Alliances with NGOs ESM210 November 7, 2007

Types of Alliances Corporate sponsorship  Firm contributes to the environmental group financially or in king through becoming involved in specific env causes or fund raising Product endorsement  Environmental group approves a firm’s product as being ecologically sound Task force  to develop economically feasible solutions for the greening of business practices

The context that leads to collaboration Perceived crisis and shortcomings of adversarial approaches to problem solving  ex Lawsuits might take years and results in greater costs Problems that are so complex that they require multiple actors to solve them  Disagreement over solution Disparity of power/expertise among stakeholders in dealing with the problem  Environmental groups have expertise and public support but lack power of implementing solution Each of the stakeholders have a vested interest in the problem

Pros of collaboration Firm perspective  Access to complementary assets Credibility Additional communication channels Scientific knowledge NGO perspective  Direct impact on firm’s behavior, potential ripple effect within industry

Cons of collaboration Firm perspective  Negative backlash if the project fails  Confidentiality issues  How to retain the Intellectual property rights? NGO perspective  Open to criticism that is becomes and ally of industry (“sleeping with the enemy”)  Open to criticism that it looses neutrality

Issue of property rights NGOs: diffusion of practices throughout industry have incentives to diffuse information to as many other corporations as possible. Example: Greenpeace-Foron alliance

Selection of an environmental partner Env group should have an established philosophy favoring market based solutions Env group should have a recognized, credible reputation Ability of the parties to provide complementary assets

Selection of project Keep alliance based on subjects that are far from firm’s IP (packaging for McDonald’s) Find organizational attributes that make Intellectual property difficult to transfer Strive for early movers advantages

Managing partner relations Clear definition of objectives  Tasks clearly defined with deadlines Bridge organizational cultural differences by building personal relationships  Frequent meetings both formal and informal facilitate cohesive linkages and build trust among partners Maintain an arm’s length relationship: formal contract  No exchange of money  Set-up conditions for ending up the contract  Confidentiality issues addressed

Exert from ED contract: Expenses & Termination The Project will be carried out by appropriate Alliance and [company name] staff, and will require priority effort and time commitment by each of the Parties. The Parties will each bear all of their own costs and expenses in working on the Project, and [company name] will not compensate the Alliance in any way for any such costs or expenses. Meeting locations and other Project activities will be chosen to equalize the expenses of the Parties Each of the Parties has the right to terminate the Project at any time. In such an event, the Parties will be free to comment on the Project as they see fit.

Exert from ED contract: Confidential information In order for the Parties to work effectively, it will be necessary for [company name] to disclose certain confidential information to the Alliance. The Alliance agrees that all information identified by [company name] at the time of disclosure as confidential will remain confidential and will not be disclosed without the written permission of [company name] or used by the Alliance other than in connection with this Project, subject to the additional terms and conditions contained in the Appendix. This confidentiality obligation shall remain in place until [company name] informs the Alliance in writing that the information is no longer confidential.

Conclusion on Alliances with NGOs Work best in following context: Perceived crisis and complex problems with disagreement over solutions Provide firms with access to complementary assets (scientific knowledge and credibility) Risky in terms of use of information and how Intellectual Property is protected Choice of partner & project as well as design of alliance are key for success

The Use of LCA There is not always a single clear answer Boundaries: intentional vs. national., containers reuse as an option, etc. How to compare impact categories, what is more important Can the study be used for comparing firms? Data sources and credibility Assumptions

Wednesday 11/14 Meeting in the computer lab at 3:30pm Sit in groups Will explain the assignment in more details Will go over publicly available sources for environmental performance evaluation Will be around for questions

Monday 11/19 Four presentations (10 min each) Additional presentations as needed Discussion

Questions? See you on Wednesday Have a great long weekend!