Sustainable Innovation


Beyond CSR reporting : How to measure the social and environmental impact of CSR strategies ?

No less than 950 representatives from Dutch industry, NGOs and the scientific world were gathered early September 2010 in Rotterdam, at the conference ‘Corporate Social Responsibility : from Ambition to Impact’ at the Erasmus University. Best CSR Practices of Dutch Sustainability leaders TNT, DSM and Rabobank were presented, as well as key findings of Karen Maas PHD ‘Measuring corporate social performance’ (1)

‘From Ambition to Impact, Corporate Social Responsibility, Conference at the Erasmus School of Accounting and Assurance, 03/09/2010, Rotterdam, The Netherlands

From Ambition to Impact : How to measure ?

‘How to create CSR strategies that create good and measurable results ? was the central theme of the conference, chaired by Marleen Janssen Groesbeek, policy maker, former journalist and author of articles and books on CSR, among them ‘Maatschappelijk Ondernemen’ and ‘Duurzamer Ondernemen’.

 

 

 

 

 

 

 

Marleen Janssen Groesbeek, policy maker at Eumedion.

As a seasoned sustainability consultant, Karen Maas PHD has observed a wide gap between highly ambitious CSR mission statements and factual CSR reporting. Mission statements often show major ambitions (‘fight climate change’, ‘reduce poverty’ and ‘support biodiversity’), where as annual reports often just list, in some cases, the output, the factual CSR activities – without linking back to societal impact.

An example of this mismatch is a new ‘sustainable building’ in The Netherlands built next to the highway without any public transport access. According to Karen Maas the building is an example of a misfit between an environmental mission and real impact. Despite the better energy performance of the new building, the environmental impact won’t go down substantially as employees need to use their (lease) car to go to the office. Another example is the building of a new school in an African country, without supervision on salary payments in the country. Net result : an abandoned school without any teacher nor children.

Sometimes business people just do not know where to find the right tools or methods to measure social impact of their CSR actions. On the basis of her research, Maas wants to guide people to make right choice of instruments to do measure social impact (people, planet ánd profit) and improve the effectiveness of CSR strategies.

Karen Maas studied the existing 250 (!) methods. She found that methods often just focus on a certain level (enterprise or society), one aspect of the ‘Triple Bottom Line’ (people, planet, profit), and often lack to tell the users ‘how to measure’.

From the 30 methods that measure impact on People, Planet, Profit, only 8 methods really the triple bottom line impact on a society level, or, so to speak, measure social and environmental impact, or, according to Karen Maas ‘measure social impact’ (2, 3). These methods are :

  • BoP Impact Assessment Framework (Ted London, 2007)
  • Measuring impact Framework (MIF, World Business Council for Sustainable Development, 2009)
  • Ongoing Assessment of Social Impacts (OASIS, The Robert Entreprise Development Fund 1999)
  • Participatory Impact Assessment (PIA, Feinstein International Center)
  • Poverty Social Impact Assessment (PSI, Worldbank, 2000)
  • Robin Hood Foundation Benefit-cost ration (Robin Hood Foundation, 2004)
  • Social Return on Investment (SRI, Pacific Community Ventures, 2000)

In her PHD report, Karen Maas comes up with detailed recommendations and guidelines. As of 2010 Karen Maas is Scientific Director of CSR education and assistant Professor at Erasmus Centrefor Strategic Philantrophie (www.ecsp.nl). In this role she will continue her research in this area, sharing experiences with students and enterprises.

Karen Maas PHD, Scientific Director of CSR Education at Erasmus University Rotterdam.

Dutch Industry Experiences

Representatives of Sustainability Industry Leaders joined Karen Maas and shared their experiences on ‘how to create good and effective CSR strategies’. Speakers were :  TNT (Peter Bakker), DSM (Ben van Dijk) and Rabobank (Bouwe Taverne) and Ernst & Young (Dick van de Waard).

‘Moving the world’, TNTs voluntary emergency logistics activity, is widely known. TNT employees (167k worldwide) are extremely proud of it, tells CEO Peter Bakker. The voluntary activities however are only valid if all other core business activities are aligned with the CSR goals. And should be adapted according to the changing environments of the company. For instance, by opening new operational centers in India, TNT has been faced to more mortal traffic employee incidents. To protect TNT employees in India and to improve the general safety on Indian roads, TNT has become member of the association that promotes traffic safety. An ambitious objective is to decrease CO2 emissions by 45% in 2020 (compared to 1995). TNT is organising worldwide driver contests in a friendly contest to encourage energy efficient drivers. Peter Bakker aims for stronger legislation on CSR reporting as ‘everybody is doing something different’. He also emphasises the key role of empowerment of employees. Bakker recently changes his Porsche for a Toyota Prius to set an exmple. However, he adds, CSR is not about hybride cars nor technical solutions : it is all about people and their behaviour.

 

 

CEO Peter Bakker of TNT Group

At DSM, the ‘Green Bonus’ helps to push Eco Innovation. The ‘Green Bonus’ for top managers is a promising tool to increase the effectiveness of sustainability goals, explains Director Special Projects Ben van Dijk. 50% of the variable bonus is related to sustainability. Some elements : (1) 70% of the new product launches should be defined as ‘Eco +’ products (2) Energy consumption should be down 2% per year, (3) Employee Engagement should be above a certain level. The debate on Green Bonus with shareholders and Advisory Board has been extensive but constructive. Eventually all agreed with the new remuneration guidelines, as the new rule would be for the benefit of DSM and society. To read more about Sustainable Innovation Best Practices, click here.

      

   

 

 

 

Ben van Dijk, Director Special Projets at DSM.

Bouwe Taverne of the Dutch Rabobank, explains how the Rabobank supports both incremental sustainable innovation (changing the course of the huge ship) as well as supporting outside start-ups (Green Tech Fund). An example of the first category of embedding sustainability principles in the banking sector is the lobby of the Rabobank to create a quality label applicable to all investments with an option to ‘opt-out’.  Instead of ‘Sociallly Responsible Investments’ all investments to be sustainable (with an opt-out). An example of the second category is the newly created ‘Green Tech Fund’. Read more about Rabobanks Best Practices here.

 

 

 

 

 

 

Bouwe Taverne, Manager Sustainable Development at Rabobank

Dick de Waard, Partner at Ernst & Young and Professor at the Groningen University on Register Accountancy is responsible for auditing annual reports. He urges for introducing ‘CSR or employee satisfaction bonus’ in all companies to counterweight the current financial focus of the top management of many companies. 

 

 

 

 

 

 

 

Dick de Waard, Partner at Ernst & Young

Conclusion

Companies can measure social impact – and should, states Karen Maas. Measuring social impact contributes to the creation of effective and realistic CSR goals. By coming up with advice on the right type of measurement methods she is ‘spot on’ – as many Sustainability Directors have difficulties to pick the right one methodology.  

CSR missions are now embedded in core business, show representatives of Dutch industry. Promising practices are eco-innovation initiative es at DSM (similar to the criteria set by Philips for its respective industries), a financial stimulus for top managers when achieved sustainability goals like at DSM (see also my earlier article on AkzoNobel) and eco-efficiency driving courses for employees, such as practices by the TNT Group.

If you want to read more about Best Practices in The Netherlands of Sustainable Innovation, I recommend you to read my articles on telecom operator KPN, energy provider Eneco, and local community of The Hague.

Sources:  1. Presentations at the conference ‘Corporate Social Responsibility : from Ambition to Impact’(Symposium ‘Maatschappelijk Verantwoord Ondernemen : van ambitie naar impact’, Erasmus University, Rotterdam, The Netherlands http://symposium.esaa.nl  ; 2. PHD report ‘Corporate Social Performance’, from output management to impact measurement’, Karen Elisabeth Huguette Maas, 2 december 2009, Erasmus Universiteit Rotterdam. http://www.hartstichting.nl/9800/13333/13371/proefschrift_karen_maas ;  3.  ‘Maatschappelijke Impact, dilemma metingen MVO acviteiten’, bu Astrid van Unen, in : P-plus, april 2010,

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Rabobank, an exemplairy bank
December 17, 2009, 4:47 pm
Filed under: Best Practices in The Netherlands | Tags: ,

The Dutch Rabobank is one of the three most Sustainable banks worldwide. It is well aware of the responsibilities of banks being able to build or break sustainable innovation (see earlier post) Rabobank wants to play a role in food and agri chains worldwide and encourage renewable energy projects.  Bouwe Taverne, Head of Sustainable Developments, tells about the origins and operational implementation of Rabobanks Sustainability Policy.

The Rabobank is one of the Dutch largest banks, employing 65,000 FTEs at 161 local banks in 27 countries. Despite the difficulties in the finance sector, Rabobank has shown to be a stable factor. It realised a net profit of 2,8 billon euros in 2008 which is a 2% rise (1). The bank has the highest credit rating (Triple A) awarded by Standard & Poors and Moody’s.

Herman Wijffels started his position as CEO of the Rabobank in 1992. It was his personal conviction that Rabobank, being a cooperative bank knitted in local communities, should embed Sustainability in the Companies Strategy. It was Wijffels who created a Directory of ‘Sustainability’. Piet Moerland took over the CEO position in 2009.

Bouwe Taverne, Head of Sustainable Developments in the CSR Direction at Rabobank

Bouwe Taverne is Head of Sustainable Developments (‘DO’ or Duurzame Ontwikkelingen’) within the CSR Direction at Rabobank. This former chemical engineer with several years of environment consultancy experience, joined the Rabobank Sustainability Department in 1997.

Rabobank Sustainability Organisation. The Directory ‘MVO’ consists of 60 people in 4 sub departments : (1) Rabobank Green Bank, (2) Rabobank Foundation, (3) Rabobank Business Generator and Rabobank Sustainable Developments. Taverne and his team work in close contact with over 200 CSR officers in the subsidiairies worldwide.

1. What are Corporate Responsibility Objectives of Rabobank ?

Rabobank was founded in 1898 as a Farmers Bank, offering loans to regional farmers and entrepreneurs. Maintaining an economical and ecological balance in local communities has always been very important as bank subsidiaries are closely knitted into local business.

The bank belongs to the world Top 3 Sustainable banks and wants to keep this position. In 2008 the company was rewarded for the Dutch most transparent CSR report (‘Benchmark Transparency’) by the Dutch ministry of Economic Affairs. It is committed to various international CR guidelines : The OECD Guidelines of Multinational Enterprises, UN PRI (UN Principles of Responsible Investments), UN Global Compact, and the UNEP-FI (UN environmental Programme Finance Initiative.

Taverne explains that the bank has chosen four central CSR themes. based on social trends, market developments and Rabobanks societal roots :

1. Introducing sustainability to food and agri chains.

2. Encouraging new production methods and renewable energy sources.

3. Promoting economic participation and diversity

4. Fostering social cohesion and solidarity.

Key performance indicators have been defined for all themes to track progress. An example of the 2nd theme is ‘Extend of sustainable loans in billions of euros as a percentage of total lending’. Every local Rabobank bank has translated the key themes into KPI’s for their own respective subsidiary.

Taverne explains that the core actions of sustainable development are all related to the ‘Trias Ecologica’ (or  ‘Three Step Strategy) :

1)      Use Less Sources : Reduce the need of materials. Develop products that use the least possible materials by keeping a long lifetime.

2)      Use Alternative Sources : Use renewable energies, the least impacting, non-toxic, recyclable and bio-degradable materials to the maximum extend.

3)      Minimize the Non-Renewable & Compensate : Minimize the need for  non-renewable sources – and if you use them : compensate with carbon credits.

Rabobank set the example with carbon neutral operations as of 2007. This is realised by effectively reducing energy consumption and green house emissions : sustainable buildings, green data centres, flexible workplaces and low emission lease cars (<120 gr/CO2). The energy being used is renewable energy (for instance by windmills). The value of the green house emissions is being compensated with carbon credits.

2. How does CR contribute to Innovation ?

To Rabobank, Sustainable Development is the basis of many of the existing and new finance products.

Taverne notices that Rabobank carefully chooses its role in the process of Sustainable Innovation : It wants to bring and share knowledge and create a platform for innovation.

The  ‘Rabo Groen Bank’ stimulates Projects  of a sustainable character (2) In 2008 a total of 4 billion euro has been collected and invested in sustainable projects. Customers profit from a rather steady interest which is tax deductable. Criteria for Green Investments are set by the Dutch government. An example of a Sustainable Project is the 84,9 millio Green Fund Investments in Afval Energie Bedrijf Amsterdam (AEB) :

Waste Management Centre Amsterdam (AEB) turns waste into energy : 320.000 households are connected to city heathing system, including the metro’s and street lightning of the capital

Rabobanks partners with Public bodies to agree on the criteria for Green Funds and tax deduction rules. Among these bodies are the ‘Senternovem’ that is responsible for verifying Green Finance applications. Green Loans can be obtained for projects in sustainable agriculture, green houses, renewable energy and sustainable buildings. As of 2009, also for bargers, mobility and waste management (see previous example).

Rabobank is extensively using stakeholder dialogues to develop its business. Among them are discussions with NGO’s (Friends of the earth, Oxfam Novib and WWF), the academic world, sector federations and Sector Policies (12 in total) like the Round Table for responsible Soy, Palm Oil, the Better Cotton Initiative, The Better Sugar Initiative and the Round Table on Sustainable Biofuels.

Recently, the Dutch Greentech Fund, was launched by Rabobank and its partners : the Dutch Universities of Wageningen (agriculture) and Delft and the WorldWildlife Fund. The fund is aimed to finance ‘Green Tech’ start-ups (15 to 25) that develop innovative technologies or processes that contribute to a more sustainable product chain. Think about biofuels, or intelligent recycling.

The New Green Tech Fund for Dutch Start-Ups by Rabobank, the WWF and the Universities of Wageningen and Delft.

3. Does the economic Crisis impacts the CR Strategy ?

All industries and activities are affected by the economical crisis. People understand that we are not anymore in a period of high conjunction. Rabobanks Sustainability strategy will certainly proceed, which is proven by the new initiatives like the Dutch Green Tech Fund.

4. What are outlooks for the sector ?

We have clearly touched borders and we need to change. We notably need to change our ways of using resources and energy. The Copenhagen conference will be important for defining governmental new directives to stop climate change.

Western industries should assist the developing countries to grow their economies in a sustainable way.

Amidst all technological and societal developments, Rabobank has chosen a position to facilitate industries by sharing knowledge and financial stimulus, in close interaction with public, private and NGO organisations.

Sources : 1. ‘Annual Summary 2008’, Rabobank Group, 2008. 2. ‘Bankieren met een missie’, Rabobank Foundation, 2009, 3. ‘Groen’ ! Rabo Groen Bank, Jaarmagazine October 2009.