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Case Studies | Friday June 3, 2011

ExxonMobil: Early Planning for Sustainable Economic Development

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The Challenge

As the operator of the Papua New Guinea Liquefied Natural Gas Project (PNG LNG)—a large-scale, integrated development project that includes gas production and processing facilities in the highlands, as well as onshore and offshore pipelines and liquefaction facilities in the Port Moresby region—ExxonMobil has the potential to greatly impact the economy of the PNG. Independent assessments anticipate that the project may double the PNG’s gross national product, greatly increasing government and landowner revenues, creating jobs, and stimulating related industry developments.

Early in the project, to ensure delivery of these long-term local benefits, ExxonMobil created a robust “national content” program that seeks to develop a qualified and globally competitive local workforce and supplier base. The program also aims to identify opportunities for strategic investments in health, education, and infrastructure. The company engaged BSR to assist with an early assessment of the in-country capabilities.

Our Strategy

In the first phase of our work, BSR conducted a review of the local context to provide ExxonMobil with an early indication of existing workforce, supplier, and civil society capacities and needs. We then began research and interviewed approximately 100 representatives of:

1. Vocational and academic institutions, to assess existing local workforce qualifications and potential focus areas for ExxonMobil training initiatives
2. Local suppliers and businesses that could be eligible to support project construction and operations, as well as capacity-building alternatives
3. NGOs focused on education, health, and community development, for possible partnerships with ExxonMobil in deploying strategic investment projects

BSR then created a preliminary database of PNG-based organizations in the three categories above, and we gave ExxonMobil an assessment of the wide-ranging perspectives on existing local capacity for the company to integrate into its national content planning.

In the second phase of our work, we used a tool designed with ExxonMobil to assess locally owned supplier companies against eight specific business criteria to provide a third-party view of the companies’ performance, training requirements, and initial eligibility for supporting the PNG LNG project. Our phase-two activities helped ExxonMobil assess prospective local supplier companies in order to:

• Lay the groundwork for ExxonMobil to constructively engage with local suppliers early in the project-planning phase.
• Identify local training needs and capacity-building opportunities.
• Match supplier capabilities with project needs.
• Set local supplier expectations regarding ExxonMobil’s standards for business conduct.
• Promote accountability by focusing on suppliers’ corporate governance improvements.

Our Impact

Many of BSR’s recommendations were incorporated into ExxonMobil’s comprehensive national content plan. Our phase-one work helped provide the groundwork for the company to determine workforce training objectives and supplier-development strategies, to formulate strategic community-investment priorities, and to enter into partnerships early in the project life cycle. In phase two, BSR’s assessments allowed ExxonMobil to engage early with local suppliers to discuss their areas of strength and opportunities for development. It also allowed for local companies to improve their business performance and potentially become eligible for engagement in the PNG LNG project.

Both phases of our work helped establish tangible baselines, early activities, and long-term focus areas for sustainable economic development programs focused on workforce development, supplier development, and strategic community investments in the PNG.

Case Studies | Friday June 3, 2011

Best Buy: A Focus on Delivering Solutions and Sustainability

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The Challenge

In an industry facing growing concerns about e-waste, the “rapid obsolescence” of products, and continued supply chain human rights issues, the senior leaders at Best Buy aim to transform the company’s business model from one based on selling only products to one that focuses on delivering “digital connections”—those technologies and services that help “connect customers to people, knowledge, ideas, and fun.” Recognizing that sustainability is key to that future, Best Buy partnered with BSR to turn that vision into a practical strategy aligned with the company’s other key priorities.

Our Strategy

Our three-phase approach allowed Best Buy to set a clear direction for its sustainability objectives:

1. Assessment

Given Best Buy’s rapid growth in sales and its move into new services and businesses, we began by conducting interviews with 40 Best Buy executives and more than 20 external sustainability experts and stakeholders. We used this information to examine Best Buy’s business direction, management perspectives on sustainability, and current gaps in the company’s sustainability-related activities. Next, we mapped near-term trends affecting the consumer electronics industry, such as new regulations and the increasing costs of input materials. We also reviewed outside perspectives on Best Buy’s role in developing more sustainable products and the opportunities associated with the company’s desire to transition from products to solutions.

2. Materiality

We analyzed more than 60 sustainability issues—from digital privacy, to access to technology, to product safety, to transportation—based on how they affect Best Buy’s business and based on their importance to consumers, communities, governments, NGOs, and others. We presented the results to Best Buy’s Sustainability Team and Advisory Group, which used the presentation to agree on four priority areas: Product Stewardship, Sustainability Solutions, Access, and Inspired Workplace.

3. Strategy Development

Once Best Buy's senior leaders validated BSR’s conclusions, BSR and the sustainability team defined goals for each area:

• Product Stewardship: to lead the industry from product design to end-of-use solutions
• Sustainability Solutions: to provide products and services that allow customers to lead more sustainable lives
• Access: to build business models that enable people who don’t have it today to access all the benefits of the connected world
• Inspired Workplace: to become the preferred place of work because of sustainability efforts

We also helped Best Buy develop specific targets for each area, and we proposed a sustainability governance structure that creates clear leadership and accountability within the company and a structured review process that incorporates external input.

Our Impact

By nature, strategy projects set the direction for changes that come into practice fully over the medium to long term. Best Buy has made significant progress in establishing its sustainability strategy and a foundation for progress. To begin implementing this strategy, company leaders have started to develop relationships with consumer products manufacturers that are focused on sustainability and are key to the achievement of Best Buy’s sustainability goals.

Case Studies | Friday June 3, 2011

Leading Business Action on Conflict Minerals

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The Challenge

In the eastern Democratic Republic of the Congo (DRC), where armed conflict has claimed more than 5.4 million lives over the past 15 years, militant groups controlling most of the region’s mines use the trade in tin, tantalum, tungsten, and gold as important sources of funding. At the same time, this trade—which feeds into complex supply chains for products ranging from cell phones and cutting tools to jet engines and jewelry—is an important source of income for a million people in the region.

The situation presents a dilemma: How can business support the people who rely on these minerals for their livelihoods without perpetuating the use of “conflict minerals” in this war zone? Campaigning NGOs, development organizations, governments, and industry working groups are addressing this important situation in a variety of ways. BSR is promoting collective action to reduce human suffering and advance economic development through a working group that began in 2009 with companies including Dell, HP, Intel, and Motorola.

Our Strategy

The complexity of these issues—the need to improve supply chain transparency, sever the link between the minerals trade and conflict, and continue to support local communities—requires multidimensional solutions involving business, governments, and others working toward a common goal. Using BSR’s experience building collaborative solutions to human rights dilemmas, and working with our extensive network of NGO partners, we developed a plan to raise companies’ awareness of the issues and facilitate constructive dialogue among business, investors, government, and NGOs. This necessary step laid the groundwork for further work in 2011 focusing on identifying actions companies can take to reduce their use of conflict minerals.

Following an initial BSR-led forum in 2009 that gathered nearly 50 people to strategize potential actions, we partnered with the GE Foundation to expand our efforts and bring in additional industries. In May 2010, we published a report highlighting critical supply chain issues, opportunities to support diplomatic peace-building efforts, and ways to promote local economic empowerment. We concurrently convened a second forum with more than 100 industry, investor, and NGO representatives to explore action in these areas.

Our Impact

Already, our efforts have increased business leaders’ awareness, promoted action on the DRC conflict and its link to the minerals trade, and helped build a shared understanding between civil society and business on how the private sector can contribute to conflict reduction. In collaboration with the shareholder advocacy group As You Sow, we catalyzed new partnerships among companies, investors, and NGOs to address these challenges.

BSR worked with these organizations to prepare the only multi-stakeholder input to the U.S. Securities and Exchange Commission’s (SEC) regulations requiring publicly listed companies to report on their use of conflict minerals. More than 20 companies, investors, and NGOs signed the consensus document, which included recommendations for reliable supply chain due diligence processes, third-party auditing, and company disclosures.

While our work has supported company initiatives and the development of strong, consensus-based SEC requirements, we are acutely aware that there is no easy solution to the conflict minerals issue. We continue to advise companies on ways to address conflict minerals in their supply chains and support ongoing multi-stakeholder engagement to solve this complex challenge.

Case Studies | Thursday January 27, 2011

IAMGOLD: Integrating Human Rights Management Throughout the Business

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The Challenge

BSR’s internal team of human rights and extractives-industry experts worked with key IAMGOLD staff to scope a multilevel training on the full spectrum of human rights relevant to mining operations. BSR developed interactive presentations, as well as facilitators’ guides and reference materials, for two levels of human rights trainings to be incorporated into a formal program for company staff and contractors.

Our Strategy

1. A 30-minute training course on human rights awareness for all 3,000 employees and contractors
2. A detailed, full-day interactive human rights training workshop for managers and supervisors

We designed the awareness-level training to be delivered initially to all employees and contractors, and then to be incorporated into employee on-boarding and annual training updates at individual mine sites. We designed the more intensive training for managers and supervisors to furnish relevant staff with an in-depth understanding of the business importance of and corporate responsibility for human rights, key risk factors, integration of human rights considerations into company management systems, and company policies related to the respect of human rights.

Our Impact

At IAMGOLD’s 2009 Sustainability Workshop in Cuenca, Ecuador, BSR reached more than 50 senior and executive staff members who have worldwide responsibility for facilitating the company’s human rights training. The company next plans to deliver the human rights training program to its global workforce by the end of 2011.

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.