materiality tool for impactful business projects
TRANSCRIPT
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Materiality Tool for Impactful Business Projects
May, 2017
Bangkok, Thailand
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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Sustainability Failure Rate
Bain Achieving Breakthrough Results in Sustainability, 2017
2%
…..of Corporate Sustainability efforts achieved or exceeded the expectations that were set….
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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746.4
593.9
513.1
428.8
415.2
404.3
334.6
330.4
300.3
281.1
271.4
264.8
257.8
245.2
238.8
Apple
Microsoft
Amazon
Berkshire Hathaway
Exxon Mobil
Johnson & Johnson
Chase
Alibaba Group
Sustainability Industry
Wells Fargo
General Electric
AT&T
Bank of America
#11 in global ranking
http://dogsofthedow.com/largest-companies-by-market-cap.htm
Why this matters: Industry
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Why this matters: Industry
• Assuming the 2% success rate
• Scaling for the total spend
• The total investment with no material benefit is larger than the total market capitalization of General Electric
-265
5.4
-300
-250
-200
-150
-100
-50
0
50
Loss Gain
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The reputation of a company has a significant contribution to its market capitalization
Why this matters: Company Value
26%
39%
12%
S&P500 (avg) S&P500 (Large) S&P500 (Small)
http://www.world-economics-journal.com/The%20Impact
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http://www.mckinsey.com/business-functions/risk/our-insights/are-you-prepared-for-a-corporate-crisis
Number of media headlines signaling corporate reputation risk is increasing
130
570
1030
1990-99 2000-09 2010-16
Why this matters: Company Reputation Risk
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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Failure: root causes
http://calleam.com/WTPF/?page_id=2213
Market & Strategy
Analysis
Organizational & Planning
Leadership and Governance
Quality
Risk
Competency
Engagement
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Failure: root causes
Market & Strategy
Analysis
Organizational & Planning
Leadership and Governance
Quality
Risk
Competency
Engagement
1
2
http://calleam.com/WTPF/?page_id=2213
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Failure: root causes
Market & Strategy
Analysis
Organizational & Planning
Leadership and Governance
Quality
Risk
Competency
Engagement
1
http://calleam.com/WTPF/?page_id=2213
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Failure: root causes - marketW
HA
Tyo
u d
o
HOW you do it +
+
--
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Failure: root causes - marketW
HA
Tyo
u d
o
HOW you do it +
+
--
TobaccoFast Fashion
Modern Forestry
Consulting
Media
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http://www.independent.co.uk/news/world/americas/kentucky-coal-museum-harlan-county-solar-panels-install-save-money-renewable-energy-green-fossil-a7676086.html
Failure: root causes - market
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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Mitigation Strategies
http://calleam.com/WTPF/?page_id=2213
Market & Strategy
Analysis
Organizational & Planning
Leadership and Governance
Quality
Risk
Competency
Engagement
2
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
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Mitigation Strategies
3.02.0
Company focuses on using their products and processes to mitigate impacton society
Company efforts on the benefits of sustainability to increase efficiencyand decreaserisk
1.0
Company efforts largely focused on marketing
Firm typologies:
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
Define
What kind of company do you
want to be
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
Map
Map your stakeholders
Define
What kind of company do you
want to be
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Mitigation Strategies
http://www.michelin.com/eng/sustainable-development/performance-and-responsibility/Materiality-Analysis
Firm-Level Materiality (Michelin)
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
Map
Map your stakeholders
Define
What kind of company do you
want to be
Develop
Create your sustainability programme
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
Map
Map your stakeholders
Create
Develop impactful
sustainability work
Define
What kind of company do you
want to be
Develop
Create your sustainability programme
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Mitigation Strategies
Understand
What kind of company are you?(1.0 vs 2.0 vs 3.0)
Map
Map your stakeholders
Create
Develop impactful
sustainability work
Define
What kind of company do you
want to be
Develop
Create your sustainability programme
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Mitigation Strategies
Bain Achieving Breakthrough Results in Sustainability, 2017
Clear commitments with quantitative
targets
Leadership Engagement
Business case for change
Process and incentive changes
Key success factors
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Mitigation Strategies
Bain Achieving Breakthrough Results in Sustainability, 2017
Clear commitments with quantitative
targets
Leadership Engagement
Business case for change
Process and incentive changes
Key success factors
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Mitigation Strategies - Reminder
Bain Achieving Breakthrough Results in Sustainability, 2017
2%
…..of Corporate Sustainability efforts achieved or exceeded the expectations that were set….
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Mitigation Strategies
Bain Achieving Breakthrough Results in Sustainability, 2017
62%
…..of respondents cited public reputation as the primary business rationale for sustainability programs—nice to have, but not essential to the business
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Mitigation Strategies
not Material=“…not essential to the business…”
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Mitigation Strategies
SEC Staff Accounting Bulletin No. 99: Materiality
Definition: “A matter is material if it is substantially likely that the information will affect decisions of a reasonable person”
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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6 Capitals Tool
Accounting Financial
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6 Capitals Tool
Accounting
Sustainability
Labor
Financial
Financial Natural Capitol
Local Community
https://www.greenbiz.com/blog/2014/01/28/materiality-drives-sustainability-reporting
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6 Capitals Tool
• In business using different screening tools can lead to richer analysis and results
http://www.accountingtools.com/questions-and-answers/types-of-financial-analysis.html
Horizontal analysis
Vertical analysis
Short term analysis
Multi-company comparison
Industry comparison
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6 Capitals Tool
• Different tools to measure sustainability project materiality
o ESG: Environment, Social and Governance
o GRI: Global Reporting Initiative
o 6 Capitals
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6 Capitals Tool
• Different tools to measure sustainability project materiality
o ESG: Environment, Social and Governance
o GRI: Global Reporting Initiative
o 6 Capitals
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6 Capitals Tool
Financial Capital Human Capital
Intellectual Capital Natural Capital
Social CapitalManufactured
Capital
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6 Capitals Tool
https://www.aicpastore.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2014/CorpFin/6-types-of-Capital.jsp
Type Example
Financial Capital Pool of financial assets available
Manufactured CapitalThese assets include physical distribution networks, products and
services, and how these goods and services are delivered to customers
Intellectual Capital Intangible assets, such as trademarks, patents, and brand equity
Human Capital Costs of employee turnover, retraining, and on-boarding new employees
Social Capital Productive relationships with external stakeholders
Natural CapitalEnvironmentally friendly buildings, alternative energy facilities, and the
integration of such practices into organizational supply chains
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GOOD FOR:
6 Capitals Tool
• Evaluation of projects
• Evaluation of investments
• Evaluation of programmes
NOT GOOD FOR:
• Full-firm sustainability assessments
• Stakeholder impact evaluation
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6 Capitals Tool
Note:• In addition to the 6 Capitals tool, users are advised to
employ the financial measurements most commonly used in their company
• For the purposes of the class – we are going to simplify and just use the 6 Capitals tool without financial measurements
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Case Study: H&M
Materiality Assessment: Conscious Collection
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Case Study: H&M
Materiality Assessment: Conscious Collection
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Case Study: H&M
Materiality Assessment: Conscious Collection
Programme:
• H&M collects used garments at its stores and uses the resulting material to create the next generation of clothing in their “conscious collection”
• €0.02 per kilo of donated clothing is donated to local charities
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Case Study: H&M
Materiality Assessment: Conscious Collection
Financial Materiality Will the sales of the Conscious Collection clothing have a net positive effect on the bottom line?
Factors:• Hurdle Rate• WACC• Risk / Yield curve• Financing Mix• etc
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Case Study: H&M
Materiality Assessment: Conscious Collection
Sustainable Materiality Will the sales of the Conscious Collection clothing have a net positive effect on the bottom line?
Factors:• Financial Capital• Manufactured Capital• Intellectual Capital• Human Capital• Social Capital• Natural Capital
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Case Study: H&M
Recycle: As of Feb 2017, 23,072 tons of clothing collected.
Donation: As of Feb 2017, €833.062 has been donated to local charity.
Materiality Assessment: Conscious Collection
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Case Study: H&M
Type ReminderMaterial
Yes No
Financial Capital financial assets
Manufactured Capital physical distribution
Intellectual Capital trademarks, patents
Human Capital employee turnover
Social and Relationship Capital external stakeholders
Natural Capitalenvironmentally
friendly
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Case Study: H&M
Type ReminderMaterial
Yes No
Financial Capital financial assets
Manufactured Capital physical distribution
Intellectual Capital trademarks, patents
Human Capital employee turnover
Social and Relationship Capital external stakeholders
Natural Capitalenvironmentally
friendly
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Case Study: H&M
Recycle: As of Feb 2017, 23,072 tons of clothing collected.
Donation: As of Feb 2017, €833.062 has been donated to local charity.
Materiality Assessment: Conscious Collection
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Case Study: H&M
Recycle: As of Feb 2017, 23,072 tons of clothing collected.
Materiality: Current technology = 276 years to use all of this this material
Donation: As of Feb 2017, €833.062 has been donated to local charity.
Materiality: This is 0.00353%of annual sales
Materiality Assessment: Conscious Collection
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Case Study: H&M
Type ReminderMaterial
Yes No
Financial Capital financial assets
Manufactured Capital physical distribution
Intellectual Capital trademarks, patents
Human Capital employee turnover
Social and Relationship Capital external stakeholders
Natural Capitalenvironmentally
friendly
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Case Study: H&M
“Sin” Example
Hidden trade-offs narrow set of attributes eg recycled paper
Lack of prooflack of tangible evidence eg % of post consumer
waste
Vague claims eg all natural
Irrelevant claims Ex: CFC free products
The lesser of two evils organic cigarettes
Outright lies false claims, eg energy rating
6 “Sins” of Greenwashing
http://sinsofgreenwashing.com/index6b90.pdf
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Case Study: H&M
“Sin” Example
Hidden trade-offs narrow set of attributes eg recycled paper
Lack of prooflack of tangible evidence eg % of post consumer
waste
Vague claims eg all natural
Irrelevant claims Ex: CFC free products
The lesser of two evils organic cigarettes
Outright lies false claims, eg energy rating
6 “Sins” of Greenwashing
http://sinsofgreenwashing.com/index6b90.pdf
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Case Study: H&M
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6 Capitals Tool - Practice
Materiality Assessment: Nestlé
Nestlé pledged to reduce water withdrawals per ton of product by 35% in 2020, compared with 2005 levels
http://www.nestle.com/csv/water/water-efficiency
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6 Capitals Tool - Practice
Type ReminderMaterial
Yes No
Financial Capital financial assets
Manufactured Capital physical distribution
Intellectual Capital trademarks, patents
Human Capital employee turnover
Social and Relationship Capital external stakeholders
Natural Capitalenvironmentally
friendly
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6 Capitals Tool - Practice
Materiality Assessment: Nestlé
Nestlé pledged to reduce water withdrawals per ton of product by 35% in 2020, compared with 2005 levels
Results (2016):• €29.53m annual savings (0.13% of COGS vs 0.05% COGS investment)
• 1500 Olympic-sized swimming pools of water per year
http://www.nestle.com/csv/water/water-efficiencyhttp://www.nestle.com/asset-library/documents/library/documents/half_yearly_reports/2016-half-yearly-report-en.pdf
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6 Capitals Tool - Practice
Materiality Assessment: Walmart
Walmart committed to doubling the fuel efficiency of its vehicle fleet. $1 billion in annual savings and significant reduction in greenhouse gas emissions
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6 Capitals Tool - Practice
Type ReminderMaterial
Yes No
Financial Capital financial assets
Manufactured Capital physical distribution
Intellectual Capital trademarks, patents
Human Capital employee turnover
Social and Relationship Capital external stakeholders
Natural Capitalenvironmentally
friendly
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6 Capitals Tool - Practice
Materiality Assessment: Walmart
Walmart committed to doubling the fuel efficiency of its vehicle fleet. $1 billion in annual savings and significant reduction in greenhouse gas emissions
Additional Info: • This project was originally presented to “reduce Walmart
greenhouse gas footprint” and failed to secure funding
• Project later reformatted to be more Material to the business, and was funded
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Agenda
Sustainability Failure RateWhy this matters
IndustriesCompanies
How do they failRoot causesExamples
Mitigation strategies6 capitals modelExamples
Putting it into practiceCase Study
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CASE STUDY
• Background:• Value Chain – Who cares and why• Supply Chain Sustainability• Special Features• Deep Dive: Child Labor
• The case of Allophone
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Value Chain – Who cares and why
Reminder
• Definition “A matter is material if it is substantially likely that the information will affect decisions of a reasonable person”
• Business Materiality = Sustainability Materiality
SEC Staff Accounting Bulletin No. 99: Materiality
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Value Chain – Who cares and why
Blume & Keim Institutional Investors and Stock Market Liquidity
Retail, 33%
Index Funds, 17%
Institution (ST), 25%
Institution (LT), 25%
75% of US Equities are held by Long Term Investors
25% of US Equities are held
by Short Term Investors
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Value Chain – Who cares and why
McKinsey and Aspen Institute panel of Long Term investors
Sharp decline in employee
satisfaction
Material change in asset base
Questionable supply chain practice
(human rights or environmental)
35% 39% 63%
Survey of long-term investors responding “most concerned”
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Value Chain – Who cares and why
Summary:
The majority owners, of the majority of the US equity market indicate that “Questionable supply chain practice” has them Most Concerned
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WHY?
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Value Chain – Who cares and why
Source: National Bureau of Statistics; Ernst & Young analysis
8%
5%
7%
12%
10%
5%
53%
Services
Tax
Labor
Capital
Raw Materials
Energy
Intermediate Goods
Manufacturing
18%
5%
16%
29%
1%
5%
26%
Services
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Value Chain – Who cares and why
Source: National Bureau of Statistics; Ernst & Young analysis
8%
5%
7%
12%
10%
5%
53%
Services
Tax
Labor
Capital
Raw Materials
Energy
Intermediate Goods
Manufacturing
18%
5%
16%
29%
1%
5%
26%
Services
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Value Chain – Who cares and why
65%
17%
5%4%
9%
Average Corporate Cost(S&P500)
Cost of Goods Sold SG&A
Interest & Taxes Depreciation and Other
Operating income
http://www.businessinsider.com/breakdown-of-sp-500-costs-since-1994-2014-3?IR=T
• On average - COGS represents the largest portion of retail prices and corporate cost structure
• In other words – the company supply chain
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CASE STUDY
• Background:• Value Chain – Who cares and why• Supply Chain Sustainability• Special Features• Deep Dive: Child Labor
• The case of Allophone
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Supply Chain Sustainability
Sustainability
Social
Environmental
Community
Financial
Company Employees1
2 Supply Chain Partners A Child Labor
B Fair Wage
C Working Hours
D Benefits
E Association Rights
F EHS
F Forced Labor
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Supply Chain Sustainability
Conduct audits in relevant factories
Training to prevent future
recurrence
Close open issues found in
the audit
Identify
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CASE STUDY
• Background:• Value Chain – Who cares and why• Supply Chain Sustainability• Special Features• Deep Dive: Child Labor
• The case of Allophone
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Special Features
UNIQUE FEATURESSupply Chain Sustainability has a number of unique features that differentiate it from traditional Supply Chain Management
Emotional Content
Observers have preexisting views
01
Transmitability
SCS issues can transmit risk to other parts of the supply chain or Company
02
Complexity
Underlying issues can be far more complex than traditional business issues
03
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Special Features
UNIQUE FEATURESSupply Chain Sustainability has a number of unique features that differentiate it from traditional Supply Chain Management
Emotional Content
Observers have preexisting views
01
Transmitability
SCS issues can transmit risk to other parts of the supply chain or Company
02
Complexity
Underlying issues can be far more complex than traditional business issues
03
![Page 81: Materiality Tool for Impactful Business Projects](https://reader036.vdocuments.us/reader036/viewer/2022062504/5a6516eb7f8b9ab5218b4b21/html5/thumbnails/81.jpg)
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Special Features
Standard Risk model
• Risk = Magnitude x Probability
• Translation: How big a problem is this x what is the likelihood of it happening?
• Example: • What happens if my company burns down?
• Who is effected?
• How can we prevent it?
https://en.wikipedia.org/wiki/Risk_assessment
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Sustainability Risk model
• Risk = Hazard + Outrage
• Translation: How big a problem is this x what is the likelihood of it happening x what is the public perception?
• Example:• What happens if my product poisons someone's family
pet?
Peter M. Sandman: Outrage Management Index
Special Features
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Sustainability Risk model
• Risk = Hazard + Outrage
• Translation: How big a problem is this x what is the likelihood of it happening x what is the public perception?
• Example:• What happens if my product poisons someone's family
pet?
• What happens if my product poisons an investment banker?
Peter M. Sandman: Outrage Management Index
Special Features
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UNIQUE FEATURESSupply Chain Sustainability has a number of unique features that differentiate it from traditional Supply Chain Management
Emotional Content
Observers have preexisting views
01
Transmitability
SCS issues can transmit risk to other parts of the supply chain or Company
02
Complexity
Underlying issues can be far more complex than traditional business issues
03
Special Features
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1%
Special Features
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1%
Special Features
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1%
Special Features
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1%
Special Features
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1%
Special Features
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“ 5%? That’s not so bad….”
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https://upload.wikimedia.org/wikipedia/commons/6/65/Fredmeyer.jpg
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https://upload.wikimedia.org/wikipedia/commons/6/65/Fredmeyer.jpg
“…mostly poison free…”
http://www.couponclippingcook.com/wp-content/uploads/2011/07/3-small-candies-in-bowls.jpg
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Your Company
..... ..... .....Tier 2
..... ..... .....Tier 3
..... ..... .....Tier 4
..... ..... .....Tier 1
Customer Customer Customer
Commodity A Commodity B Commodity C
Traditional View
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Your Company
..... ..... .....Tier 2
..... ..... .....Tier 3
..... ..... .....Tier 4
..... ..... .....Tier 1
Customer Customer Customer
Commodity A Commodity B Commodity C
Traditional View
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Q: Is this realistic?
A: Rartely
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Q: Is this realistic?
A: Rarely
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Realistic View
Your Company
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Troubled Supplier
Your Company
Realistic View
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Your Company
Troubled Supplier
Realistic View
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Your Company
Troubled Supplier
Realistic View
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Troubled Supplier
Your Company
Realistic View
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Troubled Supplier
Your Company
Realistic View
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Troubled Supplier
Your Company
Realistic View
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Supply chain context
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UNIQUE FEATURESSupply Chain Sustainability has a number of unique features that differentiate it from traditional Supply Chain Management
Emotional Content
Observers have preexisting views
01
Transmitability
SCS issues can transmit risk to other parts of the supply chain or Company
02
Complexity
Underlying issues can be far more complex than traditional business issues
03
Special Features
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Special Features
Sustainability
Social
Environmental
Community
Financial
Company Employees1
2 Supply Chain Partners
B Fair Wage
C Working Hours
D Benefits
E Association Rights
F EHS
F Forced Labor
Child LaborA
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http://www.movestheneedle.com/wp-content/uploads/2014/08/Lemonade-Stand.jpg
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http://img2.timeinc.net/people/i/2015/news/150907/harry-potter-01-1024.jpg
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https://s3-us-west-1.amazonaws.com/labs.theguardian.com/unicef-child-labour/imgtest/00173185.jpg
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CASE STUDY
• Background:• Value Chain – Who cares and why• Supply Chain Sustainability• Special Features• Deep Dive: Child Labor
• The case of Allophone
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15 18
Child Juvenile Adult
0
http://www.ilo.org/global/about-the-ilo/media-centre/issue-briefs/WCMS_206127/lang--en/index.htm
Generally accepted definition:
Topic Deep Dive: Child labor
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Topic Deep Dive: Child labor
https://en.wikipedia.org/wiki/East_Asian_age_reckoning
Country Age at birth Child Age Changes
Europe, UK, USA, Australia
0 Annually on date of birth
Cambodia 1 Sometime in the month of January
China 1 (depending on Province) February 4th or 5th
Korea 1 Beginning of the year
Mongolia 1Girls: number of full moons since conceptionBoys: number of new moons since birth
Vietnam 1 Early February
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Topic Deep Dive: Child labor
64
42
29
1
Agriculture
Manufacturing
Mining
Other
https://www.dol.gov/ilab/reports/child-labor/list-of-goods/
number of sub-sectors
In total there are 136 High Risk sectors
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http://www.ilo.org/global/topics/child-labour/lang--en/index.htm
78.0
59.0
13.09.2
Asia Pacific Sub-Saharan Africa Latin America Middle East & N Africa
employment (mils)
Topic Deep Dive: Child labor
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Child Labor on the decline (Source: International Labor Organization)http://singularityhub.com/2016/06/27/why-the-world-is-better-than-you-think-in-10-powerful-charts/
Topic Deep Dive: Child labor
246
222215
168
134
107
2000 2004 2008 2012 2016 2020 (proj)
Total employment (mils)
-40%
-25%
Girls
Boys
Since 2000
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Despite the obvious risk, most social compliance professionals in the manufacturing sector rate the risk of Child Labor in China as “low”
Why?
Topic Deep Dive: Child labor
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Topic Deep Dive: Child labor
94.00%
75.00%
35.00%
20.00%
2.00%0.05% 0.03%
Working Hours Wages Worker Safety Discrimination Juvenile Labor Forced Labor Child Labor
% of social audits with finding
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Age 0
Perception by media & public
View of subject matter experts
15 18
Child Juvenile Adult
Topic Deep Dive: Child labor
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CL example
Perceived Labor Risk
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Actual Labor Risk
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http://seeingredinchina.com/2011/04/27/how-poor-are-chinese-farmers/
5,919
19,500
Rural Urban
Average Annual Wage(renminbi)
http://economix.blogs.nytimes.com/2012/02/24/the-ieconomy-how-much-do-foxconn-workers-make/?_r=0//
3.2x
Topic Deep Dive: Child labor
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Simple, fast process:
1) Get a fake ID2) Apply at a high turnover factory3) Build your work experience4) Get a new job in 18 - 24 months
Topic Deep Dive: Child labor
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http://www.globaltimes.cn/Portals/0/attachment/2011/dff54b7e-bb85-4111-8512-38c74b8061c3.jpeg
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http://cache.boston.com/universal/site_graphics/blogs/bigpicture/recess_03_18/r14_18219891.jpg
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http://static01.nyt.com/images/2012/01/22/business/apple/appple-articleLarge.jpg
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http://cdn1.i-scmp.com/sites/default/files/styles/980x551/public/images/methode/2016/03/28/38bb97d0-f4ae-11e5-91e4-cb0759506578_1280x720.jpg?itok=jEtObqSI
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https://tailgrab.org/u/2009/03/edward-burtynsky-china-manufacturing.jpg?1754ad
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CASE STUDY
• Background:• Value Chain – Who cares and why• Supply Chain Sustainability• Special Features• Deep Dive: Child Labor
• The case of Allophone
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One of your classmates, Sam Li, has just landed a great job at the new, cool, startup allophone.
As we all know, allophone are coming up with the next best handheld device…..
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http://www.digitaltrends.com/mobile/polytron-unveils-clear-cell-phone/
…..the Air. A transparent phone
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The microlithography patent for the technology
to make the Air is owned by allophone.
MegaCom have been contracted to assemble the device
Only MegaCom, the worlds largest phone
manufacturer, can make the Air at the required
quantity and shipping dates
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MegaCom Factory, Shanghai
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Two days before the launch of the Air your
friend Sam calls you with a problem
has agreed to carry the phone in Thailand only after a social compliance audit of MegaCom, Shanghai
The audit had some disturbing findings
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The MegaCom, Shanghai audit found that 12 out of the 13,000 employees at the factory were found to be underage.
The 12 employees were all 15 years old
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Due to your experience you have been called in to advise Allophone and MegaCom on strategy
They are considering the following strategic options:
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Options Under Consideration
Option Detail Negatives
Delay the launch
Continue with MegaCom after they fix the situation
-Market share loss-Time loss-Increased costs
Admit faultDe-source MegaCom and find another, more socially compliant, factory
-Technology “lock in”
Ignore the press
Look for other phone carrier in Thailand. Wait for the media storm to pass
Does allophone have the reputation assets to spend?
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Questions
What is your preferred option?
Why?
Is the Child Labor content of the phone Materialto your decision?
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MATERIAL41,653,137 kg
23072 tons23.07 thousands (tons)
12 years per ton of material276.86 years to use all material
CHARITY 223,000,000,000 SEK in 2015 sales
€ 23,588,198,313.53 2015 in euro sales€ 833,062.00 charity
0.00353% % of sales
http://hm.charitystar.com/en/home/
https://qz.com/662031/is-hm-misleading-customers-with-all-its-talk-of-sustainability/http://www.rapidtables.com/convert/weight/kg-to-ton.htmhttp://sustainability.hm.com/content/dam/hm/about/documents/masterlanguage/CSR/2015%20Sustainability%20report/HM_SustainabilityReport_2015_final_com_5.pdf
H&M Calculations