For Good Measure: Metrics for CSR

March 2006 Volume IV Number 2

Net Contents
I. Network Presentation
Key Learnings
Perspectives

II. What’s New

III. The Women’s Network for a Sustainable Future
The Concept of the Network
Contact Information
Sponsorship Opportunities

I. Network Presentation
A big thank you to those who took the time to attend WNSF’s luncheon panel on February 9, 2006 entitled “For Good Measure: Metrics for CSR,” hosted by Deloitte & Touche in New York City. The session featured speakers from Deloitte & Touche, Ford Motor Company, and Alcoa, who shared their company’s practices in measuring CSR and the challenges faced in this endeavor.

Key Findings

  • There are various sets of metrics available to companies, but it is up to each individual company to decide which metric is best suited for its processes.
  • It can be useful to integrate sustainability and financial reporting.
  • Continual communication with stakeholders is essential.
  • Qualitative measures may be more helpful than quantitative ones.

Perspectives
Moderator: Ann Goodman, Executive Director, WNSF.

Speakers:

  • Julie Hoesterey, Global Director of Corporate Social Responsibility, Deloitte Touche Tohmatsu
  • Joseph Delaney, Director of Northeast Alumni Relations, Deloitte Services LP
  • Anita Roper, Director of Sustainability, Alcoa
  • Krista Gullo, Sustainable Business Strategies Analyst, Ford Motor Company

Ann Goodman initiated the discussion by quoting Jim Collins, author of corporate Bibles like Built to Last and Good to Great from his latest monograph on the social sector:
“It doesn’t really matter whether you can quantify your results. What matters is that you rigorously assemble evidence – quantitative or qualitative – to track your progress… If the evidence is primarily qualitative, think like a trial lawyer assembling the combined body of evidence. If the evidence is primarily quantitative, then think of yourself as a laboratory scientist assembling and assessing the data.”

Julie Hoesterey, Deloitte
Ms. Hoestery set the stage by providing background on how accounting experts like those at Deloitte develop and use metrics, both within the company and for clients. As an internationally based accounting and professional service organization, Deloitte is a services firm whose main capital asset is human resources. The firm thus finds itself measuring predominately qualitative issues and developing sensible ways to track and report them.

Ms. Hoesterey oversees Deloitte’s CSR activities globally and thus spoke about the company’s role in helping its member firms manage and report on non-financial aspects of business performance. She explained the two main techniques Deloitte uses. First, for community engagement projects, which are by definition ‘local,’ Deloitte has worked with the London Benchmarking Group to assess the impact, rather than simple “output” achieved through Deloitte’s human and financial “input” into community projects. Second, the company uses a 13-point People Commitment Survey to gather data on its key asset—employees—to measure impact of employee/employer relations on such critical ‘people’ areas as diversity, employee attraction, retention and commitment.

Such metrics are not necessarily best captured quantitatively, as accountants, who specialize in numbers, know all too well. Said Ms. Hoesterey: “When dealing with the human aspects of developing talent, it is not always possible to limit the assessment to quantifiable metrics…It is sometimes qualitative information that offers insight to see the change.”

Krista Gullo, Ford
Ms. Gullo began her presentation by sharing Ford Motor Co.’s definition of sustainability: “A business model that seeks to create value for stakeholders by preserving or enhancing environmental, social and economic capital.” Based on that definition, the company has measured the impact of its activities since 1999 when it began gathering sustainability data for its corporate citizenship reports.

Ms. Gullo then outlined the foundation of Ford’s metrics. The company, she explained, uses the GRI (Global Reporting Initiative) guidelines as the de facto standard, based on its comprehensiveness, applicability to a multi-stakeholder community and growing global acceptance. Ford reports on a majority of GRI core elements and indicators, using 30 as its key performance indicators (KPIs). The KPIs are selected subjectively according to the company’s Business Principles. Senior managers who serve on Ford’s strategy and business governance committees set corporate direction and strategic priorities, establish goals and allocate resources, providing parameters for business operation plans which are then translated into individual scorecards. Refined each year, scorecards include priorities, targets and metrics. In 2003, the company required its business groups to reflect the Business Principles in their 2004 business plans and scorecards. On a single page, the scorecards define key priorities, success drivers, targets and responsibilities for achieving business results, and they provide managers with progress indicators. Scorecard indicators are incorporated into managers’ performance reviews and are a factor in determining compensation.

As an example of what Jim Collins dubs Big Hairy Audacious Goals or BHAG in his book “Built to Last,” Ms. Gullo spoke about a BHAG Ford set in 2000. As part of six goals CEO Bill Ford set out, the company committed to improve its SUV fleet’s fuel economy by 25% in five years between 2000 and 2005. The company delivered on three of those and is on track to achieve two others. But the SUV fuel economy goal was not achieved, although the company discussed the issue at length in its 2002 Corporate Citizenship Report.

Ford failed to meet its goal, mainly because of technology development delays influenced by cost, changing market demands and external economic influences, including increased fuel prices and consumer willingness to pay. Explained Ms. Gullo: “It no longer made sense to pursue the goal. It became a question of shareholder vs. stakeholder value.” The company was severely criticized by NGOs, notably the Sierra Club, for failing to deliver.

Ford learned a few key lessons from the experience, said Ms. Gullo. Above all, the company learned how much it needs stakeholders who are flexible enough to understand when the market conditions prohibit achieving all stretch goals. What’s more, the company learned that developing flexible, understanding stakeholders requires continuous communication about its progress toward goals. Ford is now making an effort to communicate more frequently.

Currently, Ford is developing a roadmap that includes BHAGs, operational metrics and milestones to integrate into the company’s business plan. Ms. Gullo pointed to three challenges: Aligning internal and external metrics in order to make sure the metrics reflected publicly are also driving performance; Aligning sustainability and financial metrics (GRI, SRI, Financial); and cautiously creating public stretch goals, considering lessons learned.

Anita Roper, Alcoa
Ms. Roper agreed that GRI guidelines are useful but pointed to the lack of feedback from such metrics, stressing the need for performance reviews that lead to internal change.

In 2000, Alcoa developed the “2020 Sustainability Framework” that focuses on environment, health and safety (EHS) and sets clear targets allowing the company to easily measure progress. Ms. Roper said the framework has driven improvements in EHS and raised awareness of sustainability within the company as well as externally. In early 2005, the company initiated its internal review, which has led to a revised framework. The revised framework, explained Ms. Roper, expands beyond the current framework to include financial and social targets and strategies and provides a clear road map of both internal and external targets, while measuring progress.” The framework includes economic benefits, employee considerations, accountability and governance recommendations, product safety and sustainability goals, and lastly, a section on respecting communities. In 2006, the company plans to consult external stakeholders.

As an example of the company’s metrics, Ms. Roper spoke about its plant in Iceland, where a framework was developed to assess the performance of its plant against sustainability principles. The sustainability objectives, indicators and measures were developed with the input of a Stakeholder Advisory Group consisting of more than 30 members from the government, unions, church groups, academic institutions, business organizations, environmental NGOs, and local businesses. The group balanced social, environmental and economic interests. Issued considered included:

  • Changes in demographics in the local community
  • Equality in the workforce
  • Satisfaction in the workplace
  • Number of accidents, and health of subcontractors, as well as Alcoa and partner company employees

Based on lessons learned at the company, Ms. Roper suggested a few important elements to consider when applying metrics to measure CSR. First, she stressed the importance of knowing why the company is measuring its performance in this area e.g., (to increase efficiency, drive collaboration, etc). Second, she said that while external metrics can be useful, each company must mold them to its own needs, including its size, industry and culture Lastly, she stressed, the key is to ensure ownership of the issue through company and stakeholder group involvement.

Joseph Delaney
Deloitte’s Virtual Enterprise (VE) program is an example of what Mr. Delaney dubs, “an investment in human capital.” A NYC Department of Education initiative, the VE program pairs High School students with corporate employees, providing an essential experience and exchange forum. While students learn what it’s like to work in a corporate setting, developing their skills and preparing them for college and business, Deloitte employee are provided with an opportunity to give back to the community. Additionally, Deloitte builds a pipeline of employees, developing in students accounting and other skills they’ll need to work at Deloitte. So far, Deloitte has committed to hire a dozen graduates of the VE program; currently studying accounting in college, they have the chance to intern at Deloitte as client-service professionals during the summer or even during the school year, if they are at a local school. These interns are potential Deloitte employees who are already committed to the firm , who understand its culture and who can make a nearly instantaneous contribution. Plus, the program saves Deloitte literally thousands of dollars per employee in recruiting costs “The measurement of success for this particular program,” emphasized Mr. Delaney, “are the 12 young people, on their way to Professional Careers with Deloitte.”

II. What’s New

  • The next WNSF panel, “Missing Links: Next-Generation Sustainable Supply Chains,” to be hosted by Pfizer Inc., will be held from noon to 2pm at Pfizer, 235 E. 42 St., NYC. Featured will be speakers from Pfizer, Time Inc. and PriceWaterhouseCoopers. To register, go to: http://www.wnsf.org. Look for email invitations!
  • By popular demand following the success of the February roundtable, Deloitte and WNSF plan to collaborate on a series of sessions on metrics. Slated to being next fall, each session would focus on a key aspect of sustainability metrics (community, people, environment, economy). Look for emailed invitations and an announcement on the WNSF website!
  • Read WNSF’s thoughts on businesswomen and social issues in ‘Women on the Edge,’ in the December ‘05 issue of Jungle MBA magazine (jungleonline.com).

III. The Women’s Network for a Sustainable Future
The Concept of the Network

The Women’s Network for a Sustainable Future (WNSF) provides a forum for businesswomen to congregate, reflect, and act on the convergent issues of corporate social responsibility and sustainable development. Through meetings, training and simple electronic support tools, WNSF facilitates the exchange of experiences and best practices, building a community of businesswomen who can serve as powerful change agents for corporate responsibility sustainability in the US and internationally.

The Women’s Network for a Sustainable Future is a 501c3 organization. Gifts are tax deductible.

For more information, please contact:

Ann Goodman, Executive Director
Women’s Network for a Sustainable Future
Please direct inquiries to: info@wnsf.org

Board of Directors:

CHAIR: Kathy Robb, Esq., Partner and Head of Environmental Practice, Hunton & Williams; Dianne Dillon Ridgley, Director, Interface Inc. Board; Karen Flanders, Director of Sustainability, Coca-Cola Co.; Joanne Fox-Przeworski, Director, Bard Center for Environmental Policy, Bard College; Ann Goodman, Executive Director, WNSF; Sarah Howell, Director, Corporate Communications, BP; Michele Kahane, Special Projects Director, Center for Corporate Citizenship, Boston College; Clair Krizov, Executive Director of Environmental and Social Responsibility, AT&T; Joyce La Valle, Senior Vice President, Interface Inc.; Anita Roper, Director of Sustainability, Alcoa Corp.; Deborah Sliter, Vice President of Programs, National Environmental Education & Training Foundation.

This issue of Net Notes was written by Monika Kumar and edited by Ann Goodman. WNSF thanks founding sponsors AT&T and the Ford Foundation for their generous support.

Advertisements
This entry was posted in Peer Learning Sessions and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s