GUIDE TO INDUSTRY INITIATIVES IN

CORPORATE SOCIAL RESPONSIBILITY

Your guide to selecting the right

multistakeholder initiative for
your company

EXECUTIVE SUMMARY
The full report is available at www.ethicalcorp.com/initiatives

May 2009
© Ethical Corporation
 Table of contents

About this report and about us ................................................................6

Acknowledgements ....................................................................................7
Executive summary ....................................................................................8
List of acronyms ........................................................................................11
Definition of symbols ................................................................................12
Characteristics of initiatives ....................................................................14
Introduction................................................................................................15

SECTION 1: WHY INDUSTRY-BASED CSR INITIATIVES

CAN BE IN YOUR COMPANY’S BEST INTEREST ..................16
1.1 Overview ..........................................................................................16
Box 1: Why do companies join an initiative? ................................17
1.2 Characteristics of initiatives ..........................................................18
1.3 Benefits of initiatives ....................................................................19
1.4 Creating roles and responsibilities for different partners ........20
Figure 1: The ICI approach ............................................................20
1.5 Background to the initiative movement ....................................21
1.6 Drivers ..............................................................................................22

SECTION 2: IMPACT, EFFECTIVENESS AND PROFIT

FROM INITIATIVE PRODUCTS AND SERVICES ....................23
2.1 Evaluating and selecting an initiative that is right for your
company and judging the merits of alternative initiatives ....23
2.2 Formation and design ....................................................................23
2.3 Scale ................................................................................................23
2.4 Effectiveness and impact ..............................................................24
2.5 Resources for sustaining initiatives..............................................25
GUIDE TO INDUSTRY INITIATIVES IN CSR

2.6 Calculating costs ............................................................................26

2.7 The opportunity ..............................................................................26
2.8 13 challenges faced by initiatives and their
corporate members................................................................................28

SECTION 3: FORECASTING THE FUTURE OF INITIATIVES

FOR CORPORATE GOOD ................................................................33
3.1 Initiative trends among market leaders ....................................33
3.2 Industry initiatives in the future..................................................36
Box 2: The role of civil society groups within industry-based
initiatives ........................................................................................36

2
 TABLE OF CONTENTS

SECTION 4: PROFILES OF LEADING AND

EMERGING INITIATIVES ..................................................................38
4.1 Agriculture ......................................................................................38
4.1.1 Better Cotton Initiative ..........................................................39
Box 3: Focusing on root causes ....................................................40
4.1.2 Better Sugarcane Initiative ....................................................42
4.1.3 Common Code for the Coffee Community Association ......44
4.1.4 Ethical Tea Partnership ..........................................................47
Box 4: Adapting monitoring ..........................................................48
4.1.5 Forest Stewardship Council ..................................................50
4.1.6 International Cocoa Initiative ................................................52
4.1.7 Round Table on Responsible Soy ........................................54
4.1.8 Roundtable on Sustainable Palm Oil ....................................56
4.1.9 UTZ CERTIFIED Good Inside ................................................58
Case study – Sara Lee ..........................................................................62
Company overview ........................................................................62
Sara Lee’s CSR initiatives ..............................................................62
Benefits of the 4C Association ......................................................63
UTZ CERTIFIED Good Inside ........................................................63
Figure 2: Growth curve of an initiative ..........................................64
Ethical Tea Partnership ..................................................................64
Resources and staffing....................................................................64
Communicating to stakeholders ..................................................65
4.2 Mining and natural resources ......................................................65
4.2.1 Marine Stewardship Council ................................................66
4.2.2 Initiative for Responsible Mining Assurance ........................68
4.2.3 International Council on Mining and Metals ........................69
GUIDE TO INDUSTRY INITIATIVES IN CSR

4.2.4 Extractive Industries Transparency Initiative ........................71

4.2.5 Voluntary Principles on Security and Human Rights ..........73
Box 5: Steps towards adopting the VPs ........................................75
Case study – Anglo American..............................................................76
Company overview ........................................................................76
The Anglo American brand ..........................................................76
Anglo American’s CSR initiatives ..................................................76
Anglo American’s involvement in the ICMM ................................76
Anglo American’s involvement in the EITI ....................................77
Anglo American’s involvement in the VPs ....................................77

3
 TABLE OF CONTENTS

Resources and staffing for initiative management ........................77

Initiative challenges for Anglo American ......................................78
4.3 Manufacturing ................................................................................78
4.3.1 Automotive Industry Action Group ......................................79
4.3.2 Responsible Jewellery Council..............................................81
4.3.3 Electronics Industry Citizenship Coalition ............................84
4.3.4 Fair Labor Association ..........................................................86
4.3.5 International Council of Toy Industries CARE Process ........88
4.3.6 World Federation of the Sporting Goods Industry ..............90
4.3.7 Worldwide Responsible Accredited Production ..................91
Case study – Gap Inc. ..........................................................................93
Company overview ........................................................................93
Gap Inc.’s CSR initiatives ................................................................93
Gap Inc.’s path to joining initiatives ..............................................93
Assessing the value of initiatives....................................................94
Gap Inc.’s involvement with the SAI ..............................................94
Gap Inc.’s involvement in the ETI ..................................................95
Gap Inc.’s involvement in the BCI ..................................................96
Gap Inc.’s involvement with the BLIHR ..........................................96
Gap Inc.’s involvement in the Ceres network ................................97
Additional lessons from Gap Inc. on getting the most
from initiatives ................................................................................97
The necessity for additional research ............................................98
Resources and staffing for initiative management ........................98
Initiative challenges for Gap Inc. ..................................................98
Gap Inc.’s interpretation of the future of initiatives ......................99
4.4 Services ............................................................................................99
GUIDE TO INDUSTRY INITIATIVES IN CSR

4.4.1 International Tourism Partnership ......................................100

4.4.2 The Equator Principles ........................................................101
4.4.3 Logistics and Transportation Corporate
Citizenship Initiative ............................................................104
4.4.4 Media CSR Forum ................................................................105
Case study – ABN Amro ....................................................................107
Company overview ......................................................................107
ABN Amro’s CSR initiatives ..........................................................107
ABN Amro adopts the EPs ..........................................................107
ABN Amro’s ESE ethical screening strategy ................................108
Figure 3: The policy development process ................................108

4
 TABLE OF CONTENTS

Training and staffing for initiative management ........................109

Internal ABN Amro strategy ........................................................109
Initiative challenges for ABN Amro..............................................110
ABN Amro’s advantages in implementing the EPs ....................110
Figure 4: Initiatives can occur within a continuum ......................110
4.5 Retail ..............................................................................................110
4.5.1 Business Social Compliance Initiative ................................111
4.5.2 Global Social Compliance Programme ..............................112
4.6 Cross-industry................................................................................114
4.6.1 Ethical Trading Initiative ......................................................114
4.6.2 Global Reporting Initiative ..................................................116
4.6.3 Social Accountability International ....................................118
4.6.4 Fairtrade ..............................................................................121
Case study – Chiquita ........................................................................124
Company overview ......................................................................124
Chiquita’s CSR initiatives ..............................................................124
Chiquita’s involvement in SA8000 ................................................124
Chiquita’s involvement in the ETI ................................................125
CSR training ..................................................................................125
Resources and staffing for initiatives ..........................................125
Initiative benefits for Chiquita......................................................126
Initiative challenges for Chiquita ................................................126
Evolution of Chiquita’s CSR initiatives ........................................126

SECTION 5: CRITICAL ANALYSIS OF INITIATIVES ............127

Footnotes..................................................................................................129
GUIDE TO INDUSTRY INITIATIVES IN CSR

Sources ......................................................................................................131

APPENDICES: KEY MEMBERS IN EACH INITIATIVE ........133

Appendix A: Agricultural initiative members ....................................133
Appendix B: Natural resources and mining initiative members........138
Appendix C: Manufactured products initiative members..................140
Appendix D: Retail initiative members ..............................................143
Appendix E: Service industry initiative members ..............................144
Appendix F: Cross-industry initiative members ................................146

5
 About this report and about us

ABOUT THE REPORT

Corporate social responsibility (CSR) has produced a new breed of
organisations. Industry-based CSR initiatives are growing rapidly,
in number and in membership.

These initiatives emerged from the collaboration between various

stakeholders interested in CSR for a given sector. These initiatives are
usually managed by an organisation with a network structure that serves
its member companies, while relying on their involvement.

The research presented here is based on an analysis of 30 initiatives,

lessons from 19 multinational corporations, as well as detailed studies on
five multinational corporations.

This report is for you if you want to know:

• How will my company benefit from a joining an initiative?
• Are initiatives considered to be good CSR?
• How do I distinguish between a well-run initiative and a poorly-run
initiative?
• What should I consider when selecting which initiative to join?
• Which initiative does my competition support? What challenges have
they faced, and what benefits have they received?

ABOUT US
Ethical Corporation is a practical CSR think tank.
GUIDE TO INDUSTRY INITIATIVES IN CSR

Ethical Corporation produces robust and accessible business intelligence

reports for business executives. Reports are based on in-depth research
with leading multinational companies. This research also supports Ethical
Corporation training workshops and commentary services.

Ethical Corporation's research focuses on cutting edge ethical business

management issues.

6
 Acknowledgements

Ethical Corporation is grateful to Deborah Leipziger for leading this

research. Deborah is a consultant, author and expert in the field of
corporate social responsibility. Likewise, we are grateful to Jennifer
Bauser for her research assistance.

Corporate executives and other representatives from the following

companies have collaborated with our researchers, sharing their lessons
and insights on implementing initiatives: ABN Amro, Anglo American,
Bacardi, Chiquita, Ford, Gap Inc., H&M, HP, IKEA, Sara Lee, Shell,
Starbucks, TNT, Vancity, Volvo and Wal-Mart.

Ethical Corporation appreciates the information shared by all 31

initiatives discussed in this report. Substantial contributions were
provided by: the Better Sugarcane Initiative, the Voluntary Principles on
Security and Human Rights, the 4C Association, the Electronics Industry
Citizenship Coalition and the International Cocoa Initiative. The research
has also been supported by representatives from various civil society
organisations including: CAFOD (Catholic Agency for International
Development), Oxfam America, Business for Social Responsibility, and
academics from the Kennedy School of Government at Harvard Univer-
sity, and Warwick Business School.
GUIDE TO INDUSTRY INITIATIVES IN CSR

7
 Executive summary

The rise of industry-based initiatives in CSR is one of the major transfor-

mations in the landscape of corporate social responsibility. Over the past
three years, initiatives have grown in number and their membership has
continued to expand, as has their reach.

Momentum is growing in developing countries around sustainability

issues, and industry-based initiatives provide an architecture that allows
for consultation between developed and developing countries and
between the private and public sectors. Even within sectors, many of
these coalitions allow for consultation between producers, buyers and
retailers. Initiative organisations are intermediaries, bringing players to a
table that is growing to address myriad issues, from environmental, to
social, financial, ethical and anti-trust matters.

Initiatives offer the possibility to create blueprints for change, allocating

responsibilities among key actors, including governments, civil society
and the private sector. Initiatives provide an interesting view into the
field of CSR writ large; they are microcosms of CSR, where new trends
and ideas are incubated and take root.

Initiatives can be useful in establishing collective to-do lists for global

society and identifying comparative advantages of individual companies
in the realm of corporate citizenship. Initiatives can define roles for
individual companies and distribute CSR activities by working in partner-
ship. For an industry-based initiative to be successful, it must define roles
for each partner, so they work with one another.
GUIDE TO INDUSTRY INITIATIVES IN CSR

8
 EXECUTIVE SUMMARY

Companies form and join industry initiatives for several reasons.

A few of the reasons identified in the report are:

1. Organisations that manage industry initiatives provide a forum for

dialogue on difficult and sensitive topics.
2. Economies of scale in CSR: industry-based initiatives develop and
share common tools that are time-consuming to create.
3. Stakeholder engagement is easier and more time-effective in groups.
4. Initiatives can provide access to public funding for structural changes
within the industry, within supply chains or regions.
5. CSR organisations serve as portals to disseminate information on
CSR issues that are critical to a specific industry in a coordinated
manner.
6. Initiatives develop common systems for monitoring, verification,
certification and reporting.
7. Initiatives build consumer confidence and manage reputation risk
better than a single company can on its own.

Some initiatives are simply a code or set of principles that serve as a

rough guide for corporate policy and overall business strategy. Others
include a network of organisations that work in partnership; still others
have evolved certification systems.

While initiatives have many common characteristics and constraints, they

also vary dramatically from each other. It is important to distinguish
between initiatives that are developed through a multistakeholder
consensus and those that are not. Whether or not they are multistake-
GUIDE TO INDUSTRY INITIATIVES IN CSR

holder in design affects expectations and the degree of legitimacy with

which they are regarded. Initiatives that are not multistakeholder are able
to move more quickly than those that adopt multistakeholder gover-
nance systems.

9
 The organisational structures of initiatives share many common
elements. For example, they usually:

» include a wide range of corporate members;

» adopt mechanisms for including perspectives from civil society;
» strive to develop a coherent approach to promote corporate
responsibility;
» include a work plan; and
» create tools, including some or all of the following:
• codes of conduct;
• protocols for monitoring and/or auditing;
• indicators;
• verification and/or certification; and
• reporting mechanisms.
GUIDE TO INDUSTRY INITIATIVES IN CSR

10
 List of acronyms

4C ASSOCIATION Common Code for the Coffee Community Association

AIAG Automotive Industry Action Group
BCI Better Cotton Initiative
BLIHR BLIHR: Business Leaders Initiative on Human Rights
BSCI Business Social Compliance Initiative
BSI Better Sugarcane Initiative
CARE International Council of Toy Industries CARE Process
CERES Coalition for Environmentally Responsible Economies
CSR corporate social responsibility
ECF European Coffee Federation
EICC Electronics Industry Citizenship Coalition
EITI Extractive Industries Transparency Initiative
EPS Equator Principles
ETI Ethical Trading Initiative
ETP Ethical Tea Partnership
FLA Fair Labor Association
FLO Fairtrade Labelling Organizations International
FSC Forest Stewardship Council
GRI Global Reporting Initiative
GSCP Global Social Compliance Programme
ICI International Cocoa Initiative
ICMM International Council on Mining and Metals
IFC International Finance Corporation
ILO International Labour Organisation
IRMA Initiative for Responsible Mining Assurance
ITP International Tourism Partnership
LTCCI Logistics and Transportation Corporate Citizenship Initiative
GUIDE TO INDUSTRY INITIATIVES IN CSR

MSC Marine Stewardship Council

RJC Responsible Jewellery Council
RSPO Roundtable on Sustainable Palm Oil
RTRS Round Table on Responsible Soy
SAI Social Accountability International
SA8000 Social Accountability 8000
UNEP United Nations Environment Programme
UTZ UTZ CERTIFIED Good Inside
VPS Voluntary Principles on Security and Human Rights
WRAP Worldwide Responsible Accredited Production
WFSGIMCC World Federation of the Sporting Goods Industry Model Code of Conduct
WWF World Wide Fund for Nature (formerly the World Wildlife Fund)

11
 Definition of symbols

The following symbols are used throughout the report to help define the
characteristics of each initiative.

RE
DITA LI N E S
Accreditation agency DE Guidelines
TI
AC C

GUI
ON AG

A complimentary organisation The organisation has developed a

accredits certification and/or training reference for its members and other
EN Y
C bodies. companies on how to conduct a process
such as reporting.

NG M ENDE
ITI Auditing methodology EP Independent monitoring
AU D

NT
IND
E TH O D

The organisation has developed a The initiative conducts or recommends

MO
methodology or technique for auditing others to conduct evaluations of opera-
G
OL NI
OGY a facility or process. TORIN tions or processes by an independent
third-party.

OF C O
E Code of conduct or practice ATOR Indicators
IC
ND
C OD

S
IND

The initiative has developed a set of The initiative has developed

U CT O

rules and guidelines to describe how a indicators, or measures that indicate

E
IC

T RP
RA C company, or its employees or suppliers performance or change.
should behave.

EHENS
PR Comprehensive range of issues B E RS H Membership
M
S CO M

IV

IP

The organisation is working to address The initiative invites participants to

ME
E
RA N

a wide range of issues, rather than one join the initiative as members, usually
UE

EO
F I SS or two specific issues. for a fee.

L ST CO M
BA Global standard T I- Multi-commodity
A

L
GLO

The organisation has developed a

MU

This is an initiative that addresses

N DAR D

ODITY

standard which is followed by a very several different commodities rather

wide range of companies and industries than just one.
across many countries.

ERNME
GUIDE TO INDUSTRY INITIATIVES IN CSR

TAKE
Government involvement TIS Multistakeholder
GOV

NT

H O DE
MU

The initiative counts on government This is an alliance that includes

I NV

participation.
NT

O balanced representation between

LVEME R
several categories: business, NGOs and
civil society, labour, and mediating insti-
tutions (such as government, academia,
and the accounting world).

12
 DEFINITION OF SYMBOLS

ERS H EGIC
TN Partnerships AT Strategic philanthropy
PAR

IPS

PH
STR
An initiative that promotes joint Includes philanthropic contributions

ILAN
projects between different stakehold- by an initiative that promote a
TH
ers, such as NGO-corporate partner- R OP Y specific long-term outcome.
ships or government partnerships.

CIPLES Principles
A
D P RT Third party assurance
PRIN

THIR

Y
A set of guidelines or policies to be The initiative features a mechanism

followed by all parts of the company
and/or its suppliers.
A SS U
RA for attaining an independent
NCE evaluation that certain procedures
are being followed to ensure social
and/or environmental performance.

CT L A
DU Product label D P RT Third party certification
THIR
PR O

AB

An initiative that has developed Y Third party written certification

CERTI
EL

a label or stamp to be placed on the ! that a product or process meets

N

FI
goods produced to indicate that CATIO requirements.
policies and procedures are in place
to address social and/or environmen-
tal issues.

R EP S U PP
LIC Public reporting AL Total supply chain
TOT
OR
P UB

LY

The initiative regularly reports The initiative addresses the

TI N G

CHA

to the public about the social and value chain in its entirety,
IN
environmental performance of its rather than just direct
members. suppliers.

TI N G Reporting ABILI Traceability

OR CE
TY
TR A
R EP

The initiative had developed advice The initiative is developing

for members on how and what to procedures and mechanisms to trace
report. products through the supply chain to
ensure that products and their
components can be traced through
the supply chain.
GUIDE TO INDUSTRY INITIATIVES IN CSR

D DA TI O N
RE Shared database DA Validation or verification
S HA

TA

N VALI

O R VE R

The initiative maintains a joint The initiative has systems in place

BASE

database of the suppliers of for corroborating information

its members so as to facilitate IFI
CATIO about social and/or environmental
information sharing and conditions in a factory, company or
collaborative efforts. country.

13
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