Global Compact International Yearbook 2009

The road to Copenhagen is the catchphrase: Climate Change is the top issue of inaugural edition, on the market since 1th of august 2009. In a very personal and exclusive foreword, UN Secretary-General Ban Ki-moon stresses the urgency of multilateral action: „One underlying message of this Yearbook is that a global, low-carbon economy is not only technologically possible, it makes good business sense“, said Ban. „We need the voice and energy of business to help us combat climate change.“ Sir Anthony Giddens adds the importance of the upcoming Copenhagen Climate Summit: „It is an important year, and everybody knows it because it is the year of Copenhagen. It’s a key for climate change policy. I do hope the Copenhagen negotiations will be successful, but there are reasons I have to be worried. “ Another key issue of this edition is the global economic crisis: 2008 will be remembered as the year of crises. The breakdown of financial institutions and markets and the subsequent worldwide economic downturn have put the spotlight on issues that the United Nations Global Compact has long advocated as essential responsibilities for modern business and today’s global markets: comprehensive risk management, long-term performance, and ethics. Georg Kell, Executive Director of the Global Compact, writes: „Restoring confidence and trust in markets requires a shift to long-term sustainable value creation, and corporate responsibility must be an instrument towards this end. If the crisis is any indication, it is now time to build on the advances made over the past 10 years by companies and investors in the area of ESG performance and bring this discipline to the mainstream. “

The road to Copenhagen is the catchphrase: Climate Change is the top issue of inaugural edition, on the market since 1th of august 2009. In a very personal and exclusive foreword, UN Secretary-General Ban Ki-moon stresses the urgency of multilateral action: „One underlying message of this Yearbook is that a global, low-carbon economy is not only technologically possible, it makes good business sense“, said Ban. „We need the voice and energy of business to help us combat climate change.“ Sir Anthony Giddens adds the importance of the upcoming Copenhagen Climate Summit: „It is an important year, and everybody knows it because it is the year of Copenhagen. It’s a key for climate change policy. I do hope the Copenhagen negotiations will be successful, but there are reasons I have to be worried. “

Another key issue of this edition is the global economic crisis: 2008 will be remembered as the year of crises. The breakdown of financial institutions and markets and the subsequent worldwide economic downturn have put the spotlight on issues that the United Nations Global Compact has long advocated as essential responsibilities for modern business and today’s global markets: comprehensive risk management, long-term performance, and ethics. Georg Kell, Executive Director of the Global Compact, writes: „Restoring confidence and trust in markets requires a shift to long-term sustainable value creation, and corporate responsibility must be an instrument towards this end. If the crisis is any indication, it is now time to build on the advances made over the past 10 years by companies and investors in the area of ESG performance and bring this discipline to the mainstream. “


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<strong>Global</strong> <strong>Compact</strong><br />

<strong>International</strong> <strong>Yearbook</strong><br />


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2<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Foreword<br />

“<br />

The United Nations <strong>Global</strong> <strong>Compact</strong> is both a policy platform and a practical<br />

framework for companies that are committed to sustainability and responsible<br />

business practices. It provides a forum for exchanging current and emerging<br />

best practices and for debating the role that business can and must play in addressing<br />

global challenges. This inaugural edition of the <strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong><br />

shows how companies around the world are making an impact and fostering positive<br />

change.<br />

Ban Ki-moon, UN Secretary General<br />

No consideration of sustainability or responsible business can avoid the defining issue<br />

of this generation. It is fitting, therefore, that the <strong>Yearbook</strong> – which was developed and<br />

produced entirely by <strong>Global</strong> <strong>Compact</strong> participants – devotes so much of its content to<br />

climate change. In December <strong>2009</strong>, governments will convene at the United Nations<br />

Climate Change Conference in Copenhagen to negotiate a new comprehensive climate<br />

change agreement. Business will have a major role to play – through innovation,<br />

investment, technology transfer and advocacy.<br />

One underlying message of this <strong>Yearbook</strong> is that a global, low-carbon economy is not<br />

only technologically possible, it makes good business sense. I hope the perspectives from<br />

science, public policy and business presented in this publication can convince more<br />

companies of the urgency of action and the practical benefits such action will have for<br />

both the natural and business environments. We need the voice and energy of business<br />

to help us combat climate change.<br />

Since its launch in July 2000, the <strong>Global</strong> <strong>Compact</strong> has grown to become the world’s<br />

largest corporate sustainability initiative. Its more than 6,000 business participants<br />

in nearly 140 countries strive to implement universal principles in the areas of human<br />

rights, labour, environment and anti-corruption. They have undertaken hundreds of<br />

projects in health, education and infrastructure around the world, and have generated<br />

important momentum for building a more equitable and sustainable future for all. This<br />

<strong>Yearbook</strong> documents these efforts. I commend it to a wide global audience<br />

”<br />

and encourage all readers and stakeholders to do their part in supporting<br />

the <strong>Global</strong> <strong>Compact</strong>.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 3

The Politics of<br />

Climate Change<br />

Bitte Leadtext einlaufen lassen!<br />

4<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 5

By Sir Anthony Giddens<br />

It is an important year, and everybody knows it because it is<br />

the year of Copenhagen. It’s a key for climate change policy. I<br />

do hope the Copenhagen negotiations will be successful, but<br />

there are reasons I have to be worried.<br />

What are the reasons that I have worries? Well, first of all, when<br />

you have two hundred nations to agree on something, they<br />

can often only agree on a very low level. That’s exactly what<br />

happened with Kyoto: They agreed on really quite inadequate<br />

targets. This may not happen this time.<br />

Second, obviously there are no methods and no means of enforcement<br />

in the international community for countries that do<br />

not live up to their obligations. There are no strong mechanisms<br />

of enforcement in the international community. For serious<br />

issues, we have no international regulations at all.<br />

Thirdly, even if significant agreements are reached in Copenhagen,<br />

they have to be enforced. It’s not enough just to say<br />

what we are going to do: The crucial issue facing all of us in<br />

climate change is how we are going to do the things that we<br />

say we want to do.<br />

In truth, what is going to happen in respect of climate change<br />

in the world’s future will depend on the industrial countries.<br />

The industrial countries under any Copenhagen bargain have<br />

to take the lead in radically reducing their emissions, not just<br />

in the longer term, but in the short term, too.<br />

There is a gap much larger than that between what seems to<br />

be a potentially cataclysmic future – which in fact is a danger<br />

for the future of world society – and the lack of response from<br />

the majority of the public, not only in the industrial countries,<br />

but to a slight degree in most of the world. What accounts<br />

for the size of this gap? I have a theory, which to me sort of<br />

faces the political problems of climate change. That theory<br />

I called “Giddens’s Paradox”. “Giddens’s Paradox” says that<br />

climate change is an issue we never had to deal with politically<br />

before, not just because of its global scope but because<br />

it’s politics of an abstract future, mediated by scientific items.<br />

We never had to confront the issue politically, nor has any<br />

other civilization entreated so fundamentally upon nature as<br />

our civilization, for better or worse, has done.<br />

Now climate change is a substantial future threat, but it is<br />

not visible in the course of daily life, so you have to get at<br />

it through some optic representation in the melting of the<br />

Arctic icebergs or whatever. For me, that’s the reason why the<br />

majority of the public ignores such an issue. Climate change<br />

simply does not impinge on most people’s everyday concerns.<br />

Moreover, survey material shows that climate change in the<br />

public is simply one among many other potential cataclysms.<br />

We are all experiencing the possible swine flu, and there are<br />

always announcements of other possible pandemics. Catastrophe,<br />

global catastrophe, is never far away, and it’s hard for<br />

the members of the ordinary public to disentangle that.<br />

The paradox lies in the fact that, if we wait until climate<br />

change does become visible in people’s lives, especially in<br />

people’s lives in the industrial countries, it will be by definition<br />

too late. If we wait, we are lost because there is normally<br />

no way of getting the emissions out of the air once they are<br />

there. The longer we wait, the more emissions will be in the<br />

air and the more impossible it is to cope with the problem<br />

except by adapting to it. That’s the reason I think why so many<br />

members of the ordinary public are climate-change sceptics.<br />

It’s a very convenient position to adopt if you want to put it<br />

out of your consciousness.<br />

In the majority of the industrial countries, over 40% of the<br />

population are climate change sceptics. On the other side, only<br />

one percent of scientists are climate change sceptics. So you<br />

can see what a difficult political issue it is. It’s partly for this<br />

reason that I came to the conclusion that we don’t really have<br />

a politics of climate change. We don’t really have a developed<br />

account of how we are going to handle such an unusual,<br />

unique issue in the context of the democratic institutions of<br />

industrial countries, where it must be handled.<br />

I’ll just shortly drop four points: First of all, we have to disentangle<br />

Green politics and the idea of being Green. Environmental<br />

politics is quite distinct from the climate change issue and<br />

the problems that climate change poses for us. The two have<br />

become wrapped together partly because of the influence of<br />

the Green movement in bringing climate change to the attention<br />

of the population. But controlling emissions has not<br />

very much to do with a large amount of what is constituted<br />

by Green values and Green interests and Green concerns. Climate<br />

change is a serious threat, which of course is on top of<br />

other threats to the world’s resources, but we must entangle<br />

this threat in a direct way, and we have to find an adequate<br />

conceptual thinking.<br />

Secondly, we need to reduce the transformation on politics.<br />

We must develop a politics of the long-term, because we<br />

don’t have yet a politics of the long-term. In industrialized<br />

democratic countries, we have no instruments to deal with<br />

long-term issues, partly because of the impact of the era of<br />

deregulation, which is hopefully over. But when we are dealing<br />

with climate change, we have to work on a thirty-year cycle.<br />

6<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

I like President Obama’s interventions – whatever happens<br />

when progress is made through Congress – is that he does<br />

have a sense for rational politics. There are only a handful of<br />

other politicians in Europe who have to some extent achieved<br />

this. Meanwhile, the European Union has taken above all a<br />

regulatory approach.<br />

Fourthly, if you follow the consequences of Giddens’s paradox,<br />

it shows that we are probably not getting too far just by<br />

scaring people; partly because there are many things we are<br />

frightened of, partly because what we are asking them to be<br />

frightened of is an abstract future. Therefore, we have to look<br />

for a revolution in our approach to climate change issue:<br />

• which looks much more to positives,<br />

• which has an inspirational quality,<br />

• which sets out a kind of society we would like to achieve,<br />

not that kind of society we want to avoid,<br />

• which sets out a positive view of the future,<br />

• which recognizes that there are costs to be born in a changing<br />

of consumption patterns that has to be made, but in the<br />

same time also focuses on benefits, also focuses on maturities;<br />

also focuses upon a positive noble vision of the society we’d<br />

like to create.<br />

This means reintroducing these issues into politics after decades,<br />

like the return to the idea of planning. You can’t count<br />

on a future unless you have a perspective for that future that<br />

implies a long term view of what we want to achieve. The<br />

return to planning is not a return to top down. With the<br />

public opinion towards climate change, state intervention is<br />

vital, but only in conjunction with grass-roots initiatives. You<br />

need the state and the government to encourage all sorts of<br />

bottom up initiatives from civil society groups and others. But<br />

you can’t deal with climate change in a short-term phase of<br />

democratic politics without having a longer time perspective,<br />

and that is not going to be easy to create.<br />

Third, and important to creating a long-term perspective,<br />

is to pull climate change away from the left-right division.<br />

It’s a very unfortunate fact that in many of the developed<br />

countries climate change has become politically polarized<br />

between left and right. In order to confront climate change,<br />

you must get something of a consensus among at least a<br />

substantial proportion of a democratic polity or you are not<br />

going to generate support for your policies. In my view, the<br />

left has a special responsibility and has to give up claiming<br />

climate change as its issue. We should no longer say such<br />

things as “Green is the new Red”, because that immediately<br />

polarizes political opinion on the right. One of the reasons<br />

Apparently, my argument is that we need at this point something<br />

very different from what the Third Way meant; we need<br />

a good dose of utopia back in our politics. We need to think,<br />

what will be the lock on implications of moving towards a<br />

low carbon economy. Many people think there will be an<br />

economy just like the existing economy, the industrial one,<br />

where everything else stays the same, except we are producing<br />

lower emissions. That is not remotely conceivable. We<br />

have to think through a whole morass of implications on an<br />

economic level.<br />

And we have to think what kind of society should prevail in<br />

this world and how we’d like to achieve it. It’s a simple matter<br />

of that. When Francis Fukuyama spoke of the end of history<br />

he must have been wrong, because Fukuyama said we won’t<br />

invent new forms of society. Indeed: We have to invent a different<br />

form of society, because our way of life is unsustainable,<br />

strictly in climate change patterns.<br />

Source: Transcription of Lord Giddens<br />

presentation of his new book „The Politics of<br />

Climate Change“ in Essen/Germany in June<br />

<strong>2009</strong>. Set by Lisa Dahlheimer.<br />

Author: Lord Anthony Giddens is former<br />

Director of the London School of Economics<br />

and Political Science (LSE).<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 7

Road to<br />

Copenhagen:<br />

Viewpoints<br />

8<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

Paul Dickinson,<br />

1<br />

CEO at the<br />

Carbon Disclosure Project<br />

The private sector will be the source<br />

of almost all of the funds required for<br />

the transition to a low-carbon economy,<br />

and the creation of new and radically<br />

different infrastructure and energy systems.<br />

The challenge for governments is<br />

to realign financial signals so that lowcarbon<br />

solutions are the obvious choice<br />

for investment decisions.<br />

There are various means that governments can use to drive<br />

investment patterns, ranging from regulation and choice editing<br />

through to subsidies and fiscal incentives. Governments<br />

can also intervene directly in the market through large-scale<br />

public procurement. These actions can be conducted at the<br />

national level or under international agreements. However,<br />

none of them can be carried out effectively without consistent,<br />

comparable data on the carbon intensity of companies,<br />

products, and activities.<br />

Reduction Commitment). These requirements are not yet linked<br />

or consistent, which will create a heavy reporting burden for<br />

companies and also means that comparability may continue to<br />

be an issue for investors. We need to move to the next phase:<br />

towards global consistency.<br />

A strong precedent has been set by the development of international<br />

financial reporting standards. Full international<br />

adoption of these has taken many decades, but the world<br />

is now well-placed to accelerate creation of their climatechange<br />

reporting equivalent. Important work is being done<br />

to enable this to happen, for example by the <strong>International</strong><br />

Accounting Standards Board, the <strong>International</strong> Auditing<br />

and Assurance Standards Board, and the Climate Disclosure<br />

Standards Board.<br />

These efforts are relevant to many aspects of the <strong>Global</strong> Deal<br />

framework now under discussion by governments, for example<br />

to MRV (measurable, reportable, verifiable), international<br />

capacity-building, and sectoral action. They also act as a bridge<br />

between the world of government negotiations and the world<br />

of the companies and investors, who will put the necessary<br />

changes into action. It is crucial that these two worlds can<br />

find ways to communicate on each others terms in order to<br />

better work together to fight climate change.<br />

Governments must prioritize and promote the development<br />

of the key factors that allow this to happen – reporting,<br />

accounting, and assurance. The Carbon Disclosure Product<br />

(CDP) is working towards greater data comparability between<br />

companies and creating a global reporting standard<br />

for carbon through our work with the Climate Disclosure<br />

Standards Board. We are frequently told by companies and<br />

investors that one single standard will be very important<br />

in driving effective action on climate change. That message<br />

was repeated in recent CDP research, which was conducted<br />

with the AEA and detailed what global businesses need from<br />

governments.<br />

This is not simply a question of quantitative emissions reporting,<br />

although this is, of course, vitally important. Financial<br />

institutions looking to invest, for example, need to know<br />

more than emissions data – they require information about<br />

trends, risks, opportunities, strategies, performance, and<br />

corporate governance. They need to know about the future<br />

of an investment prospect, as well as its past and present.<br />

They need decision-relevant information using material and<br />

comparable data.<br />

We are halfway there. Corporate reporting regulations are<br />

proliferating all over the world, mostly requiring emissions<br />

data but sometimes requesting more qualitative information,<br />

too (as with, for example, the United Kingdom’s new Carbon<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 9

James P. Leape,<br />

Director-General of WWF<br />

<strong>International</strong><br />

2<br />

Climate change is the greatest environmental<br />

challenge the world has ever<br />

faced. It has the potential to also be the<br />

greatest developmental, social, health,<br />

and security challenge – if unchecked,<br />

global warming could potentially create<br />

hundreds of millions of climate refugees<br />

as coastal areas are flooded, crops<br />

fail – causing greater food scarcity – and water supplies dry<br />

up. It is a threat that will affect us all, irrespective of where<br />

we live. As Archbishop Tutu said, climate change is “totally<br />

indiscriminate of race, culture and religion.”<br />

When the world’s leaders meet in Copenhagen at the end<br />

of this year to agree on a deal to replace the ageing and<br />

ineffective Kyoto Protocol, they must come up with a bold<br />

response that can put the world on a track to a low-carbon<br />

economy.<br />

Attainable goals<br />

The truth of the matter is that these changes are well within<br />

our reach. In January of <strong>2009</strong>, McKinsey & Co. presented a<br />

rigorous assessment of the costs of abating climate change<br />

– a report that was sponsored by WWF and several other organizations.<br />

Mapping out the solutions for every sector of the<br />

economy in every region of the world, the McKinsey analysis<br />

makes several critical points.<br />

McKinsey’s analysis shows that it is possible, with proven<br />

technologies, to reduce global emissions to a level that is likely<br />

to keep global temperatures from rising more than 2°C. It also<br />

shows that the cost is manageable. Full implementation of<br />

all the measures assessed by McKinsey would cost less than 1<br />

percent of global GDP – challenging, to be sure, but far, far<br />

less than the cost of inaction, which Lord Nicholas Stern has<br />

estimated to be from 5 to 20 percent of global GDP.<br />

The McKinsey analysis also makes it very clear, however, that<br />

we can succeed in meeting the challenge of climate change<br />

only if we utilize the full potential of all the measures available<br />

to us. Success requires bold action in every sector of the<br />

economy – from power to transportation to forestry – and in<br />

every region of the world: across the industrialized countries,<br />

of course, but also the emerging economies and the major<br />

forest regions. The McKinsey study further demonstrates that<br />

success is only possible if we find a way to move very quickly<br />

– every year of delay makes the solution more difficult and<br />

more costly. And every year of delay locks in another 5 parts<br />

per million of CO2 in the atmosphere.<br />

Challenging times<br />

To be sure, these are challenging times – countries all over<br />

the world are struggling to deal with a global recession. But<br />

that recession cannot – and need not – delay action on<br />

climate change. The recovery will not succeed if we rebuild<br />

the fossil-fuel-dependent economy, which is vulnerable to<br />

the volatility and inevitable escalation of oil prices, and the<br />

growing impacts of climate change. To be sustained, the new<br />

economy must be low-carbon and built upon the energy solutions<br />

of the future, not the past. The trillions of dollars of<br />

stimulus now being pumped into the global economy thus<br />

provide a crucial opportunity to lay the foundation for that<br />

low-carbon future. A massive public investment in critical<br />

infrastructure – from “smart grids” that facilitate reliance on<br />

renewable energy technologies, to public transit and green<br />

buildings – can open up huge opportunities for innovation<br />

and for creating new markets.<br />

Building-blocks of a sustainable future<br />

Climate change is, of course, a truly global challenge – it<br />

threatens the future of every person and community on<br />

the planet, and it can be solved only if we find a way to act<br />

together. The UN negotiations that culminate in Copenhagen<br />

this December are thus of the highest importance. In<br />

those negotiations, the countries of the world must agree<br />

on a global deal that includes several basic elements. The<br />

global deal must establish measures that will ensure that<br />

total global emissions of greenhouse gases peak and begin<br />

to decline by 2020, and it must set the world on a course for<br />

reducing emissions to 80 percent below 1990 levels by 2050.<br />

Those are the targets necessary to prevent the planet from<br />

warming more than 2°C.<br />

Achieving those targets will require industrialized countries<br />

to greatly reduce their emissions to levels that are 25 to 40<br />

percent below 1990 levels by 2020. It will also require that<br />

emerging economies like China and India find ways to slow<br />

the increase in their emissions even as their economies grow,<br />

and that forest countries take action to curb deforestation. It<br />

is thus essential that the agreed framework provide for cooperation<br />

in developing and sharing technology, and establish<br />

robust financing mechanisms to support measures to reduce<br />

emissions from energy production and deforestation in the<br />

developing world.<br />

Finally, a global agreement will have to recognize that, even<br />

if we act boldly to bring climate change under control, we<br />

will still suffer significant impacts, and that the world must<br />

10<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

Beyond 2012 – The<br />

World Food Programme's<br />

Perspective 3<br />

provide the resources that will allow developing countries<br />

to adapt.<br />

Climate change will not wait<br />

we see that<br />

responsibility<br />

and long-term<br />

strategies pay off<br />

in the end.<br />

A strong Copenhagen agreement can be the cornerstone of a new<br />

global economy – an economy that offers huge opportunities<br />

for new industries and new jobs; an economy that can, in fact,<br />

protect the climate on which we all depend. We know that we<br />

have the technologies and the financial means to move onto<br />

that path. What we need now is the political will.<br />

Climate is a key parameter in growing food. Changes in climate<br />

pose a threat to agriculture and can lead to drastic increases<br />

in food insecurity and hunger. Climate change will affect<br />

everyone, but it has a disproportionate effect on those living<br />

in poverty in developing countries in areas where deprivation<br />

and vulnerability to climate risks and natural disasters are<br />

severe. Studies warn of a coming “global food crunch” with<br />

long-term drivers of climate change, scarcity of land and<br />

water, lack of investment in agriculture and fuel production,<br />

and rising food consumption due to population growth all<br />

combining to cause political instability.<br />

As the world’s frontline organization in the fight against<br />

hunger, the UN World Food Programme (WFP) will be in even<br />

greater demand in helping communities that are affected by<br />

recurrent natural disasters adapt to climate change. Sophisticated<br />

and innovative tools – such as the WFP Vulnerability<br />

Analysis and Mapping, Early Warning Systems, Emergency<br />

Needs Assessments, and Weather-based Insurance – are<br />

essential adaptation instruments to anticipate the onset of<br />

natural disasters and allow for protective measures to be<br />

put in place.<br />

Presence in and knowledge of the affected areas is key to determining<br />

disaster prevention and taking appropriate measures.<br />

WFP’s extensive deep-field presence in places where deprivation<br />

and vulnerability to climate change and natural disasters<br />

are severe gives an advantage in operationally strengthening<br />

resilience. The operational base of WFP consists of: 74 country<br />

offices and 270 sub-offices, an overall presence in 91 countries<br />

worldwide, and 10,200 employees, of which 91 percent are<br />

engaged in field operations.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 11

WFP is prepared for climate-related shocks and emergencies.<br />

As a leader of the <strong>Global</strong> Logistics Cluster, WFP supports UN<br />

agencies in emergency preparedness and response mechanisms.<br />

WFP manages five UN Humanitarian Resource depots<br />

in Italy, Ghana, Panama, Malaysia, and Dubai for more than<br />

30 humanitarian organizations that use this network in the<br />

various locations for storage of emergency stocks. The depots<br />

are stocked with standardized relief materials and are geared<br />

to ship essential relief supplies wherever needed within 24<br />

to 48 hours.<br />

The vision of an economy based on low-carbon incentives and<br />

“Green Growth” will only succeed if global partnerships and<br />

common framework agreements manage to bring adaptation<br />

in the least developed countries to the forefront. WFP has itself<br />

started to reduce its carbon footprint in its offices around the<br />

globe and to mainstream climate adaption activities into all<br />

of its programing areas. WFP will be engaging governments,<br />

the private sector, and civil society to also implement innovative<br />

solutions to reduce the impact of climate change and its<br />

effects on food security and hunger.<br />

Björn Stigson, President<br />

of the World Business<br />

Council for Sustainable<br />

Development<br />

4<br />

When the world’s governments meet in<br />

Copenhagen in December, their representatives<br />

will be dealing with an unprecedented<br />

level of change in two interwoven<br />

areas: climate and the economy. This<br />

massive pressure for change is leading<br />

to what I believe is a new industrial<br />

revolution, one that has the potential to<br />

dramatically reshape the world we live in. That pressure will<br />

remain, no matter what global leaders decide in Copenhagen.<br />

Sustainable solutions to the complex problems we are facing<br />

will require government and business to cooperate on a level<br />

never seen before.<br />

The time for short-term solutions is behind us. The global recession<br />

must not be used as an excuse to forget about the future.<br />

It is clear that we must revive growth in the world economy<br />

and imperative that we do this in a low-carbon way. We need<br />

to find ways of working – and of thinking – that align the<br />

needs of development, the economy and the world’s climate<br />

and find solutions that work for all three. <strong>Global</strong>ly responsible<br />

business is continuing to work to find climate solutions,<br />

address the water crisis, stem biodiversity loss and work with<br />

the poor to assist in providing sustainable livelihoods.<br />

But how we use and source energy in the future will be critical.<br />

The new industrial revolution will see a surge in green<br />

jobs; indeed, one estimate says 20 million could be created<br />

in renewable energy alone, far more than would be achieved<br />

with fossil-fuel-based energy. Clearly, there will be opportunities<br />

for some businesses in this revolution, just as there will<br />

be losses for others.<br />

Energy is essential for industry – to power infrastructure and<br />

to connect goods and services to markets. It is also essential<br />

for development. Energy shifts the quality of people’s lives<br />

enormously; it is the single largest requirement for economic<br />

growth and social development. Currently about 1.6 billion<br />

people have no access to electricity, and it will be difficult to<br />

improve their lives significantly without it. But more people<br />

with electricity must not mean more greenhouse gas emissions.<br />

Energy efficiency is widely accepted as the most cost-effective<br />

way to mitigate climate change. Fully 50 percent of the potential<br />

to cut greenhouse gas emissions in half by 2050 is expected to<br />

come from increased energy efficiency. The climate solution<br />

therefore requires us to quickly improve energy efficiency, to<br />

develop low-carbon energy sources and to find breakthrough<br />

technologies and put them to work.<br />

We now need long-term leadership, governments that put<br />

the future ahead of the present. Sustainability must be at the<br />

top of the list for world leaders. Governments clearly have a<br />

difficult task ahead of them, but business is ready and willing,<br />

also in this period of global economic crisis, to contribute to<br />

climate-change solutions.<br />

At the World Business Council for Sustainable Development,<br />

we have been working with business for 15 years to find sustainable<br />

ways to achieve economic growth. We will continue<br />

to do this, regardless of the outcome of the United Nations<br />

Climate Change Conference in Copenhagen. Our member<br />

companies will continue to invest in the innovation needed,<br />

to find and develop new products, services and technologies<br />

that the world will need as it faces the joint challenge of<br />

greenhouse gas reduction and economic growth. One example<br />

of this is our recent publication of a ground-breaking report<br />

12<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

Transforming the Market: Energy Efficiency in Buildings. This<br />

report, the result of a $US15 million investment and four<br />

years of research, shows how energy use in buildings can be<br />

cut 50 percent by 2050.<br />

Business knows it will have to provide the lion’s share of<br />

the huge investment that will be needed. But to do that it<br />

needs:<br />

• The right policy framework. This must be transparent, predictable<br />

and long-term, allowing business to understand the<br />

risks as fully as possible before investing.<br />

• Developed countries need precise intermediate targets for<br />

2020-2030 to allow them to measure and adapt if the world<br />

is to reduce CO2 emissions 50 percent by 2050. Yes, huge<br />

investments are called for in energy, urban infrastructure,<br />

water, transport and food supplies, but we must make<br />

sure these investments remain aligned with a sustainable<br />

future.<br />

• Solutions must identify ways to share the burden fairly so that<br />

all parties can and will commit to them. We need to ensure<br />

that all industrial sectors, the financial world, developing<br />

and developed countries with their national concerns and<br />

many others have their needs taken into consideration so<br />

they are willing and able to cooperate.<br />

• Rapidly emerging economies should be considered separately<br />

and in a distinct fashion.<br />

• National policies must be suited to national circumstances.<br />

• Actions in developing countries will be effective only if<br />

programmes are put in place to build up infrastructure and<br />

develop skills and those programmes are accompanied by<br />

an allocation of resources.<br />

Many questions and issues remain, but we cannot allow these<br />

to block our path to a new climate regime. For example, we<br />

need to identify market mechanisms that will create a price<br />

for carbon that takes into account its true cost. We need to<br />

understand how to scale up energy efficiency globally. An<br />

energy-lean economy: What does it look like and what technologies<br />

and policies will help create it? We need jobs in clean<br />

energy, but how do we get investment flowing into it?<br />

The world after 2050 will be different, and the changes that get<br />

us there will be transformational. But there is no alternative<br />

to making those changes. We need to build a more sustainable<br />

society with lower energy and resource use. Whatever<br />

happens in Copenhagen, this need will remain. How we live,<br />

do business and earn our living – the lives we will have in<br />

the future – all depend on what we do now to handle this<br />

need.<br />

Lila Karbassi,<br />

UN <strong>Global</strong> <strong>Compact</strong> Issue<br />

Manager, Environment<br />

5<br />

United Nations Secretary-General Ban<br />

Ki-moon has called climate change “the<br />

defining challenge of our time” – for<br />

good reasons. Climate change is the most<br />

pressing and disruptive issue the world<br />

is facing today. It affects every aspect of<br />

society, from energy resources and water<br />

sustainability to public health, food<br />

security, and even human security.<br />

Despite – or perhaps even because of – the global financial<br />

crisis, there is no time to delay action on climate change. There<br />

is only a very short window of opportunity, which requires<br />

all social actors to become part of the solution to this global<br />

threat. Greenhouse gas emissions that contribute to global<br />

warming must be cut with no further delay.<br />

This year, crucial government negotiations will be held at<br />

the UN Climate Change Conference (COP15) in December in<br />

Copenhagen. The goal is to forge a new global framework on<br />

climate change, one that will be an effective successor to the<br />

Kyoto Protocol, which expires in 2012. Ultimately, much will<br />

depend on the positions of the United States and China, the<br />

globe’s biggest generators of greenhouse gases, who together<br />

account for nearly half of all emissions.<br />

As a key stakeholder in the global climate debate, the business<br />

community has a critical role to play and many businesses<br />

have been mobilizing for some time. What is needed now is<br />

a strong signal from business that will give governments the<br />

confidence needed to negotiate a strong deal with ambitious<br />

emission reduction targets at COP15.<br />

It is in this context that the Copenhagen Climate Council –<br />

in cooperation with the UN <strong>Global</strong> <strong>Compact</strong> and a group of<br />

partners – convened the World Business Summit on Climate<br />

Change from May 24–26, <strong>2009</strong>, in Copenhagen. The Summit<br />

brought together over 650 business leaders, government officials,<br />

and NGO representatives from around the world to put<br />

forward a set of recommendations for the December negotiations.<br />

The Summit was opened by the Secretary-General, who<br />

challenged business leaders to “put themselves at the forefront<br />

of an unprecedented effort to retool the global economy into<br />

a cleaner, greener, and more sustainable economy.”<br />

The Summit was an effective forum for showing how the private<br />

sector can address the climate challenge through financ-<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 13

ing, development, and deployment of low-carbon solutions.<br />

At the same time, there was consensus that business needs<br />

regulatory certainty to unleash its full potential – certainty<br />

that only governments can provide.<br />

The Summit resulted in “The Copenhagen Call”, a strong<br />

statement urging political leaders everywhere to agree on an<br />

ambitious and effective global climate treaty at COP15. The<br />

Call further outlines the elements that business leaders believe<br />

are necessary for a new treaty.<br />

As we move closer to COP15, many businesses have emerged as<br />

climate champions and leaders by putting effective mitigation<br />

and adaptation strategies into place, driving innovation, and<br />

putting pressure on their governments to act now. However,<br />

climate leaders represent only a small portion of the business<br />

world that has made climate change a top priority. Many businesses<br />

are still sitting on the fence and waiting for others to<br />

take the initiative. Unless more businesses begin to lobby vigorously<br />

for a climate agreement in the months ahead, chances<br />

are slim that governments will seal the deal in Copenhagen.<br />

And the consequences of failure would be devastating: for the<br />

planet, for society, and for business.<br />

The good news is that there are effective fora that have helped<br />

galvanize the voice of business. The <strong>Global</strong> <strong>Compact</strong>’s own<br />

Caring for Climate initiative – launched by the Secretary-<br />

General in July 2007 – is a voluntary and complementary<br />

action platform for <strong>Global</strong> <strong>Compact</strong> participants who seek to<br />

demonstrate climate leadership. Caring for Climate provides a<br />

framework for business leaders to advance practical solutions<br />

and help shape public policy as well as public attitudes. The<br />

more than 350 chief executives in 65 countries who support<br />

Caring for Climate are prepared to set goals, develop and expand<br />

strategies and practices, and to publicly disclose emissions as<br />

part of their existing disclosure commitment (COP) within the<br />

<strong>Global</strong> <strong>Compact</strong> framework.<br />

Carlos Minc Baumfeld,<br />

Brazilian Environment<br />

Minister<br />

6<br />

Brazil’s position on global warming is extremely<br />

clear: We want the country to take<br />

on a leading role amongst the nations that<br />

are now dealing with this phenomenon,<br />

which has been named one of the most<br />

worrying for future generations.<br />

Recently, in a ministerial consultation<br />

on climate change, which took place during the 25th session<br />

of the United Nations Environment Programme Governing<br />

Council/<strong>Global</strong> Ministerial Environment Forum held in February<br />

in Nairobi, Kenya, we argued that a commitment must<br />

be made between developed and developing countries so that<br />

bolder goals for reduction of greenhouse gas emissions can<br />

be established.<br />

Dubbed the “descending carbon spiral”, the Brazilian proposal<br />

is based on common but differentiated responsibilities for<br />

developed and developing countries in addressing climate<br />

change – based on funding and technology transfer to developing<br />

countries – so that an international agreement may<br />

More information on Caring for Climate:<br />

www.unglobalcompact.org/Issues/Environment/Climate_Change/<br />

14<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

be reached at the United Nations Framework Convention on<br />

Climate Change, to be held in December <strong>2009</strong> in Copenhagen,<br />

Denmark. New standards for the second commitment period<br />

of the Kyoto Protocol are expected to be established during<br />

this high-level meeting.<br />

According to the proposal, developed countries should commit<br />

to bolder goals for greenhouse gas emissions reduction<br />

and design mechanisms for an over €100 billion fund aimed<br />

at financing mitigation and adaptation activities in regions<br />

that will be most affected.<br />

Presently, the richest countries in the European Union have<br />

adopted a maximum 20% reduction goal by 2020, which could<br />

eventually be broadened to 30% if developing nations also commit<br />

to reductions. Nonetheless, we consider this a timid goal,<br />

since the UN’s Intergovernmental Panel on Climate Change<br />

(IPCC) itself recommended that rich countries should reduce<br />

their emissions by 40% by 2020 in order to avoid imminent<br />

environmental disaster.<br />

We strongly defend the “descending carbon spiral”, because<br />

it assumes an international common but differentiated commitment<br />

to fight global warming. Initiatives carried out<br />

by developed countries, together with resources from the<br />

above-mentioned climate fund and partnerships for technology<br />

transfer, must be followed by meaningful mitigation<br />

and emissions reduction outcomes in developing countries.<br />

Therefore, developed and developing countries would rely on<br />

one another to obtain desired results.<br />

The Brazilian initiative is also based on a proposal presented<br />

by us last year during the UN climate change meeting held in<br />

Poznan, Poland. Commended both by UN Secretary-General<br />

Ban Ki-moon and by the US ex-vice-president Al Gore, the<br />

National Plan on Climate Change establishes a Brazilian commitment<br />

to reduce illegal logging in the Amazon Rainforest<br />

by 70% by 2017. This is clearly an ambitious goal, since in<br />

Brazil forest burning and deforestation represent around 75%<br />

of national CO2 emissions.<br />

Furthermore, rich countries would have to commit to contributing<br />

to this climate fund around 10% of the total value of<br />

annual transactions related to clean development mechanism<br />

(CDM) projects and 10% of the profits from the production<br />

and trading of oil and coal. These resources would be applied<br />

to immediate greenhouse effect mitigation actions as well<br />

as to activities for adaptation by affected regions and forest<br />

preservation. Funds would be invested in programmes within<br />

countries which reduced deforestation and preserved forests<br />

or created new protected areas.<br />

The basic idea behind this climate fund account is to stimulate<br />

developing countries that still harbour forests to preserve them<br />

or expand their coverage. To this end, a value per hectare of<br />

forest would be proposed in due time.<br />

So, actions proposed in Nairobi could be funded by the establishment<br />

of this general international climate fund – which<br />

could initially be fed by various sources, such as the carbon<br />

market and taxes on oil trading. Together, these initiatives might<br />

free the world from the present deadlock which threatens it,<br />

turning the United Nations Framework Convention on Climate<br />

Change in Copenhagen into a pact for the decarbonization of<br />

global economies and, ultimately, for saving the planet.<br />

Getting in the Lead?<br />

The position of<br />

the European Union 7<br />

The pledge to reduce greenhouse gas emissions in the European<br />

Union (E.U.) by 20% from 1990 levels by 2020 has been half<br />

fulfilled at present: emissions of all E.U. countries are currently<br />

at around 12% under the 1990 average. E.U. environmental<br />

commissioner Stavros Dimas has admitted that a large part<br />

of the reduction can be attributed to warm weather, however.<br />

Transport emissions rose by a quarter and household savings<br />

were not much either. But Stavros Dimas seems optimistic and<br />

has stated his confidence that the E.U. will reach its climate<br />

goals or even exceed them.<br />

An important item of the E.U. climate and energy package is<br />

the increase in the proportion of renewable energy sources<br />

used in overall energy consumption to 20% by 2020. National<br />

energy targets should be introduced for this purpose; these<br />

can vary greatly between countries. For example, Sweden<br />

needs to reach a proportion of 49%, whereas Malta must only<br />

achieve 10%. At the same time, the proportion of biofuels in<br />

overall petrol and diesel consumption should increase to at<br />

least 10% by 2020. Along with the reduction of emissions,<br />

the E.U. aims to decrease dependence on petroleum, natural<br />

gas and coal imports by promoting renewable energy sources.<br />

Another important element of the package is the reduction of<br />

emissions by power stations and energy-intensive industries .<br />

The introduction of a transnational emissions trading system<br />

should take these emissions down 21% from 2005 levels. The<br />

promotion of carbon dioxide capture and storage technologies<br />

will also figure prominently.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 15

The package of climate and energy measures that has already<br />

been adopted by the E.U. is anticipated to take effect in 2011.<br />

The E.U. is prepared to increase its CO2 reductions target from<br />

20% below 2020 levels to 30%, as long as other industrialized<br />

nations commit to comparable decreases. Even though this<br />

may make the E.U. a pioneer, it is still far less than what is<br />

necessary, according to environmentalists. Antje von Broock, an<br />

expert from the Friends of the Earth Germany environmental<br />

network, urges the E.U. to give primary support to developing<br />

nations' work on climate change, stating that industrialized<br />

nations must provide 40 billion euros annually toward<br />

climate protection in developing nations. The E.U. must take<br />

on a third of that.<br />

Climate Change in<br />

Down Under –<br />

"The worst global recession since the Great Depression means<br />

we must adapt our climate change measures but not abandon<br />

them", said Prime Minister Kevin Rudd in May <strong>2009</strong>. Emissions<br />

measures in Australia have been delayed as a consequence<br />

of this adaptation. The original government action plan for<br />

reducing pollutant emissions nationwide called for measures<br />

on emissions in 2010; the new target is 2011. Citizens' action<br />

groups in Australia, such as the Bayside Climate Change Action<br />

Group, have accused Australian Prime Minister Kevin Rudd<br />

of breaking his election promises.<br />

Another item concerns agriculture in Australia, where sustainable<br />

practices to reduce pollution should also be promoted.<br />

The government hopes that implementing these measures will<br />

not only protect the environment, but create new jobs as well.<br />

As the Minister for Climate Change and Water, Senator Penny<br />

Wong, put it, "the Australian Government Climate Change<br />

Strategy provides the long-term framework and confidence<br />

required to create the new jobs and business of a low pollution<br />

future".<br />

The Australian Position 8 USA:<br />

A study by the Oxfam charity says that a fair agreement on<br />

climate change would mean that Australia must reduce<br />

emissions by 34 per cent by 2020. Until now, however, the<br />

government has offered only a 25 per cent reduction. The<br />

government has allocated 15 billion dollars to implement<br />

its climate strategy, in which investments in renewable<br />

energy sources and the research and development of new<br />

technologies figure prominently. By 2020, 20 per cent of<br />

the electricity should be generated by renewable energy<br />

sources. It should be possible for private households as well<br />

as corporations to implement these technologies at reasonable<br />

cost and receive the corresponding guidance in using<br />

them. They will receive low-interest loans or discounts on<br />

investment in energy-efficient home insulation, solar panel<br />

installations, or rainwater cisterns and water recycling, just<br />

to name a few.<br />

From the laggard to the<br />

pioneer? 9<br />

“We’re back in the game,” said Secretary of State Hillary Clinton,<br />

and meant that the USA was “ready to lead and determined<br />

to make up for lost time” on international climate protection.<br />

With this approach, the administration of Barack Obama has<br />

clearly distanced itself from the position of the previous US<br />

administration and signaled a turnaround in the country’s<br />

climate policy. The Obama Administration clarified this backsliding<br />

with the release of a new report on climate change.<br />

16<br />

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Agenda<br />

Climate Change<br />

"It is clear that climate change is happening now," John P.<br />

Holdren, director of the White House Office of Science and<br />

Technology Policy, said.<br />

In the run-up to the Copenhagen Climate Summit in December,<br />

the USA is on the offensive: At the UN conference in Bonn,<br />

it presented its own recommendation for a new climate protection<br />

agreement. The USA is striving for a “comprehensive<br />

agreement”, says the head of the US delegation, Jonathan<br />

Pershing. The industrial countries should reduce their CO2<br />

emissions 80 percent by 2050. But specific recommendations<br />

for medium-term reduction goals were not presented. What’s<br />

new about the proposal is, the USA is no longer demanding<br />

that threshold countries, such as China, commit to specific<br />

CO2 reduction goals. The economically stronger developing<br />

countries should also make contributions, but these could<br />

look different case by case, says Pershing. The proposal is<br />

an update of the UN Climate Convention, which was agreed<br />

on in Rio de Janeiro in 1992. Environmental organizations<br />

expressed criticism of the US proposal. "The USA wants to<br />

abandon Kyoto completely," says Greenpeace. But that would<br />

cause important elements of climate protection to fall away,<br />

such as mandatory adherence to commitments. "That would<br />

be the end of an effective Copenhagen agreement."<br />

At the national level, too, the US government has presented a<br />

plan for a new start in environmental policy with its "American<br />

Clean Energy and Security Act of <strong>2009</strong>", but this hasn’t<br />

been passed yet. The proposed law would reduce greenhouse<br />

gas emissions to 17 percent below the 2005 level by 2020.<br />

Originally, a goal of 20 percent was even being considered.<br />

In addition, the bill recommends for the first time a national<br />

emissions trading system, which would start in 2012. But massive<br />

resistance in the US Congress threatens to tie the hands of<br />

the US government internationally, warns Todd Stern, the US<br />

government’s Special Envoy for Climate Change. In contrast,<br />

Steven Chu, US Energy Secretary, emphasizes the USA’s work<br />

at various levels, such as efforts to achieve cooperation with<br />

China on climate protection.<br />

Beyond the proposed law, the US government for the first time<br />

has introduced tougher rules nationwide for fuel economy and<br />

exhaust emissions from motor vehicles. The goal is to save<br />

almost two billion barrels of oil and cut emissions 30 percent<br />

by 2016 through new, environmentally friendlier automobiles<br />

and small trucks. As a result, the CO2 emissions would be<br />

reduced by 900 million tons. Further, the US government is<br />

considering following the European model and paying car<br />

owners a premium for trading in their high-fuel-consumption<br />

used cars for new, more environmentally friendly models.<br />

President Obama labels his government’s current climate<br />

protection plans a "historic step."<br />

China: The right to<br />

development 10<br />

"Climate change is an environmental issue. But ultimately, it<br />

is a development issue." The negotiations for a new climate<br />

protection agreement must therefore follow the principle of<br />

"common but differentiated responsibilities", says Chinese<br />

President Hu Jintao. Regarding the post-Kyoto climate agreement,<br />

China is pushing for continuity: The Chinese government<br />

demands that the rich industrial countries commit to reduce<br />

global CO2 emissions and fulfill their obligations on technology<br />

transfer and financial support to developing countries. In<br />

addition, China calls for the rich industrial countries to reduce<br />

their emissions 40 percent by 2020.<br />

Further, in advance of the negotiations for a world climate<br />

agreement in December in Copenhagen, the Chinese government<br />

argued that some of the Chinese CO2 emissions from<br />

exported goods should be allocated to the industrial countries,<br />

that is, to the consumers of the goods. Chinese Premier Wen<br />

Jiabao added, it would be difficult for China to commit to<br />

CO2 emissions-reduction goals for the period between 2013<br />

and 2020, since the country was still in an early stage of development.<br />

But China will work to expand renewable energy<br />

production and increase energy efficiency.<br />

The Chinese government has worked out an action plan against<br />

climate change in which it will raise the share of regenerative<br />

energy to ten percent of total energy consumption. "China has<br />

a 1.3 billion population, and in terms of per capita greenhouse<br />

gas emission, we are certainly not the biggest one, yet we are<br />

still very active and positive about our cooperation with Europe<br />

in terms of saving energy, reducing pollution, developing a low<br />

carbon economy and developing those environmentally friendly<br />

technologies," says Wen Jiabao. China is already holding talks<br />

with the USA on more intensive cooperation in developing<br />

"green technologies". Experts believe these talks could result in<br />

a treaty ready for signature by autumn <strong>2009</strong>. While the treaty<br />

will not include CO2-reduction goals for China, it will set clear<br />

and implementable energy efficiency goals. Priority should be<br />

given to further development of carbon dioxide capture and<br />

storage (CCS) as well as work on more efficient automotive<br />

fuels. Both countries want to bring mature energy-efficiency<br />

technologies to the market faster. Also under consideration<br />

is a free trade area between China and the USA, limited to<br />

"clean" technologies. In the past, the Chinese government consistently<br />

argued that accelerated transfer of climate protection<br />

technologies was a central prerequisite for the success of the<br />

international climate protection negotiations in Copenhagen,<br />

Denmark, at the end of <strong>2009</strong>.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 17

Toward a Post-Kyoto<br />

Climate Change<br />

Architecture:<br />

A Political Analysis<br />

18<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

By Robert O. Keohane and Kal Raustiala<br />

Any international regime aimed at the mitigation of climate<br />

change must solve three problems. It must: (1) secure sufficient<br />

participation to be effective; (2) achieve agreement on rules<br />

that are meaningful, so that if they were followed, climate<br />

change would indeed be mitigated; and (3) ensure compliance<br />

with the rules. That is, it must solve problems of participation,<br />

effectiveness, and compliance. These problems require<br />

careful institutional design. The standard that should be applied<br />

to an institutional design such as that proposed in this<br />

chapter is whether, given a level of political commitment, it<br />

will increase the likelihood of a satisfactory solution to the<br />

tripartite requirements of an effective regime: participation,<br />

sufficiently strict rules, and a robust compliance system 1 .<br />

The attractions of a cap-and-trade architecture for<br />

participation<br />

The paper argues that only a cap-and-trade architecture is likely<br />

to make it politically possible to secure sufficient participation<br />

to get a climate-change mitigation regime up and running.<br />

Project-oriented mechanisms fail to send a comprehensive<br />

price signal to investors and governments; they incur very<br />

high transaction costs; and they require counter-factual determinations<br />

to assess additionality. <strong>Global</strong> carbon taxes would<br />

impose economic burdens on the industries of developing<br />

countries without offering the offsetting gains of being able<br />

to sell emissions permits under a cap that made allowance for<br />

their much lower historic and per capita emissions. It therefore<br />

seems unlikely that developing countries, including China<br />

and India, would agree to such an arrangement.<br />

Yet the task of negotiating a comprehensive cap-and-trade<br />

system will be daunting. Incentives for the most reluctant<br />

countries – or those that can bluff at being most reluctant –<br />

to hold out for a better deal would be very great. The option of<br />

beginning with a smaller “club” of major contributors to global<br />

warming plus any other states that chose to join or of linking<br />

various cap-and-trade systems should be maintained.<br />

1<br />

The paper summarized here is published in Joseph E. Aldy<br />

and Robert N. Stavins, ed., Post-Kyoto <strong>International</strong> Climate<br />

Policy: Implementing Architectures for Agreement (Cambridge<br />

University Press <strong>2009</strong>). Our goal in that paper is to sketch<br />

such a design, particularly its compliance system, with careful<br />

attention to the realities of world politics. Please refer to that<br />

paper for all details and references; this is only a very brief<br />

summary.<br />

In short, we favor cap and trade as the basic approach, but<br />

do so cognizant of the many problems it faces. We are not<br />

confident that such a system will work. However, we think<br />

it has the best political prospects of any plausible climate<br />

system, and we believe that careful institutional design can<br />

help ensure feasibility.<br />

The political logic of a buyer liability system<br />

The fundamental problem of compliance in world politics<br />

is that it is virtually impossible to force powerful states to<br />

comply with international rules through a collective process.<br />

Rules that purport to ensure compliance lack credibility ex<br />

ante. Difficulties of enforcement yield two common outcomes<br />

with regard to international agreements. One is the negotiation<br />

of weak or vague international commitments that largely<br />

match existing behavior. This outcome is particularly common<br />

in the environmental realm, where agreements have often<br />

been struck that exhibit high compliance – because they are<br />

carefully tuned to the status quo – yet do little to influence<br />

actual change in behavior. An equally undesirable outcome is<br />

the negotiation of ambitious (but sometimes vague) rules that<br />

are frequently violated. When untethered to any meaningful<br />

monitoring and compliance system, ambitious international<br />

rules run the risk of substantial non-compliance. More specifically,<br />

there are at least three major political constraints<br />

on compliance provisions for a comprehensive cap-and-trade<br />

regime. Proposals that ignore these constraints will either not<br />

be implemented or will be ineffective if implemented.<br />

1| Post-hoc penalties on powerful sellers are infeasible.<br />

2| Any system that requires interstate negotiations to determine<br />

arrangements for compliance will be subject to political<br />

strategy and pressure.<br />

3| Any system that can be manipulated, or “gamed,” will be.<br />

The Kyoto Protocol contains unrealistic compliance provisions<br />

built around the idea of external enforcement. They open the<br />

door to renegotiations and exit threats and introduce a serious<br />

problem of moral hazard.<br />

We propose, instead, a system of “buyer liability,” based on an<br />

analogy with international bond markets. Firms and similar<br />

entities would be required to hold permits for the difference<br />

between their emissions and nationally set limits and would<br />

be authorized, at least to some amount, to purchase these<br />

permits from permit-holders in other countries. Buyers of<br />

emissions permits that do not represent the full amount of<br />

carbon reduction their face value implies – because their<br />

sellers did not keep their commitments – would need to<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 19

purchase more permits or engage in further internal reductions.<br />

National governments would enforce this commitment<br />

against private actors within their jurisdictions.<br />

This system thus rests on the incentives of buyers, which<br />

will largely be in industrialized democracies, to comply with<br />

domestic emissions controls, and on the incentives of sellers,<br />

largely outside these states, to command and maintain the<br />

highest price in the market. It is therefore very important to<br />

note that the likely permit-short countries, in which enterprises<br />

will be net buyers of permits, on balance have stronger and<br />

less corrupt national legal institutions than the likely permitlong<br />

countries. Furthermore, the permit-short countries are<br />

overwhelmingly democratic. We therefore rely on internal<br />

structures and incentives, such as democracy and the rule of<br />

law, to ensure that permit-short countries comply with the<br />

system. Indeed, the political asymmetry – in rule of law and<br />

democracy – between buyer and seller countries is central to<br />

our advocacy of buyer liability.<br />

Especially now,<br />

we see that<br />

responsibility<br />

and long-term<br />

strategies pay off<br />

in the end.<br />

Our system is designed to generate endogenous incentives for<br />

compliance on the part of permit-long, or seller, countries.<br />

These governments will gain economically from maintaining<br />

a high value for the permits that their enterprises sell<br />

and will therefore seek to act in a way that maintains their<br />

reputation for compliance. This system, unlike many of the<br />

most prominent alternatives, provides “institutionalized<br />

transmission belts” for compliance to flow from the advanced<br />

industrial democracies, which have the strongest commitment<br />

to climate-change abatement, to the wide range of likely selling<br />

jurisdictions, which tend to have weak commitments to<br />

abatement. Details can be found in the paper.<br />

Buyers and incentives for prudence<br />

As in all cap-and-trade systems, under our proposal emissions<br />

permits would trade on public markets. Their value would<br />

depend on buyers’ ex ante estimates of validity. Shortly after<br />

the end of the year for which permits were issued, a comprehensive<br />

assessment would decide their value. In many<br />

respects, a buyer liability system is broadly akin to the existing<br />

international bond market. After being issued by states,<br />

bonds trade on international markets just as emissions permits<br />

would trade on such markets. Permits would trade at prices<br />

that reflect market participants’ confidence that they would<br />

be valid when they came due for redemption. They would<br />

likely trade at discounts if their validity was viewed as questionable.<br />

Buyers of emissions permits that were invalid, like<br />

buyers of bonds whose issuers default, will incur losses at the<br />

end of the process, and market prices will reflect prevailing<br />

expectations of eventual validity or invalidity. Like buyers of<br />

bonds, therefore, buyers of permits will have strong incentives<br />

to assess quality ex ante, price the permits accordingly, and<br />

hedge to some degree by purchasing excess permits.<br />

Accurate assessment and pricing are key to the smooth working<br />

of permit markets. If assessments ex ante are accurate,<br />

buyers can simply discount permits appropriately and buy<br />

more nominal permits than they require to meet emissions<br />

limits set by their governments. As in other markets, actors<br />

will hedge against risk. Insurance markets may also arise to<br />

cover the risk of permit invalidity.<br />

Sellers and incentives for validity<br />

If buyers bear the liability for invalid permits, what incentives<br />

do sellers have to ensure that the permits they sell are backed<br />

by real emissions reductions at the national level? Permits that<br />

lacked full validity would have a reduced value, with the loss<br />

borne by buyers that held the permits at that time. How would<br />

this give sellers incentives to follow the rules?<br />

20<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Climate Change<br />

Under our proposal, governments of permit-long jurisdictions<br />

will seek to assure that the permits their domestic enterprises<br />

offer for sale are valid, because if they fail to do so, future<br />

permits from any enterprise within their jurisdiction will be<br />

devalued. Discounting all permits from a given jurisdiction<br />

at the same rate may appear unfair, since it penalizes those<br />

seller entities that scrupulously abate emissions but whose<br />

counterpart entities, in the same jurisdiction, fail to meet<br />

their obligations. But this unfairness is essentially a national<br />

problem, since it could only be the result of lax enforcement at<br />

the national level and can best be fixed via national action.<br />

Furthermore, emissions trading would be structured to continue<br />

for many years. Such an ongoing market creates an economic<br />

incentive for sellers to ensure quality. More specifically, if the<br />

rate at which states that are net sellers of permits discount<br />

future gains is sufficiently low and the magnitude of expected<br />

future permit sales is sufficiently high, states will seek reputations<br />

for selling valid permits. Sellers of fully valid permits<br />

would also have an incentive to cooperate with and even support<br />

credible monitoring systems, so that their permits would<br />

be regarded ex ante as valid and could command their full<br />

price. In short, buyer liability makes seller incentives largely<br />

economic rather than political. Seller incentives would not<br />

rest on concern about climate change; they would rest on an<br />

ongoing desire for profit.<br />

Reputation (for high value permits) is consequently at the<br />

center of this self-enforcement mechanism. It is therefore<br />

crucial to design the allocation system so that sellers of permits<br />

would face the prospect of a substantial stream of revenue<br />

many years into the future. If the “shadow of the future” is<br />

too short, incentives for compliance will tend to vanish. In the<br />

long run, of course, the caps will have to “bite” even on those<br />

countries that were net sellers of permits when they originally<br />

joined. Our expectation is that, over time, countries such as<br />

China would increasingly recognize their stake in mitigating<br />

climate change; that is, at the state level, incentives would<br />

become political as well as economic, even if private entities<br />

would continue to be primarily motivated by profit. Having<br />

been part of a cap-and-trade system, these governments would<br />

also have developed the institutions necessary for effective<br />

participation, and acceptance of meaningful caps would<br />

therefore create a less uncertain prospect for them. In other<br />

words, ideally, the period of being large net sellers of permits<br />

would be a transition phase, easing countries’ way into full<br />

membership.<br />

The problem of assessment<br />

To be effective, any cap and trade regime, whether involving<br />

buyer or seller liability, requires an accurate and prompt ex<br />

post assessment of permit quality. In view of our assumption<br />

that any system that can be gamed for strategic advantage<br />

will be gamed, any technically complex system of assessment<br />

should be examined closely from a political standpoint. As<br />

in liability systems, complex technical arrangements can be<br />

strategically manipulated in ways that are not transparent. If<br />

so, their very complexity may be self-defeating.<br />

The most serious problem of measurement is political: An<br />

international assessment process will be vulnerable to political<br />

pressure, and like judges on international courts, individuals<br />

responsible for conducting an assessment may feel strong pressures<br />

to support the positions of their national governments.<br />

As a result, strenuous efforts must be made to insulate the<br />

assessment process from political pressure.<br />

Conclusion<br />

Our proposed system for a post-Kyoto regime rests instead on<br />

a model of buyer liability coupled to annual ex post assessments<br />

and jurisdiction-equal discounting of invalid permits.<br />

This system is incentive-compatible for two reasons: buyers<br />

have incentives to monitor the system and price permits<br />

according to perceived validity, and sellers have incentives,<br />

if allocations are correct, to maintain their reputations for<br />

reliability. The system will not operate automatically: In particular,<br />

institutions will need to be created to assure that ex<br />

post assessment is reliable and, ex ante, that ratings agencies<br />

are also reliable. Indeed, one of the major conclusions of this<br />

paper is the urgent need for social scientists to think more<br />

carefully about assessment institutions that could be effective<br />

in a climate change regime with buyer liability.<br />

There are many potential problems with this system, which<br />

are discussed in the full paper. However, the cardinal virtue of<br />

a buyer liability system is that it would not require that an international<br />

organization ensure compliance with international<br />

commitments—a condition that, as we have seen, cannot be<br />

met. This system would instead be self-enforcing.<br />

Robert O. Keohane works<br />

as tutor at the Woodrow<br />

Wilson School of Public<br />

and <strong>International</strong> Affairs,<br />

Princeton University.<br />

Kal Raustiala works<br />

as tutor at the UCLA<br />

Law School & UCLA<br />

<strong>International</strong> Institute.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 21

50,000,00<br />

50 trillion dollars<br />

This is how much damage the financial and economic crisis has caused throughout the<br />

world so far. That is the estimate of the Asian Development Bank.<br />

The World<br />

Financial<br />

Crisis in<br />

Numbers<br />

10,000,000,000,000<br />

10 trillion dollars<br />

This is the total of the US government’s financial injection<br />

into the country’s crippled financial sector.<br />

In 2005, the average per capita income of a U.S. resident<br />

over 25 was 32,140 US dollars, according to the US<br />

Census Bureau. He or she would have to work around 300<br />

million years to earn this amount. This is the time from the<br />

Permian Age, when the first reptiles appeared, until today.<br />

4,000,000,000,000<br />

4 trillion dollars<br />

In its current report, the <strong>International</strong> Monetary Fund (IMF)<br />

places the losses to the world’s financial sector from bad<br />

securities at around four trillion dollars.<br />

This equals the private wealth of the richest 1025 people<br />

before the financial crisis, according to Forbes Magazine.<br />

428,000,000,000<br />

428 billion dollars<br />

Eastern European countries have to raise around 428 billion<br />

euros ($600 billion) to repay loans. That is 50 percent more<br />

than was first assumed, since the IMF’s “<strong>Global</strong> Financial<br />

Stability Report” had previously miscalculated it.<br />

Since 1970, the industrialized countries have promised<br />

to raise their development aid to 0.7 percent of gross<br />

domestic product. However, this percentage is unaffordable,<br />

say the G8 countries’ finance ministers in unison. But<br />

the costs would not even be half as high as the Eastern<br />

European deficit.<br />

22<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Financial Crisis<br />

0,000,000<br />

A human organism has exactly this number of cells. The body, by the way, replaces its<br />

cells every 14 days. The economic crisis will be with us longer.<br />

180,000,000,000<br />

180 billion dollars<br />

The US insurance corporation AIG received federal aid<br />

several times in the last few months, which now totals<br />

around $180 billion. At the same time, AIG paid bonuses of<br />

165 million dollars.<br />

If you stacked 100 dollar bills on top of each other, they<br />

would build a tower around 180 kilometres high. That is<br />

around 20.5 times higher than Mount Everest, the world’s<br />

highest mountain.<br />

105,000,000,000<br />

105 billion dollars<br />

This much is being contributed to the <strong>International</strong> Monetary<br />

Fund by the European Union alone, as was decided at the<br />

economic summit in London.<br />

Three-quarters of the harmful greenhouse gases in the<br />

atmosphere come from industrialized nations. Developing<br />

countries bear the brunt of the damage, however. The<br />

Oxfam NGO estimates that some 100 billion U.S. dollars<br />

are needed to protect poor countries from the effects of<br />

climate change.<br />

24,000,000,000<br />

24 billion dollars<br />

China supports the dollar with around 24 billion dollars<br />

monthly (as of May <strong>2009</strong>). Up to now, the Chinese central<br />

bank has bought a total of around 770 billion dollars worth<br />

of US treasury securities, reports the Neue Züricher Zeitung.<br />

What could this amount do? Worldwide, 800 million people<br />

suffer from hunger. This number could be cut in half with<br />

24 billion dollars per year.<br />

1,000,000,000<br />

1 billion dollars<br />

One billion seems to be the smallest unit of measure in the<br />

current worldwide rescue plans. Amounts below that seem<br />

hardly worth mentioning in the media.<br />

Experts estimate that at least one billion people worldwide<br />

have to live on an income of one dollar per day. The billion<br />

that hardly plays a role any more in the worldwide financial<br />

merry-go-round would give these people a good day. Not<br />

much, perhaps, but more than many a “rescue package” is<br />

worth.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 23

24<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Financial Crisis<br />

Corporate<br />

Responsibility in<br />

Times of Crisis<br />

2008 will be remembered as the year of crises. The breakdown of financial<br />

institutions and markets and the subsequent worldwide economic<br />

downturn have put the spotlight on issues that the United Nations <strong>Global</strong><br />

<strong>Compact</strong> has long advocated as essential responsibilities for modern<br />

business and today’s global markets: comprehensive risk management,<br />

long-term performance, and ethics.<br />

By Georg Kell<br />

No doubt, poor regulation and oversight were among the<br />

key factors contributing to this dramatic chain of events. But<br />

equally important, the financial crisis revealed an inadequate<br />

understanding of risk and a fateful focus on short-term returns.<br />

In fact, if we were to take just one clue from the meltdown, it<br />

is that the global marketplace is in need of a stronger ethical<br />

orientation and a more comprehensive understanding, assessment,<br />

and management of risks that gives consideration to<br />

material issues in the environmental, social, and governance<br />

(ESG) realms.<br />

Restoring confidence and trust in markets requires a shift to<br />

long-term sustainable value creation, and corporate responsibility<br />

must be an instrument towards this end. If the crisis<br />

is any indication, it is now time to build on the advances<br />

made over the past 10 years by companies and investors in<br />

the area of ESG performance and bring this discipline to the<br />

mainstream.<br />

By understanding and broadly applying key lessons from the<br />

financial crisis, there is a genuine opportunity to alter the course<br />

of current challenges that will otherwise have systemic and<br />

game-changing consequences, notably climate change. Crises<br />

linked to food, water, and energy also pose serious threats. The<br />

call for governments, financial institutions, corporations, and<br />

citizens to responsibly manage these risks is urgent.<br />

For business, a few key lessons have emerged<br />

Long-term considerations and comprehensive risk-management<br />

must be integrated into market expectations and corporate<br />

strategy: Obsession with short-term profits and oftentimes<br />

reckless disregard for long-term considerations played an<br />

important role in destabilizing markets everywhere. At the<br />

same time, insufficient attention has been paid to ESG issues,<br />

which have gained in relevance and, thus, materiality to business<br />

– particularly climate change, water, and poverty.<br />

True business leadership must focus on stakeholders, not only<br />

shareholders: Well-publicized accusations of greed, fraud, and<br />

abuse – ultimately disregard for ethics and the interests of<br />

society – are numerous in the wake of the financial crisis. A<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 25

Viewpoint: Do we need a<br />

new economic system?<br />

By Dr. Elmer Lnzen<br />

In 1933, representatives from 66 countries met in London to<br />

find a common solution to that era's global economic crisis. The<br />

idea: to have London send a signal for a new global financial<br />

system. The conference was a flop. On BBC Radio, economist<br />

John Maynard Keynes called it a complete yawn, and went on<br />

to say that conferences of this type usually ended in empty<br />

platitudes and ambiguous phras es.<br />

Seventy-six years later, the world is once again peering into<br />

the abyss of a global economic crisis, and they're meeting<br />

in London again to discuss the cornerstones of a new global<br />

financial system. Even if history never repeats itself, there are<br />

certainly parallels: The global economic crisis of the 1930s led<br />

once already to liberalism being criticized and to the expectation<br />

that state intervention would lead the way out of the<br />

crisis. This Keynesianism shaped the European social market<br />

economy and only came to a standstill in the wave of inflation<br />

that followed in its wake. Today, too, most politicians have<br />

decided on the collapse of neoclassical/neoliberal economic<br />

policy by acclamation. John Maynard Keynes is experiencing<br />

a magnificent comeback.<br />

So what kind of economists do we want? Sensitive psychologists?<br />

Analytical scientists, or observant historians? There are<br />

two common types in the West: the economist-as-doctor and the<br />

economist-as-prophet. The doctor is the type who has problemsolving<br />

prescriptions or drafts “surgical cuts” to bring about a<br />

cure. The aim of the pragmatic doctor is not to illuminate the<br />

economy, but rather to treat the symptoms. The doctor comes<br />

when the national economy is suffering. Any Keynes or Jeffrey<br />

Sachs would certainly be a well-known example here.<br />

When it comes to forecasting, however, we have all those<br />

economists that we could almost call astrologers: They can<br />

predict the future numbers on gross national product, exports<br />

or unemployment with seemingly exact precision. They work<br />

as augurs of the national economy in economic research<br />

institutes or as chief economists for the major banks. Since<br />

the economy has to be rational and therefore predictable, the<br />

need for their services never flags. But just as it is for most<br />

astrologers, however, the world is always full of surprises,<br />

and the forecasts are usually wrong. Economists speak of the<br />

phenomenon of "fat tails".<br />

Could the crisis lead us to remember the economists as philosophers<br />

again? After all, many of the founding fathers of<br />

the market economy were of this type: Smith, Ricardo, Hayek<br />

and others. They questioned the fundamentals: which rules<br />

should be valid for the economy, and how much of the state<br />

do we need? What is the meaning of market and competition?<br />

And how are we to understand what is fair? Such a regulatory<br />

debate appears in an era when the world is falling apart, both<br />

in real terms and in principle.<br />

The current crisis is also a crisis of economic theory. Indeed,<br />

we are learning to say goodbye to many of our fondest habits,<br />

including the fact that fundamental company disclosures<br />

alone are not sufficient. No one is “too big to fail” anymore.<br />

What are the cornerstones of a new theory, then? The future<br />

global economy will be a less American one. Nowhere can the<br />

erosion of power be deduced more clearly than in the financial<br />

world. For years, the United States has pontificated on how<br />

business should work; potential objections from European<br />

politicians in favor of a more social and consensus-based<br />

economy were waved away as "nonsense" from old Europe.<br />

What mattered were bankers’ bonuses, quarterly shareholder<br />

value and limitless creativity when inventing newer and more<br />

bizarre capital market products. None of that has any value<br />

today -- literal or figurative. This opens up opportunities for<br />

other points of view: globalization can be rediscovered as a<br />

global contest of ideas. It will be exciting to discuss globalization<br />

with people from China, Kenya, India and Peru, without<br />

establishing a hegemonic explanation beforehand; just think<br />

of a Mohammad Yunus model of social entrepreneurship.<br />

These are new paths, important ones. The <strong>Global</strong> <strong>Compact</strong><br />

and initiatives like the Principles for Responsible Investment<br />

(PRI) and Principles for Responsible<br />

Management Education (PRME) can<br />

be important platforms for discussion<br />

in this regard.<br />

Dr. Elmer Lenzen<br />

Chairman<br />

26<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Financial Crisis<br />

number of financial and corporate leaders have been blamed<br />

for focussing on delivering rewards to a relative few at the<br />

expense of the taxpayers now paying for bailouts. Companies<br />

operating in the new global context must respond not only to<br />

investors, but also consider interests of employees, communities,<br />

and other key stakeholders.<br />

For markets to function, we need effective disclosure standards,<br />

regulation, and oversight: Lack of transparency and disclosure<br />

allowed too many organizations to hide poor practices that<br />

eventually led to financial collapses and liquidity crises, as well<br />

as lost homes, jobs, and pensions. Insufficient or ineffective<br />

regulation and oversight in the financial markets were part<br />

of the problem. Additionally, outdated regulatory frameworks<br />

no longer effectively addressed sophisticated capital flows<br />

and financial products in today’s global market. Reform will<br />

undoubtedly require increased international cooperation and<br />

coordination.<br />

and increased poverty have become more widespread. Shortterm<br />

stimulus and recovery plans within companies must be<br />

mindful of ESG impacts.<br />

More companies need to engage more deeply on ESG issues<br />

and comprehensively disclose their efforts:<br />

• ESG in the boardroom: Boards and other corporate governance<br />

entities have the ultimate responsibility for the long-term<br />

Economies are more interdependent than ever before: The<br />

rapid succession from the collapse of the US mortgage bubble<br />

to a global financial crisis and a subsequent global economic<br />

downturn is proof of the high degree to which markets are<br />

interconnected and interdependent. All economies – developing<br />

to advanced – have been affected to varying degrees.<br />

And on top of massive investment losses and loan failures,<br />

many countries face imminent threats of increased poverty<br />

and social ills.<br />

A bright future for corporate responsibility?<br />

By all accounts, the crisis requires a renewed call for corporate<br />

responsibility – through the observance of universal principles<br />

in the areas of Human Rights, labour, environment, and anticorruption.<br />

Today’s confluence of global threats provides the<br />

most compelling and rational case for: embracing an expanded<br />

view of risk and opportunity management to include ESG<br />

factors; for increasing focus on long-term value creation in<br />

companies and markets; and for emphasizing responsibility<br />

and ethics to drive confidence and trust.<br />

The following framework for action should guide companies<br />

in their efforts to reconcile their commitment to corporate<br />

responsibility with the circumstances of a fundamentally<br />

altered global economy.<br />

Implementation and disclosure of ESG issues<br />

The economic downturn poses a real challenge for many<br />

companies, yet should not be used as an excuse to ignore or<br />

cut back on issues that directly impact the value of business.<br />

Climate change, Human Rights challenges, and corruption<br />

will not vanish as a result of economic decline and may actually<br />

worsen because of it. Already, downsizing, labour unrest,<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 27

stewardship of the organization. In this regard, they are<br />

responsible for assessing and overseeing risks posed to the<br />

enterprise – financial and extra-financial. Recent studies<br />

indicate that a minority of boards are adequately addressing<br />

traditional risks, and even fewer are equipped to do so<br />

in the environmental and social realms. Companies should<br />

integrate ESG issues into boardroom deliberations and policymaking.<br />

• Subsidiaries and supply chains: Without a deeper penetration<br />

throughout companies and value chains, corporate responsibility<br />

efforts will have limited impact. While CEO ownership<br />

of ESG issues has grown, the momentum has not sufficiently<br />

moved down the organization and out to subsidiaries and<br />

supply chains. It is time to move for an integrated approach<br />

to implement all <strong>Global</strong> <strong>Compact</strong> principles throughout and<br />

beyond headquarters, and then report on these efforts.<br />

• Comprehensive and accurate disclosure: Without more comprehensive<br />

and accurate disclosure, it will be difficult to establish<br />

a strong link between ESG performance and long-term<br />

value. The <strong>Global</strong> <strong>Compact</strong>’s Communications on Progress<br />

(COP) framework was introduced for this purpose and has<br />

resulted in the submission of nearly 5000 reports by participating<br />

companies. Likewise, all of the <strong>Global</strong> <strong>Compact</strong>’s<br />

specialized engagement platforms – such as the CEO Water<br />

Mandate and Caring for Climate – have introduced disclosure<br />

requirements. Companies of all sizes are called on to<br />

use established frameworks and indicators when reporting,<br />

such as the <strong>Global</strong> Reporting Initiative. While much work<br />

remains to be done, limited early efforts by companies to<br />

include ESG figures in annual financial reports have been<br />

undertaken and mark an important shift in thinking on the<br />

financial materiality of these issues.<br />

• Engaging the investment community: One of the most important<br />

trends in recent years has been the movement by mainstream<br />

investors to identify and integrate ESG issues into relevant<br />

policies and investment decision-making. This provides a<br />

powerful impetus for companies to implement and disclose<br />

performance results. It is not just the growth of the responsible<br />

investment community that is promising – for instance<br />

the UN Principles for Responsible Investment now comprise<br />

470 signatories with around USD 18 trillion of assets under<br />

management – but also the campaigns being undertaken to<br />

encourage business action. Companies should capitalize on<br />

this growing opportunity to more actively communicate their<br />

ESG policies and performance with investors – emphasizing<br />

materiality and the links to corporate value drivers.<br />

Climate change<br />

The risks from climate change are intimately linked with issues<br />

at the core of the corporate responsibility movement: Human<br />

Rights, labour, and good governance. It is the most serious<br />

threat to global development and social progress. A global<br />

agreement on climate that results in a sufficient price for carbon<br />

will help ensure the continuation of a global marketplace<br />

based on openness and competition. On the other hand, the<br />

trade tensions and discriminatory carbon tariffs that would<br />

result from a failure to find an agreement could destroy the<br />

underpinnings of the global economy, upon which so many<br />

companies and investors are reliant. The ability of stakeholders<br />

– namely government and business – to cooperate and<br />

collaborate to find climate solutions will be the litmus test for<br />

the sustainability of our current global market system.<br />

• Building a green economy: Only a small fraction of business<br />

leaders are taking the climate agenda seriously. Many are<br />

still sitting on the fence, while others are actively lobbying<br />

against climate action. It is now time to change course and<br />

help build a green economy. Business must answer the call<br />

to create a future based on a low-carbon economy – green<br />

jobs, renewable energy, and energy efficiency – and make<br />

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use of their supply chains to ensure that the cleanest technologies<br />

are developed and applied everywhere.<br />

• Caring for Climate: All companies should join Caring for Climate,<br />

the world’s largest business-led initiative on climate change,<br />

in which chief executives commit to undertake comprehensive<br />

climate policies and disclose carbon emissions. In addition to<br />

assisting companies in the development of effective climate<br />

policies, Caring for Climate also provides a channel for the<br />

business community to contribute inputs and perspectives<br />

to key governmental deliberations.<br />

• Water stewardship: A critical – and related – issue for business<br />

action is water sustainability. Through the CEO Water<br />

Mandate, the <strong>Global</strong> <strong>Compact</strong> provides an avenue for advancing<br />

corporate water stewardship. The initiative assists companies<br />

in the development, implementation, and disclosure<br />

of water sustainability policies and practices. Examples of<br />

efforts include drip irrigation, water harvesting, and new<br />

technologies for recycling water from manufacturing.<br />

• Business vision for COP 15: It is essential for business to be part of<br />

the movement for a comprehensive and meaningful agreement<br />

at COP 15, the United Nations Climate Change Conference,<br />

to be held in Copenhagen in December <strong>2009</strong>. In this context,<br />

business is called upon to develop a shared vision and a set<br />

of recommendations towards a new, global framework on<br />

climate change. Governments must understand that December<br />

is the time to seal the deal on climate change.<br />

Collective action<br />

The greatest global challenges will only be solved by cooperation.<br />

Effective partnerships can make it possible to overcome<br />

dilemmas that are too difficult or complex for one organization<br />

or sector to address alone. More and stronger collaboration<br />

between governments, civil society, and the private sector is<br />

needed.<br />

• The voice of business: The collective voice of business can lead<br />

to significant changes in expectations. Business initiatives<br />

have made important contributions to norms and standards<br />

– sometimes joining together on issues, such as corruption<br />

and nutrition, or by sector, such as extraction and textiles.<br />

For example, it will only be through effective advocacy and<br />

business statesmanship that business can help move the<br />

climate change agenda in the right direction. An enormous<br />

need for advocacy also exists in relation to water, food sustainability,<br />

and supply-chain standards.<br />

• Public-private partnerships: Almost all United Nations entities now<br />

work with business and civil society to address the Millennium<br />

Development Goals, as well as issues such as food security and<br />

disaster relief. Increasingly, government development agencies<br />

engage the private sector in coalitions and community-based<br />

initiatives. This momentum must be harnessed and a renewed<br />

focus placed on collaboration, with a move from pilot projects<br />

to large-scale transformative initiatives.<br />

<strong>Global</strong> frameworks and national regulation<br />

Today, there is an opportunity for chief executives to exercise<br />

business statesmanship by supporting solutions to issues,<br />

including climate change, anti-corruption, and other key<br />

areas. However, too often, a disconnect remains between a<br />

company’s responsibility commitments and its (direct and<br />

indirect) lobbying.<br />

There are several important opportunities linked to national<br />

regulation. Related to climate, business should support and<br />

not obstruct higher performance standards in critical areas<br />

such as energy efficiency and investments in new technologies,<br />

which will lead to low-carbon economies. Domestic<br />

stimulus packages implemented in response to the economic<br />

downturn must be carried out with sufficient transparency<br />

and oversight. Calls for regulators to require listed companies<br />

to disclose ESG performance should be supported. And<br />

efforts by governments to encourage business to implement<br />

ESG issues promise to bring increased attention and scale to<br />

corporate responsibility.<br />

Of course, in the midst of increased calls for regulatory safeguards<br />

and oversight, governments must do their part and<br />

actively encourage companies to voluntarily adopt tenets of<br />

corporate responsibility.<br />

Governments should further emphasize that regulation and<br />

voluntary initiatives are complementary. In addition to effective<br />

regulation, voluntary efforts can deliver value in terms<br />

of innovation and solution-finding that goes beyond the bar<br />

set by rules. There are additional steps to be taken to promote<br />

responsible business, most notably rewards for good corporate<br />

practices and tax incentives.<br />

None of the measures and steps outlined here will deliver results<br />

overnight. And some require fundamental transformations of<br />

business strategies and operations. But if anything good is to<br />

emerge from this economic crisis, it is the real opportunity<br />

to define a new phase in globalization, in which markets<br />

contribute to a world where all people live in societies that<br />

are prosperous and peaceful.<br />

Georg Kell is Executive Director, United<br />

Nations <strong>Global</strong> <strong>Compact</strong><br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 29

Ethics and<br />

Business:<br />

Ensuring<br />

Credibility<br />

By ???<br />

Ethics and business are often thought to be in tension and conflict with<br />

each other. How do you see the importance of ethics for the functioning<br />

of the social market economy?<br />

Andreas Suchanek: Ethics, in the form of a shared basic<br />

understanding of “right” values, such as dignity, freedom,<br />

justice, etc., are the foundation of the social market economy.<br />

Competition and legal foundations, both of which are essential<br />

for a market economy, lose their ability to function<br />

when people lose trust, and maintaining trust is always (also)<br />

a matter of the responsibility – or more generally: practiced<br />

values – of those active in the market economy. Tensions<br />

between ethics and business will always arise, but the goal is<br />

to find suitable investments that make ethics and business,<br />

responsibility and profit fruitful for each other.<br />

With the current financial and economic crisis, trust in the market<br />

economy’s advantages for society has reached an all-time low. How<br />

can business and society come together again?<br />

Suchanek: On the one hand, this is a problem of unfamiliarity:<br />

Many people understand too little about the market<br />

economy and what companies and managers achieve to have<br />

appropriate expectations; in other words, sometimes they have<br />

expectations that can’t possibly be met. Here, education and<br />

communication are needed about what we can reasonably<br />

expect and what costs are associated with a market economy<br />

(for the market economy is still the best of all economic systems<br />

today, despite recent events).<br />

On the other hand, it’s also a question of the commitment<br />

of decision-makers and companies active in the economy to<br />

clearly recognise their responsibility and communicate this<br />

credibly. In this context, “credible” means ensuring that you<br />

don’t make promises that you later can’t keep, whether these<br />

are concrete promises to customers, suppliers or employees or<br />

general promises in the form of communicated values.<br />

In many companies, a rediscovery of values has taken place in recent<br />

years. How can such a value system help companies responsibly flesh<br />

out the inadequate global order?<br />

Suchanek: Here, too: Properly understood, values are<br />

the foundation for a company’s ability to add value. Nobody<br />

wants to work for an irresponsible, unreliable company that<br />

lacks integrity, nor does anyone want to buy its products.<br />

That also holds especially for global competition. And so it’s<br />

no coincidence that a rediscovery of values is taking place at<br />

this time. Of course, it’s critical that these values be put into<br />

practice, and that requires investments in management training<br />

and development and in the governance structures. The<br />

values must be made consistent with the often challenging<br />

conditions of the company’s daily work.<br />

Implementation of values also demands mechanisms of guidance and<br />

control. These include, among other things, incentive systems, CSR<br />

management and compliance. Is this an important key for orienting<br />

innovation processes and company development on superordinate,<br />

non-financial goals?<br />

Suchanek: I believe, yes! The previously mentioned task<br />

of integrating the values into day-to-day work has a lot to do<br />

with the mentioned compliance and incentive systems. What’s<br />

important is to see both of them in context; in particular,<br />

employees must be made to understand why and how, for<br />

example, compliance measures serve to implement values<br />

such as integrity.<br />

CSR measures in the narrow sense of corporate citizenship,<br />

that is, contributions, pro-bono activities, giving employees<br />

time off for social or ecological projects, etc., can also be an<br />

important component if professionally implemented. But<br />

such measures should not be equated with a company’s<br />

responsibility; they’re only part of it. Corporate responsibility<br />

involves first and foremost the core business – the way<br />

profits are earned.<br />

Prof. Andreas Suchanek is the Dow Research<br />

Professor of Sustainability and <strong>Global</strong><br />

Ethics at the Leipzig Graduate School of<br />

Management (HHL).<br />

The interview took place in conjunction with<br />

the <strong>2009</strong> Baden-Württemberg Sustainability<br />

Congress.<br />

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Has the<br />

Triple<br />

Bottom Line<br />

Failed, Mr.<br />

Elkington?<br />

“No” would be my one-word answer to the editors’ question.<br />

Indeed, the very fact that the editorial team of the <strong>International</strong><br />

<strong>Global</strong> <strong>Compact</strong> <strong>Yearbook</strong> decided to commission this<br />

essay – some 15 years after the genesis of the “triple bottom<br />

line” agenda – itself speaks volumes. Success and failure are<br />

relative, of course, reflecting initial expectations and ambitions.<br />

In coining terms like “environmental excellence” (1984), “green<br />

consumer” (1986), or “triple bottom line” (1994), I was simply<br />

trying to help us all expand our minds for new possibilities.<br />

The second of these terms set a high bar, with our book The<br />

Green Consumer Guide selling something like one million<br />

copies worldwide, but even though Cannibals with Forks –<br />

the book in which I introduced the triple bottom line concept<br />

to a wider world – sold 95 percent fewer copies, I consider it<br />

to have had an equal, or even greater, impact.<br />

But what metrics or benchmarks of success should we use<br />

here? For me, one key consideration is this: Whatever business<br />

language we now use, the idea that corporations and<br />

financial institutions need to track and manage value creation<br />

(or destruction) in multiple dimensions is no longer as<br />

alien as it once was. In that sense, at least, the triple bottom<br />

line concept has helped open-out business, financial, and<br />

governmental horizons.<br />

Just for a moment, recall what the business agenda was like<br />

in this sector back in 1994. The leading edge of thinking<br />

focussed on what was called eco-efficiency – a term coined<br />

by the World Business Council for Sustainable Development<br />

two years prior. The idea here was that business should simultaneously<br />

pursue a reduction in the material- and energy<br />

intensity of goods or services, alongside greater durability,<br />

improved recyclability, and maximum use of renewable<br />

resources. All perfectly splendid and – as the recent energy<br />

crunch underscored – there is a great deal still to be done<br />

on those fronts.<br />

But my motivation in coming up with the triple bottom line<br />

reflected a very personal frustration that eco-efficiency – at the<br />

time often presented as shorthand for business sustainability<br />

– missed a trick (some would say deliberately so) by focussing<br />

on the interplay between financial and environmental factors.<br />

In the process, it created (or aggravated) potential blind spots<br />

in business thinking, ignoring at least two key components<br />

of business and market performance: the broader economic<br />

and social dimensions of value creation.<br />

At a time when a surprising number of otherwise sane American<br />

business leaders chose to see sustainable development as akin<br />

to socialism – even communism – this was a gamble: Perhaps<br />

we risked confirming their fears and forcing a general retreat.<br />

But I had already had a very positive response to a paper I<br />

had produced for the California Management Review in 1994,<br />

which spotlighted the potential for what I called “win-win-win”<br />

strategies and solutions. The triple bottom line language was<br />

an attempt to communicate this wider sustainability challenge<br />

to business people; the rather more populist version I<br />

came up with in 1995 – “People, Planet, Profit” – helped the<br />

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to some degree. Over time, these have evolved into a level of<br />

sophistication that would have been inconceivable a decade<br />

earlier. In parallel, socially responsible investment firms – and<br />

even mainstream financial institutions – began to open out<br />

their thinking and metrics, though the pace of development<br />

here has often been frustratingly slow. You might even argue<br />

that this new line of business thinking helped pave the way<br />

for later initiatives like the UN <strong>Global</strong> <strong>Compact</strong>.<br />

Academics and researchers have piled in behind, studying the<br />

different approaches. Triple bottom line case studies have been<br />

written and books published that critically evaluate progress<br />

to date. Among the latter, a key contribution was The Triple<br />

Bottom Line: Does it All Add Up? – Assessing the Sustainability<br />

of Business and CSR, published by Earthscan (London,<br />

UK) in 2004. As the publishers explained, it reviewed what<br />

the concept had “already achieved by stimulating change and<br />

bringing business to appreciate the importance and benefits of<br />

corporate social responsibility (CSR) and good environmental<br />

performance.” The contributors then explored what still needed<br />

to be done through regulation and legislation.<br />

concept go viral, particularly when Shell used it as the title of<br />

its first-ever sustainability report in 1997.<br />

Before long, various new institutions were adopting triple<br />

bottom line frameworks in their work, among them the Dow<br />

Jones Sustainability Indexes (where, to disclose an interest, I<br />

have been on the Advisory Board since the outset) and the<br />

<strong>Global</strong> Reporting Initiative (where I helped shift the original<br />

concept of environmental reporting to a triple bottom line focus<br />

– and now serve as a member of the Board). The concept also<br />

spurred the establishment of many other organizations, among<br />

them Robert Rubenstein’s TBLI Group, which organizes major<br />

conferences on related themes for the financial world.<br />

Over time, in addition to Shell, we have seen a growing array<br />

of companies building triple bottom line thinking into their<br />

values and strategies – with Denmark’s Novo Nordisk integrating<br />

it into its very chartering. In turn, the concept spurred the<br />

evolution and spread of related terms, including “double bottom<br />

line” (financial and social), “quadruple bottom line” (with the<br />

fourth dimension being anything from ethics to governance),<br />

the 3-D agenda of “environment, society, and governance” (ESG),<br />

and Jed Emerson’s concept of “blended value”. Whether in this<br />

last formulation or the World Resources Institute’s concept of<br />

the “next bottom line”, the quest was on for ways of accounting<br />

for and managing multi-dimensional value creation.<br />

Before long, literally thousands of companies were producing<br />

annual reports that embraced the triple bottom line approach,<br />

Overall, I am not unhappy with progress on the triple bottom<br />

line agenda, which I see gaining a new lease on life at the moment,<br />

particularly in some of the BRIC countries. But before I<br />

rest my case, I should underscore the fact that Cannibals with<br />

Forks was one of a trilogy, followed in 2001 by The Chrysalis<br />

Economy and in 2008 by The Power of Unreasonable People.<br />

The second volume went on to say that corporate responsibility<br />

was a necessary – but not sufficient – condition of<br />

sustainable development, with a major economic transformation<br />

likely during the second decade of the new century. The<br />

third volume explores the work of some of the potentially<br />

disruptive innovators and entrepreneurs who are evolving<br />

the new mindsets, technologies, and business models that<br />

will underpin any sustainability transition. This work was<br />

taken further in our <strong>2009</strong> report, The Phoenix Economy: 50<br />

Pioneers in Social Innovation. So I see the triple bottom line<br />

as a work in progress – not a museum exhibit – and as a<br />

continuing challenge to the thinking of decision-takers and<br />

policymakers. Watch this space.<br />

John Elkington is Co-Founder of<br />

SustainAbility HYPERLINKandHYPERLINK<br />

as an author he coined the term “triple<br />

bottom line” in 1994HYPERLINK.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 33

Visiting the <strong>Global</strong><br />

<strong>Compact</strong> Office<br />

When I went to New York in March <strong>2009</strong>, it was during the peak of the<br />

banking crisis and the self-doubts of the investment sector. There was<br />

a prevailing certainty that one economic era had come to an end, but<br />

ambiguity as to how the new era would look. Some of these elements are<br />

being intensively discussed and developed at the <strong>Global</strong> <strong>Compact</strong> Office:<br />

It is about lasting nature, transparency, responsible merchants, and the<br />

respectful handling of our planet.<br />

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By Dr. Elmer Lenzen<br />

The ejection from paradise finally took place at Sotheby’s.<br />

“The Peaceable Kingdom”, a naive depiction of conditions in<br />

paradise by Edward Hicks, was recently auctioned off there<br />

for just under 10 million dollars. The once superrich patron<br />

Ralph Esmerian had previously removed the painting from<br />

a New York museum. At present, this is not a unique event:<br />

Artwork on loan and promised gifts have been brought to the<br />

auction house a lot lately.<br />

The crisis has a firm hold on New York: Stocks have fallen to<br />

unexpected lows, fancy restaurants wait in vain for customers,<br />

and boutiques are unabashedly announcing discounts of up<br />

to 50 percent, even on noble shopping miles like Fifth and<br />

Madison Avenues. The government, meanwhile, is simulating<br />

“stress tests” for its sick banks, and the weather is also acting<br />

crazy: Though already the beginning of March, it’s colder than<br />

it has been in decades. Even the airports had to shut down<br />

temporarily. Good thing, some announcers said, that nobody’s<br />

flying anyway because of the crisis.<br />

In the UN district on the Hudson River, activity seems to be<br />

going on unabated. Delegations and visitors from around<br />

the world are pushing their way into the world-famous glass<br />

building to take part in a conference, one or the other of<br />

which is going on here almost all the time. Across the street<br />

is the Millennium Hotel, a popular accommodation for guests<br />

and speakers. Right next to it, almost inconspicuous, is the<br />

entrance area to one of the United Nations’ administration<br />

buildings. There on the sixth floor is DC2-612: the <strong>Global</strong><br />

<strong>Compact</strong> Office.<br />

Here, up to 25 people work in a space of barely 200 square<br />

metres on the vision of a just globalization. The floor is shared<br />

with the “UN Mine Action Service”, which has also provided<br />

the pictures in the shared hallway. The photos of mine victims<br />

in Afghanistan shake viewers up and remind them of the challenges<br />

the world faces. The working conditions in DC2-612<br />

are cramped. Besides the work stations, the open-space office<br />

serves as a storeroom and a place to plan global strategy. “Still,”<br />

<strong>Global</strong> <strong>Compact</strong> spokesman Matthias Stausberg says with a<br />

grin, “each room has its own window and so has daylight.”<br />

That’s not always the case for US offices.<br />

This is where the world’s largest and most important initiative<br />

for business responsibility has its headquarters. Unspectacular.<br />

Modest. That fits an initiative that, though sponsored by no<br />

less than the UN Secretary-General, does not draw attention<br />

to itself by making loud demands, but rather discreet recommendations.<br />

Founded 10 years ago, the UN <strong>Global</strong> <strong>Compact</strong> is<br />

a strategic policy initiative for businesses that are committed<br />

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to aligning their operations and strategies with ten universally<br />

accepted principles in the areas of human rights, labour, environment<br />

and anti-corruption. Today, the Initiative includes<br />

well over 6,000 companies and other stakeholders from 130<br />

countries around the globe.<br />

The <strong>Global</strong> <strong>Compact</strong> sees itself as a dialogue forum that has<br />

promotion of its own ten principles on the agenda as well as<br />

support of broader UN initiatives, such as the Millennium<br />

Development Goals (MDGs). Critics counter that the <strong>Global</strong><br />

<strong>Compact</strong> is a conglomeration of do-gooders. Toothless and<br />

weak. NGOs like Greenpeace or Oxfam consider every form<br />

of corporate social responsibility (CSR), and so also the <strong>Global</strong><br />

<strong>Compact</strong>, to be pure window-dressing. For them, free trade<br />

only works with hard rules, not recommendations. But <strong>Global</strong><br />

<strong>Compact</strong> director Georg Kell waves this aside: “No government<br />

bureaucracy can ever spread technology and innovation on<br />

the same scale and at the same speed as the private sector.”<br />

Former UN Secretary-General Kofi Annan understood this. In<br />

1997, he assigned Kell the task of sounding out the potential<br />

for cooperation between the UN and business. The man from<br />

Above: UNGC spokesperson Matthias Stausberg<br />

Left: The GCO offers many space for ideas but the<br />

working space is limited.<br />

southern Germany had previously gained experience with<br />

business cooperations as a development expert in Africa and<br />

Latin America. Two years later, he had to write a “really good<br />

speech” for Annan, Kell remembers during the interview. The<br />

UN Secretary-General wanted to hold the speech at the World<br />

Economic Forum in Davos as a direction-setting signal for the<br />

change of millennium. Kell was so nervous, he admits today,<br />

that he hardly heard a word. But the reactions were all the<br />

more clear: The vague vision of a <strong>Global</strong> <strong>Compact</strong> was so well<br />

received around the world that, within a decade, it would grow<br />

into the world’s leading umbrella brand for CSR. There’s a<br />

reason for its success: With the UN, the CSR issue has a credible<br />

sponsor. Companies, politicians, labour unions, scholars<br />

and civil-society groups feel equally represented and accepted<br />

here. The UN is one of the few supranational organizations<br />

whose credibility is widely recognized.<br />

The <strong>Global</strong> <strong>Compact</strong> lives from this credibility and from<br />

members’ desire to work with each other, not against each<br />

other. Olajobi Makinwa today is issue manager for the subject<br />

of anti-corruption. Previously, the lawyer was director of<br />

Amnesty <strong>International</strong> in South Africa. In the interview, she<br />

remembers that, for her, business used to be the enemy. In<br />

contrast, respect and acceptance of the other side characterises<br />

the <strong>Global</strong> <strong>Compact</strong>. Tolerance as a unique selling proposition.<br />

But there were doubts not only from the NGO side; even in the<br />

UN itself, many shared this fear, adds Melissa Powell, Head of<br />

Strategy and Partnerships. At first there was even a caricature<br />

showing the UN Building with company standards and their<br />

logos replacing the national flags. Subtitle: “UN for sale”. Today,<br />

Powell receives weekly calls from the Building asking for help.<br />

“Many believe”, Powell says, “that the <strong>Compact</strong> is sitting on<br />

mountains of company cash that we can distribute as we see<br />

fit.” That, of course, is not true, she adds.<br />

But for all participants, more important than the financing<br />

question is the upholding of credibility: Over the years, Kell and<br />

his team have quietly toughened the conditions of participation.<br />

The main instrument is the annually required Communication<br />

on Progress (COP). The COP must substantially report on the<br />

company’s engagement. Those companies that don’t submit<br />

it are first warned, then placed on the inactive list, and finally<br />

removed from the rolls. Even voluntary initiatives can have<br />

tough rules. In any case, the policy has consequences: Well<br />

over 600 companies have been delisted over the last few years.<br />

Is the <strong>Global</strong> <strong>Compact</strong> losing members then? On the contrary.<br />

The Initiative is constantly gaining in popularity, especially<br />

in the Southern Hemisphere. That is important, since it’s<br />

especially critical there to uphold labour, environmental and<br />

social standards. The ten principles must be implemented<br />

there in order to become a truly global standard.<br />

The new UN Secretary-General Ban Ki-moon also stands behind<br />

the pact. This support is important, and the Secretary-General<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 37

makes it clear that the Initiative can<br />

show us ways out of the crisis. Ban:<br />

“Ensure that your boards, subsidiaries<br />

and supply chain partners use the <strong>Compact</strong><br />

as both a management guide and a<br />

moral compass.” Morality as a compass<br />

in these times? That sounds pious. But<br />

Kell becomes feisty: Especially now, we<br />

see that responsibility and long-term<br />

strategies pay off in the end.<br />

That the worldwide crisis has come to<br />

a head in the finance and trade centre<br />

New York is understandable. And at the same time, it’s symbolic:<br />

New York, like almost no other city, incorporates globalization<br />

with all its achievements and excesses. The city is a melting<br />

pot of cultures, nationalities, lifestyles. New York is the city<br />

where every good, every service and every type of information<br />

is available at any time. But it’s also the city where one hour<br />

of parking costs as much as a pair of jeans sewn together in<br />

Bangladesh or Turkey. And where a simple dinner is as expensive<br />

as one year of school fees in Namibia. Everything in this<br />

city has its price, but only few ask about the value, Kell adds<br />

pensively. In this point, too, New York has followed its own<br />

path. The wrong path, Kell emphasises untiringly.<br />

Regardless, nowhere did the price and profit spiral turn as<br />

consistently as on Wall Street and in the Financial District. At<br />

the same time, nowhere were so few questions asked about the<br />

value of the products as right here at AIG, Lehman Brothers,<br />

Bear Stearns, Citibank and the others. Every news broadcast<br />

and every discussion in the city’s innumerable delis now seems<br />

to revolve around the cause of the crisis: The answer has five<br />

letters – greed. Greed destroyed understanding. Greed made<br />

people careless about risk. Greed made people irresponsible.<br />

That has become clearer to everyone today than in the past.<br />

Even to those who, until recently, joked about the term “business<br />

ethics”.<br />

Further down on the southern tip of Manhattan lies the heart<br />

of globalization and greed. From the Fulton Street subway station,<br />

it takes just a few minutes to walk to Wall Street: Here<br />

you can see the stockbrokers, the masters of the universe, as<br />

Tom Wolfe aptly called them in his novel. Men whose actions<br />

were guided solely by bonuses and commissions. Now the<br />

brokers inconspicuously pull on their jackets when they go<br />

out on the street. Not just because of the cold, as can be seen<br />

from their furtive glances to the left and right. Nobody wants<br />

to be recognised as a stock market speculator nowadays. The<br />

masters of the universe have grown meek. Many a finance<br />

and business magnate has taken on the role of enlightened<br />

sinner. The most spectacular was the confession of Jack Welch:<br />

The long-time CEO of General Electric and icon of US industry<br />

declared this spring that striving for short-term profits and<br />

Especially now,<br />

we see that<br />

responsibility<br />

and long-term<br />

strategies pay off<br />

in the end.<br />

higher share prices is a “dumb idea”. “On<br />

the face of it, shareholder value is the<br />

dumbest idea in the world,” Welch told<br />

the Financial Times. “Shareholder value<br />

is a result, not a strategy … Your main<br />

constituencies are your employees, your<br />

customers and your products.”<br />

Still, at <strong>Global</strong> <strong>Compact</strong> no one is happy<br />

about the crisis. Too obvious are the social<br />

and ecological costs that now have to<br />

be paid throughout the world: In China<br />

alone, 25 million migrant workers have<br />

been hit by mass layoffs so far. In Africa, the crisis is destroying<br />

the already meagre buds of economic growth. Australia,<br />

for its part, has largely put its climate protection promises<br />

on ice: Introduction of emissions trading has been postponed<br />

with the curt justification that the economic situation doesn’t<br />

permit it. And so the next step of the crisis is now starting:<br />

When companies get into trouble, the state currently jumps in.<br />

But who will stand by the state when it gets into trouble, as is<br />

happening in Iceland and many eastern European countries?<br />

38<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

<strong>Global</strong> <strong>Compact</strong> Inside<br />

Left: New York is the centre of the financial world and<br />

since the beginning home of the <strong>Global</strong> <strong>Compact</strong>.<br />

Below: Major Bloomberg has promised a "greener" city.<br />

strategic orientation has clearly been jettisoned, and longterm<br />

thinking has given way to the struggle for short-term<br />

survival. On the other hand, of course, there are companies<br />

that understand how to adapt to the situation. The core<br />

question for Stausberg is, what is the appropriate stimulus<br />

to cause a change from short-term to long-term thinking? A<br />

corresponding insight in management circles, as is currently<br />

being called for, is certainly essential. But also just as important<br />

is a state that creates incentive systems, consumers that<br />

reward such companies through conscious consumption<br />

decisions and investors that look for more than supposedly<br />

dream yields.<br />

Not long ago, British Prime Minister Gordon Brown warned<br />

of “deglobalization”, an implosion of world trade with fatal<br />

results for social systems and political orders.<br />

Freedom without boundaries must fail, German Interior Minister<br />

Schaeuble warns. But freedom itself must not be put up<br />

for grabs in consequence. Rather, crash barriers need to be<br />

erected. And to continue with the thought process, there must<br />

also be guiding stars. Both, crash barriers and guiding stars,<br />

mark a new economic order, to which the <strong>Global</strong> <strong>Compact</strong><br />

can give answers. Kell: “The quarterly short-term thinking that<br />

prevailed for so long is slowly giving way to a more comprehensive,<br />

sustainable risk assessment.”<br />

Olajobi Makinwa also sees opportunities for new moral guidelines:<br />

“It made people start asking questions,” she says with<br />

hope. Fundamental strategies are being tested. She herself is<br />

responsible for the issue of corruption and notes that many<br />

companies are now asking her for advice, since ethics are<br />

becoming more widely understood as providing a direction<br />

for the future.<br />

Only the spokesman Matthias Stausberg is not as optimistic<br />

as some of his colleagues. He currently sees two contradictory<br />

tendencies: On the one hand, there are a growing number<br />

of companies that, in panic and fully without reflection, are<br />

axing all budgets that aren’t essential for daily business. All<br />

The Green New Deal, which is being talked about so much<br />

these days, is an idea many people have to get used to. Still:<br />

“It’s time for a change” seems to be the phrase of the hour,<br />

thanks to President Obama. New York is perhaps an indicator<br />

for this change as well. The city wants to become greener. On<br />

the one hand, it wants to animate more and more people to<br />

switch to buses and subways, and on the other, it wants to<br />

make buildings, such as the currently highest skyscraper in<br />

the city – the Empire State Building – into model projects<br />

for energy efficiency. “With the renovation of the Empire State,<br />

we want to emphasise that 80 percent of the greenhouse gas<br />

emissions in New York are caused by buildings,” New York<br />

Mayor Michael Bloomberg says. The Empire State Building<br />

project can save 38 percent of the energy used. To achieve<br />

this goal, 6,500 conventional windowpanes on the building’s<br />

surface will be replaced by thermopane glass. In addition, the<br />

building’s heating and air conditioning and electrical systems<br />

will be made state of the art. Experts estimate the savings at<br />

4.4 million dollars per year, which will save 105,000 tons of<br />

CO2 in 15 years. Even now, the 78-year-old building glows<br />

green in the evening to show its good will.<br />

But let’s not get caught up in too much euphoria. The outcome<br />

of the painting auction at Sotheby’s should be a warning. The<br />

successful bidder has since fallen into financial trouble and<br />

is trying to back out of the purchase. A lawsuit has been filed<br />

between him and Sotheby’s. One thing, at least: Until the<br />

dispute is settled, the picture will remain in the museum.<br />

Dr. Elmer Lenzen,<br />

Chairman of the macondo Media Group<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 39

Ethics is Back<br />

Georg Kell about the Crisis,<br />

Climate Change and the<br />

Role of the <strong>Global</strong> <strong>Compact</strong><br />

40<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

<strong>Global</strong> <strong>Compact</strong> Inside<br />

Since the very beginning, Georg Kell has been Executive Director of the <strong>Global</strong><br />

<strong>Compact</strong>. Due to his ongoing fervour the <strong>Global</strong> <strong>Compact</strong> today is fully integrated into<br />

the UN system. We spoke with Georg Kell about the economic crisis, the search for<br />

new confidence, and the renaissance of politics and ethics. His message is clear:<br />

We have to reward sustainable business models. And we have to take climate change<br />

much more seriously, or the future might be rough.<br />

Interview conducted by Dr. Elmer Lenzen<br />

Mr. Kell, when the <strong>Global</strong> <strong>Compact</strong> was founded, the world was at the<br />

edge of the 21st Century. Since then, we have seen 9/11, questionable<br />

wars on terror and a financial and economic crisis of historic dimensions.<br />

Is the <strong>Global</strong> <strong>Compact</strong> prepared for such times?<br />

Ten years ago, the <strong>Compact</strong> was launched primarily to<br />

provide legitimacy. That was before Seattle and other World<br />

Trade Organization events. Without a doubt, these issues are<br />

still important today. But it has now become very clear that we<br />

have entered a new era: the world is struggling to restore trust<br />

and confidence in order to return to growth and employment.<br />

We are seeing enormous government interventions and experiencing<br />

market shockwaves unlike any since the 1930s.<br />

At the same time, we have to brace ourselves for the next<br />

systemic disruption: climate change. We completely agree<br />

with UN Secretary-General Ban Ki-moon’s position on sustainability<br />

in the 21st century. In his speech at this year’s World<br />

Economic Forum, he made it very clear that we need to take<br />

on both challenges at the same time: we need to restore trust<br />

and confidence, and we need to lay the foundation for more<br />

sustainable growth, which means greener growth.<br />

Cynics say the present crisis shows that economics and ethics have nothing<br />

in common. How do you respond?<br />

Ethics is back, values are back, and the search for long-term<br />

sustainability is more apparent than ever before! It may sound<br />

ironic, but the crisis has reinforced the search for values and<br />

ethics. The quarterly short-term thinking that prevailed for so<br />

long is slowly giving way to a more comprehensive, sustainable<br />

risk assessment. There is a fundamental lesson teaching<br />

us to focus on long-term value creation. Secondly, we have<br />

to come up with a more comprehensive risk paradigm, one<br />

which is adequate for interdependent growth and takes into<br />

consideration environmental, social and governance – ESG<br />

– issues. So, in a certain way, the crisis is playing into our<br />

hands. The growing need for the <strong>Global</strong> <strong>Compact</strong> may also be<br />

underscored by the fact that more than 200 companies have<br />

recently joined the Initiative, while others are rediscovering<br />

the value of engagement.<br />

But you cannot deny that we have experienced many dubious practices<br />

in the markets...<br />

The public has to distinguish among economic actors.<br />

Those entrepreneurs make investments, create employment<br />

and provide goods and services are as innocent of what has<br />

happened as most people are. Even in the financial sector,<br />

many parts were solid. What we see, if anything, is that the<br />

financial crisis started in the least regulated sub-categories of<br />

the financial system, among the so called “innovative product<br />

generators” of private equity funds and investment banks. Some<br />

of them are out of business now, and we welcome this. They<br />

stood for a lack of ethics, obsession with short-term profits<br />

and reckless behaviour. But it would be totally wrong to say<br />

that the whole private sector behaved unethically.<br />

And what role does the <strong>Global</strong> <strong>Compact</strong> play?<br />

What we presently see is a deficit of hope and stimuli<br />

for ideas and innovation. Through responsible behaviour,<br />

through deeper engagement in the <strong>Compact</strong>, you can make a<br />

contribution to restoring trust and confidence. Entrepreneurs<br />

can show that business is not just about surviving and cutting<br />

costs; they can also lead the way to a sustainable future<br />

by stressing innovation. All the government interventions<br />

right now will stimulate markets. But this is only an “incentive<br />

moment”. The true source of value creation is, of course,<br />

entrepreneurship. I’m convinced that, at the end of the day,<br />

we will come back to these economic fundamentals.<br />

In Davos this January, PM Gordon Brown warned against “deglobalization”.<br />

In his words, this does not mean a romantic return to the “good<br />

ol’ times”, but an abrupt destruction of global interdependence with<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 41

tremendous economic and social costs. Isn’t this in contradiction to the<br />

optimism of the <strong>Global</strong> <strong>Compact</strong>?<br />

I share Gordon Brown’s view. I’m very concerned, too.<br />

If you ask me what the biggest threats are, I would respond<br />

populism at the country level; discrimination against everything<br />

that doesn’t come from the domestic market; and<br />

protectionism that rolls back all that we have established over<br />

the past decades. The multilateral global system has assured<br />

at least a minimum of fairness, and I have the hope that the<br />

politicians, in their wisdom, will not forget that humanity has<br />

had to learn several times and at great cost what it means to<br />

neglect an interdependent world. It would undermine our collective<br />

ability to create wealth, employment and hope. And it<br />

would also bring to an end the rapid diffusion of know-how,<br />

technology and solutions we urgently need in the fight against<br />

poverty and climate change.<br />

Due to the crisis, we’re seeing a tremendous comeback of Keynesian policy.<br />

Will this affect the balance of power in the <strong>Global</strong> <strong>Compact</strong>?<br />

Not yet, but I suspect it will very soon. I agree that the<br />

amount of government intervention we have seen over the<br />

past months is on a scale never before seen in the history of<br />

modern markets. I think there is both a risk and an opportunity<br />

in that. The risk is obviously that government interventions<br />

distort market performance and undermine competitiveness<br />

and lead to inward-orientation. That is the risk Gordon Brown<br />

mentioned at the World Economic Forum. A positive aspect<br />

could be, on the other hand, that governments recognize the<br />

opportunities that lie in collective responsibility and working<br />

together. They could use their interventions to accelerate the<br />

change processes we were talking about. They can set the right<br />

signals to reward responsibility and green growth.<br />

In fact, politicians from Obama to Merkel say that we need a sustainable<br />

economy. Why is this so hard to achieve in everyday life?<br />

Because we are lazy. We all dislike change, because it<br />

means making an effort. That is part of human nature. Over<br />

decades, we have got used to how prices are established, how<br />

institutions regulate and all the rest. We carry the whole legacy<br />

of the past with us, and now we realize that we need to change,<br />

for instance by putting different prices on certain products.<br />

How do you do that? It will be a painful adjustment process.<br />

Can you give us an example?<br />

No doubt, climate change and putting a clear price on<br />

greenhouse gas emissions will lead to major disruptions.<br />

There will be losers, because many companies are betting on<br />

the wrong horse. They didn’t adapt in time to be on the front<br />

edge of the change agenda. And, of course, these companies<br />

don’t like this kind of change and will try to preserve the<br />

status quo as long as possible. On winning side will be the<br />

many other companies that have already started to invest in<br />

a future where greenhouse gas emissions have market prices<br />

sufficiently high to encourage green investment.<br />

Do you really think that innovation alone can stop global warming?<br />

The complexity of climate change is incredible, and the<br />

more you look at it, the more it scares you. Indeed, we are<br />

very late in the game. Maybe we are already too far behind.<br />

According to UN estimates, over 75 percent of all disaster<br />

events from 1988 to 2007 were climate-related and accounted<br />

for 45 percent of deaths and 80 percent of the economic losses<br />

caused by natural hazards. I don’t want to be a doomsday<br />

prophet, but we better get prepared for a rough future with<br />

major discontinuities. And it is not only an environmental<br />

issue Climate change affects all aspects of life: It is a social<br />

issue. It is a political issue. It is a security issue. It is becoming<br />

an overarching challenge that humanity has to cope with. So<br />

what can we do? In principle, the solution is simple: We just<br />

have to tax what is bad and reward what is good. The easiest<br />

solution would be a heavy tax on carbon emissions. That would<br />

stimulate innovation. Will this become a global movement, or<br />

not? Will politicians have the courage and the will to make<br />

that happen? That is the key question.<br />

42<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

<strong>Global</strong> <strong>Compact</strong> Inside<br />

“<br />

Entrepreneurs can<br />

show that business is not<br />

just about surviving<br />

and cutting costs;<br />

they can also lead the<br />

way to a sustainable future<br />

by stressing innovation.<br />

Georg Kell, UN <strong>Global</strong> <strong>Compact</strong> Executive Director<br />

”<br />

Do you think collective political action will be a realistic option for the<br />

Copenhagen Climate Summit?<br />

I think so. We’re still baffled by how a regional housing<br />

crisis in the US could turn into a worldwide financial crisis<br />

leading to the biggest decline in the history of export-oriented<br />

economies, such as Korea or China, and to the possible breakdown<br />

of Ukraine and some other eastern European countries.<br />

So, the message to governments is that we all live in a very<br />

closely connected world. Even more so when it comes to<br />

climate change. Therefore, the world needs to move to a<br />

proactive risk management, and there’s a stronger need for<br />

cooperation than ever before. I was pleased to read about the<br />

European debates on how to deal with the crisis in the eastern<br />

part of the European Union. This may bring more coherence<br />

to Brussels' policy. Another example is China, which is now<br />

more proactive on the climate agenda. They understand the<br />

urgency to act, especially domestically, because their water<br />

and land are polluted, and the prospects of natural disasters<br />

are dramatic.<br />

Why is a successful Copenhagen Climate Summit so important?<br />

We need a successful COP 15 for many reasons. Imagine<br />

if COP15 were a failure and individual regions and countries<br />

would pursue their own way of putting a price on carbon<br />

emissions! That would lead to a patchwork of disjointed approaches,<br />

which ultimately would put enormous pressure on<br />

the trading and investment systems. No doubt it would lead<br />

to protectionism and cause major disruptions of economic<br />

growth.<br />

...and what role can the business sector play?<br />

I’m personally convinced that investment and commerce<br />

offer the best opportunities to spread technology and knowhow.<br />

Supply chains are the most effective way to diffuse clean<br />

technology. No government bureaucracy can ever spread<br />

technology on the same scale and at the same speed as the<br />

private sector.<br />

Thank you very much!<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 43

Annual Review:<br />

Highlights and Gaps<br />

More companies joined the United Nations <strong>Global</strong> <strong>Compact</strong><br />

(UNGC) last year than ever before. The UN’s voluntary initiative<br />

of companies recorded 1,473 new entrants in 2008,<br />

which is a plus of 30 percent over the previous year. But<br />

in carrying out the Network’s ten principles, there are still<br />

“serious implementation gaps”. That is what Georg Kell,<br />

Executive Director of the <strong>Global</strong> <strong>Compact</strong> Office, writes in<br />

his foreword to the Network’s 2008 Annual Review, which<br />

appeared at the beginning of April. Even more companies<br />

need to focus more strongly on the ecological and social<br />

aspects of their activities and on good company management,<br />

says Kell. There is room for improvement, especially<br />

in the supply chain, according to the report. In a survey<br />

of UNGC members, only seven percent of the companies<br />

said they require their suppliers to be members of the<br />

<strong>Global</strong> <strong>Compact</strong>. Among companies that have subsidiaries,<br />

the number was 30 percent. It is time, says Kell, “to move<br />

from pilot programmes in select corporate departments to<br />

an integrated approach to implement all UN <strong>Global</strong> <strong>Compact</strong><br />

principles throughout and beyond headquarters, into<br />

subsidiaries and the supply chain.” In addition, company<br />

reporting on progress in implementing the UNGC principles<br />

often remains below potential, Kell believes. The reports still<br />

focus too much on policy, says the UNGC Executive Director.<br />

In contrast, detailed information on concrete improvements<br />

is seen less frequently. In 2008, the Network Office had to<br />

remove 404 companies from the member list (“delisting”)<br />

for not submitting an annual progress report. Despite these<br />

shortcomings, Kell says the 2008 annual report shows “that<br />

the <strong>Global</strong> <strong>Compact</strong> contributes positively to the global<br />

spread of responsible business practices.” The number of<br />

members has risen to 6,000, and the Network is now active<br />

in nearly 140 countries.<br />

Annual Review<br />

Sum velenim veniam, sum<br />

dolore ming enim dolorerit<br />

lam augueros diamcommy<br />

nonsed et lorero<br />

odolore conse dolobor<br />

erillup tations equatuerat<br />

lute magnit dolese magna<br />

facidui<br />

<strong>Global</strong><br />

<strong>Compact</strong><br />

Inside:<br />

News<br />

White Paper on Managing Climate<br />

Change and Water<br />

The UN <strong>Global</strong> <strong>Compact</strong> and the Pacific Institute jointly<br />

released a white paper which explores the linkages between<br />

climate change and water – from both the scientific and<br />

corporate management perspectives. Entitled "Climate<br />

Change and the <strong>Global</strong> Water Crisis: What Businesses Need<br />

to Know and Do", the paper covers a number of critical areas,<br />

including: How climate change is expected to impact water<br />

scarcity, water quality, and water demand; the ways in which<br />

water and energy are interconnected, including trade-off<br />

scenarios; the business risks of water and climate change;<br />

how businesses can strategically manage water-climate<br />

risks; the linkages between climate and water and the UN<br />

Millennium Development Goals. “This paper underscores<br />

the importance of viewing the many ways in which different<br />

environmental challenges are in fact deeply connected, and<br />

the need to approach these issues in an integrated way,” said<br />

Georg Kell, Executive Director of the UN <strong>Global</strong> <strong>Compact</strong>.<br />

“Climate change needs to be understood in terms of how it<br />

44<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

<strong>Global</strong> <strong>Compact</strong> Inside<br />

Next Step in Anti-Corruption<br />

Investors Give New Twist to Good<br />

COP/Bad COP<br />

The 38 members of the UN-backed Principles for Responsible<br />

Investment (PRI) have written to the CEOs of 130 major<br />

listed companies which are signed up in the United Nations<br />

<strong>Global</strong> <strong>Compact</strong>. Twenty-five of the companies have been<br />

praised by the investors for producing notably high-quality<br />

COPs – including Air France and Starbucks – while over<br />

100 companies were identified as laggards by the investors<br />

for failing to submit a COP this year. Those companies that<br />

failed to produce COPs include GAP Inc, Severn Trent plc<br />

and LVMH. Representing one of the collaborating investment<br />

institutions, Aviva Investors’ Head of Research and<br />

Engagement, Steve Waygood, said: “The UN <strong>Global</strong> <strong>Compact</strong><br />

system provides investors with a universe of ‘good COPs’<br />

and ‘bad COPs’. Companies that produce a ‘good COP’ send<br />

a powerful message to a valuable audience of institutional<br />

investors. Those who have failed to submit a report will<br />

trigger alarm bells among investors who want real details<br />

about a company’s business practices on ESG issues”.<br />

The United Nations <strong>Global</strong> <strong>Compact</strong> has determined the<br />

next steps in the fight against corruption. At its fourth<br />

workshop at the end of February in New York, the members<br />

of the Working Group on Anti-Corruption agreed, among<br />

other things, to provide guidance to sensitize companies to<br />

the risks of bribery. The first part of the guideline, which<br />

recently appeared in the publication series RESIST (Resisting<br />

Extortions and Solicitations in <strong>International</strong> Transactions),<br />

focuses on the company procurement process. In seven<br />

scenarios, the guideline runs through classic situations that<br />

purchasers face in everyday business and shows how they<br />

can deal with corrupt offers. A second RESIST publication<br />

is planned for the end of the year. It will probably cover<br />

possible scenarios in project implementation. In addition,<br />

the members of the working group (representatives of the<br />

<strong>Global</strong> <strong>Compact</strong> Office, civil society, business, local networks<br />

and international organizations) introduced initial<br />

elements for more transparent company reporting on the<br />

issue of corruption. Since companies and organizations have<br />

previously provided differing amounts of information on<br />

this issue – for competitive reasons, among others – the<br />

matrix should include two sets of instructions for reporting,<br />

one more demanding, one less. Other topics of the February<br />

session were: Corruption in the supply chain and possible<br />

cooperation with governmental or intergovernmental organizations.<br />

In <strong>2009</strong>, the members wish to work on anchoring<br />

the principles of the <strong>Global</strong> <strong>Compact</strong> – such as the fight<br />

against corruption – into the courses and curricula of<br />

business schools.<br />

Anti-corruption is one of the ten GC principles: Companies<br />

and organizations that join the UN initiative promise to<br />

work against all kinds of corruption, including extortion<br />

and bribery. According to estimates of the World Economic<br />

Forum, corruption causes economic losses of 2.6 trillion<br />

US dollars per year. That is more than five percent of gross<br />

world product.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 45

Annual Review:<br />

Highlights and Gaps<br />

More companies joined the United Nations <strong>Global</strong> <strong>Compact</strong><br />

(UNGC) last year than ever before. The UN’s voluntary initiative<br />

of companies recorded 1,473 new entrants in 2008,<br />

which is a plus of 30 percent over the previous year. But<br />

in carrying out the Network’s ten principles, there are still<br />

“serious implementation gaps”. That is what Georg Kell,<br />

Executive Director of the <strong>Global</strong> <strong>Compact</strong> Office, writes in<br />

his foreword to the Network’s 2008 Annual Review, which<br />

appeared at the beginning of April. Even more companies<br />

need to focus more strongly on the ecological and social<br />

aspects of their activities and on good company management,<br />

says Kell. There is room for improvement, especially<br />

in the supply chain, according to the report. In a survey<br />

of UNGC members, only seven percent of the companies<br />

said they require their suppliers to be members of the<br />

<strong>Global</strong> <strong>Compact</strong>. Among companies that have subsidiaries,<br />

the number was 30 percent. It is time, says Kell, “to move<br />

from pilot programmes in select corporate departments to<br />

an integrated approach to implement all UN <strong>Global</strong> <strong>Compact</strong><br />

principles throughout and beyond headquarters, into<br />

subsidiaries and the supply chain.” In addition, company<br />

reporting on progress in implementing the UNGC principles<br />

often remains below potential, Kell believes. The reports still<br />

focus too much on policy, says the UNGC Executive Director.<br />

In contrast, detailed information on concrete improvements<br />

is seen less frequently. In 2008, the Network Office had to<br />

remove 404 companies from the member list (“delisting”)<br />

for not submitting an annual progress report. Despite these<br />

shortcomings, Kell says the 2008 annual report shows “that<br />

the <strong>Global</strong> <strong>Compact</strong> contributes positively to the global<br />

spread of responsible business practices.” The number of<br />

members has risen to 6,000, and the Network is now active<br />

in nearly 140 countries.<br />

Annual Review<br />

Sum velenim veniam, sum<br />

dolore ming enim dolorerit<br />

lam augueros diamcommy<br />

nonsed et lorero<br />

odolore conse dolobor<br />

erillup tations equatuerat<br />

lute magnit dolese magna<br />

facidui<br />

News<br />

White Paper on Managing Climate<br />

Change and Water<br />

The UN <strong>Global</strong> <strong>Compact</strong> and the Pacific Institute jointly<br />

released a white paper which explores the linkages between<br />

climate change and water – from both the scientific and<br />

corporate management perspectives. Entitled "Climate<br />

Change and the <strong>Global</strong> Water Crisis: What Businesses Need<br />

to Know and Do", the paper covers a number of critical areas,<br />

including: How climate change is expected to impact water<br />

scarcity, water quality, and water demand; the ways in which<br />

water and energy are interconnected, including trade-off<br />

scenarios; the business risks of water and climate change;<br />

how businesses can strategically manage water-climate<br />

risks; the linkages between climate and water and the UN<br />

Millennium Development Goals. “This paper underscores<br />

the importance of viewing the many ways in which different<br />

environmental challenges are in fact deeply connected, and<br />

the need to approach these issues in an integrated way,” said<br />

Georg Kell, Executive Director of the UN <strong>Global</strong> <strong>Compact</strong>.<br />

“Climate change needs to be understood in terms of how it<br />

46<br />

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Agenda<br />

<strong>Global</strong> <strong>Compact</strong> Inside<br />

Next Step in Anti-Corruption<br />

Investors Give New Twist to Good<br />

COP/Bad COP<br />

The 38 members of the UN-backed Principles for Responsible<br />

Investment (PRI) have written to the CEOs of 130 major<br />

listed companies which are signed up in the United Nations<br />

<strong>Global</strong> <strong>Compact</strong>. Twenty-five of the companies have been<br />

praised by the investors for producing notably high-quality<br />

COPs – including Air France and Starbucks – while over<br />

100 companies were identified as laggards by the investors<br />

for failing to submit a COP this year. Those companies that<br />

failed to produce COPs include GAP Inc, Severn Trent plc<br />

and LVMH. Representing one of the collaborating investment<br />

institutions, Aviva Investors’ Head of Research and<br />

Engagement, Steve Waygood, said: “The UN <strong>Global</strong> <strong>Compact</strong><br />

system provides investors with a universe of ‘good COPs’<br />

and ‘bad COPs’. Companies that produce a ‘good COP’ send<br />

a powerful message to a valuable audience of institutional<br />

investors. Those who have failed to submit a report will<br />

trigger alarm bells among investors who want real details<br />

about a company’s business practices on ESG issues”.<br />

The United Nations <strong>Global</strong> <strong>Compact</strong> has determined the<br />

next steps in the fight against corruption. At its fourth<br />

workshop at the end of February in New York, the members<br />

of the Working Group on Anti-Corruption agreed, among<br />

other things, to provide guidance to sensitize companies to<br />

the risks of bribery. The first part of the guideline, which<br />

recently appeared in the publication series RESIST (Resisting<br />

Extortions and Solicitations in <strong>International</strong> Transactions),<br />

focuses on the company procurement process. In seven<br />

scenarios, the guideline runs through classic situations that<br />

purchasers face in everyday business and shows how they<br />

can deal with corrupt offers. A second RESIST publication<br />

is planned for the end of the year. It will probably cover<br />

possible scenarios in project implementation. In addition,<br />

the members of the working group (representatives of the<br />

<strong>Global</strong> <strong>Compact</strong> Office, civil society, business, local networks<br />

and international organizations) introduced initial<br />

elements for more transparent company reporting on the<br />

issue of corruption. Since companies and organizations have<br />

previously provided differing amounts of information on<br />

this issue – for competitive reasons, among others – the<br />

matrix should include two sets of instructions for reporting,<br />

one more demanding, one less. Other topics of the February<br />

session were: Corruption in the supply chain and possible<br />

cooperation with governmental or intergovernmental organizations.<br />

In <strong>2009</strong>, the members wish to work on anchoring<br />

the principles of the <strong>Global</strong> <strong>Compact</strong> – such as the fight<br />

against corruption – into the courses and curricula of<br />

business schools.<br />

Anti-corruption is one of the ten GC principles: Companies<br />

and organizations that join the UN initiative promise to<br />

work against all kinds of corruption, including extortion<br />

and bribery. According to estimates of the World Economic<br />

Forum, corruption causes economic losses of 2.6 trillion<br />

US dollars per year. That is more than five percent of gross<br />

world product.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 47

The <strong>Global</strong><br />

<strong>Compact</strong><br />

in the<br />

Emirates<br />

48<br />

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<strong>Global</strong> <strong>Compact</strong> Inside<br />

In just 20 years, the countries of the Gulf Cooperation Council (GCC) have transformed<br />

themselves from deeply traditional nations that depended largely on oil revenues to<br />

booming metropolises with rapidly growing and diversified economies. The transformation –<br />

especially in the United Arab Emirates (UAE) has been staggering; once home to a small<br />

and tight knit society, the UAE today boasts over 202 different nationalities, making it one of<br />

the most diverse nations in the world. The rapid development of the region is<br />

accompanied by a greater call for a more responsible and sustainable way of doing<br />

business, in order to solidify the progress that is being made.<br />

By Habiba Al Marashi<br />

The UN <strong>Global</strong> <strong>Compact</strong> is gaining momentum<br />

all over the world and the Gulf<br />

Region is no exception to this trend. One<br />

of the world’s fastest-growing regions<br />

in terms of economy as well as demographically,<br />

the Gulf Region presents<br />

the UN <strong>Global</strong> <strong>Compact</strong> with a unique<br />

opportunity to make a firm and lasting<br />

impact on the way that business is conducted<br />

in this part of the world. As the<br />

UN <strong>Global</strong> <strong>Compact</strong> Local Network focal<br />

point for the GCC states, the Emirates<br />

Environmental Group has been actively<br />

engaging local and regional businesses,<br />

government, and semi-government organizations<br />

since 2007.<br />

The state of CSR in the<br />

GCC States<br />

The Gulf Cooperation Council is made<br />

up by Saudi Arabia, the United Arab<br />

Emirates, Qatar, Oman, Bahrain, and<br />

Kuwait. This oil-rich region has seen<br />

tremendous growth in the last 20 years,<br />

with the focus – especially in countries<br />

like the UAE – shifting from being almost<br />

exclusively reliant on oil-export<br />

revenues to becoming far more diversified<br />

economies.<br />

“We have to face facts; advanced<br />

industrialized countries<br />

must accept the majority of<br />

responsibility for cleaning up the<br />

environment. Some developed<br />

countries do not want to take<br />

responsibility under the pretext<br />

that it would undermine the<br />

progress of their country and<br />

affect the welfare of their society.<br />

This is both unfair and selfish.”<br />

Sheikh Mohammed bin Rashid al Maktoum, Vice<br />

President and Prime Minister of<br />

the UAE and Ruler of Dubai<br />

As a result of this diversification, the<br />

region has witnessed an enormous influx<br />

of foreign capital, companies, and<br />

labour. This has had a significant effect<br />

on the social and environmental makeup<br />

of the countries in the GCC and has<br />

posed serious questions with regard to a<br />

wide variety of issues, ranging from the<br />

national identity of the local populations<br />

to the growing environmental footprint<br />

of the GCC.<br />

Certain aspects of Corporate Social Responsibility<br />

(CSR) have a long history in<br />

this region (philanthropy is one of the<br />

five pillars of Islam), but until recently,<br />

CSR as a comprehensive, long-term business<br />

model was largely unknown in<br />

the GCC. Although national governments<br />

have been quick to recognize<br />

the environmental implications of the<br />

massive growth of their economies, and<br />

have taken innovative steps to reverse<br />

this trend (Masdar City, the world’s first<br />

Carbon Neutral city in the Emirate of<br />

Abu Dhabi is one particularly notable<br />

example), there are other areas where<br />

legislation is lagging behind the fastpaced<br />

developments on the ground.<br />

Emirates Environmental Group (EEG) has<br />

been playing a central role in convincing<br />

businesses and the general public<br />

that it is imperative that both local and<br />

international companies step up and –<br />

voluntarily – take up the responsibility<br />

of doing more than is minimally required<br />

of them.<br />

Increasingly, companies in the GCC are<br />

realizing that there is more to Corporate<br />

Social Responsibility than just PR value,<br />

and they are starting to incorporate CSR<br />

principles into the core values of their<br />

businesses. As is to be expected of dynamic<br />

and varied economies, the CSR<br />

initiatives being undertaken by GCC<br />

businesses vary greatly in scale, qual-<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 49

ity, and sustainability. Nevertheless, the<br />

enthusiasm with which the UN <strong>Global</strong><br />

<strong>Compact</strong> has been received by companies,<br />

government, and semi-government<br />

organizations in the GCC proves that<br />

there is great potential to achieve truly<br />

sustainable growth.<br />

The UN <strong>Global</strong> <strong>Compact</strong> Local<br />

Network in the GCC states<br />

Two years of diligent preparation, raising<br />

awareness of the UNGC in the GCC<br />

states, and developing a local framework<br />

culminated in the official launch of the<br />

UNGC Local Network for the GCC states<br />

on April 7, 2008. The festive occasion<br />

brought high-level representatives from<br />

government, semi-government and the<br />

private sector together for the official<br />

ceremony. The event even received the<br />

patronage of the Crown Prince and chairman<br />

of the Executive Council of Dubai,<br />

HRH Prince Hamdan bin Mohammed<br />

bin Rashid al Maktoum, underlining<br />

the support that the UNGC enjoys in the<br />

highest levels of government.<br />

The UNGC executive director, Mr. Georg<br />

Kell, provided the keynote speech, while<br />

other speakers included Mrs. Habiba<br />

al Marashi, and Steering Committee<br />

members Mr. Mohammed Al Sarhan and<br />

Mr. Rami Ghandour. In addition to the<br />

17 companies that had already signed<br />

up before the official launch, another<br />

organization joined the UNGC Local<br />

Network at this event. The high-level<br />

guests and impressive media turnout<br />

gave the launch excellent media coverage<br />

and subsequently helped further raise<br />

the profile of the UNGC Local Network<br />

with the general public.<br />

The UNGC Local Network structure<br />

The Emirates Environmental Group acts<br />

as the focal point for the UNGC Local<br />

Network. The EEG’s chairperson, Mrs.<br />

Habiba Al Marashi, sits on the UN <strong>Global</strong><br />

<strong>Compact</strong> board. The diversity of the GCC<br />

is perfectly exemplified in the UNGC<br />

Local Network for the GCC Secretariat<br />

office, where people from 12 different<br />

countries work together to advance the<br />

principles of the UNGC in the GCC.<br />

Although the secretariat of the Local<br />

Network is based in Dubai, UAE, the<br />

Network aims to actively involve participants<br />

from all GCC states. Reflecting this<br />

aim, the steering committee for the Local<br />

Network consists of participants from<br />

the UAE, Qatar, and Saudi Arabia. The<br />

goal is to further expand this Steering<br />

Committee, so that its members truly<br />

reflect all countries of the GCC. Ideally,<br />

The <strong>Global</strong> <strong>Compact</strong> Network in Gulf<br />

Region was launched in April 2008.<br />

His Highness Sheikh Hamdan bin<br />

Mohammed bin Rashid Al Maktoum,<br />

Crown Prince of Dubai and Chairman<br />

of Dubai Executive Council, was the<br />

patron of the event.<br />

50<br />

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each country will be represented by both<br />

a member of a government entity and a<br />

representative from the corporate world.<br />

The current members of the Steering<br />

Committee aim to convene at least three<br />

times a year, with the location of the<br />

meeting rotating between them.<br />

The UNGC Local Network’s activities<br />

The UNGC Local Network has been off to<br />

a flying start. Introducing the UNGC in<br />

the region that was largely unfamiliar<br />

with the Initiative and its principles,<br />

we initially set out to raise awareness<br />

among our existing members and the<br />

general public. Support has been steadily<br />

growing and we consequently rolled out<br />

a number of lectures, workshops, and<br />

documentation to further familiarize<br />

organizations in the region with the<br />

UNGC.<br />

We also provide our participants with<br />

access to CSR experts and resource speakers<br />

to further strengthen their own CSR<br />

practices. The Local Network has represented<br />

the UNGC at three international<br />

forums; the First Alliance of Civilizations<br />

Annual Forum (Madrid, January 15–16,<br />

2008), the Second Forum of Ministers for<br />

Social Development (Amman, November<br />

12–14, 2008), and the Business for the<br />

Environment <strong>Global</strong> Summit (Singapore<br />

April 22–23, 2008).<br />

In addition to officially representing<br />

the UNGC at high-level events, we have<br />

committed ourselves to lobby for greater<br />

UNGC participation whenever the (speaking)<br />

opportunity arises. Perfect examples<br />

of such opportunities were the <strong>International</strong><br />

Business Forum (Doha, November<br />

28, 2008) and the CSR networking event<br />

hosted by the Dubai Chamber of Commerce,<br />

where the EEG chairperson, in<br />

the capacity as guest speaker, encouraged<br />

businesses to join the UNGC.<br />

In addition to public speaking engagements,<br />

the Local Network Steering Committee<br />

convened twice in the past year.<br />

The Local Network was also represented<br />

at the UNGC board meeting, with Mrs.<br />

Al Marashi present in New York (April<br />

30–May 1, 2008).<br />

UNGC Local Network participants<br />

The UNGC Local Network for the GCC<br />

states was launched under the patronage<br />

of Sheikh Hamdan bin Mohammed<br />

bin Rashid Al Maktoum, Dubai’s Crown<br />

Prince and the chairman of the Executive<br />

Council. His involvement with the UNGC<br />

Local Network and with its launch has<br />

been extremely beneficial to the Network<br />

in terms of credibility and publicity. In<br />

this region, having the government’s<br />

seal of approval is crucial to engaging<br />

key players in society, and the Crown<br />

Prince’s patronage has proven to be very<br />

helpful in this process.<br />

The UNGC Local Network currently has<br />

34 active participants spread out over<br />

five GCC states, while the applications<br />

for two more memberships are currently<br />

being processed. The participants are<br />

heterogeneous, with MNC’s, SME’s, and<br />

local companies all participating. Reflecting<br />

the GCC’s economy, the majority<br />

of participants are Construction and<br />

Engineering companies, with the Professional<br />

and Scientific and Oil&Gas<br />

enterprises coming in second and third<br />

place, respectively.<br />

As a relatively young Local Network, the<br />

UNGC Local Network for the GCC set out<br />

with a dual policy: to actively recruit new<br />

participants to the UNGC and to engage<br />

those businesses that had already signed<br />

up globally to become active participants<br />

locally. In this it has largely been successful.<br />

Businesses across the region are<br />

becoming more aware of the benefits of<br />

participating in a Local Network, and the<br />

Local Network focal point, in turn, has<br />

been stepping up its efforts to actively<br />

engage its Local Network participants.<br />

This too has paid off. UNGC global initiatives<br />

such as the CEO Water Mandate, the<br />

Caring for Climate statement, the CEO<br />

statement on the UN Convention against<br />

Corruption, and the CEO statement on<br />

Business and Human Rights were all<br />

endorsed by businesses from the GCC. In<br />

addition to these initiatives, one of the<br />

GCC Local Network participants became<br />

the first business from the Middle East<br />

to donate to the UN Central Emergency<br />

Response Fund (CERF) by answering the<br />

Secretary General’s call to donate to the<br />

Gaza Relief Fund.<br />

Among the participants of the UNGC<br />

Local Network for the GCC, there are<br />

varying motivations for joining the Network.<br />

In a participant survey held in<br />

2008, respondents cited the desire to<br />

build knowledge and capacity for CSR<br />

as their top reason for joining the UNGC.<br />

Improving stakeholder relationships and<br />

building trust came in as a close second.<br />

The fact that companies cite these objectives<br />

as being more important than just<br />

networking opportunities and PR value<br />

is a clear sign that the long-term value of<br />

responsible business is sinking in with<br />

companies in the region.<br />

The UNGC and CSR in the current<br />

financial climate<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 51

The Emirates<br />

Environmental<br />

Group (EEG)<br />

The Emirates Environmental Group (EEG) has been active<br />

since 1991. Based in Dubai, UAE, the EEG was founded with<br />

an aim to create a more sustainable and equitable society in<br />

the UAE and the wider GCC region. As the name suggests, the<br />

EEG initially focussed mainly on environmental issues in the<br />

rapidly expanding UAE. In a country where civil society was<br />

virtually non-existent, the EEG quickly became the torchbearer<br />

for a wide variety of environmental initiatives.<br />

In partnership with its corporate members, several long-running<br />

and highly successful campaigns have been rolled out, including<br />

the Can Collection Drive (under the slogan YES WE CAN!,<br />

the EEG encourages schools, businesses, and individuals to<br />

collect and donate their empty aluminium cans at several can<br />

collection points). The glass, battery, toner, and paper collection<br />

campaigns have proven very successful and continue to<br />

attract more participants with each cycle. Furthermore, the<br />

EEG regularly teams up with businesses to organize Waste<br />

Management Outreach projects, which promote recycling<br />

with a wide variety of groups.<br />

Perhaps one of the most challenging, yet rewarding initiatives<br />

has been the “Clean up the UAE 2008” campaign, which featured<br />

more than 23,000 volunteers cleaning up 140.5 tonnes<br />

of litter all over the UAE. This massive campaign, which was<br />

coordinated by the EEG, featured mainly students as volunteers<br />

and offered them a revealing glimpse into what happens to<br />

our surroundings when we do not take care of it.<br />

In addition to educational campaigns, the EEG has a long-standing<br />

tradition of honouring the people and organizations that<br />

prove to be champions of change. Each year, the EEG honours<br />

those who have made exceptional contributions to environmental<br />

protection during a very high-profile gala dinner.<br />

The EEG has always maintained that protecting the environment<br />

cannot happen in isolation. Environmental responsibility<br />

is an integral part of a wider set of social and economic<br />

issues that the UAE and the rest of the GCC are faced with.<br />

Capitalizing on the solid relationship with government, semigovernment,<br />

and businesses in the GCC, the EEG CSR Network<br />

was launched on March 15, 2004.<br />

Taking the relationship between the EEG and its partners<br />

to another level, the EEG CSR Network offers participants a<br />

tool for facilitating open and transparent business policies<br />

and practices based on ethical values that have a sustained,<br />

positive impact on business, the environment, and society as<br />

a whole. The EEG CSR Network has proven to be an excellent<br />

platform for networking, sharing best practices, and learning<br />

among the corporate leaders in the GCC. Here, too, a host of<br />

activities have taken place, ranging from community lectures,<br />

workshops, training sessions, and the highlight of the year:<br />

The Arabia CSR Awards. Launched by the EEG CSR Network,<br />

the awards honour small, medium, and large businesses<br />

across the GCC and the wider Arab world that have made an<br />

exceptional contribution towards sustainable development<br />

through their CSR programs.<br />

Environmental sustainability,<br />

then and now<br />

After years of fast-paced growth of both the economy and the<br />

ecological footprint of the UAE, the government has wholeheartedly<br />

embraced environmental protection.<br />

Masdar City was mentioned earlier as a notable example<br />

in Abu Dhabi. Dubai’s Green Initiative ensures that all new<br />

buildings adhere to strict guidelines when it comes to sustainable<br />

materials and building methods. These groundbreaking<br />

initiatives build on the strength of the UAE as a relatively new<br />

country that has the opportunity, will, and capacity to lead<br />

when it comes to environmental sustainability.<br />

With leadership that has put its weight behind the quest for<br />

a more sustainable society, the challenge of fully engaging all<br />

sectors of society remains. The UAE and, to a lesser degree, the<br />

wider GCC states have become transient societies. The large<br />

foreign labour force that has descended on the region generally<br />

only call it home for a limited number of years, making<br />

them less attached to their environment and less inclined<br />

to care for it properly. The EEG has been combating this<br />

“But this isn’t my home anyway” attitude since its inception,<br />

and will continue to do so. Fortunately, we are witnessing a<br />

gradual shift in the level of awareness and commitment to<br />

work towards a more sustainable society.<br />

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The greatest challenge that we currently<br />

face is convincing businesses in the GCC<br />

region that the current financial crisis<br />

should not be an excuse to downsize<br />

their CSR efforts. An unfortunate side<br />

effect of the fact that CSR is relatively<br />

new in this region is that its position as<br />

an integral business component has not<br />

yet been completely solidified in many<br />

and managing human capital are now<br />

more pressing than ever, and communicating<br />

this to government, semi- government,<br />

and private organizations across<br />

the region is our top priority in these<br />

trying times.<br />

Conclusion<br />

The GCC has successfully transformed<br />

itself into a global financial hub, with<br />

the UAE standing out as a shining example<br />

of a modern, open, and progressive<br />

Arab nation. Several progressive leaders<br />

of the countries in the Gulf have been<br />

lavished with praise and admiration for<br />

their visionary approaches to the development<br />

of their countries. The people<br />

of the GCC are rightfully proud of the<br />

immense leaps that they have taken in<br />

such an incredibly short time. It is, however,<br />

too soon to sit back and rest on our<br />

laurels. With the privileges of development<br />

also come the responsibilities. As<br />

His Highness Sheikh Mohammed said:<br />

“It would be both unfair and selfish to sit<br />

back and let others deal with our shared<br />

responsibility towards the environment<br />

and the society that we all live in.”<br />

Winning companies honoured as<br />

pioneering champions of the first-ever<br />

Arabia CSR Awards in 2008.<br />

businesses. In the wave of company<br />

downsizing that has also affected the<br />

GCC, departments dealing with CSR issues<br />

have been among the hardest hit.<br />

The UNGC Local Network for the GCC<br />

is acutely aware of these developments<br />

and is actively reaching out to existing<br />

and potential participants to try and<br />

reverse this trend.<br />

The Network’s first workshop of <strong>2009</strong><br />

was focussed on doing “Sustainable Business<br />

in the Current Economic Climate”.<br />

Featuring prominent guest speakers from<br />

the public and the private sectors, the<br />

workshop underlined the importance<br />

of sound CSR practices in this economic<br />

climate. According to the Director of<br />

Sustainability for Deloitte, “Corporate<br />

responsibility and Sustainability are an<br />

imperative, because those companies<br />

that fail to address CSR will find themselves<br />

on the path to corporate extinction.”<br />

His strong message was echoed by<br />

the CSR manager of the Dubai Chamber<br />

of Commerce and Industry, who told the<br />

audience that “Environmental challenges<br />

like global warming will not go away.<br />

They will intensify, causing an array<br />

of social challenges too.” Both speakers<br />

proceeded to present the audience<br />

with an outline of practical steps that<br />

can be taken to ensure responsible and<br />

sustainable business practices in the<br />

current climate.<br />

As the UNGC Local Network for the GCC<br />

focal point, we consider it to be our<br />

responsibility to continue to spread the<br />

message of the importance of CSR, especially<br />

in this current climate. Issues such<br />

as transparency, responsible investment,<br />

At the EEG, we work towards yet another<br />

transformation of the GCC – from<br />

capital-driven development to a fully<br />

inclusive and sustainable society that<br />

honours its rich heritage while leading<br />

the way towards an equitable and<br />

responsible future for all who call this<br />

region home.<br />

Habiba Al Marashi is Chair of the Emirates<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 53

Human Rights<br />

Environment<br />

Cap Gemini<br />

Carrefour<br />

Danfoss<br />

Gandaki Bee Concern<br />

Grundfos<br />

Novo Nordisk<br />

Sanofi-Aventis<br />

Groupe SEB<br />

Toms<br />

Labour Standards<br />

Adecco Group<br />

Amazon Carribean<br />

Arcandor<br />

Ernst & Young<br />

Otto Group<br />

TMS Group<br />

TÜV Rheinland<br />

Ampeg<br />

Autostrade<br />

Bayer<br />

BASF<br />

Coc-Cola Hellenic<br />

Deutsche Post DHL<br />

Dong Energy<br />

E.ON<br />

Holcim<br />

Martha Tilaar Group<br />

REN<br />

PT Smart TBK<br />

Anti-Corruption<br />

Siemens<br />

Partnership<br />

Financial Markets<br />

Medine<br />

Nexen<br />

Deutsche Bank<br />

54<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Agenda<br />

Best Practice<br />

Best Practice<br />

Solely responsible for the editorial contributions under the heading "Best Practice"<br />

are the companies and their authors themselves.<br />

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106<br />

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110<br />

112<br />

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128<br />

132<br />

134<br />

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><br />

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><br />

><br />

><br />

><br />

><br />

><br />

><br />

><br />

><br />

><br />

><br />

><br />

Adecco Group<br />

Ampeg<br />

Amazon Carribean Guayana<br />

Autostrade per L'Italia<br />

Arcandor<br />

Bayer<br />

BASF<br />

Cap Gemini<br />

Carrefour<br />

Coca-Cola Hellenic<br />

Danfoss<br />

Deutsche Bank<br />

Deutsche Post DHL<br />

Dong Energy<br />

E.ON<br />

Ernst & Young<br />

Gandaki Bee Concern<br />

Grundfos<br />

Holcim<br />

Martha Tilaar Group<br />

Medine<br />

Nexen<br />

Novo Nordisk<br />

Otto Group<br />

REN<br />

Sanofi-Aventis<br />

Groupe SEB<br />

Siemens<br />

PT Smart TBK<br />

TMS Group<br />

Toms<br />

TÜV Rheinland<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 55

Adecco Group<br />

Carrying the Torch<br />

for GC Principles<br />

The availability, nature and conditions of work are central to the wellbeing of individuals,<br />

families, economies and societies the world-over. ‘Work’ is the core business of Adecco<br />

Group, the world’s leading provider of HR solutions, with over 31,000 people dedicated<br />

to enabling more than 500,000 colleagues to work every day with clients in over 60<br />

countries.<br />

By Stephan Howeg and Lilian Furrer<br />

It is a vital role between the individual<br />

and the employer which needs to be<br />

governed by a principled approach as<br />

Adecco Group recognized signing the<br />

UN <strong>Global</strong> <strong>Compact</strong> in 2003 as the first<br />

in its industry.<br />

The principle number 6 ‘The elimination<br />

of discrimination in respect of employment<br />

and occupation’ is where Adecco’s<br />

conduct makes the most obvious impact.<br />

As you may expect, all colleagues working<br />

for Adecco directly are trained in<br />

non-discriminatory practices. This is just<br />

the starting point of a range of pro-active<br />

initiatives that the company runs to create<br />

chances for individual development<br />

and the integration of disadvantaged<br />

groups into work and society.<br />

Amongst Adecco’s efforts is the <strong>International</strong><br />

Olympic Committee (IOC) Athlete<br />

Career Programme (ACP). Launched in<br />

2005, the Programme is offered by the<br />

IOC and the National Olympic Committees<br />

in co-operation with Adecco who<br />

has been supporting athletes since 1999.<br />

Adecco uses its expertise to assist Olympic<br />

athletes make the transition from sport<br />

to the labour market, as well as advising<br />

companies on the benefits to hire athletes<br />

in conventional roles. Through the<br />

IOC Athlete Career Programme Adecco<br />

offers Career Training and Development<br />

support in the form of education, life<br />

skills and employment support.<br />

Before assuming that Olympic participants<br />

don’t need help in a career beyond<br />

competition, think again. For every star<br />

with major sponsorships hundreds of<br />

competitive athletes face a future they<br />

might not be prepared for. And in a<br />

number of cases, stars on the field of<br />

play benefit from the exposure of opportunities<br />

and education of respect and<br />

fair play in the workforce.<br />

Keeth Smart, USA fencing medalist in<br />

Bejing 2008, recognized he needed assistance<br />

to combine his work life and<br />

competitive sports.<br />

When joining the Programme in 2006<br />

he worked at a telecom company as<br />

financial research analyst where he was<br />

having difficulty balancing his work commitments,<br />

training schedule and commuting.<br />

So he looked to the IOC Athlete<br />

Career Programme for answers.<br />

With the Programme, he built his confidence<br />

and re-positioned himself effectively<br />

to combine his work life and<br />

competitive sports. "With my increased<br />

ability to describe my position and translatable<br />

skills, rather than joining a new<br />

Our principle<br />

We demonstrate respect for the<br />

rights and dignity of all people.<br />

We believe that work is a key<br />

factor for social integration and<br />

contributes to the well-being of<br />

society at large. Consequently we<br />

not only uphold the elimination<br />

of discrimination and specifically<br />

sensitize and train our staff on<br />

risks of potentially discriminatory<br />

labour practices, but also make<br />

use of our role as employer<br />

for the social integration of<br />

disadvantaged groups.<br />

2<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Labour Standards<br />

Keeth Smart, Olympic Medalist 2008,<br />

not only had a clear focus in sport.<br />

Now he is studying for an MBA, being<br />

guided and coached by the IOC Athlete<br />

Career Programme to achieve his<br />

future career plans.<br />

Our “Disability and Skills” programme<br />

is up and running in France, Italy, Spain,<br />

Norway, Belgium, the Netherlands, Japan,<br />

the US and Argentina. In France,<br />

Adecco and an organization called Agefiph<br />

help15,000 people with disabilities<br />

find a suitable job each year.<br />

Regarding the mature workforce, Adecco<br />

USA has been an honoree since 2002<br />

of the American Association of Retired<br />

Persons (AARP) list of Best Employees for<br />

workers over 50, reflecting the success of<br />

initiatives such as Adecco’s Renaissance<br />

programme offering benefits for older<br />

people wanting to work.<br />

company, my employer worked with<br />

me, kept me on the team and enabled<br />

me to have a balanced scheduled that<br />

included working, training and competition."<br />

Now having retired from sport,<br />

Keeth is studying for an MBA with the<br />

ACP Programme manager still assisting<br />

with guidance and practical help on his<br />

future career plans.<br />

Over 3,000 athletes from more than 30<br />

countries in ages ranging from under 20<br />

to over 40 across five continents have taken<br />

part in the Programme. Whilst Keeth<br />

is an excellent example, perhaps the<br />

Programme’s benefit can be most keenly<br />

felt in the developing world, acting as a<br />

shining light for positive change and the<br />

relevant <strong>Global</strong> <strong>Compact</strong> principles.<br />

An example of this is the three-day<br />

programme that took place in Dakar,<br />

Senegal, run in conjunction with the<br />

IOC and the IOC Olympic Solidarity organization.<br />

The event is helping athletes<br />

from the African region prepare for the<br />

transition to the labour market amongst<br />

them Ibrahim Maiga, who represented<br />

Mali in the 400 metre hurdles. Ibrahim<br />

commented: “The coaching has an immediate<br />

effect and changes a person right<br />

away. It is training for the whole of life,<br />

something we live everyday, everywhere<br />

and with everybody.”<br />

Even though the IOC Athlete Career<br />

Programme aims to meet individual<br />

athlete’s needs for a fair chance in labour<br />

market, each participant becomes an<br />

ambassador ‘carrying the torch’ for the<br />

<strong>Global</strong> <strong>Compact</strong> principle of eliminating<br />

discrimination in respect of employment<br />

and occupation.<br />

The IOC Athlete Career Programme is just<br />

one of Adecco’s pro-active programmes<br />

focused upon striving for fair access to<br />

the labour market and equal opportunities<br />

for all. Other activities are focused<br />

towards the ageing population and mature<br />

workforce, the disabled, unemployed<br />

youth and the long-term unemployed.<br />

In Germany, Adecco supports a publicprivate<br />

initiative called Quadriga that<br />

since 2007 has had a 70% success rate<br />

in integrating young unemployed people<br />

into the labour market. Similarly<br />

in Argentina, Adecco is one of several<br />

companies supporting an <strong>International</strong><br />

Labour Organization project aiming to<br />

coach, train and find employment for<br />

1,000 young men and women. France<br />

is home to Adecco’s largest project to<br />

support the re-integration of long-term<br />

unemployed. The ‘Interim et insertion’<br />

programme currently coaches 4,000<br />

people each year to enhance their job<br />

searching skills.<br />

Supporting the integration of disadvantaged<br />

groups is one aspect of Adecco’s<br />

three-part Corporate Responsibility (CR)<br />

strategy. The additional focal points of<br />

skill development and safety at work<br />

for colleagues strengthen Adecco’s commitment<br />

to <strong>Global</strong> <strong>Compact</strong> principle 1<br />

‘Businesses should support and respect<br />

protection of internationally proclaimed<br />

human rights; and principle 2 ‘Make sure<br />

that they are not complicit in human<br />

rights abuses’. The importance Adecco<br />

places on CR as part of its sustainable<br />

business model is reflected by the creation<br />

of a dedicated CR organisation in<br />

2008 led by Group Communications<br />

and overseen by the Group CEO and the<br />

Corporate Governance Committee of the<br />

Adecco Group’s Board of Directors.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 3

Ampeg<br />

Keep persevering<br />

and act local<br />

Bad news from the world of climate research arrives on our<br />

doorsteps nearly every day, and not one day goes by without<br />

our using a back door to redress our personal balance of<br />

thought on the world in which our children will live one<br />

day: Perhaps it is just a temporary glitch in the climate –<br />

something natural, that will right itself in the end. Even<br />

Hans Joachim Schellnhuber from the Potsdam Institute for<br />

Climate Impact Research consoles himself with the hope that<br />

the scientific community may have made a collective error<br />

on this issue. He expressed his thoughts on the percentage<br />

probability of his hopes becoming true in the following<br />

statement on 26th March <strong>2009</strong>. "Well, the chance that the<br />

whole scientific world has actually made a mistake here<br />

probably lies below one percent."<br />

By Peter Graf<br />

It was certainly naive to assume that the<br />

Kyoto Protocol would sort everything<br />

out, and it was definitely wrong to continue<br />

chanting the mantra of "everything<br />

will be alright in the end" for 10 years.<br />

Worldwide, CO 2<br />

emissions are increasing<br />

much more than feared in the most<br />

pessimistic of forecasts. Similarly naive<br />

is our ignorance of the long-term consequences<br />

of actions that have pushed us<br />

into the largest economic and financial<br />

crisis ever. The subsidises being pumped<br />

into the system to stave off this crisis are<br />

far higher than would have been needed<br />

to introduce comprehensive, short-term<br />

and effective climate-protection measures.<br />

Both situations clearly demonstrate<br />

that, in the short-term, it is wrong to<br />

rely on global regulation, which is still<br />

far-too-weak and that local action is<br />

needed.<br />

Taking our own company as an example,<br />

this white paper is designed to reveal the<br />

potential for savings that exists when<br />

an all-round investigation of energy<br />

consumption is performed outside of<br />

normal business operations.<br />

Immediate measures<br />

A tour around our company with a simple<br />

measuring device delivered the most<br />

surprising example of energy-savings<br />

potential: printers that consume just 1<br />

watt less in energy-saving mode than in<br />

normal mode! In energy-saving mode,<br />

only the display switches off on these<br />

network printers, and instead of consuming<br />

34 watts of electricity, they consume<br />

4<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

Development in electricity consumption at AMPEG<br />

100%<br />

90%<br />

80%<br />

70%<br />

60%<br />

01.2007 04.2007 07.2007 10.2007 01.2008 04.2008 07.2008 10.2008<br />

33, and they do that 24 hours a day, 365<br />

days a year. This represents an enormous<br />

waste of energy, especially since our offices<br />

close at 6:00 p.m. and open up again<br />

at 8:00 a.m. This means that our printers<br />

consume electricity more than 14 hours<br />

a day for absolutely no reason. A simple,<br />

but effective measure to control this is<br />

to connect the printers in the printer<br />

room to a multiple socket outlet strip,<br />

and then connect this to the main socket<br />

outlet through a time switch. This can<br />

save up to 144 kWh a year, depending<br />

on the printer you use.<br />

We also identified 5-litre mini-boilers<br />

under the washbasins in our offices as<br />

another unnecessary energy guzzler:<br />

Four of them consume almost 1,500<br />

kWh a year. This is the same amount suggested<br />

by the Internet consumer portal<br />

Verivox as the yearly requirement for an<br />

average single-person household. A survey<br />

amongst our staff showed that they<br />

would be happy to go without hot water<br />

in the toilets to help the environment.<br />

Our immediate solution was to switch<br />

off the boilers. Since then, no one has<br />

complained about not having hot water<br />

to wash their hands with.<br />

We also found an easy-to-implement<br />

solution for our workplace PCs: Central<br />

entries in the Group Policy for the Active<br />

Directory now ensure that hard disks and<br />

screens on workplace computers shut<br />

down during breaks after ten and fifteen<br />

minutes, respectively. The computers go<br />

into sleep mode after 20 minutes, and<br />

as a consequence they only consume<br />

3.5 watts instead of 88. If employees<br />

are at a meeting, there is no need for<br />

their computers to be in standard mode.<br />

Although they may need 30 seconds to<br />

reboot them out of sleep mode, there are<br />

lots of things they can do to use the time<br />

effectively without their computers.<br />

Energy guzzlers<br />

AMPEG maintains a complex productive<br />

network to achieve the best-possible quality<br />

in the productive evaluation of software<br />

applications and the development<br />

of proprietary software. At the beginning<br />

of 2007, we decided to virtualise as much<br />

of our hardware as possible in order to<br />

reduce the electricity consumed by running<br />

a server on a 24/365 basis. Average<br />

power consumption amounted to 178<br />

watts an hour for hardware equipped<br />

with a single processor. This provided an<br />

energy-savings potential of around 1,560<br />

kWh per server per annum, which, again,<br />

is as much as a single-person household<br />

consumes a year.<br />

Employing virtualisation software, we<br />

managed to convert our physical computers<br />

into "virtual machines". We only<br />

needed three or four hours to perform<br />

a conversion. We also invested in cutting-edge<br />

blade systems equipped with<br />

energy-saving low-voltage processors to<br />

get as many virtual machines as possible<br />

to run on a single hardware host.<br />

The energy balance<br />

The chart demonstrates how massively<br />

downsizing our server hardware made<br />

it possible for us to significantly reduce<br />

electricity consumption from the 2nd<br />

Quarter of 2008.<br />

Our comprehensive package of measures<br />

allowed us to reduce electricity<br />

consumption throughout the company<br />

by 30 percent in two years and hence<br />

reduce our carbon footprint by several<br />

tonnes.<br />

AMPEG has reinvested a large part of<br />

what it has saved in electricity costs back<br />

into the environment, and although the<br />

higher unit price eats up part of the<br />

savings, we still wanted to set a good<br />

example and now get the electricity for<br />

our whole company from a supplier<br />

providing energy from 100% regenerative<br />

sources.<br />

Proactive measures<br />

The British historian Eric Hobsbawm<br />

recently argued that both socialism and<br />

capitalism are exhausted. A phase of<br />

reorientation like this represents exactly<br />

the right time for companies to act more<br />

justly in terms of social responsibility<br />

and positively showcase their climate<br />

protection costs as having social value.<br />

In return, shareholders should honour<br />

this investment in the future, even if<br />

they receive lower dividends in the shortterm.<br />

Our employees, who reap large<br />

benefits from the profits our company<br />

makes, have already been doing this for<br />

a long time.<br />

If we, the companies from the rich and<br />

developed European nations, set a good<br />

example, it will be easier for countries<br />

like the USA, Australia, Canada and<br />

others to implement climate protection<br />

goals. AMPEG's latest project is called,<br />

“30% less paper”. And we certainly aim<br />

to achieve this in <strong>2009</strong>.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 5

Amazon Caribbean Guyana<br />

Indigenously Produced<br />

Organic Fruit<br />

By Gerd Pfitzenmaier<br />

“Without the cooperation with the indigenous people,” Xavier Richard knows, “our company<br />

would never have been able to thrive as it has.” Since its establishment in 1987, Amazon<br />

Caribbean Ltd. (Amcar) has relied on the efforts of thousands of indigenous people from the<br />

Arawack, Warrau and Carib tribes in Guyana. In the jungle of the Barima-Waini Basin, they<br />

collect the raw materials for Amcar’s products: hearts of palm and pineapple. “Our mission,”<br />

the company states accordingly, “is to generate, in partnership with the people in Guyana,<br />

economic value added from naturally growing products.”<br />

In his factory hidden in the jungle, the<br />

French adventurer Pierre Saint-Arroman<br />

has taught indigenous workers how to<br />

harvest certified organic hearts of palm<br />

and pineapples, pack them in cans and<br />

ship them to customers in Europe’s organic<br />

stores and U.S. malls. With these<br />

goods, Amcar and the indigenous people<br />

create “benefits for everyone involved”,<br />

Richard notes in summarizing the basic<br />

business idea. Economic success is, of<br />

course, important to him and Pierre<br />

Saint-Arroman – but at the same time,<br />

they want to help the inhabitants of the<br />

Orionoco Delta. “In the first 15 years of<br />

our work, Guyana went through economic<br />

crises,” Xavier Richard remembers.<br />

“Today, the people earn a secure income<br />

from Amcar.”<br />

The success story began as an adventure<br />

story: When Pierre Saint-Arroman<br />

travelled to the South American country<br />

in 1983, he actually wanted to dig<br />

for uranium. Guyana lives from the<br />

exploitation of its bauxite, diamond and<br />

gold mines, and with the experience<br />

he had gathered in the African bush,<br />

Saint-Arroman wanted to sell the ore<br />

in Europe as raw material for energy<br />

production. But the deal fell apart. Saint-<br />

Arroman stayed because he sensed the<br />

fresh political wind blowing in Guyana<br />

back then. The country was looking for<br />

foreign investors. He met Xavier Richard,<br />

and the two of them “copied the knowhow<br />

for processing hearts of palm from<br />

the neighbours in Venezuela and, with<br />

Dennis Wilson, Dennis Ramascindo and<br />

George Uthandi, built our own factory<br />

in Drum Hill,” Richard reminisces. The<br />

new entrepreneurs obtained the material<br />

for the mill from the rain forest on the<br />

Barima River. They also relied on the<br />

knowledge of their hired indigenous<br />

helpers: a first win-win business, from<br />

which the families living there have also<br />

profited from the very beginning.<br />

The company trained 500 indigenous<br />

people as organic farmers in an effort<br />

supported by the United Nations Development<br />

Programme (UNDP) and this<br />

South American country’s government.<br />

“Not only did Amcar secure its supply of<br />

organic raw materials,” the report states,<br />

“at the same time it secured the indigenous<br />

people a sustainable income.” Even today,<br />

the only connection to the cities on<br />

the ocean coast remains the boat trip<br />

through the jungle along the river and<br />

delta, which often takes up to two days.<br />

On the barges, Amcar employees transport<br />

food, clothing and fuel to the factory<br />

and carry their products to the harbour<br />

at Georgetown on the north coast.<br />

“Even in the first year, our employees’<br />

families harvested 13 twenty-foot containers<br />

of hearts of palm,” says Xavier<br />

Richard, looking back at the company’s<br />

start, “which we could ship as exports to<br />

Europe.” With this, the company showed<br />

how much potential there is in Guyana’s<br />

little-used agriculture. The secret lies in<br />

the broad, pristine tracts of land, which<br />

are mostly overgrown by jungle. They<br />

are fully untouched by agrochemicals<br />

6<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Labour Standards<br />

For Amcar, the basis of this business<br />

remains the hearts of palm. Their harvesting,<br />

the company emphasizes, is<br />

absolutely harmless for the natural environment<br />

in the jungle of Guyana, for<br />

the Euterpe oleracea are not cultivated<br />

in plantations, but grow wild in the<br />

forest. “People intervene only when<br />

harvesting,” Amcar says, describing this<br />

nature-friendly activity. To make sure<br />

that it stays this way, the company trains<br />

Guyana’s indigenous farmers to take<br />

lasting care of the jungle land. “This<br />

keeps the Amerindians from using nonecological<br />

production methods,” judged<br />

the United Nations Development Programme<br />

(UNDP) and the UWI Institute<br />

of Business in their 2005 volume The<br />

Millennium Goals and the Private Sector,<br />

The Caribbean Experience.<br />

and so could be used for organic farming<br />

within a short time, avoiding long<br />

transition times.<br />

Until Amcar was established, nobody had<br />

thought of selling the fruit or vegetables<br />

harvested in Guyana as organic food.<br />

But Richard and Saint-Arroman added<br />

another argument: They vaunt their<br />

cooperation with the indigenous people<br />

to the affluent consumers in far-away<br />

Europe and Arabia by offering hearts of<br />

palm and pineapple not just as “organic”,<br />

but also as “indigenous” fruit. And so<br />

they gain a second bonus from their collaboration<br />

with the indigenous peoples<br />

of South America. “Amcar proves,” they<br />

announce on their Internet site, “how<br />

we can benefit from the added value in<br />

the market.” And their products, ecologically<br />

produced by indigenous people,<br />

enjoy disproportional success with the<br />

customers.“ Annual growth in 2000 was<br />

almost nine percent and quickly jumped<br />

to 20 percent in 2005,” Amcar notes<br />

with satisfaction: “Investment in the<br />

professional processing of these nontraditional<br />

agricultural products can<br />

thus become an engine of growth.” And<br />

so in the company founders’ vision, the<br />

indigenous people would gain a key role<br />

in the global market: Their land and<br />

knowledge provide future generations<br />

with natural food and medicine.<br />

Consistent with this, CEO Pierre Saint-<br />

Arroman signed the <strong>Global</strong> <strong>Compact</strong><br />

membership declaration for Amcar back<br />

in 2000. And consistent in its pursuit of<br />

these commitments, Amcar organises the<br />

food supply of the indigenous communities<br />

at affordable prices. The company<br />

also supplies transportation for the remote<br />

region: Their boats are usually the<br />

only connection to the world outside the<br />

jungle, and certainly the fastest.<br />

Together with the Red Cross in Guyana,<br />

the company offers health courses for<br />

employees’ families as well as for other<br />

members of the indigenous village communities.<br />

These are meant to fight malaria<br />

and inform people how to better<br />

protect themselves against infection with<br />

AIDS. The company’s commitment also<br />

includes education for the employees’<br />

children and further development of<br />

workers’ technical skills.<br />

In all this work, the two entrepreneurs<br />

always keep the people with whom they<br />

work in view. And their commitment has<br />

not gone without recognition: In 2004 the<br />

Amcar founders were commended in “The<br />

World Business Awards in support of the<br />

Millennium Development Goals”.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 7

Autostrade Per l'Italia<br />

Upgrading<br />

Infrastructural Capacity<br />

and Reducing Atmospheric<br />

Pollution<br />

By Simonetta Giordani, Benedetta Masignani and Andrea Ragni<br />

Given the interest in the issue of air quality – an issue<br />

that necessarily implies a scientific approach – Autostrade<br />

per l’Italia embarked on an in-depth examination of the<br />

problem in all of its aspects in 2007. This was done with<br />

an awareness that the motorway network is not a source<br />

of pollution, but rather an infrastructure that facilitates<br />

the transit of vehicles, whose emissions vary depending on<br />

their basic technical features, their speed, and traffic flow<br />

in general. A correct approach to the issue of air pollution<br />

therefore leads to the conclusion that since motorways<br />

free the ordinary road system of traffic, they can serve to<br />

reduce pollution.<br />

Autostrade per l'Italia – 100 percent<br />

owned by Atlantia S.p.A., which is responsible<br />

for investments and strategies<br />

in the transport and communications<br />

infrastructure and networks sector – is<br />

the leading European concessionaire<br />

for toll motorway management and for<br />

related transport services.<br />

In Italy, about four million motorists –<br />

around 8 percent of the Italian population<br />

– use the Group's motorways daily.<br />

Those motorways cover 3413.5 km and<br />

contribute to the social and economic<br />

standing of Italy within Europe, ensuring<br />

an effective transport system and<br />

indispensable services in and between<br />

urban areas.<br />

In 2007 and 2008 Autostrade per l’Italia,<br />

in partnership with Euromobility Service<br />

S.r.l., the National Association of Mobility<br />

Managers, Rome, conducted an experiment<br />

aimed at determining the real advantage<br />

– in terms of the abatement of<br />

atmospheric pollution – obtained from<br />

the construction of an additional traffic<br />

lane in sections characterised by persistently<br />

congested traffic. The decrees that<br />

were issued between 2006 and 2007 on<br />

environmental impact evaluation (EIS)<br />

procedures for measures to upgrade the<br />

motorway concessionaire network are<br />

proof of the enormous importance that<br />

the Italian Ministry of the Environment<br />

attaches to the problems of atmospheric<br />

pollution. Every EIS decree offers the<br />

same recommendations: on the one hand,<br />

to implement environmental monitoring<br />

plans – by the proponents of civil engineering<br />

works – in order to acquire the<br />

data necessary to quantify and manage<br />

atmospheric pollution phenomena; on<br />

the other hand, to urge the regions to<br />

make their plans for rehabilitating the<br />

quality of the air – pursuant to European<br />

directives 96/62/CE and 99/30/CE –<br />

fully operational, thereby avoiding action<br />

against Italy for breach of EC regulations<br />

by the European Community.<br />

These provisions, which are contained<br />

in the EIS decrees on measures to upgrade<br />

motorway sections referring to<br />

various Italian regions (Lombardy, Emilia<br />

Romagna, Tuscany, Marche, Lazio), convinced<br />

Autostrade per l’Italia to conduct<br />

the experiment in Tuscany and<br />

Lombardy.<br />

The method used in this study marks<br />

a change to traditional methods based<br />

on the COPERT/CORINAIR methodology,<br />

since it does not use driving cycles<br />

8<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

Design/Non-Design Comparison<br />

Percentage variation (%)<br />

0<br />

-5<br />

-10<br />

-15<br />

-20<br />

CO<br />

VOC NOx PM10<br />

vehicles. As concerns NOx and PM10<br />

emissions, the same reasoning applies<br />

with respect to heavy vehicles. Therefore,<br />

it can be concluded that the building of<br />

a third lane for the section in question<br />

will produce a reduction in polluting<br />

emissions by vehicle traffic.<br />

-25<br />

-30<br />

and average speeds, but instead is based<br />

on traffic microsimulation models and<br />

instantaneous emission factors (taken<br />

from the MODEMINRETS and DVB-<br />

University of Graz databases) that are<br />

applied to monitored driving cycles on<br />

the motorway sections. As a result, this<br />

method can represent local situations<br />

more effectively and supply more reliable<br />

estimates about the differences – in<br />

terms of emissions produced – between<br />

smooth-flowing traffic and congested<br />

traffic conditions.<br />

In 2007 the method proposed was applied<br />

to the Barberino del Mugello–Incisa<br />

Valdarno section of the A1 Milan–Naples<br />

motorway, and, in particular, to the subsection<br />

Barberino del Mugello–North<br />

Florence section, in order to analyse the<br />

effect of the enlargement of the road<br />

infrastructure on traffic emissions.<br />

The present motorway layout (two lanes<br />

per carriageway) was compared with<br />

the new design layout (three lanes per<br />

carriageway). The fluidity of the traffic<br />

produced by the enlargement design<br />

increased the average travelling speed<br />

and thus was responsible for "flatter"<br />

driving cycles. More specifically, flatter<br />

cycles mean less stop-and-go, during<br />

which emissions are highest.<br />

It was therefore demonstrated that in<br />

each of the five time intervals in which<br />

the day was divided, emissions of the<br />

main pollutants (CO, NOx, COV, and primary<br />

PM10) were significantly lower with<br />

the enlargement design. This conclusion<br />

is valid not only with reference to 2007<br />

but also 2010 – taking into account<br />

expected traffic increases.<br />

The figure above illustrates the overall<br />

emission benefits for all categories of<br />

vehicles. A comparison between the columns<br />

for the years 2007 and 2010 shows<br />

that in 2010 there is a very prominent<br />

reduction in CO and VOCs with respect<br />

to other pollutants. This is explained by<br />

the fact that CO and VOC emissions are<br />

principally produced by light vehicles<br />

and thus their overall trend is strongly<br />

affected by the respective trends of light<br />

Network Average Speed<br />

km/h<br />

100<br />

80<br />

60<br />

40<br />

20<br />

0<br />

4 Traffic Lanes 3 Traffic Lanes<br />

2007 2010<br />

In 2008 Autostrade per l’Italia also conducted<br />

the experiment in Lombardy<br />

regarding the A4 Turin–Trieste motorway,<br />

which is considered one of the focal<br />

points of the Italian road network due<br />

to its connecting the Iberian Peninsula<br />

and the Balkans, thereby making it one<br />

of the most trafficked motorways in Italy.<br />

The methodology proposed was applied<br />

only to the Milan–Bergamo section (34<br />

km) of the A4 motorway and presented<br />

a direct comparison between the current<br />

network with enhancements (four traffic<br />

lanes) and the previous carriageway<br />

layout (three traffic lanes).<br />

The conclusions of previous studies was<br />

confirmed, that is, that traffic fluidity<br />

that results from road enlargement<br />

increases the average speed and produces<br />

“flatter” driving cycles as well as<br />

significantly lower emissions of major<br />

air pollutants (CO = -35%, NOx = -13%,<br />

VOC = -14%, PM10 = -22%), as shown in<br />

the following figure.<br />

6 - 7 am 3 - 4 pm 5 - 6 pm<br />

9 - 10 pm<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 9

Arcandor<br />

Action in the Supply Chain<br />

Since the nineties, retailers have been paying more and more attention to social<br />

responsibility in the supply chain. As there was extensive agreement on establishing<br />

common criteria of their individual procurement guidelines, it was only logical for<br />

them to pursue a cooperative effort. Originally under the umbrella of the Foreign<br />

Trade Association of the German Retail Trade (AVE), these efforts developed at the<br />

European level into the Business Social Compliance Initiative (BSCI).<br />

By Dr. Alexandra Hildebrandt<br />

10<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Labour Standards<br />

The goal of the BSCI is to coordinate the<br />

varied efforts of its member companies<br />

to improve workers living and working<br />

conditions in the factories, bundle their<br />

experience and act faster and more efficiently<br />

together. In addition, a uniform<br />

stance towards suppliers, various stakeholders<br />

and governmental authorities<br />

gives the Corporate Social Responsibility<br />

(CSR) efforts more a higher emphasis<br />

and more power. So far (as of February<br />

<strong>2009</strong>), the BSCI already has more than<br />

250 members from 11 European countries<br />

and enjoys a high credibility and<br />

recognition in politics and business, both<br />

nationally and internationally.<br />

We are among the first BSCI members<br />

and have worked since the start of the<br />

Initiative on developing instruments to<br />

improve and check social standards in<br />

our supply chain. While the focus at first<br />

was on goods requiring a large amount<br />

of direct manual labour (clothing, home<br />

textiles, toys or shoes/leather goods), the<br />

focus of the Initiative changed to cover<br />

factories that are more technology-intensive<br />

such as hardware manufacturers.<br />

The BSCI process model helps suppliers<br />

improve the situation in their production<br />

sites through several successive<br />

steps. Starting with awareness raising, in<br />

which suppliers, through training, are<br />

exposed to the issue of social responsibility<br />

and standards. The next step the<br />

process requires a self-assessment. If<br />

this assessment is done honestly and<br />

thoroughly, and after good preparation,<br />

no unpleasant surprises are expected<br />

from the subsequent audit.<br />

Currently, twelve certified auditing companies<br />

are authorized to perform BSCI<br />

audits: These companies conduct their<br />

audits independently and according to<br />

BSCI standards. This ensures objectivity<br />

and comparability of final results worldwide.<br />

An audit is being conducted over<br />

the period of several days and finishes<br />

with a report, including a corrective<br />

action plan (CAP).<br />

Experience shows that carrying out the<br />

CAP in the set timeframe frequently<br />

causes difficulties. In order to address this<br />

problem we are working together with<br />

the supplier and carry out qualification<br />

measures in the form of special workshops,<br />

individual discussions or training<br />

for the suppliers and also help develop<br />

ideas and possible solutions on site.<br />

A re-audit after implementation of the<br />

CAP usually has two outcomes: 1) It<br />

confirms that the agreed measures have<br />

been carried out and the factory complies<br />

with all required social standards, or 2)<br />

it shows the need for further improvement.<br />

Once the audit is successfully<br />

completed it will be three years before a<br />

follow-on cycle audit is being conducted<br />

to ensure that the level achieved has<br />

been maintained.<br />

Regarding the financing of a BSCI audit,<br />

our company has decided that suppliers<br />

must pay the costs. Other BSCI members,<br />

which largely work with exclusive suppliers<br />

and/or whose portfolio of suppliers<br />

is much smaller and largely stable, bear<br />

the audit costs themselves.<br />

How do things look in practice?<br />

The CSR team directly cooperates with<br />

employees of the Asian purchasing agent<br />

Li & Fung. They are in direct in contact<br />

with the suppliers on organizational<br />

issues during the BSCI process and are<br />

also involved in the progress checks in<br />

our production sites. In addition, new<br />

suppliers without “Group experience”<br />

are looked at in a pre-check, the so called<br />

factory evaluation and are evaluated on<br />

their suitability and need for development.<br />

Due to the large number of Group suppliers,<br />

we started with the top revenue<br />

providers and are currently working<br />

with suppliers in the broad middle of<br />

the revenue range. Starting in 2010, we<br />

will also integrate suppliers with lower<br />

revenues into the BSCI audit process.<br />

The suppliers we are working with to<br />

improve social compliance have about<br />

two months to meet their audit obligation.<br />

A supplier can also always choose<br />

to undergo an audit independent of the<br />

CSR team’s program.<br />

In some cases it also happens that several<br />

attempts are needed before our factories<br />

are truly “socially compliant”. But it does<br />

not fit our understanding of responsibility<br />

and sustainability to drop a supplier<br />

simply because conditions in its factories<br />

do not fully meet our requirements.<br />

Exceptions are the “No-Gos”, which all<br />

our suppliers are aware of, such as child<br />

labour or forced labour.<br />

However, every “problem supplier” is<br />

looked at on an individual basis. In 2007<br />

for example, it came to our attention that<br />

a Chinese factory employed a worker<br />

that was only 15 years old (the legal<br />

minimum age is 16 in China). Since the<br />

family urgently needed her income and<br />

only a few months remained until her<br />

16th birthday, it was agreed to finance<br />

the girl’s school attendance and let her<br />

work reduced hours (as allowed under<br />

national laws) at full pay. The supplier<br />

was warned and received targeted individual<br />

training.<br />

But such pragmatic solutions cannot<br />

always be found for all participants.<br />

There are also suppliers who have no<br />

interest in improving conditions in their<br />

production sites. If these suppliers fail to<br />

show evidence of changes they made or<br />

proof of being compliant despite all our<br />

efforts, an escalation process is initiated.<br />

This extends from actions and interventions<br />

by the CSR team to the involvement<br />

of the responsible parties at Li &<br />

Fung and ultimately the buyers of the<br />

individual Arcandor Group companies<br />

doing business with these suppliers. If<br />

these measures do not bear fruit, then,<br />

in the interest of the Group and as a<br />

last resort, our words are followed by<br />

actions and the business relationship<br />

is ended.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 11

Bayer<br />

The Bayer<br />

Climate Program<br />

12<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

We at Bayer consider climate change to be the most pressing challenge facing the world<br />

today. After all, climate change endangers the natural basis of all our commercial<br />

and social actions. The consequences for company policy are clear – in this time of global<br />

financial and economic crisis in particular, it is crucial that companies set a course that<br />

will steer them towards sustainability. This also involves making a clear commitment<br />

to climate protection. As part of our comprehensive climate program, Bayer is working<br />

to develop solutions across a range of areas that will enable the company to make a<br />

contribution to tackling the challenges posed by climate change.<br />

By Dr. Wolfgang Große Entrup<br />

As a founding member of the UN <strong>Global</strong><br />

<strong>Compact</strong>, we support the objectives and<br />

principles of this initiative wholeheartedly<br />

and are also committed to pursuing<br />

our own initiatives to spread and<br />

implement these goals and principles<br />

worldwide. One central area of activity<br />

is environmental protection. This issue<br />

has long been given high priority at<br />

Bayer. As a company with international<br />

production operations, we believe the<br />

judicious use of natural resources is a<br />

major part of its corporate social responsibility.<br />

This is particularly true when it<br />

comes to climate protection and tackling<br />

climate change.<br />

As an emitter of greenhouse gases, the<br />

company is aware that it is part of the<br />

problem. For that reason, the Group<br />

took steps early on to implement improvements<br />

in its production processes,<br />

introduce new technologies, and opt<br />

for efficient combined heat and power<br />

generation in the field of energy supply.<br />

Between 1990 and 2008, Bayer was<br />

able to reduce its worldwide greenhouse<br />

gas emissions by 38 percent. In 2008,<br />

the company was the only member of<br />

the chemical-pharmaceutical industry<br />

headquartered in Europe to be included<br />

in the Climate Disclosure Leadership<br />

Index four times in a row. The Climate<br />

Disclosure Leadership Index is the first<br />

global climate protection index.<br />

The Bayer<br />

Climate Program<br />

• Clear commitment to climate<br />

protection<br />

• Lighthouse projects in the fields<br />

of buildings, agriculture and<br />

production<br />

• Further measures: company<br />

vehicles, business travel and IT<br />

• Bayer Climate Award and<br />

scholarships<br />

• Expenditure on climate-related<br />

F&E and projects: EUR 1 billion<br />

(2008-2010)<br />

However, Bayer is also part of the solution.<br />

Many of the company’s products<br />

contribute towards cutting energy consumption<br />

and therefore CO2 emissions.<br />

For example, materials from Bayer are<br />

used to provide effective insulation for<br />

houses and refrigerators, and to manufacture<br />

lighter-weight vehicles with lower<br />

levels of consumption. The materials<br />

themselves also display very good energy<br />

credentials – raw materials from<br />

Bayer that are used to manufacture polyurethane<br />

for insulation, for example, save<br />

more than 70 times the energy needed<br />

to produce them in the first place.<br />

The Bayer Climate Program<br />

Bayer is keen on playing an even more<br />

prominent role in addressing the climate<br />

issue and pursuing climate protection<br />

goals. To that end, the company launched<br />

the Bayer Climate Program at the end of<br />

2007. Scheduled to continue for several<br />

years, the program clusters the many and<br />

varied skills of the subgroups and service<br />

companies with the aim of boosting<br />

climate protection. Between 2008 and<br />

2010, Bayer will invest EUR 1 billion in<br />

climate-relevant research and development<br />

and various projects.<br />

The first lighthouse projects implemented<br />

under the auspices of the Bayer Climate<br />

Program are the EcoCommercial Build-<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 13

Bayer<br />

ing – a global concept for zero-emissions<br />

buildings in the office and industrial<br />

sector – the Bayer Climate Check for<br />

analyzing and reducing greenhouse<br />

gas emissions in industrial production,<br />

and the development of stress-tolerant<br />

plants in the agricultural sector. This<br />

comprehensive program also includes a<br />

low-emission fleet of vehicles, increased<br />

use of cutting-edge video-conferencing<br />

technology to reduce the need for business<br />

trips, and energy-saving measures<br />

in the Group’s data centres.<br />

Bayer set itself emission targets to be implemented<br />

in the various sub groups. According<br />

to today’s estimates, the Group’s<br />

greenhouse gas emissions will remain at<br />

the level of 2007 up to 2020 despite an<br />

expected growth in production after the<br />

economic crisis will have been overcome.<br />

There are two more special initiatives we<br />

launched under our climate program.<br />

We founded the Bayer Climate Award<br />

to recognize the work of outstanding<br />

climate researchers. And we honor school<br />

students who have demonstrated a particular<br />

commitment to climate protection<br />

with scholarships.<br />

The EcoCommercial Building<br />

Energy consumption in buildings is responsible<br />

for around 20 percent of global<br />

greenhouse emissions. Bayer Material-<br />

Science is focussing on buildings in the<br />

office, industrial, and social amenities<br />

sector, a field that has remained somewhat<br />

neglected up till now. Working<br />

in cooperation with partners, the Bayer<br />

subgroup has developed the EcoCommercial<br />

Building, a new concept for zeroemissions<br />

buildings. Insulation materials<br />

are crucial to this project. Alongside the<br />

fact that the EcoCommercial Building<br />

generates its own renewable energies,<br />

these materials ensure that buildings of<br />

this type save energy and thus can fulfil<br />

their own energy needs independently<br />

– and achieve a CO2-neutral status as<br />

an annual average.<br />

What is special about this concept is<br />

that it can be adapted to the world’s<br />

different climate zones. In warm regions,<br />

buildings must be insulated against the<br />

heat, while in cool regions they must be<br />

protected against the cold. Bayer itself<br />

is constructing the first EcoCommercial<br />

Buildings in two different climate<br />

zones. The Group’s new administrative<br />

premises currently under construction<br />

near New Delhi will consume 70 percent<br />

less electrical energy than buildings<br />

constructed using methods common in<br />

this subtropical region of India. Meanwhile,<br />

in the more moderate climate<br />

of Germany, Bayer is building an emissionsneutral<br />

company kindergarten at<br />

its Monheim site.<br />

The Bayer Climate Check<br />

Bayer Technology Services developed the<br />

Bayer Climate Check with the aim of increasing<br />

energy efficiency and reducing<br />

greenhouse gas emissions in industrial<br />

production. This enables the company<br />

to run checks on production sites worldwide<br />

to determine their impact on the<br />

climate and identify areas where there<br />

is potential to cut emissions. The new<br />

feature of this tool is that it also includes<br />

the pre-production processes – raw<br />

materials, energy, and logistics – in<br />

the analysis.<br />

Bayer in figures<br />

Key businesses in health care,<br />

crop science and high-tech<br />

materials:<br />

• 108,600 employees*<br />

• Sales of EUR 32.9 billion*<br />

• 316 companies*<br />

• R&D budget <strong>2009</strong>:<br />

EUR 2.9 billion<br />

* As at the end of 2008<br />

We use the Climate Check to examine<br />

over 100 production sites worldwide<br />

by the end of <strong>2009</strong>, thereby recording<br />

information on around 85 percent of our<br />

greenhouse gas emissions. Steps will then<br />

be taken to make full and intelligent use<br />

of the potential savings identified. Initial<br />

results reveal that the Bayer Climate<br />

Check can help the Group to cut its current<br />

greenhouse gas emissions by around<br />

10 percent. In addition, the management<br />

also takes the Climate Check into account<br />

when making decisions on new investments.<br />

This new style of climate check is<br />

TÜV-certified and is also made available<br />

to other interested companies.<br />

Stress-resistant plants<br />

Climate change is threatening to further<br />

exacerbate issues such as heat and<br />

drought that are already reducing the<br />

agricultural yield of crops by up to<br />

80 percent. The world’s population is<br />

further growing, but the land available<br />

for cultivation is limited. Furthermore,<br />

the demand for biofuels is rising. The<br />

ultimate aim is to safeguard and even<br />

increase crop yields. As a result acricultural<br />

productivity has to be boosted<br />

significantly. Researchers from Bayer<br />

CropScience are seeking to make plants<br />

more resistant to stress factors such<br />

as drought, heat, cold, and soil salinity<br />

by unlocking the potential offered<br />

by biotechnology, for example. Bayer<br />

CropScience is also already supplying<br />

innovative crop protection agents that<br />

help to safeguard or increase crop yields,<br />

even under stressful conditions.<br />

Saving energy in further areas –<br />

company vehicles, business trips,<br />

and IT<br />

Bayer aims to cut greenhouse gas emissions<br />

from its company vehicles by 20<br />

percent by 2012. In the first year of the<br />

climate program, the accelerated introduction<br />

of company cars with lowconsumption<br />

engine technology and alternative<br />

drive systems (e.g., hybrid) in 20 countries<br />

resulted in a 5 percent reduction in associated<br />

greenhouse gas emissions.<br />

14<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

The chemical park in Leverkusen<br />

Today’s cutting-edge video-conferencing<br />

technology offers an appealing alternative<br />

form of communication that dispenses<br />

with many of the disadvantages<br />

of teleconferencing. This technology<br />

means it is possible to generate life-size<br />

representations of video conference<br />

participants, creating a realistic meeting<br />

scenario and allowing non-verbal<br />

communication. In cases where there<br />

is no need for someone to be present<br />

in person, these telepresence rooms<br />

prevent staff from having to travel<br />

long distances to attend meetings. We<br />

have set up the first such so-called telepresence<br />

rooms equipped with the<br />

latest video technology at the Group<br />

headquarters in Leverkusen (Germany)<br />

and at the Pittsburgh site in the United<br />

States. Other key Bayer sites are set to<br />

follow suit.<br />

In every large company, IT also offers<br />

the potential for making sizeable energy<br />

savings. Using a range of measures, we<br />

have set ourselves the task of reducing<br />

the energy consumption of our three<br />

data centres located at the Group headquarters<br />

in Leverkusen and at the sites<br />

in Pittsburgh and Singapore also by 20<br />

percent by 2012. This project includes<br />

energy-saving concepts for server installation<br />

and computer usage and, in addition,<br />

reductions in paper consumption.<br />

To make optimum use of the current<br />

of air needed to cool computer chips,<br />

for example, computers will be set up<br />

in such a way that cold and warm air is<br />

kept apart as much as possible.<br />

Promoting scientific and social<br />

debate on climate change<br />

Bayer is employing two initiatives to promote<br />

scientific and social debate on the<br />

challenges posed by climate change, and<br />

to recognize specific personal achievements<br />

made in this area. The Bayer Climate<br />

Award is the first international<br />

prize for outstanding contributions to<br />

fundamental climate science research.<br />

The Bayer Science & Education Foundation<br />

presented the award for the first time<br />

in <strong>2009</strong> in Berlin to Professor emeritus<br />

Eberhard Jochem from the Fraunhofer<br />

Institute for Systems and Innovation<br />

Research in Karlsruhe (Germany). Professor<br />

Jochem, who was involved in the<br />

Intergovernmental Panel on Climate<br />

Change (IPCC) and other projects aimed<br />

at developing an international climate<br />

policy, was honoured for his pioneering<br />

technological and economic contributions<br />

to research into energy efficiency.<br />

He has demonstrated not only that it is<br />

possible to achieve an 80 percent increase<br />

in energy efficiency in the industrialized<br />

nations before the end of this century,<br />

but also that it is an economically viable<br />

proposition. The Climate Award has a<br />

prize fund of EUR 50,000 and is awarded<br />

every two years.<br />

Sustainability Camps organized by independent<br />

organizations open up opportunities<br />

to gain first-hand information<br />

about climate protection and to<br />

share views and opinions with other<br />

likeminded people. Each year, the Bayer<br />

Science & Education Foundation awards<br />

scholarships to school students so they<br />

can attend these events. In doing so, we<br />

recognize and reward the dedication<br />

shown by the people who themselves<br />

are the reason why it is crucial we are<br />

proactive in tackling climate change<br />

today – the generation of tomorrow.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 15

BASF<br />

1+3: Building a<br />

responsible value chain<br />

In China, there are over 32,000 chemical enterprises and many more if we consider the entire<br />

supply chain. Over 90% of the related companies are small and medium-sized enterprises<br />

(SMEs), which contribute strongly to the overall economic activities of the country but often<br />

find it hard to mobilise enough resources to effectively practise sustainable development.<br />

Thus, BASF in 2006 initiated a program called “1+3”, which mobilises and supports its<br />

partners and suppliers in China to improve their corporate social responsibility (CSR).<br />

16<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

By JinXiu-Lucy Li<br />

BASF believes the effort of sustainability<br />

should involve the entire value chain.<br />

For example, the analysis of emissions<br />

and energy consumption should not be<br />

limited to only one single producer of a<br />

chemical, but should take into account<br />

the entire lifecycle of a product, from<br />

raw materials sourcing to disposal. If<br />

all suppliers and customers adopt green<br />

practices by maximising the "good inputs"<br />

and minimising the "bad outputs", then<br />

the whole supply chain would help in<br />

mitigating risks and speeding up innovations.<br />

The “1+3” CSR project is now gradually<br />

building up a responsible value chain<br />

by spreading and sharing the principles<br />

and practices of sustainability. To date,<br />

60 local and international companies in<br />

China are participating in the project,<br />

thus enhancing performance in, for example,<br />

environmental protection, health<br />

and safety (EHS) management.<br />

What does “1+3” stand for?<br />

The “1+3” CSR project was initiated by<br />

BASF in October 2006 as an innovative<br />

approach in supply chain management.<br />

It was launched as a program under<br />

the China Business Council for Sustainable<br />

Development (CBCSD). CBCSD is a<br />

coalition of leading Chinese and foreign<br />

enterprises registered and operating<br />

in China, established through the<br />

Ministry of Civil Affairs. It helps the<br />

World Business Council for Sustainable<br />

Development (WBCSD) shape the sustainable<br />

development agenda at the<br />

local level and also provides a platform<br />

for exchange and cooperation among<br />

businesses, government and social communities<br />

in China.<br />

A CBCSD member company like BASF<br />

forms teams with three types of business<br />

partners: customers, suppliers and logistics<br />

service providers – mostly SMEs –<br />

with the aim of promoting sustainability<br />

and giving guidance for best practices<br />

or customised solutions. Each of the<br />

three selected partner companies then<br />

introduces the same concept to a further<br />

three business partners in its own value<br />

chain: A snowball effect is created.<br />

BASF had six “1+3” partners participate<br />

in its first round, which concluded in July<br />

BASF has been a committed<br />

partner to Greater China since<br />

1885. It is one of the biggest<br />

foreign investors in the Chinese<br />

chemical industry. The company<br />

has approximately 6,300<br />

employees and operated 19 BASF<br />

wholly owned subsidiaries and<br />

10 BASF joint ventures in 2008.<br />

BASF’s sales in Greater China are<br />

about €4.2 billion.<br />

For further information, please visit<br />

www.greater-china.basf.com.<br />

2008. These were customers – Huafeng<br />

Group, Guangzhou Liby Enterprise Group<br />

Co., Ltd., Beijing Plaschem Trading Co.<br />

Ltd. and Zhejiang Kaipute Spandex Co.,<br />

Ltd. – as well as a supplier – Zhejiang<br />

Qiming Pharmaceutical Co., Ltd. – and<br />

a logistics service provider – Sinochem<br />

<strong>International</strong> Corp. Currently, BASF is<br />

running the second round of the “1+3”<br />

CSR project.<br />

Dr. Jürgen Hambrecht, BASF chairman<br />

of the board, sees sustainability as a key<br />

factor to ensure long-term economic<br />

success. This is crucial, as the concept<br />

needs commitment at the highest level. In<br />

China, BASF is the chair of the Association<br />

of <strong>International</strong> Chemical Manufacturers<br />

(AICM), which aims to promote safe and<br />

clean practices in the manufacturing,<br />

distribution and use of chemicals. In<br />

December 2006, BASF, along with other<br />

member companies, such as Bayer, Dow<br />

Chemical, Exxon Mobil, Merck Chemical,<br />

Degussa Cyprus, Romania Gate Haas, DSM<br />

and the Shanghai-based China Europe<br />

<strong>International</strong> Business School (CEIBS),<br />

invited the leaders of 25 Chinese chemical<br />

enterprises to participate in training on<br />

EHS topics. This meeting instilled in them<br />

a strong awareness of the importance of<br />

sustainability as well as an understanding<br />

of how it could be implemented throughout<br />

their businesses.<br />

"Ambassador + expert": jointly<br />

ensuring sustainability<br />

If you strive to address a complex topic<br />

like sustainability, you need to get a feeling<br />

for your partner’s specific needs. That<br />

is why the BASF team started its work on<br />

the “1+3” project by sending questionnaires<br />

out to the partners, which helped<br />

them identify their areas for improvement.<br />

An expert team was then set up<br />

for each partner according to the chosen<br />

area of cooperation. These teams consist<br />

of a representative of the relevant BASF<br />

business unit – the “ambassador” – and<br />

one BASF “expert” in the specific EHS<br />

topic. This could be pollution prevention<br />

or occupational health and safety,<br />

for example. The teams then develop<br />

a tailored plan on how to improve the<br />

partners' sustainability management<br />

capacity and how to integrate the concept<br />

into their corporate strategies.<br />

For example, one common problem in<br />

China that “1+3” participants can address<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 17

BASF<br />

is a lack of knowledge on how to obtain a<br />

Material Safety Data Sheet (MSDS), which<br />

is obligatory in China and describes the<br />

chemical and physical properties of a<br />

material and provides advice on safe<br />

handling and use of the material.<br />

Hands-on approach:<br />

BASF developed tailor-made programs<br />

according to “1+3” partners’ specific<br />

requests, ranging from seminars and<br />

training to site visits and implementation.<br />

Through these, partners started to<br />

see the bigger picture of how and where<br />

to improve their EHS areas in a systematic<br />

way. BASF also provided training for<br />

a Road Safety Quality Assessment System<br />

(RSQAS), which is a preventive program<br />

to strengthen the safety and reliability of<br />

chemical transportation in China.<br />

In so-called “Eyes for Safety” visits, the<br />

six BASF expert teams first went to inspect<br />

each partner’s production site in<br />

order to get a picture of the partner’s<br />

EHS status and make it aware of the<br />

areas which might have been overlooked.<br />

Then, the BASF experts and the partner’s<br />

EHS managers together identified priority<br />

cooperation areas. “The BASF visit<br />

provided good insight for our middle<br />

management on environmental protection<br />

and safety management,” said Mr<br />

Zhang Qiming, the Board Chairman of<br />

Zhejiang Qiming Pharmaceutical Co. Ltd.<br />

after an “Eyes for safety” visit.<br />

their improvement progress, which are<br />

then quickly addressed by BASF experts.<br />

This proved to be a very helpful tool for<br />

our partners to view their implementation<br />

as a long-term process and to ensure<br />

continuous improvement.<br />

During a “1+3” sustainability self-assessment<br />

seminar in July 2008 in Shanghai,<br />

senior executives from six “1+3” partners<br />

and the BASF project team attended a<br />

roundtable discussion. BASF experts<br />

presented detailed analysis on their six<br />

Responsible Care (RC) systems and best<br />

practices. This trust-filled sharing not<br />

only of good experiences but also of<br />

challenges and related problem-solving<br />

techniques with regard to practical implementation<br />

of sustainability aspects<br />

is another fruitful result of the whole<br />

project. All participating companies are<br />

committed to continue to implement<br />

their social responsibility objectives by<br />

putting more sustainability ideas into<br />

practice.<br />

The fruits of the “1+3”<br />

sustainability project<br />

Improving value chain competitiveness and<br />

creating new customer relations:<br />

By disseminating the “1+3” ideas and values<br />

to more partners, BASF continually<br />

broadens the platform for dialogue with<br />

them and puts an innovative customer<br />

relationship into practice. Mutual trust is<br />

established between the two parties, effectively<br />

laying the foundation for a longterm<br />

strategic partnership. This not only<br />

strengthens BASF's inter-departmental<br />

cooperation, but also reduces risk in its<br />

value chain.<br />

In the implementation phase, the project<br />

groups also provide training to address<br />

common issues faced by all companies.<br />

Every project group also reviewed one of<br />

their partner’s reform strategies.<br />

Sustainable solutions need<br />

staying power<br />

Sustainability solutions are usually implemented<br />

over a long-term period. This<br />

is why “1+3” aims to accompany our<br />

partners beyond the first year. In order<br />

to help our partners to ensure sustained<br />

improvement in their sustainability practices,<br />

BASF offers self-assessments in the<br />

form of a questionnaire asking about<br />

“Difficult times especially show that companies which conduct their business<br />

sustainably and responsibly are more successful in the long-term. That is<br />

why sustainability is a firm part of BASF’s strategy: Long-term success is<br />

not possible unless the environment and society are treated carefully. We<br />

are therefore committed to implementing the principles of the U.N. <strong>Global</strong><br />

<strong>Compact</strong>.”<br />

Dr. Jürgen Hambrecht, BASF chairman of the board<br />

18<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

environment<br />

Raising awareness of sustainability amongst<br />

participating enterprises and satisfying their<br />

developmental needs:<br />

As China’s economy is increasingly integrated<br />

into the global economy, actively<br />

practising sustainability and integrating<br />

it into business practices has been essential<br />

to maintain core competitiveness.<br />

In this respect, BASF’s six partners all<br />

believe that the “1+3” project was just<br />

what they needed. They have benefited<br />

from the free access to advanced sustainability<br />

management techniques from a<br />

large multinational corporation such as<br />

BASF. The six enterprises have integrated<br />

the “1+3” concept into their corporate<br />

strategies by improving their employees’<br />

workplace safety and their companies’<br />

surroundings as well as strengthening<br />

dialogue with various stakeholders. They<br />

have also held seminars themselves on<br />

process safety management systems or<br />

sustainability practices. One partner has<br />

even submitted a proposal to the National<br />

People’s Congress aiming to promote the<br />

“1+3” concept. At the same time, the six<br />

partners have kept focused on emissions<br />

reduction in the production process and<br />

promotion of the sustainability concept<br />

in their own supply chains.<br />

the 1+3 program<br />

MeMBer CoMPanY<br />

suPPlIer<br />

all participating companies are<br />

committed to continue implementing<br />

their social responsibility objectives by<br />

putting more sustainability ideas<br />

into practice at the conclusion event to<br />

"1+3" project in July 2008.<br />

China Business Council for<br />

sustainable development<br />

MeMBer CoMPanY<br />

CustoMer<br />

MeMBer CoMPanY<br />

ContraCtor<br />

Role-model effect:<br />

In January 2008, the United Nations<br />

<strong>Global</strong> <strong>Compact</strong> named the BASF “1+3”<br />

CSR project a case study that was then<br />

shared among members and enterprises<br />

worldwide. In China, Zhai Qi, executive<br />

secretary-general of the China Business<br />

Council for Sustainable Development<br />

(CBCSD), believes that “1+3” has already<br />

become a model for the dissemination of<br />

sustainability principles throughout the<br />

Chinese economy because it has proved<br />

particularly successful among small and<br />

medium-sized companies.<br />

The snowball effect<br />

goes on…<br />

After the successful implementation of<br />

the “1+3” CSR Project, BASF launched the<br />

"Golden Bee" concept with China WTO<br />

Tribune to further promote sustainability<br />

in China. The analogy of honeybees was<br />

chosen because the bees naturally create<br />

a win-win situation. BASF, together with<br />

China WTO Tribune and China Ocean<br />

Shipping (Group) Company, announced<br />

the "2007 Golden Bee CSR China Honor<br />

Roll" in April 2008. Sixty of the 205 participating<br />

enterprises were honoured as<br />

pioneers and role models, based on their<br />

corporate governance, overall business<br />

performance and CSR practices.<br />

BASF firmly believes that shouldering<br />

sustainability challenges leads to stronger<br />

competitiveness. Since China’s ambitious<br />

sustainable development goals cannot<br />

be achieved by large companies alone,<br />

BASF hopes that more local enterprises<br />

will gradually join in to share their sustainability<br />

practices with a large number<br />

of small and medium-sized companies<br />

along their supply chain – just like a<br />

bee disseminating pollen. Following<br />

this model, the partners benefiting from<br />

their involvement in the project would<br />

commit to continuing the “1+3” model<br />

– which means the number of partners<br />

will soon triple, and so on. If this process<br />

continues to replicate itself, a new<br />

paradigm can be created. The practice<br />

of the “1+3” model could influence all<br />

businesses and eventually the entire<br />

society.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 19

CapGemini-Naandi Collaborative Partnership<br />

Creating an Impact<br />

on Education for Girls<br />

in India<br />

With girls representing two-third of the world’s uneducated children and women<br />

representing two-thirds of the world’s illiterate adults, it has been acknowledged that<br />

successful education for girls and women is a necessary mechanism for breaking the cycle<br />

of poverty, myths, and social norms, for ensuring the well-being and health of children,<br />

and for the long-term success of developing countries.<br />

By Carolyn E. Nimmy and Cecilia Schrijver<br />

20<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

human rights<br />

Capgemini Group & naandi foundation<br />

Whilst education in India is free, the<br />

materials to support that education are<br />

not. These materials includes uniforms,<br />

clothes, notebooks, and personal hygiene<br />

products – expenditures that underprivileged<br />

families are often unwilling or<br />

unable to make for their daughters.<br />

Project Nanhi Kali is a participatory project<br />

where individuals, groups, and companies<br />

are encouraged to sponsor the education<br />

of girls. The Nanhi Kali project is jointly<br />

managed by the Naandi Foundation and<br />

the K.C. Mahindra Education Trust. The<br />

Capgemini Group is currently the second<br />

largest corporate sponsor of the Nanhi<br />

Kali project, we support the education<br />

of over 10,000 girls in India.<br />

The birth of a successful<br />

employee-led initiative<br />

What started as a friendship between<br />

Capgemini India and Capgemini Norway<br />

while looking for ways to support the<br />

Rightshore® (Offshoring) strategy and<br />

to promote understanding and cooperation<br />

has now grown into a truly global<br />

Capgemini Group program and a strong<br />

Naandi-Capgemini relationship.<br />

uK<br />

• Program deployed<br />

• Supports 2,250 girls<br />

• naandi ASE<br />

north aMerICa<br />

• Coming soon<br />

BelGIuM<br />

• Coming soon<br />

PortuGal<br />

• Christmas Card initiative<br />

norWaY<br />

• naandi norway launched<br />

• Supports 4,400 girls<br />

• Christmas Card initiative<br />

• Art Camp and Auction<br />

CaPGeMInI unIversItY<br />

event<br />

• naandi Awareness<br />

event, June 2008<br />

• Supporting 80 girls<br />

netherlands<br />

• Executive Dinner<br />

• Event supporting 300<br />

girls<br />

• Power of 10 initiative<br />

will be deployed<br />

CaPGeMInI GrouP<br />

• Successful E-Card<br />

Initiative and IWd<br />

Celebration Initiative,<br />

2007 / 2008<br />

• Supporting 146 girls<br />

fInland<br />

• naandi integrated in<br />

leadership development<br />

• Program to be launched<br />

soon<br />

GerManY<br />

• Art Camp Event &<br />

auction<br />

• Christmas Card initiative<br />

sWeden<br />

• Supports 2,100 girls<br />

• Power of 10 initiative<br />

slovaKIa<br />

• SiSp Rightshore<br />

• Supports 18 girls<br />

IndIa<br />

• Power of 50 initiative<br />

• Supports > 1,000 girls<br />

australIa<br />

• Program deployed 1 st<br />

december 2008<br />

• Supports 80 girls<br />

“Many companies have a long history of supporting social projects often driven<br />

by a philanthropic dimension enabling an ability to ‘give back’ to society.<br />

this approach has changed with companies now aligning their Corporate<br />

responsibility and sustainability approach to their corporate strategy.”<br />

Carolyn nimmy, vP, Cr & sustainability lead, Capgemini Group<br />

Today, Capgemini Group and over 10<br />

countries in the Group are supporting<br />

the Nanhi Kali project. Several different<br />

initiatives and schemes have been<br />

implemented. For example, Capgemini<br />

India, Norway, Sweden, United Kingdom,<br />

Australia, Slovakia, as well as Sogeti India<br />

have adopted the project as a formal community<br />

initiative. Within those offices, a<br />

payroll contribution system has been set<br />

up in which employees have the ability to<br />

voluntarily contribute to the Nanhi Kali<br />

project and either individually or collectively<br />

sponsor the education of a Nanhi<br />

Kali. Capgemini Norway in particular has<br />

taken a big step through its collaboration<br />

with the Naandi Foundation and has<br />

jointly established its first foundation<br />

outside of India – Naandi Norway. Many<br />

of these initiatives are being matched by<br />

Capgemini, ensuring a combination of<br />

employee passion and company commitment<br />

to the Nanhi Kali project.<br />

Capgemini Finland works together with<br />

Naandi in their leadership development<br />

programs and other countries in the<br />

Group such as Germany, the Netherlands<br />

and Portugal have launched successful<br />

initiatives.<br />

“What’s really worked is the fact that<br />

there are a lot of Naandi evangelists in<br />

the Capgemini world! Each country office<br />

now has an ambassador for Naandi and<br />

there’s nothing more credible than one<br />

of your employees – who has been there,<br />

seen it, and done it – coming back and<br />

talking about it,” explains Manoj Kumar,<br />

CEO of the Naandi Foundation.<br />

Capgemini a people company<br />

Throughout our 40-year history, Capgemini<br />

has built its business upon strong ethical<br />

values that underpin our approach<br />

to all aspects of our business. Joining<br />

the UN <strong>Global</strong> <strong>Compact</strong> in 2004 was<br />

a natural extension of these values in<br />

ensuring we remain a responsible business.<br />

As a global company and with our<br />

current growth in developing countries,<br />

we are aware of the different challenges<br />

that need to be faced, such as Human<br />

Rights standards, opportunities for education<br />

and employment, and the need<br />

for respect and understanding of different<br />

cultures.<br />

Signing up to the ten principles of the<br />

<strong>Global</strong> <strong>Compact</strong> adds to how we can<br />

contribute and leverage our skills, our<br />

people, and our know-how to make a<br />

difference. Our partnership with the<br />

Naandi Foundation is based on our belief<br />

that major community programs with a<br />

strong alignment to a business strategy<br />

have a far greater impact. Joining the<br />

forces of our employees with organizations<br />

such as the Naandi Foundation to<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 21

CapGemini-Naandi Collaborative Partnership<br />

help others strengthens our team spirit,<br />

improves communication, and gives us<br />

a better understanding of the communities<br />

around us.<br />

Capgemini has a strong desire to support<br />

diversity – gender diversity in particular.<br />

We believe that diversity and the<br />

elimination of discrimination are key to<br />

our long-term business health. Working<br />

with the Naandi Foundation and supporting<br />

education for girls in India has<br />

made gender-specific issues more visible<br />

to all employees and gives our people<br />

the opportunity to be actively involved.<br />

This too supports our commitment to<br />

the first and the sixth principles of the<br />

UN <strong>Global</strong> <strong>Compact</strong>, which concern the<br />

protection of internationally proclaimed<br />

Human Rights and the elimination of<br />

discrimination with respect to employment<br />

and occupation.<br />

Our partnership with the Naandi Foundation<br />

offers Indian girls dignity, education,<br />

equality, and empowerment – the same<br />

attributes that our people seek for themselves<br />

and the company they work with.<br />

Through our community programs, we<br />

have the ability to bring the UN <strong>Global</strong><br />

<strong>Compact</strong> principles, our values, and our<br />

own business principles alive.<br />

Capgemini’s community focus<br />

Aligning our corporate responsibility and<br />

sustainability approach with our corporate<br />

strategy provides benefits through<br />

enhanced reputation, greater consumer<br />

and employer brand-awareness, as well<br />

as attracting and increasing employee<br />

engagement, which have a longer-lasting<br />

and more effective impact on the community.<br />

At the heart of our business strategy,<br />

we focus on creating a diverse, engaged,<br />

and skilled workforce; developing strong<br />

client relationships; developing our Rightshore®<br />

approach; and supporting the<br />

development of India as a long-term and<br />

viable business location.<br />

Our initiatives are aligned to three core<br />

themes: Education – our conviction<br />

is that education is the key to helping<br />

countries and communities develop;<br />

Diversity – a source of richness and<br />

competitive advantage; Growth – our<br />

growth in the developing world brings<br />

specific duties and is especially relevant<br />

for our current strategy in India.<br />

Our partnership with the Naandi Foundation<br />

is strongly aligned with our business<br />

purpose and community strategy.<br />

Not only does it make business-sense<br />

and ensures employee engagement and<br />

motivation, we are above all supporting<br />

the education of many girls in India and<br />

have a positive community impact.<br />

Enabling cultural understanding<br />

and awareness<br />

Our corporate strategy and Rightshore®<br />

approach has enabled us to work with<br />

countries such as India. Our partnership<br />

has enabled us to change the way we<br />

think and embrace multiculturalism<br />

as we become a truly open and diverse<br />

company that is focussed on changing<br />

the lives of the girls we support.<br />

As a global multicultural company, we<br />

celebrate many different religious festivities.<br />

For the last two years, we have run<br />

a holiday season e-card initiative lasting<br />

from Diwali to the Chinese New Year<br />

(taking in Christmas, Eid, Hanukkah,<br />

and Thanksgiving). In the initiative, our<br />

people are invited to send e-cards to family,<br />

friends, colleagues, and clients. For<br />

every 1000 e-cards sent, the Capgemini<br />

Group funded the education of a girl in<br />

India. Last year 75,000 e-cards were sent<br />

and this year 113,000 e-cards. The e-card<br />

artwork used was made by the girls in<br />

India through various Art Camps run<br />

by Capgemini Germany and Norway, in<br />

which our people spend a day working<br />

with the children on art pieces.<br />

Capgemini also actively promotes <strong>International</strong><br />

Women’s Day around the<br />

Group and we ran an online campaign in<br />

support of the Naandi Foundation. Our<br />

people were invited to express support<br />

for the Nanhi Kali initiative through a<br />

simple online click – for every 250 clicks,<br />

“Government statistics in India<br />

reveal that only three out of<br />

10 girls who enter elementary<br />

school complete 10 years of basic<br />

education. Research has shown<br />

that the reason for this dropout<br />

may be as minor as the girl child<br />

not being able to afford a uniform<br />

to go to school and could include<br />

more complex factors like girls<br />

taking on the responsibility of<br />

household chores at a very<br />

young age as a result of gender<br />

stereotyping”<br />

Nanhi Kali Project, <strong>2009</strong><br />

the Group supported the education of<br />

a girl in India, translating into 33 more<br />

girls who received support.<br />

Our simple but effective e-card and click<br />

campaigns have allowed us to demonstrate<br />

that, although we may have a consistent<br />

delivery model across the Group,<br />

22<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Human Rights<br />

we actively make room for everyone and<br />

create awareness around our differences.<br />

The marked uptake of participation in<br />

the e-card and click campaigns shows the<br />

success and enthusiasm of our employees<br />

in supporting the Naandi Foundation.<br />

Because the take-up of the Naandi<br />

Foundation around the Group has been<br />

fostered at a grassroots level – without<br />

mandating initiatives or pushing<br />

particular diversity platforms onto our<br />

people – we are changing the way we<br />

think about diversity. Very soon most of<br />

our home-grown executive talent will<br />

have been impacted and touched by the<br />

program – already, many people have<br />

visited the girls we are supporting.<br />

Enabling the development of<br />

leadership skills<br />

Community projects can be used to develop<br />

leadership skills and multicultural<br />

awareness, both of which are necessities<br />

in today’s global business world. Such<br />

programs often require little investment<br />

when compared to the returns generated,<br />

but they have the valuable ability<br />

to accelerate skill-building, cultural<br />

awareness, pride, and commitments<br />

whilst maintaining engagement in tough<br />

times.<br />

We have integrated the Naandi Foundation<br />

into our people development at our<br />

Capgemini University to help illustrate<br />

to our people the link between the community,<br />

the importance of diversity, and<br />

enabling multicultural understanding.<br />

We are instilling diversity into our DNA<br />

through people’s appreciation of our<br />

work with the Naandi Foundation.<br />

Capgemini Finland successfully launched<br />

the “Leading Together” program in 2008,<br />

which is based on a collaboration between<br />

Capgemini Finland and India. The<br />

training program intends to impart the<br />

efficiency of Rightshore® collaboration by<br />

using the Naandi Foundation as a learning<br />

vehicle. The teams were charged with<br />

the assignment of creating an innovative,<br />

out-of-the-box strategy to help raise the<br />

visibility of the Naandi Foundation, both<br />

inside and outside Capgemini.<br />

Community program as a<br />

key differentiator over tough<br />

competition<br />

Community programs can also be a great<br />

means to collaborate with clients. For<br />

example, joint sponsorship or matching<br />

programs can involve both client and<br />

supplier by building increased collaboration<br />

but also by generating pride and<br />

a sense of shared achievement amongst<br />

the client/supplier teams working together.<br />

Our Norwegian team started working<br />

with the Naandi Foundation in relation<br />

to the growth in business being delivered<br />

out of India. Business growth came when<br />

we extended the Naandi Foundation to<br />

client partnerships, whereby each Indian<br />

employee participating in a client account<br />

results in a girl being supported<br />

by both the client and our Norwegian<br />

affiliate. One of our clients in Norway<br />

chose Capgemini for its capability and<br />

also indicated that Capgemini Norway’s<br />

corporate social responsibility (CSR) practice<br />

had been an important component<br />

in selecting a supplier. It was Capgemini’s<br />

support of the Naandi Foundation<br />

in India that become a key differentiator<br />

in winning the deal. Capgemini<br />

made a commitment whereby for every<br />

person working on the client account,<br />

Capgemini would sponsor a schoolgirl;<br />

the client subsequently agreed to match<br />

Capgemini’s commitment. This is a great<br />

example of CSR in action and the difference<br />

it can make to clients, employees,<br />

and the community.<br />

Client engagement is the ultimate accolade<br />

for this type of program, and to<br />

have clients willingly agree to join in<br />

our program and sponsor girls in India<br />

is a strong endorsement. “In the case of<br />

Capgemini Norway, Capgemini registered<br />

as a charity, known as Naandi Norway,<br />

the first Naandi outside of India. As a<br />

result, Capgemini Norway now has a<br />

very interesting profile in Norwegian<br />

society. Norway’s parliament knows<br />

about the relationship with Naandi, as<br />

does Norway’s media. And potential<br />

Norwegian employees know about it<br />

as well as current and potential clients.<br />

So while following passion the initiative<br />

has also been converted into a business<br />

opportunity to raise the profile of the<br />

company in Norway and win business.<br />

To my mind it’s a fantastic way of how<br />

you can start with just a link to a charity<br />

and take it to a new level,” says Manoj<br />

Kumar, CEO of the Naandi Foundation.<br />

Enhancing employee engagement<br />

During these uncertain times, the need<br />

to motivate and keep employees engaged<br />

has never been more vital. Research<br />

has shown that high employee engagement<br />

has a direct impact on the bottom<br />

line. For many years, employee survey<br />

results have been analyzed to identify<br />

key drivers or opportunities to increase<br />

people engagement. Our Capgemini<br />

<strong>Global</strong> Group Employee Survey 2008<br />

shows that our community work is a<br />

key driver in employee engagement and<br />

retention of talented people. Employees<br />

often enjoy participating in community<br />

programs, making them proud of what<br />

their company is doing. In the more<br />

socially aware environment of today,<br />

we can mark the shift from feel-good<br />

programs to those that are aligned to<br />

the corporate strategy and are designed<br />

to ensure motivation.<br />

Our relationship with the Naandi Foundation<br />

in India and our support for the<br />

Nanhi Kali project has helped us contribute<br />

to a better livelihood for the<br />

more unprivileged groups in society. The<br />

partnership has not only enabled over<br />

10,000 girls in India to have the right<br />

to education, it has also brought along<br />

several business benefits, including support<br />

for our Rightshore® strategy, building<br />

client intimacy, ensuring employee<br />

engagement, and helping our people<br />

understand the importance of human<br />

rights, the combat against discrimination<br />

and the value brought along by cultural<br />

differences.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 23

Carrefour<br />

For you, for us –<br />

Carrefour Commits Itself<br />

Since 2001, Carrefour Colombia has adhered to the United Nations Office on Drugs and<br />

Crime (UNODC) program for the voluntary, gradual eradication of illicit plantations. In<br />

another project, in Bangladesh, the focus is on the workers of controlled products suppliers.<br />

Training helps them learn more about their labour and Human Rights.<br />

By Helene Jessua<br />

The first best practice is about encouraging<br />

farmers to give up illicit cultivation:<br />

The idea is to assist those who have given<br />

up coca cultivation so that they can earn<br />

adequate incomes legally. This program<br />

consists of convincing Colombian farmers<br />

who cultivate illicit coca to change<br />

to products that are mainly consumed<br />

in their country, such as beans, cacao,<br />

palm hearts, coffee, honey, coconuts.<br />

To achieve this, and to ensure adequate<br />

income to farmers, it is important that<br />

a company can ensure the marketing<br />

of these substitution products. Thus,<br />

within the framework of the UN program,<br />

Carrefour has implemented practices already<br />

in place in other countries, such as<br />

guaranteeing a minimum price to enable<br />

farmers to live decently and committing<br />

to this in the long term.<br />

The products are selected under the UN-<br />

ODC Alternative Development Products<br />

program and by the Colombian government’s<br />

Presidential Agency for Social<br />

Action. In some cases, the United States<br />

Agency for <strong>International</strong> Development<br />

(USAID) is also involved in the project.<br />

After checking farmers’ compliance with<br />

the “zero illicit” policy, the products are<br />

presented by the UNODC to Carrefour<br />

Commercial and Social Responsibility<br />

teams. Carrefour also offers technical<br />

support on quality, logistics, and packaging<br />

provided by its commercial team. To<br />

promote the products, Carrefour communicates<br />

in-store and places signs on<br />

the shelves next to the products, which<br />

state: “For you, for us, Carrefour commits<br />

itself. In buying this product, you also<br />

support the UN and national government<br />

program for substitution of illicit<br />

cultivation.”<br />

Two examples of projects<br />

supported by Carrefour in the<br />

program:<br />

Agroamazonia was created in mid-2001<br />

by six associations of farmers that signed<br />

an agreement for the substitution of<br />

illicit cultivation, in line with the National<br />

Alternative Development Plan,<br />

which today is called Plan Colombia.<br />

The palm heart of Putumayo produced<br />

by Agroamazonia was the first product<br />

listed by Carrefour within the framework<br />

of the program in 2001. Agroamazonia<br />

includes 332 families and 660 hectares of<br />

palm. The project has thus enabled the<br />

eradication of more than 600 hectares<br />

of coca cultivation.<br />

Carrefour also works with Ecolsierra, a<br />

network that brings together more than<br />

700 families located in Sierra Nevada de<br />

Santa Marta (north of Colombia), who<br />

work to strengthen their productivity<br />

whilst implementing sustainable<br />

ecological agriculture methods. These<br />

families produce organic honey and<br />

coffee. Through application of these<br />

clean production methods, conservation,<br />

recuperation, and protection of natural<br />

resources can be achieved.<br />

24<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Human Rights<br />

Situation of the program today<br />

Today, within the program, Carrefour<br />

offers 45 products in its Colombian stores<br />

and works with 12 suppliers representing<br />

more than 3000 families from the<br />

most disadvantaged area in the country,<br />

which is also most affected by illicit cultivation.<br />

In November 2004, Carrefour<br />

Colombia received a special prize by<br />

the UNODC for its global contribution<br />

within the program for the voluntary,<br />

gradual eradication of illicit plantations.<br />

This UN civil society program rewards<br />

organizations and individuals who have<br />

contributed to the eradication of drugs<br />

and crime, corruption, and terrorism in<br />

the civil society. This was the first time<br />

the award was given to a company.<br />

Best Practice 2: Training of workers<br />

in Bangladesh<br />

The Carrefour Group has been committed<br />

to the respect of Human Rights<br />

throughout its supply chain for more<br />

than 10 years. To this aim, the Group<br />

has been working with the <strong>International</strong><br />

Federation for Human Rights (FIDH) since<br />

1998 and drew up a Social Charter in<br />

2000 signed by all its controlled products<br />

suppliers, who are audited on their<br />

compliance with it. Because training and<br />

awareness-raising of workers are key for<br />

improvement of working conditions in<br />

the factories, Carrefour and FIDH decided<br />

to launch a training project in Bangladesh<br />

with a local NGO, Karmojibi Nari (KN).<br />

The aim is to give the workers better<br />

knowledge about fundamental rights<br />

at work. The program was initiated as a<br />

pilot project in 2004 and then launched<br />

in 2006 as a three-year project with the<br />

objective of targeting all Carrefour's suppliers<br />

in Bangladesh.<br />

This three-year “fundamental rights at<br />

work” training program is named “To<br />

Ensure Decent Workplace for Better<br />

Livelihood and Increase Productivity.”<br />

Trainings sessions target three<br />

different groups, in the following<br />

order:<br />

1| Top-level management: Through a<br />

two-hour discussion at the Carrefour<br />

office in Dhaka, Carrefour and KN<br />

explain the content of the program<br />

and discuss with factory owners the<br />

importance of training workers about<br />

their rights and responsibilities, as<br />

well as the link between social compliance<br />

and increased productivity.<br />

2| Mid-level management training: This<br />

is a one-day on-site training with a<br />

main focus on gender discrimination.<br />

This training is to help the participants<br />

become more aware of what it<br />

means to be well-behaved, motivated,<br />

and heedful towards workers, how to<br />

find problem resolutions, and how<br />

to achieve productivity maximization.<br />

This training is key, as conflicts<br />

between workers and their direct<br />

supervisors are common, with the<br />

majority of supervisors being mainly<br />

men and about 75 percent of the<br />

workers being women.<br />

3| Workers: The aim of this training<br />

is to inform workers of their rights,<br />

and to build their capacities in collective<br />

bargaining, organizational<br />

skills, and conflict resolution. This<br />

training consists of a one-day on-site<br />

training session. Each training group<br />

is composed of workers both selected<br />

by the management and randomly<br />

by KN. Those workers receive five<br />

copies of the leaflets, which contain<br />

information about: the right to an appointment<br />

letter (contract); the service<br />

book; ID cards; wages; working hours;<br />

occupational health and safety; leaves<br />

for sickness, maternity, holiday, and<br />

festivals; duties and responsibilities.<br />

The leaflets are then distributed to<br />

other workers and they are assigned<br />

the task of disseminating what they<br />

have learned.<br />

Concrete results<br />

The management has increasingly realized<br />

the importance of having women<br />

as supervisors. KN noticed that workers<br />

show a genuine interest in knowing<br />

about their legal rights. After the training,<br />

workers become aware of the rights<br />

they have under the law and become<br />

more conscious of issues such as sexual<br />

harassment and complaint procedures. It<br />

was found that in some factories, workers<br />

asked for their rights and concrete<br />

changes happened in some workplaces<br />

following their demands (maternity leave<br />

with wages, overtime rates, canteen facilities,<br />

etc.). Without this program, no<br />

local NGO would ever have been allowed<br />

to access the factories and educate the<br />

workers within the workplace. The challenge<br />

now is to find ways to reach out<br />

to all workers.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 25

Coca-Cola Hellenic<br />

Lowering CO2 emissions<br />

in Company-wide<br />

effort to protect the<br />

environment<br />

Coca-Cola Hellenic, the<br />

largest independent bottler<br />

of Coca-Cola products in<br />

Europe, is constructing 15<br />

Combined Heat and Power<br />

(CHP) units in 12 countries<br />

as part of a companywide<br />

plan to significantly<br />

reduce CO 2<br />

emissions in its<br />

operations.<br />

Coca-Cola Hellenic estimates that the<br />

amount of energy used in its operations,<br />

involving production facilities, cooling<br />

equipment and transportation, is currently<br />

approximately 890,000 tonnes<br />

across 28 countries. The figure has been<br />

cut by 28% over the past 5 years, and it<br />

is expected that initiatives now being<br />

undertaken will result in a further reduction<br />

of 20% by the end of 2010. The CHP<br />

plants are the cornerstone of Coca-Cola<br />

Hellenic’s energy reduction strategy,<br />

which is being instituted throughout all<br />

operations, involves all employees, and<br />

engages suppliers, customers, governments<br />

and local community organisations.<br />

Construction is being undertaken in<br />

cooperation with the US-based firm<br />

Contour <strong>Global</strong>, a leading developer<br />

of energy-efficient systems which use<br />

natural gas and capture and reuse heat<br />

from power generation. The units provide<br />

all power needs, including heat,<br />

cooling and electricity, and also capture<br />

CO 2<br />

, for industrial use. Excess electricity<br />

will be delivered to the national grid. It<br />

is anticipated that when the units are<br />

completed in 2010, they will achieve<br />

an annual reduction in CO 2<br />

emissions<br />

of more than 20% across all production<br />

facilities.<br />

“The decision to construct the 15 CHP<br />

plants was announced in early 2008 as<br />

part of the Company’s overall commitment<br />

to Corporate Social Responsibility<br />

(CSR), to the sustainable development<br />

of its operations, and to the communities<br />

it serves,” said Doros Constantinou,<br />

Managing Director of Coca-Cola<br />

26<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

Hellenic. “Construction of the plants is<br />

now progressing as the necessary permits<br />

are granted, and the first of the plants<br />

is scheduled to be opened in June in<br />

Romania, followed by Northern Ireland<br />

in September.<br />

The plants are being built in 11 countries:<br />

Greece, Italy, Northern Ireland, Romania,<br />

the Czech Republic, Poland, Austria,<br />

Slovakia, Nigeria, Ukraine, and Serbia.<br />

The pilot plant has been running successfully<br />

since 2006 in Hungary.<br />

At ceremonies to announce the construction<br />

plan, Mr. Günter Verheugen, EU Vice<br />

President and European Commissioner<br />

for Enterprise and Industry, extended his<br />

strong support in his role as cofounder<br />

of the European Alliance for CSR. Mr.<br />

Verheugen said, “Coca-Cola Hellenic is an<br />

active member of the CSR Alliance. This<br />

initiative shows that the Alliance is not<br />

about words but about changing reality.<br />

It demonstrates that environmental and<br />

economic goals can be pursued in unison.<br />

It also demonstrates how innovation is<br />

not just a driver of economic competitiveness,<br />

but can also underpin business’s<br />

contribution to wider societal goals, such<br />

as the fight against climate change.”<br />

Mr. Doros Constantinou said that<br />

Coca-Cola Hellenic made the decision to<br />

build the CHP plants following impressive<br />

results achieved with a pilot CHP<br />

plant at the company’s bottling facility<br />

in Hungary. The first of its kind for the<br />

European beverage industry, the plant<br />

was introduced at the Dunaharaszti bottling<br />

facility in 2006, and in its first year<br />

of operation, achieved a reduction in CO 2<br />

emissions of 43%, equivalent to more<br />

than 18,000 tons of CO 2<br />

. At the same time,<br />

on the environment of its operations<br />

generally. Other energy-saving initiatives<br />

in bottling plants, for example, include<br />

new cleaning regimes that use cold water<br />

instead of hot, along with the installation<br />

of energy efficiency technologies<br />

and energy saving devices.<br />

The Group is also applying efficiencies<br />

in offices and other facilities, such as<br />

warehouses and storage areas, introducing<br />

lower-energy computers and<br />

energy-saving power and lighting systems.<br />

Employees are informed about<br />

the importance of environmental protection<br />

and encouraged to engage in<br />

energy-saving practices – at work and<br />

at home.<br />

Care is taken in transportation. Vehicle<br />

engines are being downsized, alternative<br />

fuels are being used, hybrid technology<br />

is being explored, and drivers are being<br />

trained in ecologically friendly methods.<br />

Efficient route planning and avoidance<br />

of unnecessary travel or deliveries by air<br />

are further scaling back energy usage.<br />

energy costs were reduced by €400,000.<br />

It is anticipated that each of the new<br />

plants will realise similar reductions<br />

and savings, with each plant gaining at<br />

least 40% energy efficiency.<br />

Conserving Energy<br />

As the 15 new CHP units come on-line,<br />

they are expected to make a major contribution<br />

to the efforts being made by<br />

Coca-Cola Hellenic to reduce the impact<br />

Action is also being taken in making<br />

cooling equipment, a primary source<br />

of indirect emissions, more climatefriendly.<br />

Working together with suppliers,<br />

Coca-Cola Hellenic is introducing new,<br />

low-energy cooling units. Refrigerant gases<br />

such as hydrofluorocarbons (HFCs) are<br />

being eliminated, while alternative, low<br />

impact gases, like hydrocarbon (HC) and<br />

CO 2<br />

technology, are being introduced.<br />

In addition, sales representatives are<br />

trained to work with customers, monitoring<br />

the condition of their coolers,<br />

informing them about efficient energy<br />

use, and helping them to reduce their<br />

own carbon footprints. In carrying out<br />

energy-saving activities, the Group seeks<br />

to cooperate with governments and the<br />

communities it serves. Among the relationships<br />

engaged in is the UN <strong>Global</strong><br />

<strong>Compact</strong> Caring for Climate, the largest<br />

global business coalition on climate, and<br />

participation in events such as the World<br />

Business Summit on Climate Change.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 27

Danfoss<br />

Improving the Working<br />

Environment<br />

In August 2006, Danfoss acquired the factory of Chinese company<br />

Qinbao, a manufacturer of brazed plate heat exchangers that is located in<br />

Hangzhou, approximately 150 km southwest of Shanghai.<br />

By Gerhard Teschl<br />

Within only five years, Qinbao had been<br />

able to build a strong position within<br />

the Chinese market and was therefore,<br />

from a strategic standpoint, of interest<br />

to Danfoss. As a part of the internal<br />

standardized merger and acquisition<br />

process, Danfoss carried out a working<br />

environment and safety audit to identify<br />

and analyze gaps between the Group’s<br />

mandatory corporate safety standards<br />

and those of the newly acquired company.<br />

Although the company lived up well to<br />

national standards, the audit revealed<br />

significant deviations from Danfoss’<br />

corporate standards. These deviations<br />

can be summarized in the following<br />

categories:<br />

• Insufficient personal protection equipment<br />

• Missing, inadequate, or defective safety<br />

protection for the semi-automated<br />

equipment<br />

• Insufficient workshop safety<br />

• Insufficient training and visualization<br />

of safety and environmental issues<br />

Since safety and environmental issues are<br />

a top priority for Danfoss management,<br />

an action plan was developed to address<br />

and eliminate the nonconformities<br />

within a tight, targeted time frame.<br />

Activity 1: Establish personal safety<br />

protection for workshop employees<br />

and visitors<br />

At the time of the Qinbao takeover, the<br />

personal protection equipment was insufficient<br />

and none of the employees<br />

were obliged to wear protective equipment<br />

in order to protect their personal<br />

health.<br />

Depending on the work station and area,<br />

Danfoss enforced a rule that employees<br />

must wear ear plugs, safety shoes, eye<br />

protection, working clothes, gloves, or<br />

masks. This has not been easy as it is<br />

not always comfortable for workers to<br />

wear these items, especially gloves and<br />

masks in environments where the climate<br />

is hot.<br />

Activity 2: Upgrade or retirement<br />

of semi-automated production<br />

equipment<br />

Previously, Qinbao experienced several<br />

work-related accidents and injuries.<br />

Especially the cutting, punching, and<br />

pressing process regularly led to serious<br />

injuries. Although no official statistics<br />

were kept, former management and<br />

employees admitted that these accidents<br />

were frequent and that there were few<br />

consequences for the company.<br />

Within the first two months after the<br />

acquisition, Danfoss implemented safety<br />

sensors, protection fences, and safety<br />

push buttons for all cutting, pressing,<br />

and punching machines. In phase two (after<br />

12 months), a majority of the presses<br />

were exchanged with modern presses.<br />

Currently, the focus is on increasing the<br />

degree of automation for the punching<br />

equipment, which will help in eliminating<br />

entirely the potential for those types<br />

of injuries.<br />

Activity 3: The workshop safety<br />

When Danfoss took over Qinbao, the<br />

workshop was small and dark and the<br />

equipment and working stations were<br />

squeezed in between one another. Heavy<br />

heat exchangers were manually lifted<br />

and transported by the employees.<br />

In early 2007 the lighting and product<br />

handling were improved, and the workshop<br />

was divided into different zones<br />

for transportation and safety reasons. In<br />

28<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Human Rights<br />

indicator for the individual performance<br />

systems of all blue-collar employees. In<br />

general, three stages of awareness have<br />

been observed at the company:<br />

1| Reluctance to wear safety protection<br />

and to follow safety rules<br />

2| Compliance and awareness-raising<br />

through audits, (small) penalties, and<br />

rewards<br />

3| Understanding and appreciation of<br />

safety and personal protection and<br />

safe/comfortable working environment<br />

through frequent training and<br />

permanent visualization of safety<br />

improvements<br />

These three stages are well-described by<br />

Xu Zhihua, who has worked at Qinbao on<br />

the bolt-welding station since 2004.<br />

Qinbao: The production and challenges in terms of the working environment<br />

The brazed plate heat exchangers that Qinbao manufactures are made of<br />

stainless steel and copper. The typical production process consists of cutting,<br />

pressing, washing, assembling, brazing, welding, testing, and packing. The<br />

finished product weighs up to 150 kg and the plates and product corners are<br />

sharp. Some areas of the workshop have high noise levels; in other areas,<br />

heavy products are being lifted. This means that there are several working<br />

issues to be addressed in the working environment.<br />

2008 the company was moved to a new<br />

facility, where the workshop environment<br />

and safety standards lived up to<br />

Danfoss’ corporate standards. The 6S system<br />

(Sort, Stabilize, Shine, Standardize,<br />

Sustain, and Safety) was implemented<br />

throughout the workshop. At the new<br />

facility, it is not just about raising the<br />

safety level but also about addressing<br />

the personal comfort levels of the employees.<br />

Activity 4: Training,visualization,<br />

and awareness-raising of safety<br />

Along with improving personal safety<br />

of the employees and upgrading the<br />

machines and the workshop facilities,<br />

it has been very important to train and<br />

visualize safety issues in order to create<br />

long-term awareness.<br />

Now both veteran and new employees<br />

are systematically trained to handle<br />

equipment and meet the safety standards.<br />

Each machine and working station<br />

is marked with signs describing which<br />

safety devices the employees must wear<br />

as well as how installed safety equipment<br />

on machines must be used. Safety charts<br />

in the workshop record the status and<br />

improvements in the working environment<br />

and safety levels.<br />

Daily 6S audits help to reinforce and raise<br />

awareness about safety issues. In 2007,<br />

compliance with safety standards also<br />

became an important key performance<br />

“These safety devices do give us a great<br />

protection against serious injuries, and<br />

now I know that Danfoss not only provides<br />

us with a working place to make<br />

money. The company cares about unusual<br />

details – for China – such a wearing<br />

safety devices. But we can work here<br />

happily and healthily. So I am full of<br />

energy while working in the plant.”<br />

Two years after the acquisition, Danfoss’<br />

safety and environmental standards have<br />

been fully and successfully implemented<br />

at the former Qinbao factory. In <strong>2009</strong>,<br />

Danfoss Qinbao aims to have its environmental<br />

management system certified<br />

according to ISO 14000.<br />

The example of the Qinbao takeover has<br />

proven that, even in a challenging environment,<br />

well-described and standardized<br />

safety and environmental standards<br />

can be implemented successfully within<br />

a reasonable time frame and without<br />

compromising these issues.<br />

The success is measurable: In 2008, the<br />

company had one minor and one serious<br />

accident, which is a decline of 60 percent<br />

in comparison to 2007 statistics, and a<br />

major improvement over previous years.<br />

Over the last six months, Danfoss Qinbao<br />

has been entirely accident-free.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 29

Deutsche Bank<br />

The microfinance<br />

revolution has only<br />

just begun<br />

Microcredits have proven to be powerful instruments in the fight against poverty.<br />

However, they will reach their full impact only if they manage to limit their reliance<br />

on the charitable sector.<br />

By Hanns Michael Hölz<br />

“The genocide brought the destruction<br />

of my parents’ retail shop“, Nsengiyma<br />

Gilbert from Rwanda explains. “It ended<br />

in ruins and in the brutal killing of my<br />

father. After the war, I dropped out of<br />

school, crisscrossed Kigali in search for a<br />

job to no avail. Then the idea of selling<br />

milk to a nearby kindergarten school<br />

near my home came to me. However,<br />

the earnings from this business were<br />

not enough to buy me a refrigerator and<br />

enable me to rent a bigger place to start a<br />

restaurant,” Gilbert says. “I tried to get a<br />

loan from other banking institutions, but<br />

the conditions were a little too harsh and<br />

couldn’t provide an immediate solution<br />

to my desperate situation. That’s when a<br />

friend of mine told me about RML quick<br />

loans,” he explains.<br />

RML is the abbreviation of Rwanda Microfinance<br />

Limited, a company founded<br />

in 2004 in order to provide loans to<br />

low-income salary earners and microentrepreneurs.<br />

RML provided Gilbert<br />

with a business loan of about $500, and<br />

things improved. He bought a refrigerator<br />

for his dairy products and moved<br />

to a bigger place that he turned into a<br />

restaurant. The income generated from<br />

his restaurant business helped him build<br />

a decent home for his mother. “This<br />

business has served as a lifeline for me<br />

and my family‘s financial and social<br />

livelihood. Now my aged mother will<br />

no more spend sleepless nights when it<br />

rains,” he affirms. With additional support<br />

from RML, Gilbert plans to expand<br />

his business.<br />

Supporting early-stage microfinance<br />

institutions (MFI)<br />

RML is part of Micro Africa, an East African<br />

microfinance group based in Nairobi,<br />

Kenya. In mid-2006, RML had not<br />

yet reached operational self-sufficiency<br />

and had a total loan portfolio of half a<br />

million dollars. But then the Deutsche<br />

Bank Start-up Fund provided a letter of<br />

credit in the amount of $100,000, which<br />

secured a Rwandan franc loan from a<br />

local lender. Since receiving the loan,<br />

RML has become profitable and now<br />

serves over 1,400 clients with a portfolio<br />

of over $1.4 million.<br />

The Deutsche Bank Start-up Fund, which<br />

is supported by the Deutsche Bank Americas<br />

Foundation and CORDAID, a Dutch<br />

NGO, seeks to identify start-up microfinance<br />

institutions (MFI) in underserved<br />

markets with strong management. Capitalized<br />

through grants and soft funding,<br />

it provides flexible financing to support<br />

portfolio growth and works to build<br />

governance and financing capacity. Like<br />

all the other microfinance instruments<br />

developed and used by Deutsche Bank,<br />

the Start-up Fund does not lend to the<br />

final borrowers, but gives financial and<br />

logistics support to microfinancing institutions.<br />

By transferring capital and<br />

know-how, it strengthens regional economic<br />

structures and networks in order<br />

to stabilise developing countries.<br />

A powerful instrument in the fight<br />

against poverty<br />

Microfinance, the extension of very small<br />

loans to those who lack collateral or a<br />

credit history, is proving to be a revolutionary<br />

model in enabling people to rise<br />

from poverty. It is based on the recogni-<br />

30<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Financial Markets<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 31

Deutsche Bank<br />

According to db research, women<br />

make up the vast majority of<br />

borrowers, especially in Asia. It reflects<br />

the fact that women are more reliable<br />

debtors because, due to stronger social<br />

and family ties, they often follow a<br />

more conservative investment strategy<br />

which in turn results in lower default<br />

rates for MFIs.<br />

tion that the working poor can act in<br />

an entrepreneurial manner and are, in<br />

principle, creditworthy. As a study by<br />

Deutsche Bank think tank db research<br />

illustrates, for these micro-borrowers,<br />

microcredit is often the only alternative<br />

to paying excessive interest rates<br />

charged by unofficial moneylenders or<br />

pawnshops in developing countries. For<br />

instance, in the Philippines loan sharks<br />

often charge an annualised interest rate<br />

of up to 1000% for a monthly loan. In<br />

contrast, interest rates charged by MFIs<br />

are in the range of 15% to 70% p.a. Seen<br />

from the perspective of a developed<br />

country, this may still seem high, but<br />

these rates result from the small size of<br />

loans and the high administrative costs<br />

as loan officers need to travel to remote<br />

places and intensively advise clients. It<br />

is estimated that administrative costs<br />

amount to up to two thirds of the interest<br />

paid by clients. In addition, there is<br />

a need for risk provisioning.<br />

According to db research, women make<br />

up the vast majority of borrowers, especially<br />

in Asia. This reflects the fact that<br />

women are more reliable debtors because,<br />

<strong>International</strong> Comparison: Impact of Deutsche Bank Microfinance Funds<br />

(Deutsche Bank Microcredit Development Fund, <strong>Global</strong> Commercial<br />

Microfinance Consortium & Start-Up Fund)<br />

Total Microcredits: USD 309,883,956<br />

400,000<br />

300,000<br />

200,000<br />

100,000<br />

90,000<br />

200<br />

0<br />

100,666<br />

Number of clients<br />

Average loan size USD<br />

527<br />

310,189<br />

460<br />

192,639<br />

due to stronger social and family ties,<br />

they often follow a more conservative<br />

investment strategy, which in turn results<br />

in lower default rates for MFIs. This<br />

lower credit risk is further supported by<br />

634<br />

93,060<br />

Africa & Middle East Asia Latin & South America Eastern Europe & Russia USA<br />

2,889<br />

260<br />

6,655<br />

6,000<br />

4,000<br />

2,000<br />

600<br />

500<br />

400<br />

a relatively low degree of labour mobility<br />

of female clients (due to strong family<br />

ties, women tend to work from home),<br />

which decreases the cost of monitoring<br />

debtors for an MFI.<br />

0<br />

32<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Financial Markets<br />

In order to influence borrower behaviour,<br />

many MFIs apply the principle of group<br />

lending. This entails an MFI making a<br />

small loan to an individual who belongs<br />

to a group of 5 to 20 people. As soon as<br />

the individual borrower proves reliable,<br />

credit is extended to additional people<br />

within the group. This procedure creates<br />

an incentive for the group to monitor<br />

each other’s behaviour and ensure borrower<br />

discipline, as the group is jointly<br />

liable for the failure of any single member<br />

to repay her microloan. The average<br />

loan size starts from USD 100 and can<br />

reach several hundred dollars, depending<br />

on the debtor’s repayment history.<br />

Interest rates vary significantly according<br />

to the geographic regions, e.g. in India<br />

microloans are usually granted at 15%<br />

to 30%.<br />

However, not all MFIs apply the group<br />

lending principle; instead, some MFIs<br />

prefer to lend to individuals without any<br />

shared liability aspect. This reflects, inter<br />

alia, the argument that group lending<br />

has some shortcomings, e.g. that it only<br />

fully works in rural settings where social<br />

control is higher. In addition, opponents<br />

of group lending argue individual lending<br />

is superior, as it judges people on<br />

their own merits rather than on the<br />

group’s. In some countries, individual<br />

lending exhibits higher average loan<br />

amounts and often primarily serves the<br />

self-employed rather than the very poor<br />

seeking to start a business. As db research<br />

sums up, both approaches have their<br />

advantages and respond to different<br />

circumstances; hence, it can be expected<br />

that individual and group lending techniques<br />

will continue to coexist over the<br />

long term.<br />

Deutsche Bank –<br />

a microfinance pioneer<br />

Among commercial banks, Deutsche<br />

Bank is a pioneer in the field of microfinance.<br />

As early as 1997, the company<br />

established the Deutsche Bank Microcredit<br />

Development Fund (DBMDF) in<br />

order to help established microfinance<br />

institutions reach scale and long-term<br />

sustainability by encouraging relationships<br />

with local financial institutions.<br />

The DBMDF is a registered 501 (c) 3<br />

non-profit. It provides catalytic funds<br />

as collateral for leverage loans, typically<br />

2:1, and is supported by social investors,<br />

private clients of Deutsche Bank, and the<br />

Deutsche Bank Americas Foundation.<br />

The <strong>Global</strong> Commercial Microfinance<br />

Consortium, established at the end of<br />

2005, is an $80.6 million fund that serves<br />

as a platform to combine high risk catalytic<br />

development agency resources with<br />

the scale and execution efficiency of the<br />

private sector. Deutsche Bank created the<br />

Consortium in recognition of the pivotal<br />

roles that the private sector can play in<br />

the development arena in partnership<br />

with development agencies. In so doing,<br />

the Consortium harnesses resources<br />

available through the growing corporate<br />

social responsibility sector as an investment<br />

rather than as an expense.<br />

db Microfinance-Invest No. 1 –<br />

the next step in microfinancing<br />

However, the microfinancing instrument<br />

will reach its full impact only if it manages<br />

to limit its reliance on the charitable<br />

sector and turn into a regular business<br />

highly attractive to the private sector.<br />

Against this backdrop, three branches<br />

of Deutsche Bank – Private Wealth<br />

Management (PWM), Corporate Social<br />

Responsibility (CSR) und Asset Finance<br />

& Leasing (AFL) – have developed a<br />

product which addresses economic and<br />

philanthropic customer interest at the<br />

same time: db Microfinance-Invest No.1,<br />

the first securitization of subordinated<br />

microcredits with an external rating<br />

worldwide. The securitization transaction,<br />

which has a total volume of EUR<br />

60 million, was completed in 2007 and<br />

is the first German investment product<br />

which gives retail and institutional investors<br />

access to the ever-growing asset<br />

class ”microfinance“. The securities were<br />

purchased not only by Deutsche Bank<br />

but also by KfW-Entwicklungsbank (the<br />

largest institutional investors) as well as<br />

retail clients, foundations and church<br />

institutions. Deutsche Bank and its partners<br />

agreed upon a fee structure that<br />

is attractive for investors; for example,<br />

99.6% of the total investment volume<br />

is used to support microcredits.<br />

Senior notes in db Microfinance-Invest<br />

No.1 were assigned a BBB rating by Fitch<br />

Ratings. The portfolio comprises 21 microfinance<br />

institutions and banks in 15<br />

countries in Africa, Latin America, the<br />

Caucuses, Central Asia and Southeast<br />

Asia. The diversification of the MFI-Portfolio<br />

was compiled by Deutsche Bank’s<br />

New York Center of Competence and the<br />

Community Development Finance Group<br />

in Africa, Asia, Latin America, eastern<br />

Europe and central Asia. The fund’s<br />

goals include the provision of reasonably<br />

priced debt that garners full or partial<br />

equity credit without increasing clients’<br />

weighted average cost of capital. This<br />

enables MFI clients to present a fairer<br />

picture of their financial strength to<br />

investors. The subordination layer should<br />

also enable clients to attract senior debt<br />

through strengthened equity ratios. Many<br />

microfinance institutions are also in the<br />

process of transforming themselves from<br />

unregulated into regulated financial<br />

entities, and db Microfinance-Invest’s<br />

subordinated debt provides quasi-equity<br />

that helps MFIs to meet their regulatory<br />

requirements in the transformation<br />

process.<br />

Throughout the world, Deutsche Bank<br />

seeks opportunities to play a positive<br />

role in addressing local needs by making<br />

available financial resources, the talents<br />

of its personnel and the leadership of<br />

its management. All of these efforts are<br />

geared toward forming lasting partnerships<br />

with community-based organizations<br />

to achieve durable and lasting<br />

benefits for local citizens. A combined<br />

Deutsche Bank Americas Foundation<br />

and Community Development Group<br />

carry out the firm’s corporate citizenship<br />

commitments in the Americas. The microcredit<br />

initiatives are an integral part<br />

of Deutsche Bank’s CSR activities and a<br />

recognized best-practice project in the<br />

framework of the <strong>Global</strong> <strong>Compact</strong>.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 33

Deutsche Post DHL<br />

The Green Imperative<br />

Deutsche Post DHL became a signatory to the UN <strong>Global</strong> <strong>Compact</strong> in June 2006. At<br />

that time, we sought to align our sustainability commitment and approach with key<br />

external international standards. In our effort to be a responsible corporate citizen,<br />

our overall sustainability approach focuses on environment and in particular climate<br />

protection, education and disaster management.<br />

Implementing new trailer designs to<br />

save fuel and reduce carbon impact<br />

34<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

By Steffen Frankenberg<br />

Implementing environmental responsibility<br />

continues to be a challenge and<br />

opportunity for us as we seek ways to<br />

adapt our business processes and culture<br />

to addressing the environmental challenges<br />

we face today.<br />

Our environmental strategy has three<br />

pillars:<br />

• Tackling climate change<br />

• Improving our overall environmental<br />

performance<br />

• Minimizing our use of natural<br />

resources<br />

Tackling climate change<br />

As the world’s leading mail and logistics<br />

company, we transport billions of shipments<br />

each year to over 220 countries<br />

and territories, operating one of the<br />

world’s largest transportation fleets; we<br />

recognize that our largest environmental<br />

impact is CO 2<br />

emissions. We are making<br />

a concerted effort to effectively address<br />

this impact.<br />

In 2008, we launched our GoGreen<br />

Program and became the first logistics<br />

company to commit to clear climate<br />

protection targets. Our goal is to improve<br />

our carbon efficiency by 30% by 2020<br />

in our own operations and those of our<br />

subcontractors, compared to our 2007<br />

baseline. We have entered into discussions<br />

with our subcontractors on ways<br />

to measure and reduce their footprint;<br />

and have taken the first steps towards<br />

achieving our 2012 milestone of a 10%<br />

CO 2<br />

efficiency improvement in our own<br />

operations.<br />

To deliver on our carbon efficiency commitment<br />

we are focusing on five areas:<br />

As a responsible<br />

corporate citizen<br />

Deutsche Post<br />

DHL's overall<br />

sustainability<br />

approach focuses<br />

on environment<br />

and in particular<br />

climate<br />

protection,<br />

education<br />

and disaster<br />

management.<br />

1. Ensuring transparency:<br />

We need to be transparent about our<br />

carbon footprint to help us track our<br />

progress and identify opportunities to<br />

minimize it. The ability to calculate our<br />

own carbon footprint is a key prerequisite<br />

of our GoGreen Program. We also<br />

need the data to responsibly offset our<br />

GoGreen products and services, and in<br />

time, to calculate our customers’ individual<br />

footprints. In time, we will use this<br />

data to help our country teams manage<br />

emissions locally.<br />

2. Increasing CO 2<br />

efficiency:<br />

Minimizing our carbon footprint through<br />

targeted initiatives and by introducing<br />

innovative technologies for our own operations<br />

and our subcontractors we can<br />

effectively improve our CO 2<br />

efficiency.<br />

For example, in the UK, we introduced<br />

200 teardrop trailers which consume<br />

12% less fuel than conventional trailers.<br />

<strong>Global</strong>ly we operate about 800 alternatively<br />

fuelled vehicles. We are constantly<br />

renewing our air and road fleet. We are<br />

also optimizing our network and transport<br />

planning e.g. with an electronic<br />

freight exchange system (EFX), and the<br />

utilization of our subcontractor fleet<br />

saving two million truck miles, equivalent<br />

to 3,000 tons of CO 2<br />

. We have also<br />

bundled our innovation activities into<br />

the DHL Innovation Center, in cooperation<br />

with IBM, SAP, MIT to develop<br />

innovative logistics solutions including<br />

‘green’ solutions. By doing so, we can<br />

actively promote the development of<br />

innovations such as electric and hybrid<br />

vehicles, aerodynamic solutions or new<br />

generation fuels to improve fuel and<br />

CO 2<br />

efficiency.<br />

3. Mobilizing our employees:<br />

Raising awareness of climate and environmental<br />

protection issues, and enabling<br />

our employees to minimize their impacts<br />

is critical to the successful implementation<br />

of our climate protection program.<br />

Our Save Fuel program provides driver<br />

training to approximately 50,000 drivers<br />

in Germany to help them reduce their<br />

fuel consumption by as much as 6% by<br />

the end of <strong>2009</strong>. An internal employee<br />

‘environmental idea’ campaign generated<br />

more than 11,000 ideas from employees<br />

to improve our CO 2<br />

efficiency.<br />

Our getGREEN Associate Incentive Program<br />

in the US aims to educate and<br />

reward employees for making environmentally-sound<br />

choices in their everyday<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 35

Deutsche Post DHL<br />

Employee involvement in addressing<br />

climate change is a key aspect of our<br />

global GoGreen Program.<br />

lives through monetary incentives to<br />

purchase non-conventionally fuelled vehicles<br />

such as hybrids or energy-efficient<br />

household appliances. In addition, for<br />

every five employees who take part in<br />

the program, we donate US$500 to The<br />

Nature Conservancy’s ‘Plant a Billion<br />

Trees’ campaign.<br />

We are also making changes to our<br />

company policies to ensure that, over<br />

the long term, our consideration for<br />

the environment is integrated into the<br />

business decision-making process. In<br />

Germany, we have revised our company<br />

car policy removing the worst polluting<br />

cars from those available for selection,<br />

increasing the period of usage and maximum<br />

mileage, and included a provision<br />

to encourage and incentivize individuals<br />

to make more environmentally-friendly<br />

choices. By the end of <strong>2009</strong>, we will<br />

have implemented an e-Learning module<br />

to raise awareness of the climate<br />

change challenge. The goal is to help<br />

our employees better understand the<br />

importance of their role in addressing<br />

this challenge.<br />

4. Generating value at the market:<br />

Our GoGreen product portfolio offers<br />

customers services to assess, reduce and<br />

offset their emissions. For example, we<br />

designed a new refrigerated distribution<br />

hub for a key customer in the food<br />

manufacturing industry in the USA to<br />

maximize sustainability and energy efficiency<br />

by building it 30m underground.<br />

The facility uses 65% less energy than<br />

comparable above ground facilities; saves<br />

approximately 681,000 liters of fuel and<br />

reduces CO 2<br />

emissions by approximately<br />

1.8 million kgs annually. In 2008, we<br />

expanded our GoGreen carbon neutral<br />

service making it available in over 25<br />

countries in Europe and Asia. We also<br />

offer carbon consultancy services to create<br />

and execute greenhouse gas reduction<br />

strategies for DHL customers.<br />

5. Preparing for regulatory changes:<br />

We are engaging with the legislative<br />

process to help shape regulation that<br />

brings long-term environmentally-aware<br />

changes to our sector. It is clear that<br />

sooner, rather than later, there will be<br />

a price on CO 2<br />

emissions. It is important<br />

that in general, resources and CO 2<br />

emissions<br />

are priced adequately leading to<br />

efficient allocation of resources rather<br />

than to increased costs. By engaging<br />

with the regulatory process we want<br />

to be able to provide input to policies<br />

that could influence how our industry<br />

impacts the environment.<br />

Improving our overall<br />

environmental performance<br />

Although climate change is our largest<br />

environmental impact, we are also<br />

addressing our other environmental<br />

impacts. We have implemented an Environmental<br />

Management System to<br />

ensure that we were addressing our other<br />

environmental impacts. To date, approximately<br />

46 % of our global workforce<br />

now works under ISO 14001-certified<br />

Environmental Management Systems. Examples<br />

of business units with improved<br />

ISO 14001 coverage, include our MAIL<br />

business in Germany that earned ISO<br />

14001 certification for all of its operations.<br />

The certificate covers over 159,000<br />

employees and is valid for 49 operational<br />

districts, which include 82 mail and<br />

33 parcel centers. DHL Express Europe<br />

widened its certification coverage from<br />

44 % of sites in 2006, to 80 % in 2008 –<br />

covering 43,000 employees in 717 sites.<br />

In Asia-Pacific, DHL <strong>Global</strong> Forwarding<br />

achieved certification of its entire operations,<br />

covering over 10,000 employees<br />

at 199 facilities in 14 countries. We<br />

will continue to expand the coverage of<br />

our environmental management system<br />

throughout our organization.<br />

Minimizing our use of natural<br />

resources<br />

We spent over €9 billion in 2008 on<br />

products and services, of which almost<br />

€2 billion was spent on energy (fuel and<br />

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electricity). This considerable purchasing<br />

spend provides us with an opportunity<br />

to influence the sustainability of our<br />

own supply chain. In 2008, we revised<br />

our supplier code of conduct to include<br />

environmental considerations. This Code<br />

is part of all new contracts with suppliers.<br />

Early in the procurement process<br />

we request that our suppliers commit<br />

to the Code before proceeding. Our request<br />

for information form sets out the<br />

environmental expectations we have<br />

of our suppliers, and forms the basis<br />

for discussing alternatives. To support<br />

its implementation, we have developed<br />

guidance notes for our procurement<br />

teams and trained more than 500 of<br />

The DHL Innovation Center pioneers<br />

innovative logistics solutions to<br />

deliver economic and environmental<br />

efficiencies.<br />

Acting decisively<br />

on climate<br />

change is now<br />

a key initiative<br />

in our group's<br />

global and<br />

longterm agenda.<br />

our buyers on the content of our Code<br />

in 2008.<br />

We are also continuing sustainable sourcing<br />

initiatives which we initiated last<br />

year such as vehicle fleet procurement,<br />

“greener” IT, and paper sourcing. Our Procurement<br />

organization, for example, has<br />

significantly increased the percentage of<br />

recycled and sustainably-sourced paper<br />

it purchases, in line with the guidance in<br />

our Corporate Paper Policy, to over 80 %<br />

in 2008. We will now take further steps<br />

to implement the use of recycled paper<br />

across our organization worldwide.<br />

Conclusion<br />

<strong>2009</strong> marks an important milestone on<br />

climate change with the UN Climate<br />

Conference in Copenhagen (COP 15)–<br />

aimed at setting action on climate change<br />

as a global priority. For Deutsche Post<br />

DHL, <strong>2009</strong> marks the year in which our<br />

Group’s climate protection program,<br />

GoGreen becomes firmly cemented in<br />

our company’s 2015 strategy and a key<br />

performance indicator for our company’s<br />

overall performance. Acting decisively<br />

on climate change is now a key initiative<br />

in our Group’s global and long-term<br />

agenda.<br />

The Danish Ministry of Foreign Affairs<br />

recently appointed DHL as the official logistics<br />

partner providing carbon neutral<br />

logistics services at UN Climate Conference<br />

in Copenhagen. We are proud to<br />

be an active part of this event and this<br />

achievement demonstrates to us that<br />

our GoGreen Program is steering our<br />

company in the right direction. At the<br />

same time, we recognize that we may<br />

not have all the answers and that we<br />

are counting on our business partners<br />

to embark on this journey with us. Yet,<br />

we realize waiting to act is not an option<br />

and that as a leader in our industry we<br />

have the power and obligation to set<br />

the pace. We are doing our best to lead<br />

by example.<br />

To find out more on Deutsche Post DHL’s<br />

climate protection program, GoGreen, visit:<br />

www.dp-dhl-gogreen.com<br />

To find out more about our sustainability<br />

commitment and programs, visit:<br />

www.dp-dhl.com/sustainability<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 37

DonG Energy<br />

A Nationwide charging<br />

network for electric<br />

vehicles in Denmark<br />

Our modern lifestyles offer a wealth of exciting possibilities, but also go hand in hand with<br />

high energy consumption. Because of the carbon footprint that our energy consumption<br />

leaves behind, there is no longer any reason to doubt that our lifestyles affect the climate.<br />

Each and every one of us, including DONG Energy, is responsible for minimizing our<br />

energy consumption and maximizing our consideration for the environment. As an energy<br />

company, we have a special responsibility for producing energy in as environmentally<br />

friendly a manner as possible.<br />

By Anders Lyngtorp, M. Sc. Techn. Soc.<br />

We aim to triple our renewables capacity<br />

by 2020. That is a major challenge in<br />

itself. Despite these measures, our power<br />

plants will remain an essential part of<br />

our energy supply for the foreseeable<br />

future in order to provide reliable supplies<br />

of energy. Therefore, we need to<br />

identify efficient methods for reducing<br />

CO 2<br />

emissions from our power plants,<br />

which are among the most efficient in<br />

the world. We have removed almost every<br />

pollutant from the flue gases. Now we<br />

are focussing on the CO 2<br />

challenge. Our<br />

long-term objective is clear – providing<br />

reliable energy without CO 2<br />

emissions.<br />

Therefore, we are engaged in developing<br />

a range of projects that support this<br />

objective. Examples of these projects are:<br />

wind power generation; production of<br />

second-generation bioethanol; co-firing<br />

with biomass when generating combined<br />

heat and electricity; capturing and storing<br />

CO 2<br />

; employing geothermal energy<br />

as a supplement to district heating; and<br />

generating energy via solar energy, hydro<br />

power, or wave and tidal energy.<br />

We are constantly trying to improve<br />

our competitiveness and expand our<br />

presence in the northern European energy<br />

market – particularly through<br />

growth outside Denmark. The growth<br />

will be underpinned by a whole series<br />

of identified, well-defined investment<br />

options that have been chosen because<br />

they support our long-term objectives,<br />

utilize skills and existing market positions,<br />

and enable synergies across the<br />

entire Group.<br />

Recently, we entered into an agreement<br />

with Siemens to supply up to 500 wind<br />

turbines – with a total capacity of up<br />

to 1800 megawatts – for our planned<br />

offshore wind farms in northern Europe.<br />

This agreement is the largest single offshore<br />

wind turbine supply agreement<br />

ever, and it strengthens our leading position<br />

within offshore wind energy. Finally,<br />

it is an important tool for implementing<br />

our strategy of significantly expanding<br />

DONG Energy's position within the sustainable<br />

energy sector.<br />

Nationwide charging network<br />

In 2008, DONG Energy formed a cooperation<br />

with Better Place in Denmark. By<br />

doing so, DONG Energy became partner<br />

in a program for rolling out a nationwide<br />

charging network for electric vehicles in<br />

Denmark. The project provides optimum<br />

exploitation of renewable energy, which<br />

until now has been impossible to store,<br />

and also saves CO 2<br />

.<br />

As a geographically small country, Denmark<br />

has relatively low transportation<br />

needs. There is a high car-registration<br />

tax on conventional cars, but apart from<br />

VAT, there are no taxes on electric vehicles,<br />

making Denmark an ideal loca-<br />

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with 5.4 million inhabitants and some<br />

2 million passenger cars, the entire passenger<br />

car fleet could thereby be run on<br />

electricity produced by less than 750<br />

windmills.<br />

But as the wind is not blowing constantly,<br />

we have also estimated that even if all the<br />

electrical charging of cars was sourced<br />

from coal-fired power plants, net CO 2<br />

emissions would still decline by half. The<br />

reason is partly that electric motors are<br />

far more efficient than even the most<br />

modern combustion engines, and partly<br />

that the energy efficiency of our power<br />

plants is high.<br />

tion for launching an electric vehicles<br />

program.<br />

The goal of Better Place is to reduce CO 2<br />

emissions from the transport sector by<br />

implementing a charging infrastructure<br />

for electric vehicles. DONG Energy is<br />

shareholder in a Better Place operator<br />

in Denmark and will be supplying the<br />

energy to drive the electric vehicles. In<br />

close cooperation with DONG Energy,<br />

Better Place Denmark will be responsible<br />

for building an electric-car-charging network<br />

as well as a control centre that will<br />

communicate wirelessly with the cars in<br />

order to optimize the charging behaviour<br />

in relation to hourly fluctuations<br />

of market prices for electricity. Thereby<br />

it can be ensured that if a car is plugged<br />

into the carport socket outlet at 5 p.m.,<br />

it will not start charging until late at<br />

night when general energy consumption<br />

is at its minimum – or alternatively, at<br />

times of the day or night when there is<br />

a surplus of energy.<br />

The infrastructure will include thousands<br />

of charge spots per region: in private<br />

homes, workplaces, and public locations<br />

throughout a deployment area. The<br />

charge spots are supplemented by a network<br />

of battery-switch stations that allow<br />

drivers to exchange a depleted battery<br />

for one with a full charge, in less time<br />

than it takes to fill a tank with petrol.<br />

That said, as the vast majority of driving<br />

trips are shorter than the 150-km range<br />

possible with a fully charged EV-battery,<br />

most customers will use charge spots as<br />

their primary source of energy.<br />

Charging electric cars with power<br />

We estimate that one medium-sized<br />

windmill with a 2 megawatt capacity<br />

on an annual basis can supply the energy<br />

needed for 3000 cars. In a country<br />

About DONG Energy<br />

However, the more wind power we have<br />

in our production mix at any given time,<br />

the higher the reduction in CO 2<br />

emissions<br />

will be. An additional benefit will come<br />

from the fact that most charging will<br />

take place at night when wind power<br />

is in excess supply. This means that it<br />

will be possible to use wind energy for<br />

transportation purposes that otherwise<br />

would have to be exported to neighbouring<br />

countries, typically at relatively low<br />

prices.<br />

Ultimately, the transition to an electricvehicle-based<br />

transportation system powered<br />

by renewable energy will lead to a<br />

reduction of CO 2<br />

emissions to the benefit<br />

of our climate.<br />

DONG Energy is an integrated energy company that operates across the<br />

entire energy value-chain, with a presence in a number of important markets<br />

in northern Europe – Germany, the United Kingdom, Norway, the Netherlands,<br />

Sweden, Poland, and Denmark. The company’s core business activities<br />

are: natural gas and oil exploration and production; production of thermal<br />

and renewable energy; natural gas and power sales; and distribution in the<br />

wholesale market and to end customers. More than 5000 employees are<br />

doing their best to fulfil the ambition of securing stable energy supplies for the<br />

company’s different markets.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 39

E.ON<br />

R&D driving the<br />

sustainable future<br />

of energy<br />

The world of energy is currently facing its potentially greatest challenge since the invention<br />

of electricity. This is being fuelled by three fundamental development trends. Firstly, demand<br />

for energy is continuing to increase. The IEA estimates that there will be about a 50 percent<br />

increase in demand for primary energy worldwide by 2030. This will require massive<br />

investments in energy generation. Secondly, climate change and the real threats it involves<br />

demand unrelenting action in support of global climate protection. Thirdly, the fact that<br />

fossil resources are not unlimited means that energy has to be treated even more responsibly.<br />

By Erik Brandsma<br />

Dealing with these seemingly irreconcilable<br />

conflicts – i.e. breaking the correlation<br />

between growth and energy<br />

consumption – requires a fundamental<br />

transformation of the energy sector and<br />

a new understanding of how we generate,<br />

distribute and use energy. New innovative<br />

technologies are key to making this<br />

happen. These range from tapping more<br />

into the potential renewables have to offer,<br />

successfully realizing carbon capture<br />

and storage, developing more effective<br />

energy storage systems and flexible distribution<br />

right up to devising intelligent<br />

solutions for increasing energy efficiency<br />

in residential homes.<br />

When it comes to R&D in forwardlooking<br />

energy technologies, E.ON is<br />

committed to attaining a leading position<br />

in its industry. On the one hand,<br />

E.ON wants to act as a catalyst between<br />

basic research and the energy sector’s<br />

day-to-day business and so accelerate<br />

the transformation of new ideas into<br />

marketable products and processes. In addition<br />

to that, we are forging ahead with<br />

the development of key technologies<br />

ourselves. As a successful international<br />

group, E.ON has unrivalled first-hand insight<br />

into the demands and requirements<br />

from the field. Accordingly our R&D<br />

strategy focuses on optimization of our<br />

facilities and processes with innovative<br />

solutions, development and commercial<br />

implementation of strategically relevant<br />

key technologies ("innovate.on") and<br />

promoting of research at universities<br />

and institutes around the world.<br />

Our activities to promote research focus<br />

on challenges for which fundamental<br />

solutions have to be found or which are<br />

at the very beginning of their research<br />

cycle. E.ON therefore supports the “E.ON<br />

Energy Research Center” (ERC), a public<br />

private partnership with RWTH Aachen<br />

University, which, among other areas, is<br />

researching into storage and efficient<br />

integration of renewable energies into<br />

the existing power supply. Today renewables<br />

cannot supply baseload power, as<br />

the wind does not always blow without<br />

interruption and the sun does not shine<br />

around the clock. We therefore have to<br />

develop innovative storage technologies<br />

to be able to store energy from renewable<br />

sources to make it available without<br />

interruption. The independent ERC is<br />

also conducting research into intelligent<br />

network systems, which enable the flexible<br />

use of renewables across borders and<br />

allow power generated decentrally to be<br />

fed into networks on demand. The findings<br />

remain the property of researchers<br />

and are published to be accessible in the<br />

public domain.<br />

Beyond that, regarding the pressing challenges<br />

of today’s energy sector, another<br />

objective is to make clean-coal technologies<br />

available on an industrial scale. If<br />

40<br />

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out at sea, and maritime energy technologies,<br />

such as tidal and wave power<br />

plants as well as the generation of bio<br />

natural gas on an industrial scale. And<br />

given the future application of nuclear<br />

power, we also have to develop the next<br />

generation of nuclear power plants. They<br />

will then have to provide the greatest<br />

possible level of inherent safety and<br />

even higher protection against external<br />

influences.<br />

We have pooled these and other issues<br />

within our technology initiative “innovate.on”<br />

and, thanks to our international<br />

footprint in 30 markets, we are able to<br />

distribute tasks effectively and learn<br />

from each other. One example is that, as<br />

a group in Germany, we can benefit from<br />

the experience in wind energy which<br />

has been gathered in the UK and Spain,<br />

while our customers in Italy and the US<br />

stand to gain from German expertise in<br />

coal technology.<br />

innovate.on<br />

efficient ecological energy<br />

Future Fossil Fuel<br />

Power Plants<br />

High<br />

Efficient<br />

Coal<br />

Power Plant<br />

Carbon<br />

Capture<br />

Storage<br />

Nuclear<br />

Generation<br />

III+<br />

this is to be achieved, we have to increase<br />

the thermal efficiency of coal-fired<br />

power plants considerably. However, the<br />

greatest challenge when it comes to low<br />

carbon is undoubtedly the low carbon<br />

power plant based on CCS technology. In<br />

capturing CO 2<br />

, we are currently pursuing<br />

three technologies but are concentrating<br />

on the “post combustion process”, as it<br />

Renewable Energy<br />

Wind<br />

Offshore<br />

Upgraded<br />

Biogas<br />

Marine<br />

End Use<br />

Efficiency<br />

Gas Heat<br />

Pump<br />

is easier to retrofit into existing power<br />

plants and can also be made available<br />

to other countries. In Europe we are<br />

working on establishing a fleet of pilot<br />

plants and intend to make CCS technology<br />

commercially viable by 2020.<br />

Further technological challenges include<br />

building offshore wind farms, even far<br />

As part of our commitment to push these<br />

fields of research and development, E.ON<br />

has once again considerably increased<br />

its investments in new technologies to<br />

support universities, research, development<br />

and demonstration plants, which<br />

amounted to € 106 million in 2008, after<br />

€ 83 million in 2007 and € 57 million in<br />

2006. The successes we have been able to<br />

claim reaffirm our conviction to continue<br />

with our broadly based R&D activities<br />

to find solutions for sustainable energy<br />

generation, distribution and use.<br />

R&D is also a field of action which affects<br />

different parties involved in the energy<br />

sector – government, universities, research<br />

institutions, industrial companies<br />

as well as the energy industry – and<br />

requires a joint effort to master the considerable<br />

challenges ahead. This applies<br />

for Germany and Europe, but also worldwide<br />

when it comes to the application<br />

of new technologies for global climate<br />

protection, where concerted actions by<br />

governments, companies and financial<br />

institutions are needed.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 41

Ernst & Young<br />

Diversity and<br />

Inclusiveness at<br />

Ernst & Young<br />

By Sabine Moron and Karin Sahr<br />

We recognize difference as a way of<br />

harnessing the individual and combined<br />

talents of our people. That is why D&I<br />

has been declared one of our ten global<br />

priorities. We live in an increasingly<br />

global economy, where multicultural<br />

(and often virtual) teams are the norm<br />

rather than the exception. We need to<br />

take into account the new mix of cultures<br />

and individual characteristics that shape<br />

our workforce and the different work<br />

styles that build our talent pool. At the<br />

same time, our clients and markets have<br />

become more diverse themselves, and<br />

we must mirror this diversity in more<br />

than just claims and quotas. As business<br />

challenges become more complex,<br />

solving them requires us to call on the<br />

widest spectrum of views and opinions.<br />

Our global D&I strategy aims to create<br />

structures in which these positive<br />

effects of a diverse workforce can be<br />

leveraged.<br />

The 6th principle of the UN <strong>Global</strong> <strong>Compact</strong> addresses<br />

the elimination of discrimination in respect of<br />

employment and occupation. At Ernst & Young, we not<br />

only believe in that goal from a moral perspective: We<br />

are convinced that Diversity and Inclusiveness (D&I) are<br />

actually a business must. That is why we do more than<br />

just look for ways to prevent or eliminate discrimination;<br />

we actively promote diversity as a value crucial to our<br />

company.<br />

However, it is important to recognize that<br />

the ability to cooperate across cultures<br />

does not come overnight. We are all<br />

biased – it is a part of human nature.<br />

While the abstract concept of diversity<br />

as a value might seem plausible to a<br />

lot of people, the actual confrontation<br />

with different points of view, different<br />

personal values, different ways of<br />

dealing with projects and problems on<br />

a day-to-day basis can easily create confusion<br />

and frustration. If not managed<br />

properly, the risk is high that the possible<br />

positive effects will never be uncovered.<br />

Instead, whoever represents the majority<br />

or the highest hierarchy level in the<br />

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Best Practice<br />

Labour Standards<br />

team could make decisions according<br />

to their belief-system, which can lead<br />

to discrimination against those who do<br />

not share it. This is why it is not enough<br />

to just have a diverse workforce – it<br />

is important to create awareness and<br />

develop the necessary skills to avoid<br />

frustration and discrimination and to<br />

leverage diversity’s benefits.<br />

We recognize that there is no fast-track<br />

or short-cut for D&I. That is why there<br />

are various initiatives on the office,<br />

country, area and global levels to address<br />

these issues in a comprehensive<br />

and sustainable way. In Germany, the<br />

roots of our D&I strategy go back to the<br />

long-existing program GROW – Growth<br />

and Retention Of Women. The program<br />

focuses on leveraging female leadership<br />

by providing networking and mentoring<br />

opportunities, events and quarterly<br />

measurements of gender equity, which<br />

are used as an important indicator in the<br />

German sustainability strategy. GROW<br />

has laid a solid foundation for our D&I<br />

initiative, and the heart of the program<br />

remains a priority within D&I. However,<br />

the definition of relevant diversity factors<br />

within our organization has widened.<br />

The challenge we are facing today lies<br />

in adjusting activities to that new scope<br />

as well as coordinating and streamlining<br />

our global activities.<br />

One important step was the creation<br />

of the new position of D&I Partner for<br />

Germany, Switzerland, and Austria (GSA).<br />

Ana-Cristina Grohnert’s task is to integrate<br />

the various programs across GSA<br />

and define innovative actions connected<br />

to our global D&I vision and priorities.<br />

For GSA, we have decided to set the first<br />

focus for the next 18-24 months on the<br />

aspects of gender management and crosscultural<br />

communication. We believe this<br />

will help drive broader benefits across<br />

all other Diversity groups. We are defining<br />

Diversity on a much broader basis<br />

than just the official 6 aspects which<br />

anti-discrimination laws address (gender,<br />

age, ethnic background, religion, sexual<br />

orientation and disabilities). For us, Diversity<br />

also includes cultural aspects, different<br />

experience levels and backgrounds,<br />

diverse concepts of courage, honesty or<br />

quality. D&I is a highly complex topic. If<br />

The Ernst & Young<br />

definition of Diversity<br />

and Inclusiveness<br />

Diversity is the demographic<br />

mix in a given environment,<br />

including differences in gender,<br />

ethnicity, national cultures, subcultures<br />

within countries, sexual<br />

orientation, disability, generation,<br />

experience levels, social<br />

backgrounds, etc. The mix varies<br />

among our areas and sub-areas.<br />

Inclusiveness is how we<br />

make the mix work. It is about<br />

creating an environment where<br />

all people feel valued, are part of<br />

the community and are able to<br />

perform at their best and achieve<br />

their potential.<br />

we want to transfer it successfully into<br />

our organization, we will have to do this<br />

in strategically sensible steps.<br />

The base for all activities is the creation<br />

of awareness and understanding,<br />

in and across our organization, that D&I<br />

management is not only morally right:<br />

Institutionalization of D&I in our value<br />

system, in our understanding of leadership,<br />

commitment and behavior, in our<br />

business and decision-making processes<br />

and in our market strategies is essential<br />

to adequately address the needs of our<br />

people and our clients.<br />

Building on that base, various agents<br />

and levels have to be empowered to actually<br />

work with the concepts, tools and<br />

methods of effective D&I. In <strong>2009</strong> alone,<br />

there will be 15 interactive Diversity<br />

workshops for about 40% of our partners<br />

across GSA, based on the belief that a successful<br />

D&I strategy requires a top-down<br />

approach. Our leaders have to ensure<br />

that D&I considerations are included<br />

in our processes, including rotation, client<br />

assignments, mobility experiences,<br />

performance evaluation, promotion, etc.<br />

At the same time, all employees need<br />

to be addressed. Currently this is done<br />

via various communication channels,<br />

with a focus on raising awareness of the<br />

need to reflect upon one’s own values<br />

and frame of reference on a day-to-day<br />

basis. As a next step, D&I skills need to<br />

be systematically included in the training<br />

program. An inclusive mindset has to<br />

become a prerequisite skill for promotions<br />

and leadership roles. We will build<br />

this by defining this specific competence,<br />

the related training, awareness modules<br />

and self assessment tools.<br />

We have defined a number of methods<br />

to measure success, including:<br />

• analysis of the diversity represented in<br />

our current partnership and leadership<br />

roles and the corresponding pipeline,<br />

• integration of D&I aspects into employee<br />

surveys and feedback processes,<br />

• review of turnover, career development<br />

experiences and promotion within our<br />

various groups.<br />

The final goal of these initiatives is not<br />

only the elimination of discrimination but<br />

also the comprehensive and sustainable<br />

management of diversity as an asset that<br />

creates value for our company, our clients<br />

and markets and society at large.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 43

Gandaki Bee Concern<br />

Hope Through Honey<br />

“Fight poverty, maintain ecological equilibrium and so shape sustainable development.”<br />

These three clear goals are the essence of this truly mammoth project, Bhusan Shrestha<br />

says. The large Nepalese beekeeper Gandaki Bee Concern (GBC) wants to make money<br />

and at the same time bring progress to the small Asian country in the Himalayas. The<br />

company, founded in 1990 in the capital Kathmandu, wants to do no less than help<br />

more and more Nepalese “gain a source of income and at the same time conserve the<br />

quality of nature for the future.”<br />

By Gerd Pfitzenmaier<br />

To do this, CEO Dev Bahadur Gurung<br />

employs thousands of yellow-and-brownstriped<br />

helpers. They buzz over mountain<br />

meadows, hum in the orange groves of<br />

the lowlands and circle in thick swarms<br />

on astonishingly steep cliffs around<br />

semicircular or circular golden-yellow<br />

honeycombs. “In all nooks and crannies<br />

of the country,” GBC announces,<br />

“we’re promoting honey collection.” For<br />

Bhusan Shrestha and his boss, this craft,<br />

which has been exercised for centuries<br />

on the roof of the world, is the key to the<br />

economic rise of many small and micro<br />

enterprises in this region furrowed by<br />

deep gorges below the Earth’s highest<br />

summits. Through proper care of their<br />

bee colonies, the farmers of Nepal shall<br />

continue to boost the country’s constantly<br />

growing honey production and<br />

so earn enough money to support their<br />

families. Demand for the sweet substance<br />

is immense and guarantees them<br />

income with which they can finance<br />

a better life for themselves. A desired<br />

side-effect: Since the insects also need<br />

a clean environment, the farmers also<br />

pay attention to their most important<br />

capital: They protect the landscape and<br />

flora in this mountain country.<br />

He started his company with a few apis<br />

cerana hives. Today, most of the honey<br />

comes from around 1500 apis mellifera<br />

bee colonies, which produce up to 50<br />

kilograms per hive per year. Around<br />

300 tonnes of sweet nectar is the total<br />

yield of GBC per year, and the business<br />

has good prospects: One estimate assumes<br />

there are around 125,000 bee<br />

colonies in Nepal. “Eight of the world’s<br />

nine honeybee species are native to the<br />

country,” notes GBC as it describes the<br />

fundamentals of this business. At the<br />

same time, it recognises the challenge:<br />

“In Nepal, modern beekeeping is still in<br />

its infancy.”<br />

The company is working on this. It not<br />

only collects and processes honey for its<br />

own sale. GBC now earns money through<br />

a wide-ranging network of customers,<br />

including some financially stronger ones<br />

outside the country. But above all, GBC<br />

wants to pass on its know-how to the<br />

country’s farmers and so put beekeeping<br />

on a broader production footing. To do<br />

this, it has implemented a seven-step<br />

procedure, which first identifies suitable<br />

regions and then potential beekeepers,<br />

trains them and later provides continuing<br />

education. GBC helps the farmers<br />

prepare business plans and write marketing<br />

concepts. Employees see themselves<br />

as trainers and helpers, whose goal is to<br />

build an entire movement of beekeepers<br />

and honey producers in Nepal.<br />

And so GBC also relies on teamwork.<br />

Farmers do not need to act in the market<br />

alone. Rather, the company forms<br />

small cooperatives and shares with them<br />

the essential costs to buy equipment.<br />

“The cooperatives are the basis to ensure<br />

that development works,” GBC believes,<br />

and so it offers training courses for the<br />

new beekeepers or organises fairs in<br />

which they can exchange information<br />

and learn from each other. The focus<br />

always remains on “practical methods<br />

and pragmatic approaches”.<br />

These are especially essential in marketing.<br />

In Nepal, which has only a few<br />

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paved roads and vehicles, the beekeepers<br />

often stack the tin cans containing their<br />

honey onto regular buses to begin the<br />

sometimes difficult and long trip to the<br />

market, often in Kathmandu. Here, too,<br />

the members of a cooperative can help<br />

each other by dividing up the tasks. This<br />

saves time and minimises costs.<br />

“And so we’re increasing honey production<br />

from year to year,” GBC says about<br />

its positive results so far. Currently, the<br />

total amount of honey harvested and<br />

processed is over 1,500 tonnes per year.<br />

“The volume could potentially exceed<br />

10,000 tonnes per year,” the company’s<br />

specialists calculate. This potential, Dev<br />

Bahadur Gurung and Bushan Shrestha<br />

believe, can also be met especially with<br />

disadvantaged people. The two experts<br />

argue that beekeeping is not only a craft<br />

with relatively low capital needs: Honey<br />

can also be harvested in Nepal throughout<br />

the year and in almost all locations,<br />

they underline their business model.<br />

Thanks to its topography, the tiny country<br />

is home to many climate zones and<br />

thus a wide variety of the flora that serves<br />

as the best basis for producing the most<br />

varied flavour varieties of honey.<br />

Dev Bahadur Gurung and Bushan<br />

Shrestha also know that honey harvesting<br />

does not require beekeepers to own their<br />

own land. After all, bee colonies ignore<br />

property boundaries. “And so especially<br />

poorer farmers can also take advantage of<br />

this business,” GBC believes. Even people<br />

who never learned to read and write can<br />

raise bees, GBC notes as one of the plus<br />

points of the assistance project.<br />

And support for women has been up at<br />

the top of its agenda even before the company<br />

became a member of the United<br />

Nations’ <strong>Global</strong> <strong>Compact</strong> in 2000 and<br />

committed itself to its own CSR policy.<br />

“Beekeeping is easy work and doesn’t get<br />

in the way of housekeeping duties,” GBC<br />

employees say, which is a major advantage<br />

in giving women their own sources<br />

of income. The company sees this as an<br />

important step in reaching its goals of<br />

reducing poverty and promoting more<br />

equality in Nepal. “Our membership<br />

in the <strong>Global</strong> <strong>Compact</strong>,” says Bushan<br />

Shrestha, explaining the GBC’s decision<br />

to join the UN initiative, “also strengthens<br />

society’s trust in our actions.”<br />

GBC then uses this immediately for the<br />

good of all participants: The company<br />

simultaneously represents to the Nepalese<br />

government the interests of the<br />

small cooperatives’ many beekeepers. It<br />

takes care of the formalities for certifying<br />

the honey production as organic and<br />

maintains contacts with national and<br />

international authorities or NGOs that<br />

organise projects with the beekeepers’<br />

association of Gandaki Bee Concern or<br />

that want to sell their products.<br />

GBC is the nerve centre of the “selffinancing<br />

network”, as Bushan Shrestha<br />

proudly calls it. There employees do<br />

market research, devise new processing<br />

methods and keep all beekeepers in<br />

Nepal informed of progress. “Our honey<br />

market is still being established,” the<br />

GBC experts say optimistically, “but if we<br />

continue to improve technologically and<br />

in management, we’ll soon be competitive<br />

in the world market.”<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 45

Grundfos<br />

When water becomes<br />

sustainable business<br />

By pairing existing technologies with an innovative business<br />

model, Grundfos LIFELINK responsibly changes the way of<br />

operating and managing rural water supply systems.<br />

By Carsten Kvistgaard<br />


An oxcart is bumping along a red, dusty<br />

road in central Kenya with an empty water<br />

drum bouncing against the frame. A<br />

woman and two small boys are walking<br />

next to it. They have been walking for<br />

almost an hour when they finally stop<br />

at a small stone house next to the road.<br />

Women, children, and a few men swarm<br />

around the house, many carrying yellow<br />

plastic cans.<br />

In the middle of the house stands a<br />

rectangular black box, almost like an<br />

obelisk. The woman enters the house,<br />

picks a small plastic piece from inside<br />

her dress pocket and places it in a slot in<br />

the black box. The digital display above<br />

shows: “credit 0 KSh”. Then she fishes<br />

out her mobile phone.<br />

The LIFELINK concept<br />

The world’s leading pump manufacturer,<br />

Grundfos, heralds a new era in rural<br />

water supply. With its newly established<br />

subsidiary, Grundfos LIFELINK, it targets<br />

rural communities in Africa, Asia, and<br />

Latin America with a sustainable supply<br />

of safe drinking water at affordable<br />

prices.<br />

LIFELINK is a business, not a charity. It<br />

builds upon a combination of pump,<br />

mobile phone, and mobile banking technologies,<br />

and it is above all an innovative<br />

business model that allows consumers<br />

to pay back into the original system<br />

investment, simply by paying via their<br />

mobile for the water they use.<br />

A LIFELINK System is a single-point water<br />

supply with a submersible borehole<br />

pump that is powered by energy from<br />

solar panels. Water is pumped to an<br />

elevated storage tank, whereupon it is<br />

led by gravity to a tap unit in a small<br />

house. The tap unit also serves as a payment<br />

facility.<br />

New habits, new opportunities<br />

The woman’s fingers dance across her<br />

mobile phone. First she checks her mobile<br />

bank account: There is still money,<br />

even after buying a goat yesterday. She<br />

types in a few more figures and hits<br />

“send”. After a few seconds she receives<br />

an SMS: “100 KSh transferred to Grundfos<br />

for account AA0093”. She inserts the<br />

plastic key again to check her balance:<br />

She now has 100 shillings for tapping<br />

water. Enough for almost two weeks.<br />

So she places the water key in another<br />

slot and water starts flowing though<br />

a hose to the 200-litre water drum on<br />

her oxcart.<br />

A few weeks ago, she had to work hard<br />

at the hand pump for almost an hour to<br />

fill her drum. Now she can just relax and<br />

talk to people. One of them is a small,<br />

slight man carrying three jerrycans on<br />

his bicycle. His smile covers the whole<br />

of his face when he explains that he is<br />

doing good business: After paying two<br />

shillings per jerrycan at the water tap,<br />

he can drive less than half an hour away<br />

on his bicycle and sell it for 10 times as<br />

much to people who do not have the<br />

time or strength to travel a long distance<br />

to get safe drinking water. By expanding<br />

this business he will be in a position to<br />

feed his family.<br />

Children come from the nearby school to<br />

fetch water. With three taps on the unit,<br />

everybody can now fill their canisters<br />

without waiting, like they did before<br />

the LIFELINK system – sometimes an<br />

hour or more. School lessons are not<br />

affected anymore.<br />

A pump attendant looks after the system<br />

and ensures that everybody understands<br />

how to operate the tap system. He used<br />

to have a hard time counting people and<br />

cans and collecting money, but now he<br />

just needs to assist a few people. He is<br />

happy: “People now get what they pay<br />

for – no more, no less. And I don’t have<br />

46<br />

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water revenue, it goes back into the<br />

community’s own account.<br />

Facts about LIFELINK and Grundfos<br />

• LIFELINK is the Grundfos Group’s first step into the socalled BOP market:<br />

The four billlion people in the world who live for less than two USD per day<br />

(Base of Pyramid).<br />

• LIFELINK is business with a responsible approach, closely connected to<br />

Grundfos’ CSR policy. We call it inclusive business because it creates value<br />

for both Grundfos and the local communities.<br />

• A LIFELINK system operates on solar energy and has a capacity of 8-16 m3<br />

per day.<br />

• By paying a water tariff similar to officially recommended tariffs, a<br />

community can pay back a LIFELINK system over 5-7 years.<br />

• Banking via mobile phones is becoming widespread in the developing world<br />

because traditional banks are little present in rural areas.<br />

• Grundfos has a solid record on providing access to water through our well<br />

tested solar or wind powered pump solutions. Tens of thousands of these<br />

are working steadily all over the world, from developing countries to remote<br />

parts of USA and Australia.<br />

• With such solutions, Grundfos contributes to fulfilment of several MDG’s<br />

(Millenium Development Goals) in developing countries.<br />

to explain it to them but can just help<br />

them instead. It’s great fun.”<br />

Financial and social sustainability<br />

The money used to pay for the water<br />

via mobile phone banking goes into an<br />

account at the telecompany, where it is<br />

transferred to the financing bank with<br />

whom LIFELINK has partnered. After<br />

deducting the community’s monthly<br />

loan repayment, the bank transfers an<br />

amount to pay for a service contract<br />

between the community and LIFELINK<br />

to cover service, maintenance, and spare<br />

parts. If anything is left over from the<br />

After their repayment of the system investment,<br />

the community will own the<br />

system and can invest the water income<br />

in new development projects. This closedpayment<br />

system prevents the need for<br />

cash to be exchanged between people<br />

and makes the concept transparent so<br />

that everybody with special interests and<br />

access – like financing institutions or<br />

donors – can follow each community’s<br />

financial and technical performance<br />

via the Internet. A special surveillance<br />

facility even makes it possible to see<br />

how much water is being tapped and<br />

displays alarms so that LIFELINK’s local<br />

service organization can take immediate<br />

action, should any problems arise. Thus,<br />

the system’s sustainability not only deals<br />

with environmental aspects by using<br />

solar energy, but also with social and<br />

financial aspects.<br />

The village chief explains: “I had an idea<br />

that this new water system would attract<br />

more people to our place. But I am surprised<br />

that we have been able to almost<br />

triple our water sales. I have a vision of<br />

LIFELINK systems in many more communities<br />

in our constituency because I see<br />

them as a motor of development. People<br />

get more time for productive work, cultivating<br />

and selling crops is much easier,<br />

and peoples’ health standard improves<br />

because they don’t need to take water<br />

from polluted sources.”<br />

The oxcart woman has filled her drum<br />

in 12 minutes and is heading home.<br />

Three other carts have already lined up.<br />

Women, children, and men come and go<br />

with jerrycans on their backs, on bicycles,<br />

donkeys, or wheelbarrows.<br />

The creaking of the hand pump has<br />

ceased, replaced by cheerful voices and<br />

laughter. And while the sun sets behind<br />

the acacias and pump performance slowly<br />

fades, the pump attendant can make<br />

his account: 11 cubic metres. He can lock<br />

the doors. It has been a good day.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 47

Holcim<br />

Collaborating to<br />

conserve ecosystems and<br />

biodiversity<br />

Conserving ecosystems and stopping biodiversity loss is one of the major issues of our time,<br />

in particular in situations where industrial activities and population growth put increasing<br />

pressure on natural habitats. Believing that this issue can only be addressed by working<br />

together, leading building materials company Holcim and IUCN, the <strong>International</strong> Union for<br />

Conservation of Nature, have joined forces to effectively manage biodiversity conservation<br />

and to create biodiversity-based sustainable livelihoods.<br />

By Stefanie Koch and Rashila Tong<br />

The production of cement and aggregates<br />

depends on long-term access to<br />

raw materials that are acquired through<br />

quarrying. Being in a resource-intensive<br />

business has led Holcim to the conviction<br />

that biodiversity conservation plays an<br />

important role in its long-term resource<br />

and reserve strategy. The company plans<br />

raw materials extraction and management<br />

according to a defined process with<br />

impacts assessed at each stage of quarry<br />

operation. Rehabilitation guidelines and<br />

plans are implemented by almost all cement<br />

and aggregate quarries, resulting<br />

in many conservation and restoration<br />

projects.<br />

This and the fact that Sustainable Development<br />

is a key element of the vision<br />

and mission of Holcim and integral<br />

part of business strategy has led the<br />

company to engage with a respected<br />

organization to get advice on assessing<br />

and mitigating its biodiversity footprint.<br />

IUCN is the world’s oldest and largest<br />

global environmental organization, with<br />

more than 1,000 government and NGO<br />

members and almost 11,000 volunteer<br />

experts in some 160 countries. IUCN<br />

works on biodiversity, climate change,<br />

energy, human livelihoods and greening<br />

the world economy by supporting scientific<br />

research, managing field projects,<br />

and bringing governments, NGOs and<br />

companies together to develop policy,<br />

laws and best practice. Given its expertise<br />

and network, IUCN makes a strong<br />

partner for Holcim to understand and<br />

address biodiversity conservation issues<br />

worldwide adequately.<br />

Developing company and<br />

industry relevant<br />

recommendations<br />

Given the many synergies between the<br />

two organizations, IUCN and Holcim<br />

have entered into a four years relationship<br />

(2007-2010) that aims at developing<br />

“robust ecosystem conservation standards<br />

for the Holcim Group, and contributing<br />

to sector-wide improvements in the cement<br />

and related sectors.” In this context,<br />

IUCN provides biodiversity expertise and<br />

enables Holcim to work more closely<br />

with relevant stakeholders internationally<br />

and locally through its network. In<br />

placing biodiversity conservation at the<br />

core of its collaboration, the strategic<br />

alliance between Holcim and IUCN is<br />

breaking new ground in the industry.<br />

A five-member Independent Expert Panel<br />

of biodiversity and conservation experts<br />

plays a key role in achieving the ambitious<br />

targets. The Panel is entrusted to<br />

develop key elements of a biodiversity<br />

policy and strategy. In order to advise<br />

Holcim, the panel has visited several different<br />

sites in Spain, Indonesia, Belgium,<br />

Hungary, and the US. These visits ensure<br />

that before making recommendations,<br />

the Panel understands the functioning<br />

of cement and aggregates operations,<br />

the diversity of sites and the different<br />

48<br />

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Stakeholder dialogue in Nagarote,<br />

Nicaragua<br />

constraints encountered in different locations.<br />

These visits and the elaboration<br />

of a baseline of practices in biodiversity<br />

conservation management of Holcim<br />

were relevant to understand industryand<br />

company related biodiversity conservation<br />

issues. A quarry inventory now<br />

contains more than 300 Holcim quarries<br />

and includes examples of conservation<br />

practices all over the world.<br />

Creating sustainable livelihoods<br />

through biodiversity-based<br />

microenterprises<br />

Developing biodiversity-based microenterprises<br />

has the potential to lift individuals<br />

and communities out of poverty<br />

while conserving biodiversity. The main<br />

characteristic of these enterprises is that<br />

they depend on biodiversity for their core<br />

business or contribute to biodiversity<br />

conservation through their activity while<br />

at the same time providing sources of<br />

incomes for entire families. The development<br />

and pilot-testing of an approach<br />

in selected countries is another focus of<br />

the Holcim – IUCN collaboration. The<br />

main actors of microenterprise development<br />

projects and owners of respective<br />

businesses are local stakeholders<br />

themselves. The process of assessing the<br />

local environment, identifying business<br />

opportunities and entrepreneurs, equipping<br />

them with the skills necessary to<br />

lead a business as well as supporting<br />

the integration of the businesses into<br />

the local value chain is facilitated and<br />

supported by Holcim and IUCN.<br />

The concept, that will be made available<br />

to the public, incorporates a variety of<br />

approaches and key tools for the different<br />

phases of microenterprise development.<br />

In Nagarote, Nicaragua, a pilot project<br />

was initiated in 2008. A working group<br />

made up of Holcim and IUCN representatives<br />

and local community stakeholders<br />

conducted a participatory assessment of<br />

the socio-economic situation as well as<br />

available economic and natural resources.<br />

The team surveyed existing microenterprises<br />

and identified opportunities<br />

for biodiversity-related businesses such<br />

as ecotourism, reforestation and waste<br />

management. The start-up of businesses<br />

is foreseen for late <strong>2009</strong>.<br />

Local collaboration in Sri Lanka<br />

To complement and strengthen the work<br />

being carried out, local agreements between<br />

Holcim country operations and<br />

IUCN are being actively promoted to<br />

address and resolve site specific issues<br />

and to support country level implementation<br />

of Holcim policies and recommendations.<br />

Such a local agreement has been signed<br />

between Holcim and IUCN in Sri Lanka.<br />

One of the projects under the agreement<br />

includes providing waste management<br />

solutions for Puttalam, a city near the<br />

location of the Holcim plant. Recently,<br />

the construction of a waste sorting facility<br />

has been completed that will separate<br />

solid waste into compostable and<br />

non-compostable fractions. The facility<br />

can process 7 tons per day, providing a<br />

waste solution to the community as well<br />

as compost to the residents. The noncompostable<br />

fraction is co-processed by<br />

the plant. Training has been provided<br />

to the staff and will now be turned over<br />

to the Puttalam Urban Council for operation.<br />

This example demonstrates<br />

how the two organizations functioned<br />

as a catalyst to improve the local area,<br />

providing benefit to all.<br />

The biodiversity efforts of Holcim, in<br />

particular in collaboration with IUCN,<br />

are deemed to be respectable as expressed<br />

in the words of the chair of the Panel<br />

after the visit to Indonesia: “What we<br />

saw, heard and experienced was not<br />

what we had expected – it was on par<br />

with, maybe even above, what we had<br />

seen elsewhere”.<br />

The panel visited the Four Holes<br />

Swamp adjacent to the Holly Hill,<br />

US site.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 49

Martha Tilaar Group<br />

Kampoeng Djamoe Organik<br />

Martha Tilaar<br />

Martha Tilaar Group is one of Indonesia’s foremost purveyors of innovative, high-quality<br />

beauty products and services. With its wide-ranging stable of sub-brands under the<br />

Martha Tilaar umbrella brand, the group offers an impressive array of beauty and<br />

well-being choices for women of all ages and income groups. While many of its products<br />

and treatments feature the ancient wisdom of traditional Indonesian herbal<br />

ingredients (jamu) and other natural plant extracts, Martha Tilaar also produces a wide<br />

variety of up-to-the-minute color cosmetics and skincare, body care<br />

and hair care products for the modern woman.<br />

By Nuning S. Barwa and Heru D. Wardana<br />

From its humble beginnings as a beauty<br />

salon in the early 1970s, the company<br />

has grown into an integrated, world-class,<br />

total beauty provider which exports its<br />

products all over the world. The company’s<br />

key brands have won numerous<br />

prizes and consistently achieved<br />

the country’s highest ratings for brand<br />

awareness, reflecting Martha Tilaar’s<br />

strong focus on beauty products specifically<br />

designed for the Eastern woman.<br />

Establishment of ‘Kampoeng<br />

Djamoe Organik Martha Tilaar’<br />

Garden<br />

As a natural cosmetic producer from the<br />

beginning, we have always integrated<br />

socially and environmentally responsible<br />

practices into our business activities and<br />

blended Indonesian medicinal plants,<br />

Eastern beauty, our rich culture and<br />

environment together in our mission.<br />

The three pillars of our corporate social<br />

responsibility focus on environmental<br />

and cultural stewardship, caring communities,<br />

and empowering women’s<br />

wellness.<br />

In 1998, the company established the<br />

10-hectare garden located in Cikarang<br />

industrial estate, West Java, which was<br />

conceived and developed by Dr. Martha<br />

Tilaar as a result of her total dedication<br />

to preserving Indonesian biodiversity,<br />

especially in medicinal, aromatic and cosmetic<br />

(MAC) plants. The main objective<br />

is to serve as a center for environmental<br />

and cultural education and a holistic garden<br />

that enhances our physical, spiritual<br />

and moral balance.<br />

Since the garden’s land is very marginal<br />

and dry, it took extra effort and dedicated<br />

commitment by our team for more than<br />

5 years in applying good organic agriculture<br />

principles to transform it so it could<br />

be planted with grass, trees, and MAC<br />

plants. Finally, after 8 years of hard work,<br />

the sustainable launch of Kampoeng<br />

Djamoe Organik (KaDO) was celebrated<br />

by Indonesian Environment Minister Ir.<br />

Rachmat Witoelar in June 2006.<br />

As an Indonesian company producing<br />

herbal and natural cosmetic products,<br />

we obtain our herbal materials from the<br />

local community and farmers in Indonesian<br />

provinces. Through partnerships<br />

with local farmers to provide high-quality<br />

plant materials, we can secure their supply<br />

to meet our needs all year round. For<br />

the time being, we always check farmers’<br />

activities in cultivating the medicinal<br />

plants to produce simplisia (dried plant<br />

materials). It is important to supervise<br />

them at every step of plant cultivation<br />

and post-harvest treatment to achieve a<br />

high standard quality of plant materials.<br />

To efficiently and effectively transfer<br />

knowledge of good agricultural practices<br />

as well as good post-harvest practices<br />

50<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Environment<br />

to farmers and the local community,<br />

we have also established in ‘Kampoeng<br />

Djamoe Organik’ complete training facilities<br />

for organic farming and post harvest<br />

treatment of MAC plants.<br />

Green mission of ‘Kampoeng<br />

Djamoe Organik Martha Tilaar’<br />

Training in organic farming has been<br />

conducted since 2001, when we started<br />

giving free training in organic farming<br />

and simple production management<br />

to 20 cooperative farmers throughout<br />

Indonesia. In 2003, we also published<br />

a book on the organic farming system<br />

for Indonesian “empon-empon” (in the<br />

Zingiberaceae family, like ginger, Javanese<br />

turmeric, galangal). Our goal is to<br />

ensure that the organic plant cultivation<br />

system is being effectively implemented<br />

to support the supply chain process and<br />

conserve original Indonesian seeds and<br />

plant diversity. We then began to work<br />

with the Indonesian Agriculture Minister<br />

and Indonesian NGOs to conduct training<br />

on the organic farming system and<br />

good post-harvest practices for medicinal<br />

plants and promote them in Indonesia<br />

through printed and electronic media.<br />

Now we already have more than 200 cooperative<br />

farmers from Aceh to Papua.<br />

We have been collecting plant species<br />

from their habitats one-by-one since the<br />

year 2000, so we now have about 600 species<br />

of Indonesian MAC plants. Moreover,<br />

‘Kampoeng Djamoe Organik’ was planned<br />

as a green area in downtown Cikarang<br />

and to serve as a carbon trap and oxygen<br />

factory for the community. All program<br />

activities here are designed to achieve<br />

spiritual, physical and moral balance.<br />

These include training in organic farming<br />

and post-harvest treatment, agent<br />

development for green actions, rising<br />

awareness of global warming, herb-use<br />

training for healthy living, outdoor activities,<br />

promotion of the community’s<br />

green products, fun-learning for children<br />

and life-enhancing programs for senior<br />

citizens.<br />

We use this holistic garden based on<br />

organic precepts as a center for environmental<br />

education to enhance the balance<br />

of mind, beauty and behavior. Through<br />

‘Kampoeng Djamoe Organik’, we are trying<br />

to improve the quality and beauty of<br />

the environment through the collection<br />

of MAC plants and by spreading a new<br />

concept of agriculture through educational<br />

activities and natural relaxation.<br />

We are also endeavoring to conserve<br />

Indonesia’s biodiversity by applying winwin<br />

solutions for all stakeholders and<br />

the environment itself.<br />

In the long term, ‘Kampoeng Djamoe<br />

Organik Martha Tilaar’ has provided a<br />

beautiful and pleasant environment in<br />

the heart of Cikarang city with high added<br />

value in supporting the agrobusiness<br />

of MAC plants and ultimately stimulating<br />

the birth of “Environmental Heroes”<br />

in urban and industrial areas. There<br />

are so many benefits offered to visitors,<br />

such as fresh air in a green garden in<br />

the center of the city, relaxation, and<br />

education as well as broader knowledge<br />

about MAC plants and their uses. Next,<br />

the garden will also host an Eastern<br />

Spa, herbal laboratory, and School for<br />

Nature that will make this area a ‘Health<br />

Care & Education Center’, providing a<br />

traditional touch with modern nuances<br />

while serving as a hospitality host for<br />

global consumers.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 51

Medine<br />

Master Plan for<br />

Mauritius<br />

Established on the island of Mauritius in 1911, Medine originally grew and processed<br />

sugar cane. But since then, the importance of tourism and other service areas has steadily<br />

grown. The ‘Fondation Medine Horizons’ (FMH), which the company established for this<br />

purpose, promotes optimism and entrepreneurial self-help, states the GC report “Africa<br />

leads”.<br />

By Gerd Pfitzenmaier<br />

52<br />

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Partnership<br />

“Development,” says Dany Giraud, “can<br />

only be sustainable, in our opinion, if all<br />

the people of a region participate and enjoy<br />

the advantages of change.” The CEO<br />

of Medine, a conglomerate of companies<br />

in the holiday paradise Mauritius, has<br />

also been the driving force of the FMH<br />

since 2006. The Group established the<br />

foundation, funded by 10 million Mauritian<br />

rupees (€0.24 million) annually, in<br />

accordance with its master plan.<br />

The plan paints a picture of the future for<br />

the people living on the 10,625 hectares<br />

of land belonging to Medine. The vision<br />

promises them lives based on education,<br />

good jobs and social services. After all,<br />

the area in which the FMH works covers<br />

a good 5.5 percent of the entire island,<br />

which is located around 900 kilometres<br />

east of Madagascar in the Indian Ocean.<br />

About 15,000 islanders live in the area<br />

around the cities of Richelieu, Tamarin<br />

and Bambous.<br />

The company’s managers reacted early<br />

to changes in the world market and<br />

diversified their product portfolio. And<br />

so the company also plants vegetables<br />

and farms chickens among other projects.<br />

Employing over 1700 people, Medine<br />

also operates luxurious holiday resorts,<br />

nature parks and golf courses for wellto-do<br />

tourists. Medine’s CSR activities<br />

played a major role here. And so, consistent<br />

with this, FMH was founded in<br />

September 2006. The main goals of the<br />

master plan are to improve education<br />

and employment and promote entrepreneurship.<br />

Six employees transferred in 2006 from<br />

Medine to the newly established FMH.<br />

There, Sophie Desvaux de Marigny has<br />

steered teachers, social workers or organisers<br />

of the farmers’ market as well as<br />

financed microcredit to small businesspeople.<br />

“All our projects have the same<br />

goal,” says Sophie Desvaux: “We are<br />

integrating the poor into the economy<br />

of our region.” Since December 2007, the<br />

foundation has also been working with<br />

small companies. It provides them with<br />

small loans of between 950 and 31,250<br />

US dollars (750 – 25,000 euros). These<br />

jump-start loans give the recipient companies<br />

a leg up and stabilise the island’s<br />

economy. In the current and coming year,<br />

FHM is putting a special focus on the<br />

fight against drugs. Mauritius has the<br />

world’s second-largest heroin market<br />

in relation to its population, so this is a<br />

worthwhile project for the foundation.<br />

One of the fortunate beneficiaries of<br />

the foundation’s work is the tinsmith<br />

Seeven Seevathean. One of the last of<br />

his trade, the craftsman cuts, hammers<br />

and solders tanks, pails and cans under<br />

the corrugated metal roof of a wood<br />

hut in the provincial town of Bambous.<br />

Seevathean sells his wares at a stand<br />

beside the Royal Road, and his customers<br />

stream to him from far away. To expand<br />

the small company and boost production<br />

with new machines, he needed capital.<br />

Seevathean is a good businessman, and<br />

FMH credit expert Benoit Adolphe did not<br />

hesitate long before fulfilling his wish in<br />

December 2008. Adolphe granted him a<br />

125,000 rupee loan (€2000), repayable in<br />

small instalments over three years. The<br />

tinsmith was happy and immediately<br />

hired an additional worker.<br />

“Seevathean is a prime example of our<br />

work,” comments foundation employee<br />

Benoit Adolphe. “We help him to help<br />

others.” The tinsmith stands symbolically<br />

for at least 200 untrained unemployed<br />

people whom the foundation helped gain<br />

basic knowledge and technical skills in<br />

its specially constructed Medine Training<br />

Centre (MTC) between autumn 2006 and<br />

2008. Jean Marc Boissezon taught them<br />

reading and writing, and in the Centre<br />

they received basic training in home economics,<br />

child care or gardening. Today<br />

they work as domestic servants, hotel<br />

employees or landscapers. These professions<br />

are in demand in the region, and<br />

a job guarantees income. “That changes<br />

the social structure of society,” concludes<br />

Priscille Ramcharran, who works as a<br />

social worker at FMH. Alcohol and drug<br />

addiction, dropping out of school, unemployment<br />

and teenage pregnancy have<br />

long been a sad part of everyday life in<br />

the holiday dream island in the Indian<br />

Ocean. “Exactly that is what our master<br />

plan intends to change,” says Sophie<br />

Desvaux de Marigny.<br />

Not only has FMH supported 97 local<br />

NGO actions with around 15 million<br />

rupees (€365,000); most of all, it has<br />

trained the unemployed. “That provides<br />

families with an income,” says Sophie<br />

Desvaux proudly of this work. In a 150-<br />

hour course, FMH trains people to work<br />

in hotels. Some holiday resorts on the<br />

west coast of Mauritius cooperate intensively<br />

with the foundation and provide<br />

the trainees practical experience “on the<br />

job”. The operations of Medine also profit<br />

from the foundation’s work. They recruit<br />

their employees from the reservoir of<br />

the previously untrained.<br />

In 2007, Medine signed the Principles<br />

of the <strong>Global</strong> <strong>Compact</strong>. “Since then,”<br />

concludes the GC report “Africa leads”<br />

of 2008, “Medine and the foundation<br />

have spread optimism and entrepreneurial<br />

self-help.” With this they have<br />

also reached people who were previously<br />

left behind. Medine gives land to<br />

citizens’ action groups, builds nurseries<br />

and homes for the handicapped. “The<br />

foundation sets an example in all its<br />

activities,” Medine CEO Dany Giraud concludes.<br />

“We show how people, through<br />

their commitment, build and strengthen<br />

neighbourhood structures in which everyone<br />

suddenly helps to improve living<br />

conditions and gain access to social assistance<br />

and good jobs.”<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 53

Nexen<br />

Yemen Water and<br />

Sanitation Project<br />

Is it possible to create a sustainable water and sanitation infrastructure project?<br />

Yes, but corporations and international organizations, such as the United Nations<br />

and its agencies, are still learning to work together. And it is paramount to<br />

effectively engage the community if such projects are to be successful.<br />

By Jeff Flood<br />

Nexen Inc. is a Canadian-based, global energy<br />

company growing value responsibly.<br />

We are strategically positioned in some<br />

of the world's most exciting regions: the<br />

North Sea, deep-water Gulf of Mexico,<br />

Middle East, offshore West Africa and<br />

the Canadian Athabasca oil sands.<br />

Yemen has been a significant international<br />

region for us since we first began<br />

production at Masila in 1993. We operate<br />

the country’s largest oil project and have<br />

developed strong relationships with the<br />

government and local communities.<br />

Yemen is one of the most water-scarce<br />

countries on earth. Small communities<br />

in Yemen have very limited resources<br />

for water and sanitation. When Nexen<br />

considered options for community investment<br />

that would make a sustainable<br />

difference to local residents, water was<br />

a natural area of focus.<br />

The community of Ressib is the settlement<br />

closest to our Central Processing<br />

Facility. From the outset, Ressib has been<br />

one of our key areas for community investment,<br />

with Nexen providing support<br />

for electricity, drinking water, health and<br />

education as priorities.<br />

54<br />

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Partnership<br />

As an active member of the UN <strong>Global</strong><br />

<strong>Compact</strong>, we began looking for ways to<br />

partner with the UN and its agencies to<br />

address development-related issues, such<br />

as the Millennium Development Goals.<br />

After a period of consultation, we undertook<br />

to create a sustainable community<br />

development project in concert with the<br />

United Nations Development Programme<br />

(UNDP), with additional support from the<br />

Canadian <strong>International</strong> Development<br />

Agency (CIDA). This was one of the first<br />

partnership projects announced under<br />

the <strong>Global</strong> <strong>Compact</strong> and the first to be<br />

launched in the Middle East.<br />

Our mutual objective was to establish<br />

a clean water and sanitation program<br />

in the community of Ressib to enhance<br />

local quality of life by reducing incidences<br />

of water-borne diseases. To help<br />

us achieve those objectives, we launched<br />

a project to:<br />

• provide a long-term source of quality<br />

water for drinking and domestic use<br />

(local water wells showed moderately<br />

excessive levels of fluoride);<br />

• develop a locally appropriate sanitation<br />

and wastewater management system;<br />

and<br />

• build community capacity to sustain<br />

the water and sanitation systems.<br />

The project was approved in October<br />

2004 with the UNDP as the implementing<br />

body. We had hoped to complete<br />

the effort within three years. In truth,<br />

we have not achieved the goals we set<br />

for ourselves within the hoped-for time<br />

frame. The project is continuing and is<br />

now targeted for completion by yearend<br />

2010.<br />

There are several reasons for the project<br />

failing to meet our initial expectations:<br />

• The organizational cultures of the<br />

UNDP and Nexen were substantially<br />

different. The culture of an oil and gas<br />

company is less concerned with internal<br />

processes than a UN agency must<br />

be. For example, the steps required to<br />

approve materials procurement were<br />

significantly more detailed – and time<br />

consuming – than Nexen expected.<br />

• Thanks to multiple community investment<br />

efforts by Nexen over the years,<br />

the community (Ressib) has come to<br />

expect a “full service” project, with<br />

Nexen funding, installing and in some<br />

cases maintaining essential community<br />

infrastructure. The community has not<br />

fully embraced the concept of owning<br />

and managing the water and sanitation<br />

project themselves.<br />

• The security situation in Yemen has<br />

deteriorated since the project’s outset.<br />

This has limited the ability of UNDP<br />

staff to travel to, and spend time in,<br />

the community.<br />

Originally, the project was estimated at a<br />

cost of US$2 million, with US$1 million<br />

coming from Nexen and US$500,000<br />

coming from the UNDP and CIDA (each).<br />

With the lag in the project schedule, we<br />

now expect actual costs will exceed our<br />

original budget by about 25%.<br />

In early <strong>2009</strong>, Nexen met with the UNDP,<br />

the Government of Yemen and community<br />

leaders. Together, we celebrated<br />

the fact that clean drinking water has<br />

now been provided to some 700 households,<br />

serving a population of about<br />

5000 people.<br />

By mutual agreement, Nexen agreed to<br />

complete the sanitation system (to be<br />

built by a local contractor) and to also<br />

support the local community in developing<br />

the capacity to own and manage the<br />

completed system.<br />

We are confident the project will ultimately<br />

achieve its goal of enhanced quality<br />

of life for the community of Ressib<br />

through successful completion of the<br />

water and sanitation project. But given<br />

the substantial delays in the project, it is<br />

important for us to capture the lessons<br />

learned, not only for ourselves but for<br />

other private/public partnerships such<br />

as ours.<br />

So what have we learned?<br />

We’ve learned not to underestimate the<br />

cultural differences between corporations<br />

and international organizations<br />

such as the UN and its agencies. While<br />

we both share the goal of sustainable<br />

development, our approaches to achieving<br />

that goal can differ substantially. It is<br />

important to recognize and deploy the<br />

skills and competencies of the project<br />

partners in the most effective manner<br />

right from the outset of the project, and<br />

to allow for adjustments as project conditions<br />

change.<br />

We’ve learned that sustainable infrastructure<br />

programs require long-term<br />

commitment from the community and<br />

the resources, will and education to see<br />

them through. The community must<br />

establish a clear champion and commit<br />

to an education program.<br />

Perhaps most importantly, we’ve learned<br />

an important difference between oil<br />

and gas infrastructure and community<br />

infrastructure. As a global oil and gas<br />

company, we have proven to be adept at<br />

drilling wells, at building roads, pipelines<br />

and processing facilities – all despite<br />

significant challenges in terrain, climate<br />

and culture. But when it comes to<br />

partnering with international agencies<br />

and developing community capacity to<br />

manage their own infrastructure, we’ve<br />

come to appreciate the complexities<br />

involved.<br />

On our part, we’ve learned valuable lessons<br />

we hope other private-sector players<br />

can study. We also hope that, from our<br />

experience, the UN, its agencies and the<br />

UN <strong>Global</strong> <strong>Compact</strong> can learn how to<br />

partner more effectively with companies<br />

such as ours.<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong> 55

Novo Nordisk<br />

Changing<br />

Diabetes®<br />

By Craig Ludwig<br />

Protecting and promoting the right to<br />

health is first and foremost a responsibility<br />

of states. But business can make a big<br />

difference. Novo Nordisk is committed<br />

to pursuing its business goals as a profitable<br />

enterprise. However, as a global<br />

pharmaceutical company and a leader<br />

in diabetes care, we believe that we have<br />

a responsibility to try and influence the<br />

negative trends of this global health issue<br />

to prevent unnecessary human suffering.<br />

That is why we launched Changing<br />

Diabetes® in 2005, which is dedicated to<br />

bringing meaningful change to the lives<br />

of people living with diabetes. This promise<br />

underpins the company’s strategy in<br />

diabetes care and three ambitions drive<br />

its efforts: giving priority to people with<br />

diabetes, improving treatment outcomes,<br />

and breaking the curve of the global<br />

diabetes pandemic.<br />

There are 3.8 million deaths attributed to diabetes each<br />

year, accounting for roughly 6 percent of total causes of<br />

mortality globally. Yet the disease still goes largely ignored.<br />

Of the estimated 246 million people worldwide who are<br />

affected by diabetes today, 50 percent do not even know<br />

they have it. Diabetes is a global issue and presents a<br />

significant challenge to both the individual and society.<br />

In low- and middle-income economies, governments<br />

lack the resources to provide the health care that their<br />

populations need, and in high-income economies, ageing<br />

populations – combined with increased treatment costs –<br />

are putting public health budgets under pressure.<br />

To improve the lives of people affected<br />

by diabetes, change needs to happen at<br />

every level – in science and research,<br />

in humanitarian and outreach efforts,<br />

in education, and in government and<br />

public policy worldwide. This ambition<br />

poses huge challenges that require collaborative<br />

actions.<br />

Giving priority to people<br />

with diabetes<br />

The importance of raising awareness of<br />

diabetes led Novo Nordisk to become a<br />

strong partner in the Unite for Diabetes<br />

campaign, which led to the adoption of<br />

the 2006 UN Resolution on diabetes. The<br />

resolution calls upon all nations to tackle<br />

the growing diabetes pandemic.<br />

56<br />

<strong>Global</strong> <strong>Compact</strong> <strong>International</strong> <strong>Yearbook</strong> <strong>2009</strong>

Best Practice<br />

Human Rights<br />

In March 2007, Novo Nordisk gathered a<br />

wide range of stakeholders at a forum in<br />

New York to discuss how to put the resolution<br />

into action. The keynote speaker<br />

at the forum was former US President<br />

Bill Clinton, who stated: “We will never<br />

be forgiven, and I mean never, if we<br />

allow our children to live shorter lives<br />

than our own.”<br />

To date, 16 such national forums have<br />

been arranged in countries across the<br />

world, including Australia, Belgium,<br />

Denmark, Italy, and France. The forums<br />

aim to put diabetes on the health policy<br />

agenda and offer an opportunity to drive<br />

change on the ground through discussions<br />

about national diabetes strategies,<br />

improved diabetes prevention, and early<br />

detection of diabetes. At these forums,<br />

participants debate how to develop sustainable<br />

health policies and design health<br />

systems that generate value-based outcomes<br />

for people with diabetes.<br />

Improving treatment<br />

The effects of this devastating dis