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Case Studies | Sunday June 13, 2010

Alcatel-Lucent’s CSR Council Embeds Sustainability Into Core Strategy

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The Challenge

Information and communications technology (ICT) plays a critical role in enabling the transition to a low-carbon economy—and, increasingly, investors, consumers, and NGOs expect ICT companies to step up to the challenge. Alcatel-Lucent, a world leader in high-tech equipment for telecommunications networks, wanted to meet not just these expectations, but also to embed a strategy to anticipate future sustainability requirements.

Alcatel-Lucent’s newly appointed CEO Ben Verwaayen called for bold sustainability objectives that would be integrated into the company’s long-term business strategy. Verwaayen wanted to enable and inspire employees to lead, test the limits of what is physically and financially possible for the business, and define new concepts for growth and value creation. To meet these goals, Alcatel-Lucent turned to BSR to develop and guide the company’s advisory body to focus the company’s sustainability strategy, develop initiatives, and deploy them to the company’s more than 77,000 employees in 130 countries worldwide.

Our Strategy

BSR worked with Alcatel-Lucent to set up and manage the CSR Council, an advisory board comprising C-level executives from each of Alcatel-Lucent’s four business units as well as external sustainability experts. Aligning its focus with the company’s most material sustainability issues, such as climate change and the role of ICT as an enabler for other companies to reduce their carbon emissions, the council sets CSR priorities and goals, reviews progress, and provides perspective on potential risks and opportunities related to emerging social and environmental issues.

We participated as one of two external experts in the council’s quarterly meetings, leading discussions, sharing insights from our experience in key markets, and challenging assumptions. In addition, we provided support to the council activities by helping:

• Design the CSR Council and its governance based on a review and analysis of other similar efforts.
• Shape strategic priorities based on research and analysis of a range of market trends, and the role of innovation in sustainability within the sector.
• Define the company’s 2020 goals on issues such as climate change and CSR in the supply chain through dialogue with sustainability leaders inside the company.
• Refine the concept underpinning Green Touch, a consortium that brings Alcatel-Lucent together with other leaders in industry, academia, and government labs. The initiative is designed to invent and deliver radical new approaches to energy efficiency that will help transition the world to a low-carbon economy.

Out Impact

Not long after the formation of the CSR Council, the strategy began yielding results. For example, Alcatel-Lucent has committed to reducing its carbon footprint by 50 percent of 2008 levels by 2020. To achieve this goal, the company is taking measures that involve the entire workforce and the full range of its activities, from facility operations and logistics to information technology and business travel.

Case Studies | Tuesday June 1, 2010

HERproject: Investing in Women Workers for Health and Business Returns

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The Challenge

The global economy has brought millions of women between the ages of 16 and 25 into employment in export factories all across the developing world. Because many of these women are migrants working long hours, they are often isolated from traditional support networks that can help them with challenges such as working conditions, proper compensation, and access to education, health care, and other social services. At the same time, there is a great opportunity to leverage their presence in global supply chains to improve the welfare of these women, many of whom are entering the formal economy for the first time.

Our Strategy

Drawing on nearly two decades of supply chain expertise, we created HERproject, a factory-based program that links BSR member companies, their suppliers, and local NGOs in emerging economies to raise female workers’ awareness of general and reproductive health and to improve their access to basic health services.

In 2009, we expanded the initiative to include projects in China, Egypt, India, Mexico, Pakistan, and Vietnam, working with eight multinational companies and eight local NGOs. Through the project, local NGOs trained women in 30 factories to become peer educators on issues including nutrition, personal hygiene, reproductive health, family planning, and sexually transmitted diseases. This approach allows peer educators to share information not just through formal trainings and new worker orientations, but also during lunch and commute times.

In addition to the peer education, we launched efforts to improve factory-based clinics and create links between the factories and local hospitals or women’s clinics. So far, we have connected 12 clinics with local hospitals in China, India, Pakistan, and Vietnam.

Our Impact

To date, HERproject has benefited approximately 50,000 women globally. The two main areas of impact are: Improved health awareness: Following trainings in factories in Vietnam, 97.3 percent of women said they knew how to use condoms to prevent sexually transmitted infections, compared with 59.3 percent before the trainings. In Pakistan, safe pre- and post-natal care knowledge increased:

The number of women who knew to get tetanus toxoid immunization during pregnancy increased from 30 percent to 83 percent, and the number of women who learned the importance of post-natal checkups increased from 50 percent to 92 percent. In Mexico, one factory saw a 38 percent increase in the number of respondents who had heard about, seen, or read about how to prevent diabetes.

Increased worker productivity: In Pakistan, women who improved their menstrual hygiene as a result of factory trainings reported a 25 percent reduction in poor concentration at work, 28 percent lower absenteeism, and 33 percent less difficulty in meeting production targets. Initial return-on-investment (ROI) analysis has confirmed that women in the factory worked an average of two-and- a-half more hours per month during the project period, representing an additional 615 days of work per year.

Thanks to our partnership with the Swedish International Development Cooperation Agency (Sida), we will further expand HERproject in 2010, launching initiatives in several new countries, with a focus on East Africa. More information is available in our 2010 report on HERproject, “Investing in Women for a Better World,” at herproject.org.

Case Studies | Tuesday June 1, 2010

Nestlé Waters North America: Strengthening Dialogue with Communities

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The Challenge

As the largest producer of bottled spring water in the United States, Nestlé Waters North America (NWNA) faces a unique set of challenges related to managing a natural resource perceived by many as a public good. The company has faced criticism at its spring water sites in North America from community members who have two primary concerns.

They want to ensure that NWNA’s water withdrawal does not have negative ecological impacts, and they want the opportunity to participate in decisions about their water resources. NWNA asked BSR to develop a siting and community-commitment framework in order to proactively manage site impacts, incorporate increased local input into the company’s water-siting process, and increase the transparency of the company’s siting efforts.

Our Strategy

BSR developed a phased approach of assessment, design, alignment, and piloting the framework. Our goal was to design a companywide framework for siting and community involvement that addresses NWNA business objectives, includes full participation by and addresses the concerns of the community and government agencies, and is designed with the input of national stakeholders. To execute this project, we employed our experience developing community-engagement strategies for the extractives industry, as well as our expertise in responsible natural resource management. We also sought the involvement of community representatives and water experts throughout the life cycle of this project in order to ensure a high degree of credibility, transparency, and trust during the development of the framework.

First, we conducted interviews with company officials, national experts, and community members at several of NWNA’s U.S. sites in the Pacific Northwest and Maine to collect candid feedback—positive and negative—about the company’s existing approach to community engagement and water stewardship.

BSR’s findings served as the foundation for a two-day design workshop, during which NWNA staff and experts in community engagement, conservation, and watershed management co-developed a siting and community- engagement framework based on past experiences and current and future expectations of key stakeholders and local communities. Following this, NWNA field staff will test and revise the framework at potential U.S. spring water sites.

Our Impact

At the time of this Report’s publication, NWNA was at the midway point of this engagement, and the company had already begun to take several important steps toward the development and implementation of the new siting framework. We believe that, if implemented, this will lead to a more consistently successful approach to engaging with communities and will build NWNA’s capacity to serve as a valued member of the communities in which it operates.

NWNA’s challenges point to more fundamental questions that we will attempt to address with the company in 2010: What expectations must a company meet as a responsible steward of water? If water is a human right, who has rights to access it, and how should access be regulated? How should NWNA evolve its approach to community involvement in light of these questions?

Case Studies | Tuesday June 1, 2010

Walmart: Improving Supplier Energy Efficiency

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The Challenge

In 2008, Walmart committed to improving the energy efficiency of its top 200 suppliers’ factories in China by 20 percent by 2012. With the aim not only to benefit the environment but also to help suppliers become more competitive, Walmart sought to replicate the success it has had in Europe and the United States in increasing supply chain efficiency. In China, however, the company found that its suppliers often prioritize overall growth over increased energy efficiency. As a result, operations managers commonly lack the necessary incentives and know-how to achieve efficiency improvements. An additional challenge in China is the lack of a developed professional energy-efficiency industry to provide equipment and data-measurement tools that make this process easier in other regions. To help overcome these barriers, Walmart enlisted BSR’s help.

Our Strategy

We focused our work on identifying and addressing suppliers’ needs that prevented them from taking advantage of energy-efficiency opportunities. The most common needs we found were buy-in and support from senior managers and performance incentives for staff. Therefore, we centered our initial efforts on launch meetings to educate executives about the business opportunities associated with energy efficiency. Each meeting involved more than 300 executives and representatives from technical service providers.

Next, the BSR expert embedded in Walmart’s global procurement headquarters in Shenzhen, China, created a data-collection tool that enabled factories to measure their energy use and a framework that allowed Walmart to verify the factories’ performance reporting. Our surveys of suppliers showed that many managers lacked the skills and knowledge needed to manage energy more effectively. To address this critical need, BSR’s China Training Institute in Guangzhou led practical workshops focused on energy management for suppliers. We also worked with partners such as the Environmental Defense Fund to educate suppliers about the “low-hanging-fruit” opportunities in their facilities.

Finally, to enable better access by suppliers to energy- efficiency technology, we improved communication between suppliers and technical service providers through joint workshops and a common auditing tool that allowed for easier comparison between providers.

Our Impact

By the end of 2009, more than 100 factories had improved energy efficiency by more than 5 percent, beating Walmart’s expectations. The company also reported that dialogue between suppliers and technical service providers improved.

This created new lines of accountability within supplier factories, leading them to pursue efficiency programs for energy and other resources in the future. And it put participants on track to profit from saving energy—the largest budget item for many companies—while playing a key role in addressing climate change.

Following the initial success of this commitment, in early 2010, Walmart unveiled a new, sweeping goal of reducing 20 million tons of greenhouse gas emissions in its supply chain over the next five years. Ultimately, these efforts set the stage for Walmart to expand its program to Africa, the Middle East, and South Asia, while providing an example of how other companies can leverage the power of their networks by building win-win efficiency programs with their suppliers.

Case Studies | Tuesday June 1, 2010

Pfizer: Focusing, Refining, and Aligning CSR with a New Strategy

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The Challenge

In late 2008, Pfizer began a process to refine its CSR strategy to better support the company’s evolving business priorities and organizational changes. This presented a new opportunity to involve senior leaders and functions from across the company in guiding the company’s approach to CSR. The company also wanted to leverage its strong environmental, health, and safety (EHS) programs to build a leading environmental sustainability initiative that would connect to and support its other CSR strategies. Pfizer’s CSR leadership and its EHS team asked BSR to help guide the development of these new strategies, to support their global implementation, and to assist with its external reporting.

Our Strategy

BSR worked with Pfizer to achieve three main objectives:

Out Impact

Our work has enabled Pfizer to make significant progress in aligning internal CSR efforts, engaging colleagues throughout the organization, and improving transparency.

There is now stronger board oversight and a global network of employees who meet regularly to share approaches to managing CSR issues in their regions. Our materiality analysis allows Pfizer to focus its environmental sustainability strategy on three key issues—climate, product stewardship, and water—where the company can have the biggest potential impacts, maximizing benefits to the environment and the company’s bottom line. Specific action plans and strategies for each are now being developed.

Finally, Pfizer’s most recent CSR report has provided readers with improved information to evaluate the company’s performance on key issues and challenges, as well as a set of specific goals and metrics for the year ahead. In 2010, Pfizer will begin to incorporate CSR into the company’s annual review that accompanies its financial report and will provide more information to all investors about how Pfizer integrates CSR into its business practices. By providing such information directly to all investors, the company is signaling to the broader investment community that management of CSR issues is a critical part of its long-term business success.

1. Create a more coordinated and effective approach to CSR management. In addition to providing ongoing, strategic guidance to the company on how to improve global coordination of its CSR strategy, we developed recommendations on ways to expand board-level oversight of CSR and identify new opportunities to involve the board in CSR strategy and decision-making. BSR also worked to support the development of Pfizer’s global CSR network that brings together Pfizer employees from around the world who have CSR-related responsibilities in an effort to localize their global CSR strategy.
2. Develop an environmental sustainability road map. BSR partnered with Pfizer’s EHS taskforce to develop a more strategic approach to environmental initiatives that will result in greater business and societal value. We began with an assessment and benchmarking of Pfizer’s current practices by interviewing key staff with responsibility for Pfizer’s sustainability programs. We then led a materiality analysis and workshop with senior business leaders to identify the environmental issues for which Pfizer could have the biggest impact. Based on these inputs, we worked with Pfizer to design a road map for environmental sustainability that aims to achieve cost efficiencies, product and brand differentiation, and, most importantly, progress on some of the world’s most pressing environmental challenges and their impact on global health.
3. Strengthen Pfizer’s CSR reporting. BSR also supported Pfizer’s ongoing efforts to improve the measurement and communication of its performance on CSR issues such as access to medicine, research and development, patient safety, and corporate governance. Drawing on our knowledge of best practices in reporting, we guided the day-to-day development of Pfizer’s CSR report, drafted the content, and identified opportunities for innovation such as the inclusion of stakeholder voices and more balanced commentary about challenges.

Case Studies | Tuesday June 1, 2010

Hitachi: A Global Strategy for Social Innovation

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The Challenge

In 2006, Japan-based Hitachi Ltd. committed to a new corporate strategy to stabilize business performance and create a foundation for long-term growth based on its vision of contributing to the solution of fundamental global challenges. The company had grown into 900-plus business units, serving diverse sectors, including power systems, appliances, transportation systems, advanced materials, construction equipment, data centers, and much more. Ultimately, Hitachi wanted to ensure that the new strategy aligned its businesses around the common theme of “social innovation,” and provided a platform for innovation and sustained growth. Hitachi asked BSR to help create a strategy for social innovation that would strengthen commercial performance and contribute to solutions to significant global challenges linked to sustainability.

Our Strategy

We focused our efforts on the need to support Hitachi’s global strategy of increasing revenues outside of Japan, creating a truly global organization, and aligning innovation with society’s current and future needs. To do this, we designed a program that provided Hitachi with a wide range of perspectives on global environmental challenges from both inside and outside the company to sharpen the company’s focus on a key set of priorities in corporate responsibility and social innovation. It comprised three steps:

1. Finding gaps and doubling down on strengths: Given the breadth of Hitachi’s businesses (and corresponding impacts), we used the principle of materiality to highlight and prioritize issues that presented the most significant risks for the business, both at the corporate level and at the business- unit level, across all geographies. This allowed Hitachi to be strategic about addressing significant stakeholder concerns, while staying focused on important business opportunities.
2. Aligning management under one mission: Our business- unit-level assessment generated considerable dialogue among senior executives on issues most relevant to their business units. These conversations helped better define CSR for Hitachi and highlighted opportunities to focus innovation more directly on critical social and environmental needs.
3. Listening to society: BSR worked with Hitachi to design and facilitate two stakeholder engagement events in New York and Brussels, so that Hitachi executives could hear directly from opinion leaders about their expectations of Hitachi to address significant social and environmental challenges.

Our Impact

Hitachi’s global CSR strategy now guides key investment decisions in the company’s business portfolio and helps focus Hitachi’s investments toward social innovation, which aims to fuse social infrastructure with information and communications systems. As a result, Hitachi strengthened its position in social innovation businesses, such as:

• Information and communications systems, including data centers and cloud computing
• Social infrastructure systems, including water, power, and transportation systems
• Smart-grid technology » Lithium-ion battery development

Lower weight and higher efficiency lithium-ion batteries, and the advanced materials innovation required to create them, are needed to make advancements in green mobility and new energy production. Hitachi’s innovations in this area already led to the world’s first commercial hybrid train and batteries for use in hybrid and electric vehicles. The new global CSR strategy enables Hitachi to double down on efforts to deliver similar products and services that will address society’s biggest needs.

Case Studies | Tuesday June 1, 2010

Building the South China Energy Conservation Community

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The Challenge

Today, China is one of the world’s largest carbon emitters and consumers of energy, with the average Chinese factory using about 11 times as much energy as its equivalent in Japan. In 2005, the Chinese government began an aggressive five-year plan to improve the energy efficiency of the country’s top 1,000 energy-consuming enterprises. These companies, which together account for one-third of China’s energy use, each emit more than 450,000 tons of carbon dioxide per year. The companies include China’s largest power plants, steel mills, petrochemical companies, and paper mills, among others.

By 2009, however, few companies had taken advantage of government incentives for energy-efficiency improvements, and many companies experienced significant challenges in meeting the targets: a lack of data analysis and reporting capacity, a lack of knowledge about the ROI for energy- efficiency improvement programs, and very little actionable guidance on how to make improvements. BSR partnered with the Guangdong Energy Conservation Center (GDECC) to help address these challenges and help Guangdong’s top energy-consuming enterprises improve their efficiency.

Our Strategy

BSR, with the support of the British Consulate General in Guangzhou, China, and in partnership with the GDECC, launched a two-year project to train factory staff in energy management and to develop tools to calculate the ROI for energy-efficiency retrofits. Our strategy included the following key components:

• Launch of a six-month technical training curriculum to help energy managers find low-cost, high-ROI ways to reduce their energy consumption
• Creation of an energy-efficiency web portal (www.chinajieneng.org) that incorporates energy efficiency and ROI calculators, energy-management information and guides, and current energy technology information from local sellers
• Development of an online tool for companies to analyze and report their energy use and efficiency data on a quarterly and annual basis
• Launch of the China Energy Efficiency Training Series for suppliers of leading international companies to collect best practices on energy and carbon efficiency for small- and medium-sized enterprises

Out Impact

Since our energy-efficiency training series, all of the 25 top energy-consuming enterprises who participated in the training developed action plans to reduce energy use by 2010. For example, Guangdong’s largest steel mill, a project participant, will install a heat-recovery system that will help it cut 100,000 tons of carbon dioxide per year.

Most of the 20 small- and medium-sized suppliers who participated in the program have also begun energy- efficiency projects, with some already reporting reductions in energy use. In addition, by the end of 2009, nearly 900 companies had begun using the online tool to report and analyze their energy data.

As China prepares to develop its 12th national five-year plan, the GDECC will share with local and national policymakers the successes and challenges of this program to make recommendations on which policies and targets to implement at the national level.

Case Studies | Tuesday June 1, 2010

ANZ: Responsible Growth in the Financial Services Industry

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The Challenge

In an era when the bank down the street is often headquartered in another country, the question of a company’s social license to operate has taken on new meaning. In this context, Australia-based ANZ asked BSR to apply its expertise in stakeholder relations in Asia as a key enabler of its strategy for expanding into new markets in the region. The company, which has a strong history of corporate responsibility at home, sought input on how to develop a new, groupwide corporate responsibility strategy to align with its business growth strategy, focusing on new target markets in China, Indonesia, and Vietnam.

Our Strategy

We developed and executed a regional stakeholder dialogue plan for ANZ to help the company understand expectations for a responsible bank in these markets.

This included planning and facilitating eight separate engagements in Beijing, Ho Chi Minh City, Hong Kong, and Jakarta. We identified the more than 55 stakeholder organizations that participated, including representatives from local and national government, multilateral institutions, peer companies, consumer protection organizations, environmental and labor NGOs, and others. We drew on BSR’s expertise in the industry and in the region, our stakeholder network, and our knowledge of advanced facilitation techniques.

The events yielded critical information on ANZ’s most material social and environmental risks and opportunities in these new regions, and also identified opportunities to build new relationships with stakeholders who will be critical to the bank’s social license to operate. Key themes such as urban sustainability, bridging urban and rural divides, and building financial capability emerged directly from these engagements and became core elements of the company’s new strategy.

Our Impact

Based on the dialogues, additional BSR research, and a two-day strategy workshop we facilitated with the company’s corporate responsibility team, BSR helped ANZ develop a new companywide corporate responsibility framework, and BSR CEO Aron Cramer joined ANZ CEO Michael Smith in the launch of the strategy in September 2009. The framework focuses on:

• Building individual prosperity: using products, services, education, and employment programs to create pathways to security and prosperity
• Contributing to thriving communities: developing local capacity to create solutions for important community issues
• Navigating growth responsibly: demonstrating responsible practices and decisions that balance economic, social, and environmental considerations

The company is now working on developing specific programs to support the framework and implementation at the country level. This includes providing specific tools and resources for bank leadership in these new markets, as well as a new network of local stakeholders who understand ANZ’s objectives and can support responsible market entry or expansion in these countries. This new platform will add value to the company’s existing work as it expands. It will also add consistency through more focused activities and communications, as ANZ implements its strategy of becoming a super-regional bank in the Asia-Pacific region.

Case Studies | Monday June 1, 2009

Achieving Global eSustainability

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The Challenge

The Information and Communications Technology (ICT) sector moves quickly. It is known for developing new products and services, as well as driving the convergence of previously separate services into integrated products. These constant changes are accompanied by rapidly shifting CSR risks and opportunities. While companies often seek to maximize the sustainability of CSR efforts by prioritizing their most material issues, there is no consensus on which issues are most material for the ICT industry as a whole.

Our Strategy

The Global eSustainability Initiative (GeSI), a partnership including Vodafone, Nokia, Motorola and BT, recruited BSR to fill this void by coordinating a process to define the most material issues for companies in the ICT sector.

These issues are:

• Informed by consultation with stakeholders (for example, through a series of multi-stakeholder dialogues)
• Focused on those areas where the ICT sector can make the most substantial contribution to sustainable development
• Categorized by ICT industry sub-sectors such as consumer electronics, service providers, Internet and equipment manufacturing
• Forward looking—which is particularly important given the speed of development in the ICT industry

Impact

While the outcome of the materiality process is intended to deliver the following benefits:

• GeSI's 22 member companies will improve the quality of their own sustainability reports and strategies, focusing on the issues that matter most and maximizing their contribution to sustainable development
• Investment analysts will gain an understanding of the issues considered most material to companies in the ICT sector, and thereby improve the quality of analysts' engagement with the ICT sector
• GeSI will be prepared to focus the development of its own future strategy and work plan on those issues most material to the ICT sector.

Case Studies | Monday June 1, 2009

Women’s Health Enables Return in Global Supply Chains

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The Challenge

Women between the ages of 18 to 25 often comprise the vast majority of developing world workers making products for export to the developed world. Much of this work is performed in environments where access to information about reproductive health, as well as critical health services, is lacking. Moreover, factory managers often question the value of investing financial resources in health programs due to high turnover and the perception that young, unmarried women workers are not sexually active and thus are not at risk for reproductive health problems. Despite the challenges presented by this reality, we set out to leverage our unique position to improve the general and reproductive health of women workers along global supply chains.

Our Strategy

After an initial research phase in 2006, BSR's women's health initiative—known as HERproject (Health Enables Return)—is now focused on testing innovative models for delivering health training, services and more to factory-based women workers in China, India, Indonesia, Pakistan, and Vietnam. With ongoing funding from the David and Lucile Packard Foundation, this model coordinates health training pilot projects that are implemented by local NGOs, which are compensated for their services by participating companies. BSR acts as a facilitator of these partnerships, catalyzing corporate action to address the unique health needs of women workers while simultaneously supporting the development of grassroots NGOs. Our model is further enhanced by the quantitative acumen of BSR's primary project partner, the Extending Service Delivery (ESD) initiative, funded by the U.S. Agency for International Development.

Impact

ESD, through a landmark return-on-investment study in a Bangladeshi factory, found that for every US$1 invested in women's health training and services factories reaped a return of US$3 in the form of higher productivity, reduced absenteeism and lowered turnover.

To help BSR member Nordstrom achieve similar results, we recently launched a series of pilots for the company in five factories in China. Our goal is two-fold: to educate young, female factory workers on women's health issues with a focus on HIV/AIDS, and to measure and evaluate any changes in productivity, absenteeism and turnover during the pilot period. In addition, through the program, three to five percent of the female workforce are educated on specific health matters such as diabetes and breast cancer screenings. In turn, the trained women teach the rest of the workforce, empowering the new peer educators through leadership opportunities. Pilot planning is well underway in Vietnam, India and Pakistan as well.

This initiative has elicited an overwhelmingly positive response from our membership and beyond—confirmation that our strategic, innovative approaches can offer value to businesses while also advancing social well-being. In June of 2008, a workshop, held in Vietnam, brought together 60 factory managers, brand representatives, and NGOs to talk about women's health in factories and the HERproject model. At the end of 2008, HERproject will be active in 18 factories and with 10 brands.