1. N RE OOWPO NRT AL S E GUIDE TO INDUSTRY INITIATIVES IN CORPORATE SOCIAL RESPONSIBILITYYour guide to selecting the right multistakeholder initiative for your companyEXECUTIVE SUMMARY The full report is available at www.ethicalcorp.com/initiatives Ethical Corporation 2009Call to order on +44 (0) 20 7375 7500

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Table of contents About this report and about us ................................................................6Acknowledgements ....................................................................................7Executive summary ....................................................................................8List of acronyms ........................................................................................11Definition of symbols ................................................................................12Characteristics of initiatives ....................................................................14Introduction................................................................................................15SECTION 1: WHY INDUSTRY-BASED CSR INITIATIVESCAN BE IN YOUR COMPANYS BEST INTEREST ..................16 1.1 Overview ..........................................................................................16 Box 1: Why do companies join an initiative? ................................17 1.2 Characteristics of initiatives ..........................................................18 1.3 Benefits of initiatives ....................................................................19 1.4 Creating roles and responsibilities for different partners........20 Figure 1: The ICI approach ............................................................20 1.5 Background to the initiative movement ....................................21 1.6 Drivers ..............................................................................................22SECTION 2: IMPACT, EFFECTIVENESS AND PROFITFROM INITIATIVE PRODUCTS AND SERVICES ....................23 2.1 Evaluating and selecting an initiative that is right for your company and judging the merits of alternative initiatives ....23 2.2 Formation and design ....................................................................23 2.3 Scale ................................................................................................23 2.4 Effectiveness and impact ..............................................................24 GUIDE TO INDUSTRY INITIATIVES IN CSR 2.5 Resources for sustaining initiatives..............................................25 2.6 Calculating costs ............................................................................26 2.7 The opportunity ..............................................................................26 2.8 13 challenges faced by initiatives and their corporate members................................................................................282 3. TABLE OF CONTENTS SECTION 3: FORECASTING THE FUTURE OF INITIATIVES FOR CORPORATE GOOD ................................................................333.1 Initiative trends among market leaders ....................................333.2 Industry initiatives in the future..................................................36 Box 2: The role of civil society groups within industry-based initiatives ........................................................................................36 SECTION 4: PROFILES OF LEADING AND EMERGING INITIATIVES ..................................................................384.1 Agriculture ......................................................................................38 4.1.1 Better Cotton Initiative ..........................................................39 Box 3: Focusing on root causes ....................................................40 4.1.2 Better Sugarcane Initiative ....................................................42 4.1.3 Common Code for the Coffee Community Association ......44 4.1.4 Ethical Tea Partnership ..........................................................47 Box 4: Adapting monitoring ..........................................................48 4.1.5 Forest Stewardship Council ..................................................50 4.1.6 International Cocoa Initiative ................................................52 4.1.7 Round Table on Responsible Soy ........................................54 4.1.8 Roundtable on Sustainable Palm Oil ....................................56 4.1.9 UTZ CERTIFIED Good Inside ................................................58Case study Sara Lee ..........................................................................62 Company overview ........................................................................62 Sara Lees CSR initiatives ..............................................................62 Benefits of the 4C Association ......................................................63 UTZ CERTIFIED Good Inside ........................................................63GUIDE TO INDUSTRY INITIATIVES IN CSRFigure 2: Growth curve of an initiative ..........................................64 Ethical Tea Partnership ..................................................................64 Resources and staffing....................................................................64 Communicating to stakeholders ..................................................654.2 Mining and natural resources ......................................................65 4.2.1 Marine Stewardship Council ................................................66 4.2.2 Initiative for Responsible Mining Assurance ........................68 4.2.3 International Council on Mining and Metals ........................69 4.2.4 Extractive Industries Transparency Initiative ........................71 4.2.5 Voluntary Principles on Security and Human Rights ..........73 3 4. TABLE OF CONTENTS Box 5: Steps towards adopting the VPs ........................................75Case study Anglo American..............................................................76 Company overview ........................................................................76 The Anglo American brand ..........................................................76 Anglo Americans CSR initiatives ..................................................76 Anglo Americans involvement in the ICMM ................................76 Anglo Americans involvement in the EITI ....................................77 Anglo Americans involvement in the VPs ....................................77 Resources and staffing for initiative management........................77 Initiative challenges for Anglo American ......................................784.3 Manufacturing ................................................................................78 4.3.1 Automotive Industry Action Group ......................................79 4.3.2 Responsible Jewellery Council..............................................81 4.3.3 Electronics Industry Citizenship Coalition ............................84 4.3.4 Fair Labor Association ..........................................................86 4.3.5 International Council of Toy Industries CARE Process ........88 4.3.6 World Federation of the Sporting Goods Industry ..............90 4.3.7 Worldwide Responsible Accredited Production ..................91Case study Gap Inc. ..........................................................................93 Company overview ........................................................................93 Gap Inc.s CSR initiatives ................................................................93 Gap Inc.s path to joining initiatives ..............................................93 Assessing the value of initiatives....................................................94 Gap Inc.s involvement with the SAI ..............................................94 Gap Inc.s involvement in the ETI ..................................................95 Gap Inc.s involvement in the BCI ..................................................96 GUIDE TO INDUSTRY INITIATIVES IN CSR Gap Inc.s involvement with the BLIHR ..........................................96 Gap Inc.s involvement in the Ceres network ................................97 Additional lessons from Gap Inc. on getting the most from initiatives ................................................................................97 The necessity for additional research ............................................98 Resources and staffing for initiative management........................98 Initiative challenges for Gap Inc. ..................................................98 Gap Inc.s interpretation of the future of initiatives ......................994.4 Services ............................................................................................99 4.4.1 International Tourism Partnership ......................................100 4 5. TABLE OF CONTENTS4.4.2 The Equator Principles ........................................................1014.4.3 Logistics and Transportation CorporateCitizenship Initiative ............................................................1044.4.4 Media CSR Forum ................................................................105 Case study ABN Amro ....................................................................107Company overview ......................................................................107ABN Amros CSR initiatives ..........................................................107ABN Amro adopts the EPs ..........................................................107ABN Amros ESE ethical screening strategy ................................108Figure 3: The policy development process ................................108Training and staffing for initiative management ........................109Internal ABN Amro strategy ........................................................109Initiative challenges for ABN Amro..............................................110ABN Amros advantages in implementing the EPs ....................110Figure 4: Initiatives can occur within a continuum ......................110 4.5 Retail ..............................................................................................1104.5.1 Business Social Compliance Initiative ................................1114.5.2 Global Social Compliance Programme ..............................112 4.6 Cross-industry................................................................................1144.6.1 Ethical Trading Initiative ......................................................1144.6.2 Global Reporting Initiative ..................................................1164.6.3 Social Accountability International ....................................1184.6.4 Fairtrade ..............................................................................121 Case study Chiquita ........................................................................124Company overview ......................................................................124Chiquitas CSR initiatives ..............................................................124GUIDE TO INDUSTRY INITIATIVES IN CSR Chiquitas involvement in SA8000 ................................................124Chiquitas involvement in the ETI ................................................125CSR training ..................................................................................125Resources and staffing for initiatives ..........................................125Initiative benefits for Chiquita......................................................126Initiative challenges for Chiquita ................................................126Evolution of Chiquitas CSR initiatives ........................................126 5 6. TABLE OF CONTENTSSECTION 5: CRITICAL ANALYSIS OF INITIATIVES ............127 Footnotes..................................................................................................129Sources ......................................................................................................131APPENDICES: KEY MEMBERS IN EACH INITIATIVE ........133Appendix A: Agricultural initiative members ........................................133Appendix B: Natural resources and mining initiative members ............138Appendix C: Manufactured products initiative members ......................140Appendix D: Retail initiative members ..................................................143Appendix E: Service industry initiative members ..................................144Appendix F: Cross-industry initiative members......................................146 GUIDE TO INDUSTRY INITIATIVES IN CSR6 7. About this report and about usABOUT THE REPORT Corporate social responsibility (CSR) has produced a new breed of organisations. Industry-based CSR initiatives are growing rapidly, in number and in membership. These initiatives emerged from the collaboration between various stakeholders interested in CSR for a given sector. These initiatives are usually managed by an organisation with a network structure that serves its member companies, while relying on their involvement. The research presented here is based on an analysis of 30 initiatives, lessons from 19 multinational corporations, as well as detailed studies on five multinational corporations. This report is for you if you want to know: How will my company benefit from a joining an initiative? Are initiatives considered to be good CSR? How do I distinguish between a well-run initiative and a poorly-run initiative? What should I consider when selecting which initiative to join? Which initiative does my competition support? What challenges have they faced, and what benefits have they received?ABOUT US Ethical Corporation is a practical CSR think tank. GUIDE TO INDUSTRY INITIATIVES IN CSREthical Corporation produces robust and accessible business intelligence reports for business executives. Reports are based on in-depth research with leading multinational companies. This research also supports Ethical Corporation training workshops and commentary services. Ethical Corporation's research focuses on cutting edge ethical business management issues. 7 8. Acknowledgements Ethical Corporation is grateful to Deborah Leipziger for leading thisresearch. Deborah is a consultant, author and expert in the field ofcorporate social responsibility. Likewise, we are grateful to JenniferBauser for her research assistance.Corporate executives and other representatives from the followingcompanies have collaborated with our researchers, sharing their lessonsand insights on implementing initiatives: ABN Amro, Anglo American,Bacardi, Chiquita, Ford, Gap Inc., H&M, HP, IKEA, Sara Lee, Shell,Starbucks, TNT, Vancity, Volvo and Wal-Mart.Ethical Corporation appreciates the information shared by all 31initiatives discussed in this report. Substantial contributions wereprovided by: the Better Sugarcane Initiative, the Voluntary Principles onSecurity and Human Rights, the 4C Association, the Electronics IndustryCitizenship Coalition and the International Cocoa Initiative. The researchhas also been supported by representatives from various civil societyorganisations including: CAFOD (Catholic Agency for InternationalDevelopment), Oxfam America, Business for Social Responsibility, andacademics from the Kennedy School of Government at Harvard Univer-sity, and Warwick Business School. GUIDE TO INDUSTRY INITIATIVES IN CSR8 9. Executive summary The rise of industry-based initiatives in CSR is one of the major transfor-mations in the landscape of corporate social responsibility. Over the pastthree years, initiatives have grown in number and their membership hascontinued to expand, as has their reach.Momentum is growing in developing countries around sustainabilityissues, and industry-based initiatives provide an architecture that allowsfor consultation between developed and developing countries andbetween the private and public sectors. Even within sectors, many ofthese coalitions allow for consultation between producers, buyers andretailers. Initiative organisations are intermediaries, bringing players to atable that is growing to address myriad issues, from environmental, tosocial, financial, ethical and anti-trust matters.Initiatives offer the possibility to create blueprints for change, allocatingresponsibilities among key actors, including governments, civil societyand the private sector. Initiatives provide an interesting view into thefield of CSR writ large; they are microcosms of CSR, where new trendsand ideas are incubated and take root.Initiatives can be useful in establishing collective to-do lists for globalsociety and identifying comparative advantages of individual companiesin the realm of corporate citizenship. Initiatives can define roles forindividual companies and distribute CSR activities by working in partner-ship. For an industry-based initiative to be successful, it must define rolesfor each partner, so they work with one another.GUIDE TO INDUSTRY INITIATIVES IN CSR9 10. EXECUTIVE SUMMARYCompanies form and join industry initiatives for several reasons.A few of the reasons identified in the report are:1. Organisations that manage industry initiatives provide a forum for dialogue on difficult and sensitive topics.2. Economies of scale in CSR: industry-based initiatives develop and share common tools that are time-consuming to create.3. Stakeholder engagement is easier and more time-effective in groups.4. Initiatives can provide access to public funding for structural changes within the industry, within supply chains or regions.5. CSR organisations serve as portals to disseminate information on CSR issues that are critical to a specific industry in a coordinated manner.6. Initiatives develop common systems for monitoring, verification, certification and reporting.7. Initiatives build consumer confidence and manage reputation risk better than a single company can on its own.Some initiatives are simply a code or set of principles that serve as arough guide for corporate policy and overall business strategy. Othersinclude a network of organisations that work in partnership; still othershave evolved certification systems.While initiatives have many common characteristics and constraints, theyalso vary dramatically from each other. It is important to distinguishbetween initiatives that are developed through a multistakeholderconsensus and those that are not. Whether or not they are multistake- GUIDE TO INDUSTRY INITIATIVES IN CSRholder in design affects expectations and the degree of legitimacy withwhich they are regarded. Initiatives that are not multistakeholder are ableto move more quickly than those that adopt multistakeholder gover-nance systems.10 11. EXECUTIVE SUMMARY The organisational structures of initiatives share many common elements. For example, they usually: include a wide range of corporate members; adopt mechanisms for including perspectives from civil society; strive to develop a coherent approach to promote corporate responsibility; include a work plan; and create tools, including some or all of the following: codes of conduct; protocols for monitoring and/or auditing; indicators; verification and/or certification; and reporting mechanisms. GUIDE TO INDUSTRY INITIATIVES IN CSR 11 12. List of acronyms 4C ASSOCIATION Common Code for the Coffee Community AssociationAIAG Automotive Industry Action Group BCI Better Cotton Initiative BLIHR BLIHR: Business Leaders Initiative on Human Rights BSCIBusiness Social Compliance Initiative BSI Better Sugarcane InitiativeCARE International Council of Toy Industries CARE Process CERES Coalition for Environmentally Responsible EconomiesCSRcorporate social responsibilityECFEuropean Coffee Federation EICCElectronics Industry Citizenship CoalitionEITI Extractive Industries Transparency InitiativeEPSEquator PrinciplesETIEthical Trading InitiativeETPEthical Tea PartnershipFLAFair Labor AssociationFLOFairtrade Labelling Organizations InternationalFSCForest Stewardship CouncilGRIGlobal Reporting InitiativeGSCP Global Social Compliance Programme ICI International Cocoa Initiative ICMMInternational Council on Mining and Metals IFC International Finance Corporation ILO International Labour OrganisationIRMA Initiative for Responsible Mining AssuranceITPInternational Tourism PartnershipLTCCILogistics and Transportation Corporate Citizenship Initiative GUIDE TO INDUSTRY INITIATIVES IN CSR MSC Marine Stewardship CouncilRJCResponsible Jewellery CouncilRSPO Roundtable on Sustainable Palm Oil RTRSRound Table on Responsible Soy SAI Social Accountability InternationalSA8000 Social Accountability 8000UNEP United Nations Environment ProgrammeUTZUTZ CERTIFIED Good InsideVPSVoluntary Principles on Security and Human Rights WRAPWorldwide Responsible Accredited Production WFSGIMCCWorld Federation of the Sporting Goods Industry Model Code of ConductWWFWorld Wide Fund for Nature (formerly the World Wildlife Fund) 12 13. Definition of symbolsThe following symbols are used throughout the report to help define the characteristics of each initiative. REDITA LI N E SAccreditation agencyDE Guidelines TIAC CGUI ON AGA complimentary organisation The organisation has developed aaccredits certification and/or trainingreference for its members and other EN Y Cbodies.companies on how to conduct a process such as reporting.NG MENDEITI Auditing methodologyEP Independent monitoringAU DNTIND E TH O DThe organisation has developed a The initiative conducts or recommends MOmethodology or technique for auditingothers to conduct evaluations of opera- GOLNI OGYa facility or process.TORINtions or processes by an independent third-party.OF C O ECode of conduct or practiceATORIndicatorsIC NDC ODSINDThe initiative has developed a set ofThe initiative has developed U CT Orules and guidelines to describe how a indicators, or measures that indicate EIC T RP RA C company, or its employees or suppliers performance or change.should behave.EHENS PR Comprehensive range of issuesB E RS HMembership MS CO MIV IPThe organisation is working to address The initiative invites participants toMEERA Na wide range of issues, rather than onejoin the initiative as members, usuallyUEGEO F I SS or two specific issues.for a fee.L STGlobal standard CO M BA T I- Multi-commodity ALGLOMThe organisation has developed aMU This is an initiative that addresses N DAR D ODITYstandard which is followed by a very several different commodities ratherwide range of companies and industries than just one.across many countries.ERNME GUIDE TO INDUSTRY INITIATIVES IN CSRTAKEGovernment involvementTISMultistakeholderGOVNTL H O DEMUThe initiative counts on governmentThis is an alliance that includesI NVLparticipation.NT O balanced representation between LVEMER several categories: business, NGOs and civil society, labour, and mediating insti- tutions (such as government, academia, and the accounting world). 13 14. DEFINITION OF SYMBOLSERS HEGIC TNPartnerships AT Strategic philanthropyPAR IPS PHSTR An initiative that promotes joint Includes philanthropic contributionsILAN projects between different stakehold- by an initiative that promote aTH ers, such as NGO-corporate partner- R OP Yspecific long-term outcome. ships or government partnerships.CIPLES Principles AD P RT Third party assurancePRIN THIRY A set of guidelines or policies to be The initiative features a mechanismA SS U followed by all parts of the company RA for attaining an independent and/or its suppliers. NCE evaluation that certain procedures are being followed to ensure social and/or environmental performance.CT LA DUProduct labelD P RT Third party certification THIRPR O AB An initiative that has developed YThird party written certification CERTIEL a label or stamp to be placed on the !that a product or process meets NFI goods produced to indicate thatCATIOrequirements. policies and procedures are in place to address social and/or environmen- tal issues.R EPS U PP LIC Public reporting AL Total supply chain TOTORP UB LY The initiative regularly reportsThe initiative addresses theTI N GCHA to the public about the social andvalue chain in its entirety,IN environmental performance of itsrather than just direct members.suppliers. TI N GReporting ABILI Traceability OR CETY TR AR EP The initiative had developed advice The initiative is developing for members on how and what toprocedures and mechanisms to trace report. products through the supply chain to ensure that products and their components can be traced through the supply chain. GUIDE TO INDUSTRY INITIATIVES IN CSRD DATI O N REShared databaseDA Validation or verificationS HA TA N VALIO R VE R The initiative maintains a jointThe initiative has systems in place BASE database of the suppliers offor corroborating information its members so as to facilitate IFICATIOabout social and/or environmental information sharing and conditions in a factory, company or collaborative efforts.country.14 15. Ethical Corporation report centre Recent publications cover topics such as anti-corruption, voluntary initiatives in CSR, emerging market issues, and managing carbon emissions. You can also visit Ethical Corporations website and download some free research papers: www.ethicalcorp.com/reports Anti-corruption, ethics and compliance in Russia Practical information to develop local compliance strategies and overcome corruption challenges. For more information, current prices or online ordering, visit: www.ethicalcorp.com/russia Anti-corruption, ethics and compliance in China and Counter corruption in your supply chain in China Learn more about the issues critical to your operational security, ethical management and success in China. For more information, current prices or online ordering, visit: www.ethicalcorp.com/china Best practices for designing effective ethics programmes Find out which ethics and compliance training is most effective and productive. For more information, current prices or online ordering, visit: www.ethicalcorp.com/ectraining How to manage carbon reduction, and make it pay A hands-on management briefing on real-life ways big UK companies cut carbon, and their costs. Order online or obtain more information at: www.ethicalcorp.com/crc Corporate greenhouse gas emissions reporting Learn how your competitors are calculating and verifying their GHG emissions and discover which metrics and verification standards will work for you. For more information, current prices or online ordering, visit: www.ethicalcorp.com/greenhousegas Guide to industry initiatives in CSR Get the inside track from some of the worlds key industry-based initiatives. For more information, current prices or online ordering, visit: www.ethicalcorp.com/initiatives Job-specific guides for embedding CSR throughout your company Winning methods for integrating sustainability into operational departments including communications, finance and facilities. For more information, current prices or online ordering, visit: www.ethicalcorp.com/csr Essential strategies for effective emissions trading and offsetting With practical information from the leading companies, this report is everything you need to develop your companys emissions trading and offsetting strategy. Including case studies from 15 companies across industry. For more information, current prices or online ordering, visit: www.ethicalcorp.com/emissionstrading The must-have guide to water ethics, footprinting, programmes and supply security Learn how water risks factor into your operations, and what you should do to ethically manage water use. 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Reports focus on cutting edge ethical business management issues are based on in-depth research with leading multinational companies. Ethical Corporation 2009All rights reserved 17. ETHICAL CORPORATION In-depth responsible business research, training and advisoryEthical Corporation produces robust and accessible business intelligence reports for business executives. Reports focus on cutting edge ethical business management issues are based on in-depth research with leading multinational companies. Ethical Corporation 2009All rights reserved 18. N RE OOWPO NRT AL S E GUIDE TO INDUSTRY INITIATIVES IN CORPORATE SOCIAL RESPONSIBILITYYour guide to selecting the right multistakeholder initiative for your companyEXECUTIVE SUMMARY The full report is available at www.ethicalcorp.com/initiatives Ethical Corporation 2009Call to order on +44 (0) 20 7375 7500