Standardized Voluntary Codes for Social Responsibility By Bill Blackburn October 26, 2007 The Conference Board Council of Senior International Attorneys Philadelphia, PA William Blackburn Consulting, Ltd. Web: www.WBlackburnConsulting.com Email: WRB@WBlackburnConsulting.com Phone: 847.530.4014 © Copyright 2007: William R. Blackburn

Sustainability-Related Codes The Big Three ISO 26000 SR Guideline Standard GRI G3 Sustainability Reporting Guidelines UN Global Compact Other Sustainability Codes of Behavior Sustainability Management Systems Standards American Bar Assn Model Sustainability Policy for Law Organizations

ISO 26000 Guidance Standard on Social Responsibility

ISO 26000 Update: Scope & Issues What it will be - International “guidance standard” providing practical guidance on 1. operationalizing social responsibility 2. engaging stakeholders 3. enhancing the credibility of SR reports and claims - Complementary to other intergovernmental and global SR initiatives (e.g., UN, ILO, OECD, GRI) - Applicable to all types and sizes of organizations - Guidance emphasizing results and performance improvement What it will NOT be - A management systems (PDCA) standard - A specification standard for certification - A set of social obligations or expectations of the type properly defined by governments

ISO 26000 Update: Content: Definitions; Principles Definitions of “social responsibility,” other terms SR principles legal compliance respect for internationally recognized instruments recognition of stakeholders and their concerns accountability transparency sustainable development ethical conduct precautionary approach fundamental human rights respect for diversity

ISO 26000 Update: Content: Implementing SR General guidance for organizations in implementing SR Vision, strategy development Stakeholder identification and engagement Monitoring and measurement Reporting and communication Etc. Reference existing tools?? Management system elements??

ISO 26000 Update: Schedule Mar. 06: 1st draft Nov. 06: 2nd draft Dec. 07: Enquiry draft to national ISO orgs. for comment and preliminary vote July 08: Final draft to national ISO orgs. for vote Oct. 08: Final standard published Will be delayed!

Global Reporting Initiative’s G3 Sustainability Reporting Guidelines

Why GRI Matters Growth of company sustainability reporting - 2/3 of Global Fortune 250 - Up 40+% from 2002 - Investor resolutions; UK, France, S. Africa initiatives Source: KPMG Survey—January 2005

Uptake Over Time >950 Reporters/ 40% of Global Fortune 250 use GRI GRI Reporters Look at the growth in reporting! Highlight the growth post release of 2002 Guidelines… be part of the increase post the G3 release! By mid 2006, XX were In Accordance reporters. GRI-based reports continue to feature heavily in sustainability indexes. In May, 2006, 59% of organizations listed in the DJSI produced GRI reports; 69% of the S&P Global 100 were GRI reporters; Year

Top Strategies for Strengthening the Credibility of Reports External verification Being honest about mistakes and bad practices External reporting standard (GRI) Source: Pleon Kohtes Klewes Global Stakeholder Survey--2005

G3 Launch October 2006 Key message: (Presenter: take stock. Recap that you’ve just walked through the G3 Guidelines). So, that’s the G3. How does it relate to the huge array of corporate governance standards/codes/frameworks etc out there. To ensure we reach our goal – a more sustainable future – we must work together. Streamlining corporate governance so that acting responsibility does not become burdensome for organizations. a) Good reports: are those that are not isolated. Reporting is part of the process of demonstrating, understanding, improving corporate responsibility goals. Organizations have a suite of CR tools available to them: harmonization is important so reporters have consistent approach, can satisfy multiple needs. b)… GRI has always sought synergies; G3 is stronger than ever in allowing this. 2) Supporting facts At our conference in October, the GRI recently united in a strategic alliance with the UN-Global Compact This aims to provide global private sector (the core audience of the UNGC) with an opportunity to embrace a responsible business strategy that is comprehensive, organizing, and integrated. Ernst (GRI CEO) and Georg Kell (UNGC executive head) were proudly ‘married’ at the conference. They announced their commitment to undertake advocacy and other partnership efforts to encourage companies and corporate responsibility organizations to support the synergistic platforms of the Compact and the GRI. For each, the harmonization is clear. The UNGC require public disclosure from their signatories as to their progress on the 10 principles of the UNGC. It makes sense to use a trusted, widely used and credible framework – the GRI – to do this. In working together, it is hoped efforts can be consolidated, are targeted and focused, and achieve the common goal of improved sustainability outcomes, for organizations all around the world.

The Reporting Framework Principles G3 Standard Disclosures + Sector Supplements Key message: Good reports: are based on a credible, trusted, transparent framework, which facilitates comparable reporting. The G3: The improved Guidelines are part of the world’s most used and trusted framework. 2) Supporting facts: (overview of the following few slides, which provide greater detail) The Guidelines are the basis of all the Reporting Framework. They are the entry point for all reporting organizations. They contain principles and guidance (helping determine the content of the report) as well as standard disclosures, including performance indicators Indicator protocols: provide ‘the recipe’ for the indicators: eg, compilation methodology, further reference. Ensure consistency and comparability when different organizations report on the same indicator. Sector supplements: respond to the limits of a ‘one size fits all’ and contains some guidance for sector specific information. National annexes: soon to start, not yet existing. enables thorough reporting that fits in with national-specific reporting requirements, legislation, or issues – whilst being GRI based enables globally comparable information disclosures. National Annexes

Reporting Principles (with Tests) Principles that help define report content Materiality (significant impacts, substantially influence stakeholder decisions) Stakeholder inclusiveness Sustainability context Completeness Boundary setting Principles that help determine report quality Balance Comparability Accuracy Timeliness Reliability Clarity

G3 Report Content Strategy and analysis Organizational profile Governance, commitments & engagement Discussion of management approach (DMA) Performance indicators Core and additional indicators Sector supplements National annexes

Examples of the 3 Classification Levels of Indicators Category (6) -Economic -Environment -Social (4) Environment Social: Labor Practices and Decent Work Aspect (35) Water Occupational Health and Safety Indicator (79) -49 core -30 additional Total water withdrawal by source Injury, illness and lost-day rates, absenteeism, fatalities, by region

Disclosure on Management Approach Report on each of the 6 indicator categories covering those 35 aspects that are material: Economic (3) Environmental (9) Social: labor and decent work (5), human rights (8), society (5), product responsibility (5) DMA content: Goals and performance Policy Organizational responsibility Training and awareness Monitoring and follow-up Additional contextual info

Sector Supplements Development completed (but not final yet): automotive, telecom, metals & mining, tour operators, financial services, public agencies, logistics & transportation, In development: energy utilities, apparel & footwear, nonprofit, foodservice

Reporting Application Levels Rpt Content Application Level C C+ B B+ A A+ Profile, Governance Rpt all but 12 items Ext. Assurance Rpt all items Same as B DMA Not req’d Rpt for each of 6 categories Indicators Min 10 (1 each for econ, env, social) Min 20 (1 each for econ, env, HR, labor, soc’ty, prod resp) Rpt on each core and sect. suppl. indicator or explain

In Support The common disclosure framework is out there… and now introducing new support services to help you

UN Global Compact

UN Global Compact Code of corporate social responsibility Launched 2000 Approx 4000 participants Over 3000 businesses 100 countries

GC Support Network Global Compact Office Guardians Office of the High Commissioner for Human Rights UN Environment Programme International Labour Organization UN Office on Drugs and Crime Implementing arm: UN Development Programme SME Resources: UN Industrial Development Organization

Company GC Requirements Adopt principles Annual progress report to GC and stakeholders Engage in dialogue on legitimate complaints about adherence to the code

GC 10 Principles for Business Human Rights • Principle 1: Support internationally proclaimed human rights; • Principle 2: No complicity in abuses

GC 10 Principles for Business Labour • Principle 3: Supporting freedom of association; right to collective bargaining; • Principle 4: Eliminating forced and compulsory labour; • Principle 5: Eliminating child labour; • Principle 6: Eliminating employment discrimination

GC 10 Principles for Business Environment • Principle 7: Precautionary approach to environmental challenges; • Principle 8: Greater environmental responsibility; • Principle 9: Promoting environmentally friendly technologies Anti-Corruption • Principle 10: Eliminating corruption, including extortion and bribery.

Other Sustainability Codes of Behavior

How to Select Voluntary Standards Is the topic relevant and material to the company? Is this an important area where improvement or companywide consistency is needed? What burden is imposed on endorsing companies? Does the company have the resources to meet the code requirements? Is the code sufficiently flexible and not overly prescriptive?

How to Select Voluntary Standards How much credibility does the code and its issuing body have with company management and key stakeholders? Will future amendments to the code be likely, and will the company be expected to conform to them? Is the company already supporting an internal or external code on the same topic? Are there legal implications?

Sustainability Management Systems Standards

Sustainability Management System Standards ISO (26000, 9004?, etc.) UK (SIGMA, BS 8900) Australia (AS 8000 series) Mexico (IMNC SAST 004) France (AFNOR Guide SD 21000) Austria (Guide ON-V 23) Int’l Finance Corp. (Env & Soc. Mgmt System)

Compliance Management Framework?

The Sustainability Handbook– The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility (order thru www.WBlackburnConsulting.com) The Drivers The Efficient Enablers The Pathway The Evaluators A champion/leader Approach for selling the organization on sustainability Accountability mechanisms Organizational structure Deployment and integration Vision and policy Operating system standards Strategic planning for aligned priorities Indicators and goals Measuring and reporting progress Stakeholder engagement and feedback

Continual Improvement Cycle (Sustainable quantum leap in performance) Collect Data to Measure Performance Implement Plan Identify Strengths and Gaps Plan Priorities for Addressing Gaps Report Data Solicit Stakeholder Feedback

Model Sustainability Policy American Bar Assn Model Sustainability Policy

ABA Model Sustainability Policy for Law Organizations Vision: It is in the best interests of our law organization and society as a whole that our organization move along the path to sustainability. To that end, we will strive to achieve the following vision of performance, publicly communicate this commitment, and periodically report our progress and challenges in fulfilling it: 1. Economic success: the wise use of financial resources a. Organization’s Economic Prosperity. Our organization is positioned to survive and prosper economically. b. Community’s Economic Prosperity. We help our community survive and prosper economically through the taxes, salaries, and suppliers we pay, and through our civic and philanthropic efforts.

ABA Model Sustainability Policy for Law Organizations-cont. 2. Social responsibility: respect for people Respect for Employees. We treat our employees in a respectful, fair, non-exploitative way, especially with regard to compensation and benefits; promotion; training; open, constructive dialogue with management; involvement in decision-making; working conditions that are safe, healthy and non-coercive; right of privacy; employment-termination practices; and work-life balance. Diversity, Fair Hiring Practices. We promote diversity and use hiring practices that are fair, responsible, non-discriminatory, and non-exploitative for our employees, management board, and suppliers. Responsible Governance; Professional Courtesy. We manage our risks properly, use our economic power responsibly, and operate our organization in a way that is ethical and legal. We treat with due respect others who are involved with us in the discussion of legal issues and resolution of legal claims.

ABA Model Sustainability Policy for Law Organizations-cont. 2. Social responsibility: respect for people Dealing With Clients. We acknowledge that our primary legal and ethical duty is to serve our clients honestly and effectively. We compete fairly for their business, respect their privacy and confidentiality, and provide them efficient and effective services under the conditions we promise. Awareness and Advice. We help raise the awareness of our employees about sustainability issues in the primary fields of our legal practice, and include consideration of such issues in the advice we provide our clients. Well-being of Stakeholders. We work collaboratively with our communities and other stakeholders to enhance the well-being of others through pro bono services, philanthropy, and/or other ways.

ABA Model Sustainability Policy for Law Organizations-cont. 3. Environmental responsibility: respect for life; the wise management and use of natural resources a. Resource and Energy Conservation. We conserve our use of natural resources and energy to the extent practicable. b. Waste and Pollution Prevention and Management. We reduce to the extent practicable the quantity and degree of hazard of the wastes we generate from our operations, and handle them in a safe, legal, and responsible way to minimize their environmental effects. We also reduce to the extent practicable the direct and indirect emissions of greenhouse gases and other harmful air pollutants from our operations and travel. c. Reduction of Supply Chain Impacts. We work with others in our supply chain to help assure adverse environmental impacts and risks associated with our operations are reduced and properly controlled, and environmental benefits optimized.

Piloting ABA Model Policy Adopt policy substantially like model Develop implementation plan, considering guidelines/checklist of ideas Provide feedback on tool Periodically report progress Post materials on ABA website

Firms Piloting ABA Model Policy Levenfeld Pearlstein, LLC Ballard Spahr Andrews & Ingersoll, LLP Manko, Gold, Katcher & Fox, LLP Schwabe Williamson & Wyatt Holland + Knight McMahon DeGulis LLP

Takeaways for the International Lawyer Global and national SR codes are proliferating Changing stakeholder expectations for lawyers and their clients Can aid positive change, manage legal and other risks Can create standards of care even if you don’t adopt them Need to evaluate them carefully, be selective

William Blackburn Consulting, Ltd. Web: www.WBlackburnConsulting.com Email: WRB@WBlackburnConsulting.com Phone: 847.530.4014 Book: The Sustainability Handbook— The Complete Management Guide to Social, Economic and Environmental Responsibility (See Web site)