Sustainable Innovation


5 reasons to start measuring social impact

people

Companies taking the lead 

In January politicians, leaders of multinationals, entrepreneurs and scientists gathered at the World Economic Forum in Davos to discuss today’s societal challenges. It is encouraging to see that the private sector is taking a leading role in defining plans to mitigate climate change, ensure health and safety and move towards a circular economy. Companies employ the most employees in the world and have the largest investment and innovation capabilities. Nowhere else such significant impacts on society can be made as by companies if they run their business in a responsible way. Think about sustainable sourcing policies, careful choice of materials, eco-design, production methods, creation of jobs and good working conditions.

Why should you start measuring social impact?

All impacts organisations have on society can be summarized as ‘social impact’. These can be from economic, environmental and social perspectives. How to measure this impact? How to identify the best opportunities for a maximum positive social impact? Where do companies create most impact? How to shift to new more sustainable consumption patterns? How to define priorities, and how to track progress?  Measuring impact has surfaced in recent years as a new important perspective in doing business. There are five reasons why:

(1) Underpinning company mission: An increasing number of companies have defined company aspirations and targets that explicitly refer to the social impact they aim to achieve. Philips aims to improve the lives of 3 billion people with health care solutions. DSM wants 65% of its products to have a measurably better environmental or social impact (Eco+ or People+). Underpinning these missions are  essential to monitor and manage performance.

(2) Requests for transparency: External stakeholders set higher expectations on transparency than before. Reporting financial and non-financial results are becoming common practise. Companies are not only asked to be transparent about their profits and revenues, but also to inform the general public about the status of ‘externalities’ such as the safety, health and employee engagement of their staff as well as the green house gas emissions of their sites.

(3) Consumer expectations: A large majority of consumers expects that companies take responsibility for healthy, safe and decent working conditions under which products are being produced. Two thirds of all consumers sense responsibility to purchase products that support environmental or societal goals (Globescan). Half of all consumers state they are even prepared to pay more for products that have a clear environmental or social benefit (Nielsen). Producers of goods or services that want to tap into this pull will need to come up with evidence that shows the positive impact on society is not biased, but real.

(4) Changing investor preferences: The investor community increasingly steers on the social impacts of investments. Before, most investors applied an exclusion policy, avoiding certain sectors. Nowadays investors increasingly steer their portfolio based on performance on several Environmental Social and Governance factors (ESG). For companies this is a reason more to track and manage these factors more closely.

(5) Employee engagement: Last but not least, the ‘sense of purpose’ of a company has become the most important reason for Millenials to work for that company (Deloitte). And this not only accounts for the Generation Y. Many people like to work for a company that has a social mission in its headlines. It inspires people to get up in the morning.

Impact measurement important for companies to flourish

Measurement of social impact is still in its early stages. There are ongoing discussions how to do this, and how to monetise externalities. Integration of impact measurement results in business cases is expected, and even on company balance sheets in the future. There is much to be explored, and much to gain. The progress in the coming decade will be instrumental to have better insights in the real social impact of companies, and be able to steer, for a healthy planet, a prosperous society and companies that flourish.

– by Karen Maas (Academic Director Impact Center Erasmus) and Jacobine Das Gupta (DSM Corporate Sustainability) published previously in Dutch: NRC Live Impact Day



Dutch Business News Radio Interview

Why do customers want green?

This week I have presented my new book on the Dutch radio in the Business News Radio program ‘BNR Duurzaam’.

Presentator Mark Beekhuis, Jos Cozijnsen and I exchanged about sustainability news and strategies, employee engagement, cultural differences and the new book.

For those who understand Dutch find hereby the link to the radio emission: http://www.bnr.nl/programma/bnrduurzaam/555237-1201/bnr-duurzaam-14-januari-uw-klant-houdt-van-groen



Your customers want your products to be green

I am proud to announce my new book:

‘Your customers want your products to be green’

During the last few years I have had the chance to interact with senior managers of European sustainability frontrunners.

‘Your customers want your products to be green’ contains Best Practices of Sustainability Frontrunners such as Ericsson, Shell, Rabobank, DSM, Philips, Danone and Veolia Environnement completed with freshly printed business recommendations.

Create societal impact and develop new business opportunities. More information on The Green Take website here. Enjoy and be inspired!

I wish you a happy and healthy 2012!



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,



Best Practices in The Netherlands

‘What about The Netherlands ?’  

How are Dutch companies dealing with Corporate Responsibility and Sustainability > There should be a sense of urgency with respecto to sustainable matters, knowing that a large part of the country is situated below sea level. As well, there are quite some entreprises that have started 10 years ago with CSR and Sustainability policies. 

What to learn from the Dutch entreprises ? It will be subject of the next series of articles.

  

Water Civil Works (Zeeland) and canels in Amsterdam (The Netherlands Capital)

I am talking to the Senior Managers that are responsible for the Sustainability or Corporate Responsbility Policy. In Dutch , this is called ‘Maatschappelijk Verantwoord Ondernemen’ (Societal Responsibly Entrepreneurship) or ‘Duurzaam Ondernemen’ (Durable/Sustainable Entrepreneurship).

Group and Trading Community Roots. The Dutch Society can be characterised as a ‘Group Community’  and a ‘Trading Community’ (1), consisting of interacting groups and individual. There is a high sense responsible for both their individual tasks as well as the groups objectives. People are very aware ‘Opportunities’ and ‘Threats’ for the maintenance of the (trading) business.

Extensive Negotiation Rounds leading to Consensus Decisions. Whereas the French society can be characterised by a ‘Royal Culture’, with a top-down structure, The Netherlands is certainly not. There is a long tradition of negotiations : between public organisations, entreprises, trade-unions, consumer pressure groups and ONGs, the ‘Poldermodel’. Politics and industry Leaders are valued for their negotiation skills and their capabilities to bring and keep everybody together. Socially Engaged Entrepeneurship (or Sustainable Development) does perfectly fit in this model.

Dutch companies have understood quickly that CSR is a license to operate. Stakeholders dialogues have always been essential for surviving as a business.

Dutch Best Practices. In order to understand the business principles and processes in The Netherlands, I have interviewed Dutch senior managers responsible for Sustainable or Corporate Responsible Development. I have used questions similar to the ones asked to the French counterparts  :  How are CSR goals created ? Does it stimulate Innovation ? How does the economic crises effect Sustainability ? What are outlooks ?  How were the Sustainable Innovations conceived ? How have the stakeholders been involved ?

Enjoy the next series of Best Practices; those about Corporate Responsibility and Sustainability in  The Netherlands.

Source 1 : ‘Hoe dromende fransen en efficiente Nederlandse samenwerken’, Pieter Kottman, NRC 3 October 2003.