Posts filed under ‘Corporate Social Responsibility’
What We Can Learn from Apple’s Foxconn Factory Audit
Bruce Klafter
As most of us know by now, in February, 2012 the Fair Labor Association (FLA), a multi-stakeholder organization focused upon workers’ rights, inspected three large factories in China, where Foxconn assembles products on behalf of Apple, probably our country’s most iconic brand manufacturer. The report that was issued is interesting reading and offers some lessons that any business would be wise to learn and apply:
- Listen to your workers: In the health and safety area, the FLA found that workers were alienated from safety and health committees, and had little confidence that management would address safety issues. Keeping in mind that the scale in this case is unprecedented (i.e. FLA surveyed 35,000 employees out of the 179,000 working at these three locations!) the challenge of uncovering EHS issues is one that EHS professionals and management confront all the time. It is virtually impossible to identify issues without the assistance of line workers, and workers will report issues only if they believe there will be no retaliation and that corrective action will follow. In this instance, Foxconn has agreed to assure the election of worker representatives without management interference, something that was lacking and that prevented open communication about EHS issues.
- Compliance can be hard, but the alternatives are generally worse: The principal problem that precipitated these audits and that FLA confirmed was widespread at Foxconn is noncompliance with Chinese law and voluntary code prescriptions for hours worked. Chinese law limits work to 40 hours per work and 36 hours of overtime a month, meaning a workweek should generally be no more than 49 hours. Foxconn workers were found to regularly work 60 hours a week or more. The causes of excessive working hours are manifold, including a desire on the part of workers to get as much overtime and compensation as possible, and the solutions are going to be extraordinarily difficult. Foxconn has pledged to comply with the law and to maintain compensation for its workforce, necessitating the hiring of tens of thousands of new workers. Given the amount of bad press this situation has created for Foxconn and Apple, it is no wonder that many are calling this Apple’s “Nike moment”, meaning the moment where it has been forced to meaningfully confront poor working conditions in its supply chain. Apple was by no means sitting idly by while these violations persisted, but it was unable to devise a solution even with knowledge of its existence – an alarming state of affairs for any manager.
The kinds of issues disclosed by the FLA report are unfortunately endemic in China and other parts of the world, and are by no means confined to Foxconn and Apple, or even to the electronics industry. Hopefully the attention generated by the situation will create some positive momentum for lasting change.
What do you think about the potential impact of this situation? Has it provided an opportunity for renewed conversation about EHS in your company?
Bruce Klafter is head of Corporate Responsibility and Sustainability at Applied Materials, Inc., where he leads the effort to fulfill the company’s commitment to sustainability in the design and implementation of business strategies and worldwide operations.
Adding the Big “S” Doesn’t Always Make it Sustainable
Mark C. Coleman
Does it seem as if environmental, health, and safety (EHS) professionals are getting longer titles? In the past year I have participated in many conferences and workshops, including NAEM’s well-attended 2011 EHS Management Forum, “EHS & Sustainability Success in the New Economic Era” in Tucson last fall. Call it a qualitative trend, but more EHS professionals now have “Sustainability” as part of their professional title. This should come as no major surprise, particularly as companies, small and large, begin to formally address sustainability within their daily operations, strategic planning and management of their enterprise.
Sustainability is serious business and it is the new and in-vogue “big S” confronting stakeholder engagement, current affairs and future competitiveness of corporations. Understanding the business context of, and taking action on, sustainability, requires support and engagement from all corporate functions (i.e., C- suite, EHS, legal, marketing, HR, public affairs, finance, manufacturing, and so on). Corporations can gain or lose ground on the “big S” depending upon how they align internal resources and pursue sustainability as a business strategy.
While this is anecdotal, it seems as if more companies have added the “big S” of sustainability to their traditional EHS functions more rapidly in the past two years. This begs the questions: Are EHS organizations equipped and prepared to deliver upon the “big S”?, Is EHS the right corporate function to lead the “big S”?, Is the “big S” truly being addressed in the company, or is it simply an additional title to maintain appearances?
These questions are highly consequential, not only to the viability of addressing sustainability in a deliberate and strategic way, but also to the success of the EHS organization, and the long-term performance, reputation and impact of the corporation. Given the challenges of the global economic environment, and amid many internal-and-external stakeholder pressures, many organizations are facing resource and talent constraints in trying to address all issues or being all things to all people. And, another responsibility, albeit a very ambiguous one at that in the “big S”, can tax those already-constrained resources.
So what to do? The following questions provide a framework for initiating critical thinking behind whether the “big S” should be part of your EHS organization, and to what degree your organization is prepared to assume responsibility for sustainability within your traditional EHS framework.
- Strategic Orientation: Does your company have a sustainability strategy? How was the strategy initiated? Has the strategy been adopted? Who is responsible and accountable to ensuring the strategy is achieved? Have processes and metrics been established to monitor and measure the performance and impact of your strategy? How frequently is your sustainability performance reviewed? Is your sustainability strategy an integral part of your overall corporate strategy?
- Current State of Affairs: What stage of development are your sustainability efforts within your corporation? Are there formal strategies, programs, processes and people dedicated to your sustainability efforts?
- Accountability: Who is responsible and accountable for ensuring your sustainability strategy is enacted, measured and integrated throughout the company? What is the scope of influence of this individual? Do they have profit-and-loss responsibilities, or do they serve an enterprise service function? Is sustainability managed as a centralized, decentralized, or combination of both functions within your company?
- Leadership and Governance: Has your senior management embraced sustainability as a strategic priority? Has your sustainability effort been reactionary to market, shareholder, stakeholder, customer needs or issues? Has the corporate board discussed sustainability? Has sustainability been integrated into corporate governance procedures, policies or documentation?
- Engagement: Have people, policies and practices been aligned toward a sustainability strategy within your company? How has this evolution occurred? Who has led the evolution of sustainability within your company?
- Role of EHS: Is sustainability considered an extension or addition to the responsibilities within EHS? What role does or has EHS served in supporting sustainability within your company?
- Integration: Has your company defined sustainability goals and strategy within the context of its people, corporate culture, business, products, history and business strategy? What internal functional groups have participated in the sustainability dialogue and evolution? What is the role of these groups going forward?
- Enterprise Risk Management: Has your organization conducted risk mapping of emerging issues, internal and external stakeholder points-of-view and perceptions, and other factors that influence the sustainability context of your business?
- Customized Pursuit of Growth and Innovation: Are your sustainability strategy and goals customized to your business, products and corporate context? Or are they a “drop-down menu” of disparate programs, metrics and goals that “seem” to be what every other company uses? Is sustainability viewed and pursued as an opportunity for risk management, innovation and corporate growth? Or is sustainability the “extra thing” on your full plate?
EHS organizations have a great deal to offer to the sustainability agenda for business, and can serve as the center of excellence to help bring corporate functions together, facilitate discussion and support strategic planning for sustainability. Benchmarking what is being done in other companies, including assessing best practices on business sustainability, is another service EHS organizations can conduct to provide immediate value to the corporation. Corporate EHS and sustainability programs are currently, and will continue to be, compared against each other as much as your product portfolio and financial performance is evaluated by external organizations. Thus, benchmarking others programs can lead to greater understanding of how others are finding value in, and implementing sustainability, and can lead to a more strategic and purposeful advancement of the “big S” within your company.
Adding the “big S” to EHS titles needs to be a deliberate and strategic decision. And once that “S” is added, we need to be prepared to be accountable to the new title. What do you think the relative opportunities and risks are of adding sustainability to the EHS function? Should any one department have responsibility for the “big S” or should it be attached to everyone’s job title?
Mark C. Coleman manages the Clean Energy Incubator (CEI) at Rochester Institute of Technology (RIT) and is a Senior Program Manager for the Center for Integrated Manufacturing Studies (CIMS) and the Golisano Institute for Sustainability (GIS). His first book, “The Sustainability Generation: The Politics of Change and Why Accountability is Essential NOW” will be published in September 2012.
Why You Should Attend NAEM’s EHS Management Forum
Thinking about attending or exhibiting at NAEM’s annual EHS Management Forum? Hear from some of last year’s attendees about why it’s worth the trip.
Are your sustainability efforts scalable?
Dr. Jennifer Schmitt
One corporation can make a difference. Can’t it?
I struggle with this question much like I struggle with the idea that one person can make a difference. I firmly believe one person or one corporation can make a difference. I have to. Otherwise, much of what I do, personally and professionally, would be for naught. When I am pressed on this belief I must acknowledge that it is my assumption that many others are also taking similar actions and thus collectively my actions, or a corporation’s actions, can make a difference. In essence I have faith that my actions are scaled up by the collective actions of many.
Alas, I am a scientist so my faith leads me to exploration and research. Fortunately as a research fellow with the NorthStar Initiative for Sustainable Enterprise I have the opportunity to research the scaling up of sustainability. To date we do not have an example of a particular sustainability action that has been scaled up globally, across sectors and countries. At NorthStar we have begun exploring the idea of globally scaling up a sustainability action through our research into financing energy efficiency improvements in global supply chains.
We are partnering with a company that is working with upwards of 10,000 factories to identify energy efficiency improvements, aggregate them and link them with large global investors. We are examining who all is involved in this financing of a “saved kilowatt hour” including the supply chain factories, the retail parent companies, energy service companies, financial institutions, etc. By scaling up one factory’s energy efficiency improvement project(s) to a portfolio of many factories’ energy efficiency improvements, large scale global investors can finance sustainability and institutionalize a system of global aggregation of sustainability actions.
Our financing a “saved kilowatt hour” project is only in its infancy, but once we have an understanding of what it takes to finance a “saved kilowatt hour” we can expand our research to explore a “saved gallon of water” or an “adverted toxic ingredient”. We can ask questions such as how to aggregate these sustainability actions? And whether the global financial world will provide the financing? This will then give a resounding “YES!” to the question of whether one corporation can make a difference.
In the meantime, I’d love to hear from you: Does your company have an aggregation story of a sustainability action occurring in your supply chain? Or all your worldwide offices? Perhaps you know of a global, cross-sector sustainability initiative that we have missed?
Dr. Jennifer Schmitt is a postdoctoral research fellow with the NorthStar Initiative. Her research is broadly focused how sustainability initiatives lead to improvements in environmental and social metrics. You can contact her at jorg0206@umn.edu.
Who really cares about sustainability data?
Mike Wallace
Like so many environment health and safety (EHS), and sustainability professionals, you are probably working hard to make sure sustainability is a core part of your organization’s overall business strategy. This means integrating it into your company’s operations, providing a constant source of relevant information, continuous operational improvements and, of course, a return on investment.
But does anyone really care about all that effort? Fortunately, the short answer is, “Yes!”
We’ve seen significant changes in the public’s interest in sustainability issues, with more concern and media attention to issues like global warming, human rights, conflict minerals and corruption. For business, this has meant much closer scrutiny of environmental and social impacts, and in many cases, a demand to see disclosures on more than just the typical environmental metrics.
This has resulted in a multitude of ways for companies to be transparent about their activities, from publishing sustainability information right in their financial reports, to signing up for initiatives like the United Nations Global Compact or disclosing to initiatives like the Carbon Disclosure Project. And in the past decade or so, producing more extensive sustainability reports. In this series of five blog posts for the Green Tie, I’ll look at who’s asking for sustainability data, what that means and how you can make sure your information effectively and efficiently reaches your intended (and unintended) audience.
The audience for sustainability information is much wider and more varied than you might think. Stakeholders come in many shapes and sizes, ranging from investors and business partners in the supply chain, to employees and even your local mayor. These stakeholders are analyzing and evaluating your company’s performance on a variety of levels, using data directly disclosed by companies, sustainability listings and an ever-growing number of rankings and ratings.
How do you distinguish good raters from bad, useful from useless? How do you make sure the questionnaires you answer give you an entry point to the right people?
All the surveys you’re getting are just the tip of the iceberg, hinting at the proliferation of rankings, ratings, listings, research tools and sustainability indices. Companies aren’t fully aware of how many entities constantly monitor, analyze and convey sustainability information about them and their competitors, entire industries and/or entire indices.
Mainstream investors are increasingly examining sustainability information (sometimes through the intermediaries mentioned above) and even stock exchanges around the world are exploring what sustainability means to their institution and to their listed companies. Business decisions are no longer solely based on financial information.
It seems obvious that requests for disclosure are only going to increase and a GRI report is the recognized method of communicating sustainability performance. More than 80 percent of the Global 250 are using the GRI Guidelines to report on their sustainability performance, and those are just the ones that we know. You can see a snapshot of those in the North American GRI Reporters based on a review we did in January 2012. There is a clear upward trend in the number of organizations that are reporting across all regions and sectors.
In this sea of information, how do you keep it real? Efficiently gathering the relevant information and transforming it into a credible communication for the mix of interested stakeholders is key. To understand who is looking at sustainability information and how this information is being measured, take a look at my presentation Measuring Sustainability Performance.
In closing, there are a couple of key questions you might want to consider:
If you are using the GRI Guidelines for your sustainability report, does GRI (and the world) know it? Search the global GRI database and register your report at – http://database.globalreporting.org/
Are you fully aware of the Application Level and how and why it is being used by reporters? Get the latest at GRI’s Report Services https://www.globalreporting.org/reporting/report-services/Pages/default.aspx
Mike Wallace is Director of the U.S. Focal Point for the Global Reporting Initiative and is responsible for supporting the growth of sustainability reporting in the United States. You can follow him on Twitter at @M_A_Wallace.
Seeing Beyond the Sustainability Horizon: From Best Practices to Next Practices
Samantha Putt del Pino
As we turn our sights toward our upcoming sustainability conference in Atlanta, we sat down this week with keynote speaker Samantha Putt del Pino, Co-Director of Business Engagement in Climate and Technology at the World Resources Institute, to discuss her perspective on where sustainable business is heading.
GT: How would you describe the state of corporate sustainability, worldwide?
SPP: It’s hard to think about global business homogeneously. There is a wide range of environmental performance, even among those companies that ascribe to sustainability principles. On one hand, sustainability isn’t nearly as engrained into core business practice as we would like it to be. Some companies have not set themselves a very high bar for what it means to be sustainable. These are the companies that see sustainability as more of a niche issue, something that can help with public relations or to engage select customers.
But on the other hand, I think we are starting to see something interesting among leading companies, and that is the shift from using sustainability as short-term defense to using it for long-term offense. These companies see sustainability as essential to their long-term competitiveness. For example, some companies are aggressively investing in sustainable products and services and are seeing their revenues grow. Many have set revenue targets reflecting expectations of future growth. We also are seeing some companies factor sustainability into their mergers and acquisitions strategy, making decisions that can improve the company’s capacity to fulfill its sustainability objectives over the longer term.
GT: The World Resources Institute (WRI) is working on a new research project focused on the “Next Practices” in sustainability management. Why are best practices no longer the gold standard?
SPP: In today’s fast-changing, competitive landscape, we see an urgent need to innovate beyond best practices. Best practices are still important: Companies have made, and can continue to make, significant improvements in their environmental performance by pursuing best practices. However, companies can do more to understand how big trends, such as climate change or water scarcity create new risks and opportunities, and will shape the markets of tomorrow. Companies that proactively implement smart strategies today can gain an edge, both in terms of preparedness and in terms of accelerating progress, towards a sustainable future.
GT: What are some of the future forward issues U.S. companies should begin learning about (if not planning for) today?
SPP: There are several challenges companies face when looking for the next big sustainability issue. First, there’s no crystal ball. So, how do you anticipate future needs without trying to predict the future? Second, too often the “hot topic” of the day will shift with the political winds. How can you make a case for long-term sustainability issues if your colleagues are scrambling to address issues that come and go on a quarterly basis? And third, issues must be understood in terms very specific to each company. How do you engage your colleagues to understand big changes in the context of your company’s specific strengths and weaknesses?
These are the types of questions we are working to answer with partner companies in WRI’s Next Practice Collaborative. Many partners have told us they want to understand what other sustainability leaders see as issues of rising priority, such as water risk, life-cycle sustainability impacts, or ecosystem degradation. Oftentimes, the issue itself (like climate change) may not be new, but a new, more transformative approach is required.
WRI and its partners are working on a tool kit to help companies sort through the possibilities and connect these opportunities and threats with their core competencies. That can go a long way to making the case for action on issues on the horizon, or for tackling an existing issue with renewed innovation.
GT: Based on your knowledge of how corporate sustainability comes to fruition, what role do you think the individual leader can play in driving progress within an organization?
SPP: The most successful corporate sustainability professionals act as catalysts. They facilitate collaboration and generate excitement inside and outside the organization. They are the ones who can make a really good case to the company’s leadership for investments in bold sustainability strategies. This means making a solid business case and showing how investments create big opportunities or address big risks to the company.
Samantha Putt del Pino is co-director of Business Engagement in Climate and Technology at the World Resources Institute. As part of the Next Practice Collaborative, she works with companies to foster the transformative approaches needed to quickly close the gap between today’s best practice and the pace and scale of the climate challenge. She previously led WRI’s U.S. Climate Business Group, a cross-sector network of 36 Fortune 500 companies that developed strategies for companies to thrive in a carbon-constrained economy including building internal support for corporate climate change strategies, exploring emission reduction opportunities and technologies, and navigating the dynamic climate policy landscape. She will share insights on the state of sustainable business at NAEM’s 2012 Sustainability Management Conference on March 7-8 in Atlanta.
Transparency Begins with Data Management
Connie Prostko-Bell
Meeting the demands of new product regulations requires better data management solutions. We sat down this week with 3E Company’s Connie Prostko-Bell to learn more about this emerging issue and to find out what companies are doing to provide greater supply chain transparency.
GT: Why do companies collect MSDSs and other product data from their suppliers? What is this information used for?
CPB: Operational risk and compliance management is increasingly focused on environmental issues across the supply chain. As companies strive to deliver sustainable ongoing improvements in compliance and risk management, they are closely scrutinizing the management of products in the enterprise, especially chemicals and other hazardous materials, with a special emphasis on fulfilling requirements in environmental, health and safety (EHS) regulatory compliance. A comprehensive view of compliance performance and risk management throughout the supply chain and product life cycle is necessary to promote and sustain ongoing improvement.
This vision is fueled by accurate and comprehensive content, including environmental, health and safety (EHS) product data, such as Material Safety Data Sheets (MSDS), which can be leveraged to ensure that the products that are incorporated into finished goods meet legal, regulatory, industry and self-imposed standards. Leveraging this type of data helps communicate to a company’s stakeholders that externally sourced processes and materials do not introduce legal, financial, ethical or market access risks to the company. Furthermore, it gives organizations an opportunity to advance their own value-based agendas by leveraging buying power to enforce desired practices.
GT: What trends are driving the management of supplier-sourced product data?
CPB: Manufacturers with complex supply chains are struggling under the burden of spiraling global EHS regulations. More often than not, they possess neither the requisite internal methodologies nor the necessary personnel to collect, analyze, share, and distribute key information related to supplier compliance and corporate risk across the various functional groups within the organization. Compliance issues such as GHS, REACh, RoHS and Frank-Dodd are driving the need for a common source of product data.
The shifting regulatory landscape also burdens suppliers, who often need help gaining access from suppliers and understanding the global EHS laws with which they must comply. Companies are increasingly recognizing supplier compliance as a critical component of business continuity efforts.
GT: A company’s efforts are only as strong as the quality of its data. How can companies ensure data quality, especially when they are dealing with a multitude of suppliers?
CPB: The number of suppliers can vary wildly from company to company. Generally speaking, it is safe to say that the larger the organization, the more suppliers it will have. Many factors influence this number such as geographical diversity of operations and customers, the complexity of the product line, and availability of the required raw materials. It is certainly not uncommon for a large company to have tens of thousands of suppliers. However, regardless of whether the company has hundreds or thousands of suppliers, managing supplier data can be a very challenging task. Finding, maintaining and acting on data is difficult and painstakingly time-consuming.
It is important that companies use documented, best practice methodologies and direct relationships to gather, refine and maintain data.
When it comes to sharing the information, you should choose an easy-to-use and practical system that meet each customer’s specific needs. The data should be broad, dynamically updated, and of the highest quality and accuracy. Substance- level regulatory data and product level MSDS data should be integrated together to provide a view into the impact of regulatory changes across inventories in the enterprise.
At the product level, from its inception to the present day, the vendor supplied product MSDS has evolved into a document that goes far beyond its original purpose, now serving as a source, foundation and clearinghouse for a range of safety and regulatory compliance data, including classification, transportation, environmental, ecological and disposal considerations. MSDS product-level data should be continuously updated with information and search technologies, documented best practice methodologies and through direct data obtainment relationships with raw material and other chemical product manufacturers.
Connie Prostko-Bell is a Senior Solutions Manager with 3E Company. She has 16 years of EH&S and chemical industry experience, spanning the project management, product safety and product stewardship sectors. She will share strategies for getting accurate supplier data during NAEM’s webinar on the topic Feb. 16.
How a New Design Revolution will Change Supply Chain Management
Howard Brown
Stories about Henry Ford’s genius with manufacturing abound, though it’s rarely clear which ones are actually true. One of my favorites is his insisting that parts manufacturers deliver their products to his plants in wooden crates of his design, which he then dismantled and used as floorboards in his cars.
Supply chain management has grown in sophistication and importance since Ford’s time. The quality movement, just-in-time manufacturing, corporate responsibility initiatives, enterprise-wide information systems, environmental impact analyses like life-cycle assessments, and growth in transparency and public access to information have all brought about major changes in supply change management. Now a new design revolution is about to create an even bigger change in supply chain thinking. The change will come both from new materials and products and from new manufacturing technologies.
Radical new materials and products (such as the ones we feature in the dMASS Insights newsletter) will themselves disrupt traditional supply chain relationships. For example, there are composite materials that exhibit behaviors with the potential to replace mechanical appliances, tools, and other machinery – even entire factories. There are materials that can be used to generate electricity by movement, temperature differences and solar energy conversion. Others have the ability to interfere with the growth of harmful bacteria, actively transfer heat or emit light with minimal energy subsidy. The cumulative effect of new materials and products will be shorter and simpler supply chains.
New manufacturing technologies will be at least as disruptive as the products themselves. Nano-scale manufacturing technologies such as Additive Layer Manufacturing (including 3D printing) and bio-manufacturing (the growing of products) stem from recent advances in the scientific understanding of how nature organizes itself at the most fundamental levels of matter and energy. Similarly, biomanufacturing stems from new discoveries in the fields of genetics and micro-organisms. The common thread among each of these technologies is a growing knowledge of nature’s tendency to self-organize, and an ability to leverage this knowledge.
Three-dimensional (3D)printing, in particular, has the potential to drastically cut resource demands, costs and dependence on resource-intensive supply chains, as well as pollution and waste. Advanced computer-aided design (CAD) systems bring design down to the level of individual molecules. The entire downstream supply chain for a 3D-printed product can be a set of printer cartridges containing different chemical elements. When laid down in precise proportions, the atoms arrange themselves into material structures with the desired characteristics. Printing can often be done in small shops, portable facilities, or even in the home. There is little or no need for high-temperature smelting in parts manufacturing, high-speed grinding or stamping that produces manufacturing scrap, or glues, adhesives, staples, rivets and other parts to hold separate pieces together.
Henry Ford’s tactic saved resources a century ago by creatively taking advantage of existing supply chain resources and harvesting value from waste. Nano- and bio-technologies will radically transform supply chain management in a new way. Business success will increasingly require understanding these technologies and taking advantage of the changes they will bring about.
What are your thoughts? Have you begun to experience supply chain changes due to commodity prices or supply problems, or due to the availability of new materials, products, or technologies?
Howard Brown is a noted entrepreneur and the founder of dMASS.net, an organization focused on helping businesses improve resource performance. For more than 20 years, he was CEO of the consultancy RPM Systems, Inc. (Resource Planning and Management), where he worked with companies such as International Paper, Mobil, BP, Duracell, Avery- Dennison, Whirlpool, SaraLee, and Wrigley, earning a worldwide reputation for developing practical strategies that merge environmental and business goals. To learn more about dMass, visit: http://www.dmass.net/wordpress/
Meet the NAEM Board of Directors: What are the EHS and sustainability trends to watch in 2012?
As part of NAEM’s 2012 Member Appreciation Week celebration, we sat down with members of the NAEM Board of Directors to talk about the EHS and sustainability trends to watch in 2012. Featuring Michael Miller of Dean Foods; David Newman; Mark Hause of DuPont; and Verne Shortel of NRG Energy.
Meet the NAEM Board of Directors: What are some of the lessons you learned in 2011?
In honor of this week’s 2012 Member Appreciation Week celebration, we sat down with members of the NAEM Board of Directors to talk about trends in EHS and sustainability management. Featuring Deb Hammond of Abbott Laboratories; Stephen Evanoff of Danaher Corp.; Bruce Karas of The Coca-Cola Co.; and Minda Sarmiento of Shaw Environmental Inc.
