models of local and state support for climate-friendly businesses and approaches.

This independence has made parts of the US leaders in areas like clean energy, energy efficiency, renewables, organic and sustainable agriculture and sustainable forestry. The States boasts some of the most mature markets in these new kinds of businesses, proving that federal government policy needn’t be an obstacle to progress.

The new markets remain volatile and, despite everything, still subject to the effects of government policy and subsidy (the rollercoaster of cleantech provides one example). Yet it looks as though these market areas will grow as communities and values-driven businesses, if not governments, look for new ways to react to climate change. This could be a growth area for impact investors and businesses.

Mainstream businesses go greener

Large multinational corporations and mainstream business will also feel the effect of the new climate change policies at ground level; and this will have a knock-on effect for impact investors and the businesses they capitalize.

All businesses will need to respond to the international regulations that grow out of the new IPCC report findings. More directly, they will need to meet national and regional standards set locally, and these too will be affected by the report. There also seems to be a feeling in the corporate sector that an upturn in the economy will leave them freer to take steps toward carbon emissions reduction. Many see a “green” profile as key to their corporate image. A growing number of organizations in the developed world are making sustainability a core value in their operations and employing sustainability professionals to help them achieve it.

All this will drive the market for services that support sustainability and carbon emission reduction in companies; for example, consultancies that help organizations shrink their carbon footprint and conserve resources. This will create a possible growth area for impact business-to-business providers, offering services that embed sustainability and carbon-thrift into corporate operations practice.

CSR, now a norm for business, will continue to play a key role in the business/government/climate change triangle. Already an important factor, CSR will become more central as the need for businesses to meet emissions targets increases under new regulations; and new, very real resource pressures anticipated by the IPCC report. A closer relationship between CSR and impact investing could open new avenues for corporations to use their considerable resources for good. Supports like the impact business CSR Hub, which helps track the effectiveness of CSR efforts, will help businesses hone their choices and give the public information about the real effect of corporate claims.

Beyond this, there’s a trend toward mainstreaming businesses that once were considered alternative. Words like sustainability, clean or green technology, renewable and clean energy; all important areas for lowering carbon emissions; already feature prominently in the reports of large multinational companies. General Electric invests in renewable energy projects, while ExxonMobile has programs for reducing its greenhouse emissions and innovating carbon capture technologies and biofuels made from algae. This is largely an effect of earlier government regulation on emissions. But it’s partly due to public pressure and, for some of the companies, canny strategic positioning for a future where business will have to be energy efficient to be successful.

The fact that these companies continue non-climate friendly business practices alongside these progressive ones leaves them open to the accusation of greenwashing from some quarters. Nonetheless, these examples are evidence of a mainstreaming of climate-friendly technologies and approaches in business. This trend suggests that the demand for them will continue and increase, especially as resources, such as fossil fuels, arable land and water become more scarce, as the IPCC findings seem to indicate they will.

This “greening” trend among multinationals could create opportunities for impact intermediaries, dynamic impact enterprises and engaged impact investors. Those who successfully bridge what’s been called the “pioneer gap” and manage to scale up socially and environmentally beneficial businesses to the point where they can join the mainstream, will be able to attract investment by multinationals and a wider pool of “neutral” investors; those for whom positive impact goals are not a motive for investment. This could increase the flow of capital into beneficial enterprises exponentially; and finally establish impact investing as a normal way to do finance.

Reducing Carbon Emissions: Key sectors for impact investment

(Maximpact Deal Listing)Agriculture

Agribusiness

Cleantech

Biotech

Renewable Energy

Energy Efficiency

Forestry

Waste Reduction

Land Remediation

Water

Sanitation

The public demands change

Another important consequence of the IPCC report will be its influence on public attitudes toward climate change; this too will have consequences for impact businesses and for the practice of impact investing.

Some recent surveys of public attitudes in developed countries have recorded a shift toward a more skeptical view of human-generated climate change. Pro-climate-change commentators put this down to the success of a well-organized media campaigns by special interest groups opposed to more government regulation.

But there is also a common-sense issue: people doubt the science when they don’t perceive significant climate change around them. Extreme weather events, such as the last year’s heavy snowfall in the US and the high temperatures in Australia, have been shown to produce large swings in public opinion in favor of belief in climate change. As events such as these become more common, as the IPCC report suggests they will, it’s likely that the climate will make its own case for action.

Still, there’s plenty of evidence that suggests that the public already accepts the idea of anthropogenic climate change and wants to see governments, businesses and individuals do something about it. The IPCC report will strengthen the convictions of many who already feel that we need to change tack. As impact investing becomes more accepted as a means of effecting positive change, this group will be supportive, buying products and services from impact businesses and providing funding, through micro-lending and crowdfunding platforms. The popular movement for divestment from fossil fuels could create a whole generation of small investors looking for more climate-friendly ways to deploy their capital.

People in developing countries; some of whom will be the worst hit by the effects of climate change; may need more convincing. As mentioned before, the governments of countries like China and India look on moves to limit carbon emissions as curbs to their growth by developed nations. Similarly, people in the developing world focus on the need for economic growth and view the talk of controlling emissions and resource consumption with suspicion.

There is some evidence that this is beginning to change. As in the developed world, people in economically emerging countries are beginning to see the effects of climate change for themselves; often in disastrous forms. Extreme weather events such as droughts and floods have the power to change opinions there, too. And there is anecdotal evidence that those who work on the land, farmers, are seeing the changes firsthand. These local observations, plus the hard lessons of extreme natural forces, may shift world opinion in time to make a difference.

For people in the developing world, the impact investing model could offer a middle way between economic development and climate stewardship. Its market-based approach encourages economic growth, while its commitment to positive impact has the power to channel that growth in climate-friendly directions. In this sense, the multiple bottom line of impact investing holds out hope for developed countries, too, who also need to find new ways to thrive economically without further damaging the planet.

Impact: a powerful tool to counter climate change

It looks likely that the IPCC report will generate a new groundswell of activity around the issue of climate change and this could be a boon for the growing, diversifying impact investing sector.

Impact investing’s pragmatic approach to finance, and its commitment to capitalizing impactful businesses, make it a powerful weapon in the fight to save the planet from the effects of global warming. Its market methods translate across borders and geographies, providing solutions for developed and developing countries alike. Its flexible techniques can be used in many contexts to support the kind of businesses, processes and technologies that can help minimize climate damage while supporting economic development.

All this means that it’s time to for the impact sector to get to work. There are still market infrastructure issues that need to be solved: impact metrics and the lack of exits are two important examples. More research is needed; investment models need to be tested, honed and replicated. Education for impact professionals, now in its early days, still needs to be developed as the sector expands, professionalizes and becomes, in time, part of mainstream finance.

However, if some of these limitations can be overcome, impact investing could play a key role in helping mankind develop an effective response to the threat of climate change. Let’s all hope the warning has come in time; and we are up to the job.

Coca Cola teaches ColaLife how to turn profit points into healthy babies

 New collaborative models in social impact delivery are springing up all around us, sometimes in surprising places. At Maximpact, when we see them, we like to celebrate them. One encouraging example is the story of ColaLife.

The founders of ColaLife had a brilliant idea: using Coca Cola’s extensive distribution network to get anti-diarrhoea medicines into the remotest parts of rural Zambia. The goal was to improve infant mortality rates in a country where as many as 1 in 9 children die before their fifth birthday from preventable causes like dehydration from diarrhoea.

ColaLife’s innovative design for packaging the medicine to fit into Coca Cola crates won product of the year design award from the Design Museum. But it wasn’t until they began talking to the people at Coca Cola that they began to understand what would really make their plan work.

This podcast by BBC broadcaster Peter Day is an excerpt from one broadcast in From Our Own Correspondent aired 18th July. It tells the story of how ColaLife learned the secret of successful distribution from Coca Cola.

At first, they were floored when Coca Cola personnel asked them a simple question: “What is the value chain of your product?” But they responded by changing their model; and changing their minds about the best way to deliver their mission. Now ColaLife is taking Coca Cola’s market lessons to heart, exploring more ways to use market methods to deliver health benefits in Zambia.

For more on how they’re adapting business practices to deliver mission, see their inspiring website.

To hear the entire 18th July episode of Radio Four’s From Our Own Correspondent click here.

Moving with the times: Example of a ColaLife Crate

Impact Investing and CSR

7978415_sImpact investing and Corporate Social Responsibility (CSR) have much in common. Both are founded on a belief that business can be used to affect positive social and environmental change. Both use market mechanisms and harness business expertise, though in different ways. And both are reflections of a global trend for aligning the goals of enterprise and with the needs of society.

These similarities are bound to make impact and CSR natural allies in the years ahead. Yet the two sectors have important differences, too. And in these differences lie opportunities as well as challenges for both sectors.

THE BENEFITS OF MATURITY

Impact investing is still the new kid on the block while CSR, with its origins in the corporate culture of 1950’s America, has been around for some time. With decades to mature, CSR has had time to grow its infrastructure and consolidate its working models to a degree impact can only dream about. Its workforce of CSR managers and consultants has professionalized. This body of professionals has honed the practice of CSR, helping to integrate it into day-to-day business processes worldwide.

Crucially, these professionals have also developed the art of communicating about CSR to a range of stakeholders including the public. Corporations, especially large ones, have become adept at using CSR to manage reputation. At the same time the public and government have come to expect them to have comprehensive CSR programs. In a paradigm shift that has seen the practice of CSR move from fringe to mainstream, CSR today forms an integral part of corporate culture.

THE CORE DIFFERENCE

This widespread acceptance marks a triumph for those who believe in CSR’s social aims; and it should be an inspiration to a young impact sector, which has yet to reach this level of recognition. Yet there is a fundamental difference in the way they relate financial and benefit goals.

For all its popularity, CSR remains voluntary and self-regulated. This means that businesses define “social responsibility” for themselves and practice CSR in very different ways. There is a movement toward establishing CSR standards based on sustainability, and some companies are already reporting their results using guidelines such as those provided by the Global Reporting Initiative (GRI). One Maximpact-listed company, CSRHub, has created a research tool that aggregates information about CSR ratings for some 15,000 companies. Yet most companies don’t use any such standards and most don’t report. It’s also the case that many keep their social benefit activities (like employee volunteering or philanthropic grant making) entirely separate from their profit-generating ones.

This is where CSR differs significantly from impact investing. By definition, an impact investment must demonstrate a social as well as a financial return. This means that benefit is, at least theoretically, hard-wired into every impact deal. Admittedly, metrics remain an issue for the sector and questions will persist until some measurement methods prove their reliability. Yet the principles of yoking social and financial impact, and demonstrating outcomes with metrics, have been central to impact from the start.

THE CSR/IMPACT OPPORTUNITY

For the CSR sector, this innovative way of delivering benefit using market mechanisms presents an opportunity. Many businesses have already shown an interest in early-stage social enterprises through their CSR programs, for example those who work with venture philanthropy intermediaries like Impetus. Impact investment is a logical next step for such companies, especially those who would like to support later-stage development. With a wide array of sectors, new technologies and geographical areas to invest in, impact opens up a world of possibility for CSR capital.

For businesses whose CSR work has meant hands-on mentoring and grants-based philanthropy, a blended approach to impact is also possible. As recent studies suggest, a combination of grants with mentoring plus impact capital, each applied at the right time, can be just what a young venture needs to grow beyond the startup stage and become a viable business. With deep pockets and expertise to spare, corporations have all the elements needed to bring enterprise potential to fruition. With aims aligned tightly with a defined social mission, impact provides a new way to use all CSR resources for good.

It’s clear that CSR capital could bring much to the impact sector. Impact also may have something to offer the more mature CSR sector. Its triple commitment to profit and benefit and metrics provides a template for thinking about how business might do more to bring benefit. Ultimately, the tools developed for impact measurement may prove a boon for all types of social business projects, including those pursued by CSR programs. By taking impact’s cues and integrating their business goals with their social mission, CSR programs could take a huge step forward in creating a positive impact.