Corporate Social Responsibility: Lessons Learned · Corporate Social Responsibility: Lessons...

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Corporate Social Responsibility: Lessons Learned Final Summary Report

Transcript of Corporate Social Responsibility: Lessons Learned · Corporate Social Responsibility: Lessons...

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Corporate Social Responsibility: Lessons Learned

Final Summary Report

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Corporate Social Responsibility: Lessons Learned Summary Report

Contents

Contents 2 Acknowledgements 3 1 Executive Summary 4 2 Study Context and Objectives 9 3 Methodology 12 4 Highlights of Company CSR Activities 17 5 CSR Program Areas 27 6 Business Case for CSR: Key Drivers and Benefits 35

6.1 Business Benefits of CSR ...................................................................................................35 6.2 Risks of Not Adopting CSR...............................................................................................40

7 Change Management: Success Factors and Challenges 44 Vision and High Level Commitment to CSR .......................................................................45 Skills, Tools and Information..................................................................................................49 Incentives, Motivational Factors and Employee Buy-In.....................................................50 Resources ...................................................................................................................................51

8 Role of Government in Supporting CSR 54 9 Conclusion 57 Appendix 1: General CSR Interview Outline 59 Appendix 2: Company Contacts 63 Appendix 3: External Viewpoints 66 .

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Acknowledgements

This report was undertaken for the Interdepartmental Working Group on Corporate Social Responsibility. The Working Group – led by Natural Resources Canada – comprises a number of Federal Government Departments including Environment Canada, Fisheries and Oceans Canada, Industry Canada, Transport Canada, the Department of Foreign Affairs and International Trade, and the Policy Research Initiative. Kevin Brady, Wylie Thomas, and Jennifer Clipsham of Five Winds International, with the support of Malcolm Smith of Hemmera Envirochem, conducted the study. The study was made possible through the generous cooperation of the participating companies who took the time to share their experiences and expertise. Their open sharing of information will assist the Working Group in working cooperatively with industry in the future to facilitate the adoption of corporate social responsibility within Canadian industry. The names of the individuals interviewed are contained in Appendix 2 of this report. For more information on this study please contact: Jim Frehs Sustainable Development and International Affairs Corporate Policy and Portfolio Coordination Branch Natural Resources Canada [email protected]

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1 Executive Summary

This study documents the experience of companies that have developed programs or activities that address the elements of corporate social responsibility (CSR). The study is part of a larger federal Policy Research Initiative (PRI) on sustainable development, being undertaken to look at key policy issues facing Canada in the short and long term. The steering committee for the project is comprised of representatives from Natural Resources Canada, Industry Canada, Environment Canada, Department of Fisheries and Oceans, Department of Foreign Affairs and International Trade, Transport Canada and the Policy Research Initiative. The results of the study will assist to further guide industrial policies and program development to ensure a strong and competitive Canadian economy. The purpose of the case study component of the project was to better understand the drivers, implementation approaches, challenges and barriers facing companies as they attempt to advance CSR, and to explore the role of government in promoting CSR. The report consists of two parts: 1) this summary report; and 2) ten individual company case studies. With the exception of the context section of this report, there has been no attempt to define CSR or look at broad drivers and trends other than those identified by the companies who participated. For detailed descriptions of the drivers, benefits, challenges and success factors, readers are encouraged to read the individual case studies. A companion paper to this study entitled Rising Expectations: Corporate Social Responsibility, explores these issues in more depth. The framework for the study is based on a modified version of the Canadian Business for Social Responsibility guidelines on CSR, which organizes CSR into key program areas. The study proponents selected this framework and participating companies were asked to highlight the program areas where they felt they were particularly strong. The framework groups CSR activities into the following nine program areas: community and broader society; employees; customer or product stewardship; environment; stakeholder engagement; reporting and communications; shareholders; suppliers; governance / code of conduct. A more detailed description of CSR and examples of activities that make up these program headings are provided in Section 5 of this report. Ten companies participated in the study (box 1). The companies were selected to reflect a cross-section of sectors and a range of understanding and implementation of CSR practices. For each case study, initial research was conducted on the company, which was followed by interviews with key managers, as well as external stakeholders. The information

Box 1 Company Studied Sector Teck Cominco Metals and Mining DuPont Canada Chemicals Husky Injection Molding Manufacturing Home Depot Canada Retail Weyerhaeuser Canada Forestry Canadian Pacific Railway Transport Nutreco Canada Fisheries Syncrude Oil and Gas VanCity Credit Union Finance TELUS Telecommunications

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gathered was written up in a case study format and reviewed by the companies for accuracy. It is important to note that the study has not attempted to evaluate or judge the performance of participating companies. The independent verification of the information contained in the case studies was beyond the reach and resources of the current survey, and was not the aim of the research. Instead, the study is an attempt to document the experiences and challenges of implementing CSR from the perspective of the participating companies. It is hoped that these findings will make a contribution in understanding the issues facing companies from their perspective as they attempt to advance CSR. The methodology of the study is described in detail later in this paper. Readers are encouraged to familiarize themselves with that section to better understand the scope of the study’s findings. The study proponents recognize that no one company can exemplify best practice in CSR. By telling a range of stories from a cross-section of sectors, it is hoped that the study will help the reader understand the complexities, challenges and opportunities facing organizations as they implement CSR. Key findings of the study were: Terminology There was a range of interpretations of CSR among companies, and each company is at a different stage of implementation. While some of the firms used the term CSR explicitly (e.g., VanCity, TELUS, Syncrude), many other terms were used including sustainable growth (Dupont), corporate responsibility (Teck Cominco, Nutreco), social responsibility (Home Depot, CPR), corporate citizenship (Weyerhaeuser). One company (Husky Injection Molding) did not have a preferred term, and instead referred to its CSR activities as living out its purpose and values. CSR implementation Companies have adopted a range of strategies, management systems, programs and tools to implement business practices that support CSR. These concepts and tools are most advanced in the environmental field. However, there is considerable activity related to community and stakeholder engagement. Each company was asked to highlight program areas where they believed they had good business practices or programs in place. Case study companies were asked to identify the CSR program areas in which they had some activity. All companies were active in the following areas: Employees; Communities and Broader Society; and, Environment. A majority of companies were also active in Reporting and Communications. For a large number of companies, Governance/Code of Conduct and Stakeholder Engagement had recently emerged as priority areas. Program areas that were less common, and most likely least developed, were Suppliers, Customers and Shareholders.

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Business Case All of the companies had a strong understanding of the business case for CSR, and many had realized tangible results from their CSR efforts. The business benefits identified are shown in Box 2 and included cost savings due to efficiency improvements, enhanced employee morale and accelerated approvals processes, among others (see Section 6.1).

Box 2. Business Value: Drivers & Benefits for CSR

- Reputation / Brand Image (10 / 10) - Corporate Values “Right Thing To Do” (9/10) - Relations With Stakeholders / Dispute Resolution / Issues Management (8/10) - Improved Access to Markets / Customers (8/10) - Expedited Permitting / Relations with Regulators (8/10) - Compliance with Regulation (Environment) (8/10) - Social License to Operate or Grow (7/10) - Cost Savings / Improved Bottom Line (7/10) - Increased Employee Morale and Productivity (7/10) - Changing Stakeholder Expectations (6/10) - Attract and Maintain Skilled Employees (6/10) - Reduced Business Risk (4/10) - Improved Reputation with Investors, Bond Agencies, Banks (4/10) - Stimulate Innovation (4/10) - Input to Strategic Planning & Understanding SD (4/10) Note: Brackets indicate the number of companies out of ten that identified the driver/benefit

The study revealed that the risks of not getting involved in CSR are also clear to many companies. These risks include loss of licence to operate and expand, inability to attracted quality employees and loss of brand reputation (see Section 6.2). Success Factors The case study companies identified a number of success factors for implementing CSR. These include: Vision and High-Level Commitment to CSR—All companies interviewed recognized

that having a vision and high-level commitment was necessary for transforming their organizations and integrating CSR into the way they conduct business. High-level commitment provides leadership for the change process, ensures that the needed resources are made available, and that any barriers to change, such as lack of incentives or skills, are addressed. Two companies had board-level committees responsible for stewarding their CSR activities. For some companies (Husky, Weyerhaeuser, VanCity and Home Depot), commitment to CSR originated in the personal beliefs of their

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founders that being socially responsible was the “right thing to do”. For others, senior management commitment to CSR was a relatively new phenomenon, brought about by external pressures from stakeholder groups or a recognition of the business benefits of CSR.

Skills and Tools—Most companies (eight out of ten) identified skills and tools among the success factors of their CSR programs. Surprisingly, few explicitly identified specific tools or training programs as a means for developing the needed skills, although all companies had these in place. Four companies (Teck Cominco, Weyerhaeuser, Husky, CPR) mentioned that success depended to some extent on hiring people with the right skills, especially when these skills were innate (e.g., interpersonal skills) and could not be easily taught.

Incentives, Motivational Factors and Employee Buy-In—Seven of the ten companies interviewed reported that corporate recognition programs, bonus or profit-sharing schemes and accountability systems made an important contribution to the success of their CSR efforts. Companies who view their supply chains as part of their own overall performance (Syncrude and Teck Cominco) also use recognition programs to encourage improvement in the performance of their suppliers. Seven companies operated internal training programs geared towards increasing employee awareness and understanding of the company’s vision, values and policies and their relationship to the company’s core business practices. These often include presentations by the president or other senior executives to further drive home the importance of CSR to the company’s business objectives and ensure employee buy-in.

Other success factors noted by the companies included strong stakeholder engagement programs, assigning adequate internal resources to CSR, reporting, and developing a strong business case. The companies noted a number of challenges for implementing CSR including: changing the corporate culture; developing performance measures; and, ensuring continuity of CSR programs in the face of management and staff turnovers. Role of Government Case study companies were asked their views on the role government can play to support CSR. At least half of the companies identified the following roles for government: Develop and / or support programs that help companies with CSR (e.g., roundtables on

CSR; partner with organizations already working in this area, help with developing CSR metrics, etc.);

Act as a role model—communicate what government is doing;

Disseminate best practices (such as this case studies project);

Recognize companies that are leaders in CSR / provide incentives.

Another key role for government identified was to help make sense of competing terms and standards in this area and to clarify what CSR means in terms of expectations on performance.

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Conclusions

This study was conducted in a changing landscape of how stakeholders view the role of the corporation in society. The case studies support the view that stakeholders are taking a broader perspective of corporate responsibility that incorporates not only economic performance, but also environmental and, increasingly, social performance factors. Recent corporate failures have also illuminated the importance of corporate governance practices. At the same time, corporate social responsibility approaches, tools and concepts are becoming increasingly important to companies who want to maintain or increase their competitiveness in the global marketplace. There has been an explosion of definitions and implementation guidance on CSR. While many companies, governments and other policy organizations are taking proactive approaches to CSR, it is clear from this study that implementing CSR approaches within companies represents a significant change management challenge. While the business case may be becoming clearer, implementation of CSR requires more exploration. The drivers for CSR identified by companies in this study provide important information that will help determine the best approach for Canada to take on CSR. However, the case studies have also illustrated that there is still some variation in what exactly CSR means. Different terms such as sustainable growth, corporate responsibility, core values are used to describe activities that fall under the scope of CSR, as it is defined in this study. Work is needed to develop a broader understanding of CSR, and perhaps some measure of consensus on the scope of CSR. Organizations such as Canadian Business for Social Responsibility and the Conference Board of Canada have initiated work to develop some consensus on the meaning and scope of CSR, which will be helpful for defining what the appropriate roles of different sectors of society should be in advancing CSR.

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2 Study Context and Objectives

The globalization of the economy, pressing ecological issues such as climate change, and recent events such as the collapse of WorldCom and Enron are shaping and changing how we view the role of corporations in society. Traditionally, the role of the corporation has been understood primarily in economic terms. Companies provide products and services and, in doing so, they create jobs and wealth. Increasingly, stakeholders (shareholders, investors, communities, regulators, employees, customers and non-governmental organizations) are taking a broader perspective of corporate responsibility that incorporates not only economic performance, but also social and environmental performance factors. These are the sorts of areas that stakeholders are evaluating to determine whether a company is moving toward sustainable business practices and whether a company is conducting its business in an ethical and socially responsible manner. Evidence of this broader perspective on corporate performance can be found in the variety of guidelines and standards that have emerged in recent years (e.g., the Global Reporting Initiative guidelines and SA8000, a social performance standard based on International Labour Organization conventions, Universal Declaration of Human Rights and the United Nations Convention on the Rights of the Child) and a growing interest among financial sector rating schemes that try to identify best-in-class performers (e.g., the sustainability rating schemes developed by companies such as Innovest and Sustainable Asset Management). More recently, the financial collapse of a number of major corporations, and the associated massive loss of shareholder value, have focused stakeholder attention on ethical and transparent governance policies and procedures. A number of organizations are currently developing guidance to improve corporate accountability in these areas (e.g., the OECD’s recent initiative to review, and provide recommendations on strengthening, corporate governance procedures). 1 In response to, and in some cases in advance of, the current situation, a growing number of private and public sector organizations are adopting the term corporate social responsibility (CSR) to describe an organization’s overall commitment to meeting stakeholder expectations on economic, environmental, social and governance performance. Examples of organizations utilizing or investigating elements of CSR include:

• Canadian Business for Social Responsibility ( CBSR) and their Good Company Guidelines for Corporate Social Performance and research on CSR practices;

• The Conference Board of Canada’s Corporate Social Responsibility Initiative. Under this initiative, the Conference Board of Canada and Imagine have developed the CSR Assessment Tool which companies can use to manage, measure, and improve their CSR performance;

• The World Business Council on Sustainable Development’s (WBCSD) report entitled Corporate Social Responsibility: Making Good Business Sense;

1 http://www.oecd.org/EN/document/0,,EN-document-76-3-no-12-36547-0,00.html

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• The OECD Guidelines for Multi-National Enterprises which include a discussion of CSR; and

• The Commission for the European Communities’ Green Paper entitled Promoting a European Framework for Corporate Social Responsibility.

In addition, many private sector organizations use the term CSR to describe their activities in a range of areas such as environmental performance, employee programs, community investment, stakeholder engagement, supply management and others. Many of the world’s biggest companies (e.g., Microsoft, Shell, HP, General Motors, Coca-Cola, IBM, ABB, Alcoa and many others) are also members of organizations such as CBSR and CSR Europe which promote the adoption of CSR practices. The range of proponents advocating CSR has led to a range of definitions and interpretations of best practice. Some recent definitions include:

Corporate social responsibility is the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.2

World Business Council for Sustainable Development (WBCSD)

CSR is defined as operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business.3

Business for Social Responsibility

Corporate Social Responsibility is the overall relationship of the corporation with all of its stakeholders. These include customers, employees, communities, owners/investors, government, suppliers and competitors. Elements of social responsibility include investment in community outreach, employee relations, creation and maintenance of employment, environmental stewardship and financial performance.4

The Conference Board of Canada

Corporate social responsibility is essentially a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment.5

European Green Paper Promoting a European Framework for Corporate Social Responsibility

2 World Business Council for Sustainable Development (WBCSD) http://www.wbcsd.org/projects/pr_csr.htm 3 Business for Social Responsibility http://www.bsr.org/resourcecenter/ 4 Canadian Centre for Business in the Community, The Conference Board of Canada 5 Commission for the European Communities, Green Paper Promoting a European Framework for Corporate Social Responsibility. (COM Brussels, 2001) http://europa.eu.int/comm/employment_social/soc-dial/csr/greenpaper.htm

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As varied as the definitions of CSR are, they possess the following common elements: • Commitment of business—a responsibility or obligation of companies to operate in a

manner that adds value (beyond traditional economic value) to society. • Benefits to society/stakeholders—this is fairly broad, although some of the definitions have

been specific in listing families, communities and employees as the parts of society that should benefit from a company’s operations.

• Ethical behaviour—three of the definitions talk about “ethics”. This ties in with the commitment of business to operate in an ethical manner. However the ethics in these definitions appear to move beyond traditional business expectations (i.e., fair, non-corrupt business practice), and include society’s expectation of what is “acceptable” business practice.

• Environmental performance—although CSR is a broad concept, environmental management/performance is often highlighted perhaps because it is more easily measured.

This study is an attempt to provide Canadian decision-makers with some insights into the drivers and challenges that organizations face as they strive to implement and advance corporate social responsibility (CSR). The objectives of the study are to:

• identify CSR best practices among the case study companies;

• provide insight on how to utilize these examples of best practice to promote actions within Canadian companies that are not actively engaged in CSR; and

• provide recommendations on the role of government in working cooperatively with

industry to facilitate CSR with Canadian industry.

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3 Methodology

In order to fulfil the project objectives, the work was divided into four (4) phases, summarized in the following table and described briefly below.

Table 1: Study Methodology-Four Phases Phase Title Phase 1—Survey Design

Develop Survey Instrument Selection of Candidate Companies and Initial Data Gathering Pilot Test and Revisions

Phase 2—Survey and Detailed Information Gathering Conduct Initial Detailed Company Research Conduct Interviews and Write-Up Case Studies Review of Written Case Study by Company

Phase 3—Data Analysis Analyze Company Case Studies and Summarize Findings

Phase 4—Final Report and Presentation Prepare and Deliver Final Report Presentation of Findings to CSR Working Group

Phase 1—Survey Design The Interdepartmental Working Group on CSR and the study team agreed to a template for the CSR best practices case studies and a survey approach to guide the interviews that were to be conducted with participating companies and their stakeholders. A list of ten companies for the CSR best practice case studies was finalized by the Working Group after initial screens of 55 candidate companies were conducted (recommended by both study team and study sponsors). The ten companies selected for participation were based on a number of criteria. Selection criteria included:

• Company should be committed to, and active in a number of CSR activity areas (e.g. community involvement, employees, environment, suppliers etc.);

• Case studies should reflect a balance of sectors of interest to the Interdepartmental Working Group which included Forestry, Metals and Mining, Energy, Transportation, Manufacturing, Fisheries, Agriculture/aquaculture, Financial, etc.;

• Some companies should have experience with International/Americas operations (e.g., Canadian companies with international operations or U.S. or Mexican companies operating in Canada);

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• Case studies should include a mix of SMEs and large companies; • Some of the case study companies should have operations, experience working in

developing countries; and • Case studies should illustrate the full breadth of CSR. The suite of case studies

should strive to illustrate a full range of CSR approaches being undertaken by companies with more emphasis being placed on ethics/values and social program areas.

Of the ten companies initially selected by the study sponsors to be included in the study, one company declined participation and was replaced by another company from the same sector. Corporate profiles for the ten companies who agreed to participate in the study are summarized in Table 2. Table 2: Corporate profile for each company participating in the study.

Company Profile

Canadian Pacific Railway

CPR has been operating since 1881 and is a North American railway that delivers freight transportation services to all sectors over a 14,000 mile (22,000-km) network in the U.S. and Canada. CPR is based in Calgary, Alberta, employs 15,840 people, and had total revenues in 2001 of $3.733 billion. CPR began a new era in 2001 when, under a proposed reorganization of Canadian Pacific Limited, it became an independent, publicly owned company.

DuPont Canada DuPont Canada is a science company that specializes in the delivery of science-based solutions in markets such as food and nutrition, health care, apparel, home and construction, electronics and transportation. Headquartered in Mississauga, Ontario, the company is actively living the directive of “Sustainable Growth”, under the care of its Chairman and CEO Dave Colcleugh. DuPont Canada was established in 1877 and currently employs approximately 4,000 employees in Canada. DuPont Canada reports business in five key segments: Nylon Enterprise (35 percent of total sales), Performance Coatings and Polymers (23 percent of sales), Specialty Fibres (10 percent of sales), Specialty Materials (14 percent of sales), and Specialty Polymers and Films (18 percent of sales). DuPont Canada is part of the DuPont group of companies that operates in more than 70 countries worldwide (in North America, South America, Asia Pacific, Europe, the Middle East and Africa).

Home Depot Canada

Home Depot was founded in 1978 in Atlanta Georgia, and has grown to become the world’s largest home improvement retailer and the second largest retail chain in the USA with total sales of $53.6 billion in 2001. The company employs a workforce of more than 250 000 “associates” in 1436 retail locations of which 83 are located in Canada. Home Depot also operates in Mexico, Chile and Argentina.

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Table 2: Corporate profile for each company participating in the study.

Company Profile

Husky Injection Molding

Husky Injection Molding Ltd. is a Canadian supplier of injection molding systems to the global plastics industry. Customers use Husky’s equipment to manufacture a wide range of plastic products such as soft drink and mineral water bottles, food containers, technical products and automotive components. The company serves customers in over 100 countries from approximately 41 sales and service offices around the world. The three major manufacturing facilities (or campuses) are located in Bolton, Ontario; Dudelange, Luxemburg; and Milton, Vermont and main markets for Husky are the USA, Europe, Latin America and Asia. Husky’s worldwide sales for the fiscal year 2001 were $640 million and the company employed more than 2800 people worldwide.

Nutreco Canada (Marine Harvest)

Nutreco, which stands for Nutrition, Ecology and Economy, is a global foods company with two major business streams: agriculture (60%) and aquaculture (40%). Nutreco is headquartered in the Netherlands and has operating companies in over 20 countries, including the Netherlands, Spain, Germany, Canada, Chile, France, Portugal, Poland, Chile, France, Scotland, Belgium, Hungary, Norway, Australia, and the USA. Nutreco’s sales in 2001 were EUR 3,835.3 million and the company has approximately 11,000 employees worldwide. Marine Harvest operations in Canada have only a few hundred employees.

Syncrude Syncrude Canada Ltd is the world’s largest producer of synthetic crude from oil sands. In 2001, the company produced 81.4 million barrels of sweet crude oil—the equivalent of 223 000 barrels a day—and supplied Canada with 13 percent of its petroleum needs. The company’s revenues in 2001 were $3.2 billion. Syncrude’s operations are located on the Athabasca Oil Sands Deposit near the First Nations community of Fort McKay in the Regional Municipality of Wood Buffalo of north-eastern Alberta. In 1983, Syncrude moved its headquarters from Edmonton to Fort McMurray in order to be closer to its operations.

Teck Cominco Teck Cominco Limited is a Canadian-based integrated natural resource company whose principal activities are mining, smelting and refining. The company was formed in 2001 through the merger of two companies – Teck Corporation and Cominco Ltd., established in 1913 and 1906, respectively. Teck Cominco employs 6,100 people and has 5,800 shareholders. Teck Cominco’s reported revenue in 2001 was approximately $2.4 billion. Teck Cominco is based in Vancouver and has 9 producing mines in Canada, the U.S. and Peru, and significant zinc-refining operations in Canada and Peru.

TELUS TELUS is one of Canada's leading telecommunications companies having approximately 26,000 employees and revenues of $7.2 billion in 2001. The company dates back to 1990, when AGT (Alberta Government Telephones) was reorganized into TELUS and then sold to the public. In 1999, BC TELECOM and TELUS merged to form the company that exists today, headquartered in Vancouver, British Columbia. TELUS provides local, long-distance and wireless services; high-speed data networks; advanced data, Internet and e-commerce solutions; and multimedia, advertising, mapping and information services.

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Table 2: Corporate profile for each company participating in the study.

Company Profile

Vancouver City Savings Credit Union

Vancouver City Savings Credit Union is Canada’s largest English-speaking cooperative financial institution. VanCity started out modestly in 1946, with total assets of $22 and hired its first employee in 1952. By 2001, it had 1600 employees, 39 branches throughout the Greater Vancouver area, Victoria and the Fraser Valley of British Columbia, and a lending portfolio of $6.7 billion, representing 90 percent of total consolidated assets of $7.5 billion. As a financial cooperative, VanCity subscribes to the cooperative principles of the International Cooperative Alliance (ICA), an international NGO whose mandate is to unite, represent and serve co-operatives in a broad range of sectors worldwide.

Weyerhaeuser Canada

Weyerhaeuser is an international forest products company that has four major product/service lines. The company grows and harvests trees; produces and sells forest products – including logs, wood chips, pulp, paper and packaging; operates a business to collect and recycle wastepaper, boxes, newsprint; and builds single and multi-family homes, and develops land. The company now employs approximately 58000 people in 18 countries, and generated $14.5 billion in sales in 2001. Weyerhaeuser Canada has grown through acquisition significantly over the past 15 years and now employs approximately 11 500 people. The company is headquartered in Washington, USA, and has 168 manufacturing facilities in North America, Asia, Europe and New Zealand.

The interview questions and case study template were pilot tested with Teck Cominco, a Canadian-based integrated natural resource company based in Vancouver. Results of the pilot test were presented as an interim report to the Interdepartmental Working Group on CSR for comments and feedback to ensure that the interview approach taken yielded the desired outcomes. After making a few required changes, the study team proceeded with the pilot case study as the model for the full information-gathering exercise and documenting of the remaining nine company case studies. Phase 2—Survey & Detailed Information Gathering Comprehensive case studies of ten companies active in CSR implementation (listed in Table 2) were developed through a combination of literature research and interviews with key personnel in the case study companies. Members of the Interdepartmental Working Group on CSR sat in on and participated in each interview. The names of the individuals interviewed are contained in Appendix 2 of this report. In many cases, follow-up interviews were required with other company representatives who could provide more insight into certain CSR program areas. During the interviews, companies were asked to provide names of stakeholders that the researchers could contact for outside opinions on company performance. Where these were provided, short follow-up interviews were conducted, quotes from which are provided in Appendix 3.

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Phase 3—Data Analysis Information gathered during the case study writing process was further analyzed to look for common trends, drivers, benefits, best practices, success factors, barriers, challenges, and lessons learned with the perspective to look for policies or approaches the Canadian government can take to promote CSR in Canadian companies operating domestically and abroad. Phase 4—Final Report and Presentation The outputs of Phases 2 & 3 were assembled into a draft report that was reviewed by members of the Interdepartmental Working Group on CSR. The final draft incorporated the feedback and comments received from the Working Group. Five Winds International briefed the Interdepartmental Working Group on CSR on the key findings from the study and gave some recommendations as to how the government can promote and support CSR in Canadian industry operating both domestically and abroad. Study Limitations:

• Because the selection criteria used for determining candidate case study companies was so broad, all of the case study companies were at different stages of CSR implementation.

• Interviews were conducted with only one, or sometimes two representatives of each company. Therefore, the case studies by no means represent everything each company may be doing in the area of CSR.

• No external verification of the information contained in the case studies was done, although in most cases follow-up calls were made with stakeholder contacts provided by the companies.

• There is not a widely held definition of CSR in Canada today and a number of the companies do not use the term CSR to describe their activities. Therefore, while specific aspects of the companies’ activities are directly related to the CSR framework utilized for the study, this does not imply an endorsement of the framework.

• The study focuses on presenting the positive features and elements of a range of CSR initiatives across different companies. Resource and methodological limitations did not provide room to pursue an overall or more comparative perspective of the CSR performance of companies.

• Given that only ten case studies were conducted, conclusions should be interpreted with caution and cross-checked with results from other studies to determine where there is convergence and divergence. If there are no other studies with related results or where divergence occurs, more research would appear to be warranted.

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4 Highlights of Company CSR Activities

The ten case studies provide insight into what CSR means to each organization, the journeys or transformations each organization has gone through, and what each is doing to be a better corporate citizen. The table below highlights examples of CSR practices from the companies. The accompanying text boxes highlight some examples from the case studies that study team considered to be best practice in CSR. Table 3: Exemplary CSR Practices Company Highlights of CSR Activities Corporate Social Responsibility at Canadian Pacific Railway

• Although railways have right of way under federal regulations, the company embarked on an exercise to develop deeper relations with communities along its rail corridor and to proactively address local disputes arising from proximity to its rail lines (e.g., noise, vibration, aesthetics).

• Worked with the Federation of Canadian Municipalities (FCM) and the Canadian Association of Municipal Administrators (CAMA) to develop mechanisms for resolving disputes locally, best practices related to changes in rail operations and guidelines for how municipal governments develop their lands near rail lines. The model is now being developed into an industry-wide standard following the signing of a memorandum of understanding between FCM and the Railway Association of Canada.

• Has developed a number of programs and is working with a number of organizations to reduce accidents related to road-rail crossings, trespassing, etc.

• Conducts regular open houses in communities across the country to discuss community concerns and what the company can do or is doing to address these.

• Has set up a number of toll-free lines which allows it to respond quickly to public concerns regarding rail operations, identify emerging issues and report safety infractions.

Sustainable Growth at DuPont Canada

• Wants to be a sustainability leader in the industry, and works with its customers to bring them along the sustainability curve.

• After meeting the aggressive environmental goals it set itself in 1990, the company has set further definable Sustainable Growth goals for the year 2010, which include economic, environmental and, now, social goals.

• Created a radar chart to measure performance against the pursuits and metrics to meet its 2010 goals. The radar chart is used as a framework for discussion at DuPont Canada business meetings, as a useful visualization or “snapshot” that shows how the company is doing holistically.

• DuPont’s commitment to creating lasting value in communities is

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Table 3: Exemplary CSR Practices Company Highlights of CSR Activities

best illustrated by its ground breaking Social Innovation Enterprise Program. The Social Innovation Enterprise is now a cornerstone of DuPont Canada’s community investment program and represents a significant paradigm shift from a focus on input (what the company gives) to a focus on output (what values it actually creates).

• Launched an Advisory Council to improve understanding of complex sustainability issues and which will help direct DuPont Canada’s implementation strategies for Sustainable Growth.

Corporate Social Responsibility at Home Depot Canada

• Giving back to communities is part of the personal values of the company’s founders. Corporate donations are structured around four priority areas: environment; affordable housing; at-risk youth and emergency preparedness, areas where the company’s line of business can make an impact.

• Successfully created a culture of volunteerism among employees, whose volunteer hours are often used to support the corporate donations program. Team Depot volunteers spent more than 6 million hours in 2001.

• Recognized early that the biggest impacts and, therefore, the biggest difference it can make are associated with the environmental performance of the products it sells, and developed a number of innovative programs to help consumers reduce their environmental footprints by making better choices and using and disposing of products wisely. The programs include: the environmental “greenprint”, a check-list of environmentally preferred products and practices for shoppers; in-store “clinics” and online tips for energy efficiency; support for a public online service that provides information on using and disposing of common household items in an environmentally friendly manner; third-party verification of all products with environmental claims; alternative products developed in partnership with vendors.

• Early adopter of a number of voluntary environmental initiatives. These include the first environmental policy (or “Principles”), in-store energy efficiency programs (US EPA’s Green Lights Program); reverse distribution programs to recycle packaging; and wood products independently certified as originating from well-managed forests.

Purpose and Values at Husky Injection Molding

• Committed to making a contribution to society through community development, evident in the Moose Deer Point First Nations Community sustainable community project, touted one of the first innovative private, public and First Nations partnerships of its kind in Canada.

• Prides itself on actively living out its five core values: Make a Contribution, Proactive Environmental Responsibility, Passion for Excellence, Uncompromising Honesty and Bold Goals.

• Robert Schad, the company’s CEO, is a visionary leader. From the

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Table 3: Exemplary CSR Practices Company Highlights of CSR Activities

beginning his personal vision of the company included not only making money, but also making a positive contribution to society.

• By demonstrating the company’s Purpose and Values, the company has an easier time obtaining the necessary permits to earn its right to operate and expand.

• No real difficulty getting employee buy-in to all aspects of the company’s Purpose and Values because of its practice of introducing the Purpose and Values to prospective employees in the interview phase.

Corporate Social Responsibility at Nutreco Canada (Marine Harvest)

• Committed to partnering with First Nations Communities in Canada and to ensuring a sharing of power between the First Nation and the company through formal business agreements.

• CSR objectives set out in the company’s 2001 Social and Environmental Report are overarching and apply to all operations, yet each company has the autonomy to work toward CSR objectives in its own way.

• Corporate-wide Credo outlines the company’s understanding and acceptance of its responsibilities towards its stakeholders, people and the planet. Nutreco’s Code of Ethical Conduct lays out requirements and expectations of the company and its employees.

• Employee Council Programs are an innovative and effective CSR program in the area of human resource and employee relations.

Corporate Social Responsibility at Syncrude

• Recognized before start-up that its operations would have a significant impact on the local Aboriginal communities, and that if special effort were not made, these communities risked being excluded from the economic boom the industry would bring.

• The company’s goal is to have a workforce where Aboriginal participation is representative of their percent of the local population. The company is now the largest industrial employer of Aboriginal people in Canada.

• CSR activities are founded on a belief in the importance of stakeholder relations to business success and that sustainable development encompasses not only environmental and economic objectives, but also community relations, human rights and social inclusiveness. The company engages with a broad range of stakeholders to ensure that the company (and industry) is able to address any strains on communities and the environment that come with rapid industrial development in a remote area.

• Has a policy of giving preference to local suppliers to ensure the local population benefits economically from the presence of its operations. In 2001, $452 million out of a budget of $1.2 billion was spent locally (i.e., Fort McMurray) of which $92 million was on goods & services supplied by the Aboriginal community.

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Table 3: Exemplary CSR Practices Company Highlights of CSR Activities

• Implements a number of programs to build capacity among its Aboriginal neighbours to maximize their participation in the company’s success. These include special assistant to foster the development of Aboriginal businesses and to help them meet the standards required to supply to the company.

Corporate Responsibility at Teck Cominco

• Approved a Charter of Corporate Responsibility in 2002, following the merger of Teck Corporation and Cominco Ltd. The Charter is translated into a Code of Business Practices to provide guidance to employees at the operations and community level.

• Sustainability Report is structured around the Charter, allowing the company to gauge how well it is living up to its commitments.

• Believes it can contribute to sustainability through application of three broad principles: product stewardship; environmental performance; respect for communities.

• Engages early with communities and stakeholders to agree on sharing of benefits, minimizing disruption to local traditions and way of life, mitigating environmental impacts, plan to ensure sustainability of communities following mine closure and mechanisms for addressing community concerns as they arise.

• Has developed a track record of successful relationships with communities around its mines. These include the NANA Inupiat at its Red Dog Mine in Alaska, the community of Metaline Falls near its Pend Oreille Mine in Washington State, the town of Kimberley near its Sullivan Mine in British Columbia, and communities near its Antamina Mine in western Peru.

Corporate Social Responsibility at TELUS

• Encourages its suppliers to incorporate sustainability into products and services through its Environmentally Responsible Procurement Policy and Practices.

• Set a target to reduce energy consumption per unit of revenue generated (millions of dollars of sales) by 10% by 2007.

• Set a 2005 target to reduce the number of chemicals used by 50% from 2000 levels.

• Life Balance Account provides funding for management employees to purchase any product, service or experience that helps them improve work/life balance (e.g., fitness, home cleaning, pet care, childcare, entertainment, a relaxing get-away, etc).

Corporate Social Responsibility at VanCity Financial

• Statement of Values and Commitments (SOVAC), developed in consultation with stakeholders, clearly articulates credit union’s mission, purpose and values and translates these into commitments for living up to these values.

• Uses the A1000 social accountability, auditing and reporting standard

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Table 3: Exemplary CSR Practices Company Highlights of CSR Activities

to embed SOVAC into core business practices and drive continuous improvement. SOVAC provides the framework for public reporting which shows how the credit union is living up to its commitments.

• Considers itself a values-based organization that balances financial responsibility with making a contribution to the communities and broader society in which it operates, especially those members of the community who are underserved by mainstream financial organizations.

• Developed a number of innovative financial products and services including the first values-based credit card (EnviroCard VISA); the first self-reliance loans to businesses without collateral; first socially responsible mutual fund, and a number of financial products that allows its members to invest according to their personal values.

Corporate Citizenship at Weyerhaeuser Canada

• Acquisition of MacMillan Bloedel reinforced the business case for, and the importance of, having a reputation as a good corporate citizen.

• Code of Ethics and Business Conduct, Our Reputation: A Shared Responsibility, ensures that all employees hold themselves to the highest standards of ethical behaviour and recognize that they have a responsibility to all stakeholders affected by their business.

• Set a goal of having all manufacturing and timberland operations ready for certification to ISO 14001 by 2005.

• Adheres to the principles and objectives of the Sustainable Forestry Initiative (SFI) and the Canadian Standards Association (CSA) Sustainable Forest Management System Standard.

• Developed a formal policy for building relationships with Canada’s Aboriginal peoples in 2002.

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Box 1—DuPont’s Social Innovation Enterprise

After reviewing all areas of the company’s stakeholder engagement programs, DuPontCanada’s business leaders concluded that the company’s approach to communityinvestment was not as strategic or as successful as it could be. The company did not knowif it was having a positive impact or even having the impact it wanted to have on thecommunity groups or NGOs it was investing in. To address this issue, DuPont formed amulti-stakeholder round table including several representatives from non-governmentalorganizations and engaged them in dialogue about what they thought would improvecommunities in general, and what support NGOs could use to enhance their programs.Many NGOs expressed that they lacked a concrete business approach as a means tomaximize value – value in terms of outcomes for pursuits being taken. DuPont recognizedthat it could help NGOs address this need and launched its new Social InnovationEnterprise Program. DuPont realized it could share its expertise with NGOs on how to runefficient, effective business operations. NGOs could in turn assist DuPont with productinnovation by providing DuPont employees with a better understanding of collaborativeprocesses and techniques – the company’s product innovation process depends heavily oneffective collaboration between representatives of several departments. This SocialInnovation Enterprise program is an example that clearly illustrates DuPont’s commitmentto being a good corporate citizen. The company looks for win-win solutions that ensure thecompany is contributing to the communities in which it operates.

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Box 2—Husky’s Commitment to Making a Contribution: The Moose Deer Point Sustainable Community Project

The Moose Deer Point First Nations reserve is very close to where Husky’s CEO Robert Schad’s summer cottage is located in Muskoka Ontario. On many occasions, Mr. Schad had reflected that the conditions the Moose Deer Point people were living in were very poor. There did not appear to be many lucrative employment opportunities on the reserve and there was evidence of social problems. He asked himself, “What could Husky do to improve the health and sustainability of this community”? Mr. Schad sat down with J. Edward Williams, Chief of the Moose Deer Point First Nations community, to discuss possibilities for some sort of sustainable community project. The two men proceeded to launch an indigenous peoples partnership program through the Schad Foundation (Husky’s philanthropy program). With additional funding from both the federal and provincial governments, they were able to construct a state-of-the-art injection molding facility on the Moose Deer Point reserve called Niigon, which means “future” in the local language Ojibway. Niigon is fully owned by the Moose Deer Point First Nations people, and all employees are residents of the First Nation community. Husky will continue to provide know-how and technical support until the facility can be run independently. The facility brings employment opportunities and economic stability to the community and contributes to sustainable community development in other ways as all dividends are reinvested in community social, environmental, wellness and infrastructure projects. This sustainable community project has been touted as the first innovative private, public and First Nations partnership of its kind in Canada.

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Box 3—Helping Communities Sustain Themselves: Teck Cominco’s Pend Oreille Mine Story Metaline Falls is a town of 235 people near Teck Cominco’s Pend Oreille Mine development, in northeastern Washington State. Unemployment in the region is high and the region has gone through a number of boom-bust cycles (a former mine; forestry; and a cement factory that closed). Teck Cominco realized that its mine would be short-lived, on the order of 10 to 12 years, and therefore the impact on the community near the mine would be significant—an influx of people for a short period of time, leading to the typical boom-bust economic environment. Teck Cominco asked itself the question What does the community want?, believing that answering this question would help the company figure out what it could be doing today to ensure a sustained positive impact on the community. Teck Cominco decided to approach the community early in the development process and initiate a dialogue to determine ways that the company could support the development goals and objectives of the community. In 1998, Teck Cominco and the City Council of Metaline Falls formed a committee of 10 to 15 people with broad representation from the community and the company to act as liaison and to develop an economic development plan for the community. The plan that emerged from this process outlined community economic development goals and objectives and identified ways in which the company and the development of the mine could help in achieving those goals and objectives. For example, the company is looking at ways in which mine infrastructure can be used to support economic activities once operation ceases. To support the community’s desire to hire locally, the company has initiated a project with the state-level department of employment to develop a local job bank for the community to facilitate local hire by Cominco’s contractors. The company is also working with the local environmental community to address their concerns and has agreed to do its best to reduce metal loads below those required by the permits. The trust and good will generated between the company and the community has reduced the level of confrontation of the mine development to “just about zero”. This is significant as, under US law, while permits may be granted, they can also be challenged in court. Such challenges can lead to significant delays and costs for project proponents to the point where they can affect the economic viability of projects. As well, the lack of conflict associated with plans to open the mine and the willingness of the company to explore new ways of doing business has encouraged a relationship of collaboration between the company and regulators, which can help with permitting processes. According to Teck Cominco, while effective stakeholder engagement processes have a clear benefit to companies in terms of dealing with regulatory processes, progressive approaches to stakeholder engagement are not just about expediting the process. Effective engagement helps build relationships that support the resolution of other issues that inevitably arise over time. The process has helped reframe the entire debate from “bad mining” and jobs versus the environment to a debate on how “the mine could contribute to the social health of the community”.

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Box 4—Syncrude’s Aboriginal Relations: Earning Its Social Licence to Grow

When Syncrude began construction of its oil sands facilities in the Fort McMurray/ Wood Buffalo region in the early 1970s, it quickly realized that the development of the enormous oil sands deposit would inevitably have a significant impact on the local way of life and the environment. On the one hand, development could bring economic opportunity and an increase in the standard of living to the people of the region. On the other hand, it could create stress on the socio-economic fabric of the local communities. Of particular concern was the effect of development on the region’s Aboriginal people. Thus, in 1974, before operations began, the company’s first president set up a formal Native Development Program and established an Action Plan for Native Training and Counselling. These programs have evolved over the years to focus on developing capacity and self-sufficiency among the local Aboriginal communities that will enable them to compete for business and employment opportunities on an equal footing with the larger population. The programs have been successful in helping the company meet its goal for Aboriginal participation in its workforce to reflect their regional population of 13 percent, making the company the largest industrial employer of Aboriginal people in the country. However, the majority are skilled tradesmen or process or equipment operators. Syncrude is working on a number of fronts to increase Aboriginal representation in management positions. For example, it offers scholarship and other programs to support the pursuit of higher education among Aboriginal youth, diversity / cultural training for non-Aboriginal employees to the dispel myths that can prevent people from reaching their full potential within the organization. Syncrude works with its contractors to increase the number of Aboriginal employees. Syncrude, along with eight other oil sands developers, is working with the Athabasca Tribal Council (ATC) to address five priority issues: environmental; employment and training; physical infrastructure; human infrastructure (health and social development); and long-term benefits. By implementing a number of programs supporting the development of Aboriginal business, Syncrude has managed to steadily increase the share of goods and services it purchases from Aboriginal-owned business. In 2001, the company spent $92 million on goods and services from Aboriginal-owned businesses, equivalent to more than 20 percent of the $425 million purchased in the Regional Municipality of Wood Buffalo. The company recognizes that these efforts are also good for business. The local population represents a huge pool of human resources for the industry, and ensuring their participation in the oil sands economy makes for better relations, a stake in the industry’s success and reduced business risks related to delays caused by lengthy public hearings for project approvals.

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Box 5—Values and Social Auditing: VanCity’s Approach to Embedding CSR in Business Practice

A key challenge for organizations embarking on a strategy of corporate social responsibility is to move from an ad hoc approach to improving social, environmental and economic performance to a situation where these considerations are integrated and embedded into the very way they conduct their business. Among other things, this transformation requires an understanding of how and where they can add value to society (beyond traditional economic expectations of creating wealth and jobs) and ensure continuous improvement, while minimizing any negative impacts. While there is no universally accepted definition of CSR, most definitions emphasize transparency and accountability, and the importance of stakeholder engagement as a prerequisite for understanding societal expectations and identifying what matters most in terms of social, environmental and economic performance. VanCity has been able to successfully overcome these challenges and deeply embed CSR into its core business activities, through the development of its Statement of Values and Commitments (SOVAC), which articulates in clear language the credit union’s mission, core purpose and values, and translates these into a series of six commitments for living out its values. SOVAC guides the credit union’s business decisions and strategies and provides a coherent framework for its social audit and reporting processes. VanCity follows the AccountAbility 1000 (AA1000) standard for its social audit process to drive continuous improvement in living up to its commitments. The social audit is embedded in the organization’s governance and management systems as its findings come out just in advance of the business panning cycle, so that the information can be used to plan the next cycle of business activity. The board of directors sign off on the findings of the social audit report and its broad commitments to action, which are then communicated to the business units who identify concrete initiatives to fulfill the commitments. Reporting at VanCity is driven internally mainly as a management tool for improving performance more than it is by external demands for information (although public reporting is a key component of CSR and social auditing). On the one hand, it is used as an internal management tool for identifying gaps in performance and prioritizing areas for action. On the other hand, it helps further embed CSR within the organization by communicating to staff and members what the company is doing.

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5 CSR Program Areas

The specific CSR activities which companies were asked to consider were organized into nine key program areas. Table 4 below provides a summary of the nine program areas and the range of activities that comprise them. In advance of each interview, companies were asked to select 3 or 4 program areas that they considered to be unique or best practices to which they could speak at length during the interview. Table 4: Elements Included in Key CSR Program Areas CSR Program Area

Potential Elements Included

Community and Broader Society

• Local hires • Local purchasing • Support for employee volunteerism • Work schedules tailored to local

needs • Philanthropy • Social impact assessment • Community consultation

• Community development programs

• Human rights monitoring • Supplier diversity programs • Indigenous peoples programs • Emergency response programs • Cultural sensitivity training for

staff

Employee Programs

• Workplace diversity (especially in management)

• Work-life balance (flex time, etc) • Profit-sharing / share options • Full benefits for part-time employees • Training / career advancement • Incentive programs • Employee assistance programs

• Employee participation in decision-making

• Child labour / human rights • Occupational health & safety • Open communication channels

between employees and managers

• Employee satisfaction surveys • Collective bargaining

Customer/Product Stewardship Programs

• Product stewardship programs • Labelling programs • Health and environmental

Information on products & services • Involvement of customers in

product development

• Customer screening • Communication with customers

on company’s standards (e.g., procurement)

Environment Programs

• Design for environment (development of eco-efficient products)

• End-of-life management (product take-back, recycling,)

• Green procurement program • Internal recycling programs • Toxics/hazardous waste

• Alternative energy programs (purchasing, R&D)

• Resource efficiency programs (water, materials, energy)

• Emissions management (air, land, water)

• Transportation & distribution (logistics, employee

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Table 4: Elements Included in Key CSR Program Areas

management • Environmental evaluation of capital

investments/projects • Greenhouse gas programs

(measurement, reporting, trades, off-set projects)

transportation, information technologies)

• Industrial ecology/by-product synergy programs

Stakeholder Engagement Programs

• Surveys • Joint management committees • Advisory boards

• Web-based communications • Town hall or community

meetings Reporting and Communications Programs

• SD data integrated into annual Reports

• Separate environment reports • Separate SD / CSR reports • Any combination of social,

economic, environment

• Web-Site • Reports tailored to local facility • VCR, TRI, NPRI, etc. • Various reports to government

Shareholders • Any information on activities or programs that the company implements to involve shareholders in non-financial matters.

• Any information on how the company makes information available to minority shareholders (those not holding majority of voting shares or having significant influence over board decisions) that allows them to effectively participate in company decisions.

Supplier Programs • Supplier screening (environment,

working conditions, child labour) • Supplier communications

• Supplier audits—Internal or third party

• Supplier training/ working with suppliers to improve performance

Governance/ Code of Conduct Programs

• Code of ethics • Accountability systems

• Support systems for code of ethics

• Investment screening (Human Rights, Environment, etc)

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Case study companies were asked to identify the CSR program areas in which they had some activity. All companies were active in the following areas: Employees; Communities and Broader Society; and, Environment. A majority of companies were also active in Reporting and Communications. For a large number of companies Governance/Code of Conduct and Stakeholder Engagement had recently emerged as priority areas. Program areas that were less common, and most likely least developed, were Suppliers, Customers and Shareholders. Since time and resources were limited to discuss and document company activities in all program areas, participating companies were asked to select 3 or 4 areas that they considered to be unique to their CSR approach or examples of their best practice to discuss in detail. Table 5 below indicates the areas of emphasis chosen by each company. Table 5: Areas of CSR focused on by each Company

Company Program Areas Selected by Company

CPR Stakeholder Engagement, Environment, Local Communities and Broader Society

DuPont Canada Communities and Broader Society, Stakeholder Engagement, Environment, Reporting

Home Depot Canada Communities and Broader Society, Environment, Employees Husky Injection Molding

Communities and Broader Society, Employees, Environment

Nutreco Canada (Marine Harvest)

Reporting, Stakeholder Engagement, Employees, Environment, Communities and Broader Society

Syncrude Stakeholder Engagement, Employees, Environment, Communities and Broader Society

Teck Cominco Communities and Broader Society, Environment, Stakeholder Engagement

TELUS Communities and Broader Society, Employees, Environment VanCity Financial Communities and Broader Society, Shareholders, Governance and

Conduct, Employees Weyerhaeuser Canada Governance and Conduct, Environment, Stakeholder Engagement

(specifically with Aboriginal Communities), Communities and Broader Society

The following sections provide a brief overview of each of the CSR program areas and some of the highlights from the case studies. Employees Employees have long been considered a key stakeholder for companies, so it was not surprising that all companies interviewed had programs in this area. Employee programs have broadened from basic health and safety programs to now include diversity programs, work-life balance programs and programs to facilitate fuller employee participation in decision making, etc. TELUS feels intuitively that offering programs such as the company’s Life Balance Account and Team Machine programs for employees may also pay off in the long run in terms of increased employee satisfaction and motivation. Most companies concurred that employees who enjoy their work and feel that their employer respects and recognizes their contribution in the workplace tend to be more innovative and dedicated to

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developing solutions to problems. TELUS’s regular Pulsecheck surveys help the company stay attuned to employee satisfaction levels and informs the company on how well its employee programs are working. Employee programs are especially important to companies in sectors that have tight labour markets (Syncrude, Husky, Teck Cominco). Communities & Broader Society All companies interviewed were active in this program area. This is understandable as all of the companies selected for the study had to, at a minimum, have some programs dedicated to Communities and Broader Society. The study sponsors had expressed a desire for more emphasis on the social aspects of CSR in the case studies. Although all companies interviewed had activities in Communities and Broader Society, this is still an emerging program area of CSR, which extends beyond simply donating money to charitable organizations. While philanthropy is still an important way in which companies contribute to communities and broader society, leaders are assuming a larger role in the communities, a role that supports development and involves communities in decision making. For example, Husky Injection Molding believes its Schad Foundation, which donates 5% of its pre-tax corporate profits each year, is important for supporting local environmental and social community initiatives. The company also recognizes that it can make a contribution to society through community development, as is evident in its unique partnership with the Moose Deer Point First Nations People, and the federal and provincial governments. There is some overlap between the Communities and Broader Society program area and the Stakeholder Engagement Program area. However Stakeholder Engagement refers to a company’s communication with a much broader group of stakeholders. Communicating and consulting with local communities is an increasingly important facet of a company’s responsibility to communities. Teck Cominco has learned from its long history with the Sullivan Mine in Kimberley, B.C., that responsible companies—ones that listen to and work with communities—are better able to obtain and maintain their social license to operate. DuPont Canada believes that one way it can add value to communities is to work directly with NGOs and community-based organizations to share expertise in running efficient, effective operations. With respect to community economic or social development, some companies are still grappling to define the roles and responsibilities with respect to those of local or national governments.

Environment Environment was the third area in which all ten companies interviewed were active. Pressure on companies to reduce their impacts on the environment increased in the 1980s and early 1990s, and as a result, the majority of larger companies (e.g., emissions reductions, hazardous waste management, life cycle assessment of products etc). Many companies elected to talk about their environmental programs as best practice areas during the interviews as these programs are well established, performance indicators have been developed, and companies have had opportunity to see the business benefits of their efforts. For example, TELUS indicated that the investments the company made in fuel tank upgrades and alarm systems have already paid off in terms of preventing harm to the environment and avoiding remediation costs and fines associated with the spills. Weyerhaeuser was the first company in the forest products sector to develop an environmental policy. The company is also the only forest products company to be on the Dow Jones Sustainability Group Index and was also

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named North America’s top company in Innovest’s Forest Products Industry EcoValue 21 report of March 2000. Reporting Nine of ten companies interviewed published some type of annual sustainability or CSR report. Although environmental reports have been produced since the 1980s, when companies such as Norsk Hydro pioneered the practice, it was not until the 1992 UN Conference on Environment Development that corporate public reporting on environmental performance began to enter mainstream business practice. The action plan for sustainable development Agenda 21 adopted at the conference called on business and industry to communicate their environmental performance and to report “annually on their environmental records, as well as on their use of energy and natural resources” and “on the implementation of codes of conduct promoting best practice”. The predominance of environment reports over other types of non-financial reports can be attributed in part to a much longer history of collecting such information as part of government-mandated reporting programs. As well, the link between environmental performance and the financial bottom-line are better established, and the benefits of managing environmental performance to companies are reasonably clear. There is an undeniable trend among corporations to expand the environmental report to include other non-financial indicators of performance in a CSR report or sustainability report. The last few years has seen a proliferation of initiatives to develop a common framework for reporting on economic, environmental, and social performance. The Global Reporting Initiative’s Sustainability Reporting Guidelines, one of these reporting initiatives, is gaining momentum with companies. More and more companies (e.g., Shell, HP, ABB, BP) are using the GRI guidelines to structure their reporting programs and organizing their websites to help reduce the burden of filling out the large number of questionnaires on social and environmental performance they receive from financial institutions, investors, NGOs etc. Although most companies in the study pool did not strictly adhere to the GRI guidelines, some companies (VanCity, Teck Cominco) refer to the Sustainability Reporting Guidelines in defining measurement indicators and preparing reports. Nutreco also takes into account the GRI guidelines in developing its Social & Environmental Reports and has received excellent feedback on its first two Social & Environmental Reports

Governance and Conduct Governance is central to the entire concept of CSR. Some key stakeholders expect companies to address their concerns through ethical governance systems and to make those governance systems accessible and transparent to stakeholders. CSR is about aligning corporate business objectives with the expectations of society in general. Companies need to have governance structures in place that allow those issues to be addressed or acted on at the highest level. Among other things, stakeholders are looking for evidence of codes of conduct, rules or statements that outline expected behaviour of employees that are in line with the company’s values. Weyerhaeuser’s Code of Ethics and Business Conduct clarifies the expected behaviour of employees and is an important building block of the company’s corporate culture. The company’s business conduct office ensures that all employees are trained on the code when they join the company and that they continue to receive training related to the code on a

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regular basis as it is revised and new issues arise. Stakeholders also expect that there be mechanisms in place to ensure accountability to these codes of conduct. For example, if a violation of the code occurs, there should be procedures for any employee to bring those issues to light and to provide discipline accordingly. Weyerhaeuser’s business conduct committee produces a brochure that outlines the various avenues available to employees who are seeking guidance or want to report violations. This ensures that employees are well informed and feel comfortable addressing internal issues. Employees can call the chair of the business conduct committee directly or a representative in their jurisdiction to raise any ethical concerns they may have. Recently, pubic attention has turned to corporate governance issues in the wake of corporate scandals such as Qwest, WorldCom and Enron. CSR in general is also being propelled by these corruption scandals. Stakeholder Engagement Effective engagement of stakeholders is often cited as a key component of a company’s overall CSR or sustainability strategy. Corporations now face a situation in which groups with an interest in environmental, economic and social performance have expanded from special interest groups (environmental organizations, shareholders, labour groups) to a broad array of stakeholders (communities, investors, regulators, employees, suppliers, customers) who often see the linkage between environmental, economic and social issues. This has led to a key change in the organization’s view of engagement; in the past companies simply provided information—today many companies are involving stakeholders in decision-making processes. DuPont Canada believes that collaborating with external resources (NGOs, community groups, government, etc.) will help the company better understand sustainability issues and stakeholder expectations of their company. The company has drawn up terms of reference for an advisory council of five external and five internal advisors. Weyerhaeuser believes that stakeholder engagement, particularly with Aboriginal communities, is critical to business success in the forest products sector and has recently developed a comprehensive formal policy for building relationships with Canada’s Aboriginal peoples. Seven of the ten companies interviewed had some form of stakeholder engagement program. All indicated that it was an extremely important program area for their companies, but most admitted that it is a constantly changing area that requires a great deal of organizational change. Many recognize that stakeholder engagement is key to their ability to understand and respond to societal expectations. Many companies also indicated that it is challenging to develop meaningful stakeholder engagement programs that are valuable for companies and also make stakeholders feel as if their contributions are worthwhile and effective. Suppliers Sectors vary in terms of the pressures they are under to address issues in the supply chain. Sixty percent of the companies interviewed had some form of supply chain management program in place. Some sectors have been under greater pressure to develop more comprehensive supplier screening or auditing programs. For example, environmental issues in the supply chain have become a big issue for the electronics and automotive sectors in

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response to recent European legislation restricting the use of certain substances and mandating recycling of products at their end of life. (the End of Life Vehicle Directive, and the Waste Electrical and Electronic Equipment Directive, etc). In other sectors, such as telecommunications, the value chains are more complicated and therefore supply chain management is a greater challenge. The retail industry has come under pressure to address the environmental attributes of the products it sells as consumer interest in this area has continued to grow. Home Depot has responded by being one the first retailers to offer wood products from responsibly managed forests and is now the largest seller of wood products that have been certified by the Forest Stewardship Council (FSC). The home retailer is also expanding its offering of environmentally preferable products and ensures that any environmental claims made by vendors are independently verified. The trend to extend compliance with its values and policies to its suppliers and subcontractors was also apparent in the natural resources sector case studies. Syncrude and Teck Cominco both work with, and monitor the performance of, their subcontractors. These companies are also looking at social issues in their supply chains and sub-contractors. Customers CSR implies that companies look beyond traditional customer complaint and quality assurance processes. The number of stakeholder groups expecting companies to help customers make better environmental and social choices is growing. Many companies are working downstream with customers to improve the environmental and social performance of products and services. Other companies involve customers in the product development process. For example, Husky Injection Molding works with its customers to ensure that the orders customers place with the company make a contribution to society. Husky uses its core values to screen projects and contracts. In another example, after hearing concerns from stakeholders regarding unhealthy homes because of off-gassing of glues in traditional particleboard, and also concerns over the use of hard wood, Home Depot worked with one of its suppliers, DOW Chemical, to create a particleboard made of straw. Home Depot then provided signage in its store on the straw particleboard (as well as about other environmentally friendly products) to help educate consumers about its efforts. CSR programs that focus on customers typically force companies to “think outside the box”. This is an evolving area that has potential to help companies to innovate and change. Shareholders It might be surprising that only one company interviewed had a CSR program directed at its shareholders (VanCity). Shareholders have always been a priority stakeholder for companies in the sense that companies have always been under pressure to show a quarterly increase in share value. In many cases, this is the primary driver for how companies manage their bottom line. CSR now calls on companies to involve shareholders in non-financial matters as well as well as financial matters. As a cooperative, VanCity makes an effort to involve its owners in governance decisions, whether they be financial, social or environmental. The International Cooperative Alliance, of which it is a member, sets out in broad terms the expected behaviour of cooperatives and their relationship to society. Among these principles is a commitment to diversity, democratic decision making and working for the sustainable development of communities. Together, these require that VanCity involve its depositors and other clients—its “members” and, therefore, in a sense, its shareholders—in all aspects of its governance. VanCity has formally articulated this approach in its Statement of Values and Commitments (SoVaC), which, among other things, commits the credit union to

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provide opportunities for its members to have a say in setting the direction of the credit union, which includes decisions pertaining to social and environmental matters.

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6 Business Case for CSR: Key Drivers and Benefits

All ten companies participating in the study identified clear business benefits to becoming involved in CSR, and recognized that there are also risks associated with not addressing CSR. The benefits identified by companies during the interviews are summarized in Table 6 at the end of this section. 6.1 Business Benefits of CSR

The business benefits of adopting CSR practices as identified by the case study companies are described below. Benefits are illustrated with examples taken from the individual case studies. Corporate reputation and enhanced brand image—Good organizational performance in relation to CSR can build reputation while poor performance can damage brand value. All ten of the companies identified good corporate reputation as a key driver, since many of the other business benefits of CSR flow from a good reputation. In particular, Syncrude and Teck Cominco noted that their CSR activities had helped them build good relations with their various stakeholders and that this in turn had helped them on a number of fronts. Among other things, a good reputation affords resource companies their social licence to operate and improves relations with regulators, which help them obtain the required permits for their operations with fewer hold-ups. It also helps attract good employees in what is often a tight labour market. For other companies, such as VanCity, CSR is part of their brand image, which has allowed them to tap into a growing demand for values-based products or services. In the case of VanCity, potential depositors (“members”) may also see the credit union’s CSR work as a reflection of how they will be treated as clients, thereby helping expand VanCity’s client-base. Earn and maintain social licence to operate—For resource companies, reputation as a good corporate citizen determines its social licence to operate and expand. Failing to obtain community support or attracting the ire of the non-governmental community can increase costs by holding up approvals in lengthy public hearings. Syncrude estimates that its failure in the early 1990s to proactively engage residents in one of its development applications cost the company $1.5 million in delays and wasted effort in its development plans. Cominco notes that its efforts to build trust and relations with communities living near in its Pend Oreille mine development reduced the level of conflict to “just about zero”. A nearby mine, that failed to invest in developing relations with its local communities and non-governmental organizations saw its project challenged in court, even after permits had been issued by the relevant regulatory authorities. The company in question invested seven years and $30 million in a mine that never opened. Establish or improve reputation with investors, bond agencies and banks—There is a small but growing trend in the investment community to use environmental and social performance factors to evaluate a company’s suitability for investment. According to Matthew Kiernan, executive managing director of Innovest Strategic Advisors, this is

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because “a company’s environmental and social performance is an increasingly potent proxy and leading indicator” for three typically under-weighted drivers critical to future profitability potential: corporate agility or adaptability; durability of a firm’s competitive advantage; and the quality of its strategic management. In addition to institutional investors, individual investors are using environmental and social criteria to guide their investment decisions. Banks and insurers are also beginning to look at a company’s environmental and social performance and activities to determine risks and liabilities. Companies that can demonstrate they are acting to reduce environmental and social risks and future liabilities can benefit from enhanced credit worthiness and lower premiums. Only a few companies explicitly identified the financial community as a driver, although those that did felt that the importance of this stakeholder group as a driver for CSR and sustainability was increasing. For example, Teck Cominco believes that, in the future, leading companies with best practices in CSR will have more opportunities than their competitors in terms of access to capital, resources, project opportunities and markets. According to Home Depot’s executive vice president of human resources, CSR helps the company in its four goals of being: the neighbour of choice; the retailer of choice; the investment of choice and the employer of choice. Reduce and manage business risks—Managing risk in an increasingly complex market with greater stakeholder scrutiny of corporate activities is becoming essential to business success. Companies are starting to realize that failing to invest the time and resources in understanding stakeholder expectations and address their concerns upfront can increase risks to business such as project delays or cancellations, public relations disasters, and damaged reputations. Recognizing the power of communities and municipalities, Canadian Pacific Railway (CPR) has launched a process to reengage communities at the local level to resolve disputes related to the proximity of residential and commercial neighbourhoods to pre-existing rail lines. This is helping avoid the intervention of courts and the imposition of government regulations which can add to the costs of doing business. CPR notes the experience of a major rail company that has had to put on hold its plans to open an intermodal terminal, perhaps indefinitely, for failing to engage communities effectively. Teck Cominco’s reputation for building successful partnerships with the communities near its mines has helped it avoid the fate of others who have had time spend large amounts of resources and time dealing with communities and other groups that challenge their right to operate, even to the point where these projects become no longer financially viable. Nutreco has had significant challenges dealing with stakeholders in its industry sector. Currently, a number of well-known and respected NGOs are staging a public boycott of the company’s salmon because of environmental and social impacts of its business they believe the company is not addressing. Public boycotts of products are extremely damaging to all company reputations, and Nutreco is trying to manage the boycott by sitting down to work through the issues with the NGOs. Nutreco believes that improving stakeholder dialogue will also work to reduce misconceptions of the sector that have hampered growth for the company in the past. Employee morale and productivity—More than half the companies interviewed noted that their CSR programs contribute to increased employee morale and motivation and these, in turn, translate into greater productivity. Syncrude observed that its good employment practices and safety record demonstrate to employees that the company cares, and this improves labour productivity. Team Depot, the employee volunteer program that is part of Home Depot’s larger corporate donations program, helps reinforce the teamwork culture

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that is a signature of the company’s success as a retailer, and gives individuals the opportunity to demonstrate skills such as leadership that they might not otherwise have a chance to in their day-to-day duties. VanCity has conducted survey work that has shown that its values and corporate culture resonate very strongly with staff. This has advantages in attracting and maintaining good people, keeping them loyal and motivated, all of which translate into better service to their clientele. Attract and maintain employees—There is growing evidence that companies with strong CSR or sustainability reputations often find it easier to recruit and retain high quality employees in tight labour markets. A 1999 study by the World Resources Institute (WRI) and the Initiative for Social Innovation Through Business (ISIB) entitled Beyond Pinstripes Preparing MBAs for Social and Environmental Stewardship found that graduates of MBA programs look at corporate values in addition to other criteria (such as salaries, job responsibilities, etc) in determining where to work. The Teck Cominco and Syncrude case studies support this view. They note that CSR appears to be growing in importance as a factor that influences individual choices of where to work. Syncrude notes that its CSR activities help it deal with potential labour shortages in a market that is becoming increasingly competitive as new capital projects worth $50 billion come on line in the next 15 years. A reputation as a good place to work is also making it easier to attract people to move to a relatively remote region of the country and work in what is perceived to be a relatively dangerous industry. Competition for access to resources—A good track record for managing social and environmental performance and a demonstrated willingness to work with stakeholders to address their concerns can enhance the success of bids when competing with others for access to resources such as energy, minerals and forests. These advantages were noted by Weyerhaeuser, Teck Cominco and Nutreco / Marine Harvest. Teck Cominco believes that increasingly companies with good reputations will have more opportunities than their competitors in terms of access to resources and project opportunities. The company’s good reputation for negotiating and honouring agreements with indigenous groups and communities where they are ensured a share of the benefits (in terms of jobs, royalties, etc) has helped it access mineral rights in new areas. Weyerhaeuser attributes the timely and uneventful acquisition of MacMillan Bloedel in part to the reputation it had earned through its CSR commitment and programs. Access to markets/customers—The majority of companies interviewed felt that their investment in CSR pays off in improved access to markets, including customer loyalty, security in existing markets and attractiveness in new markets. VanCity noted that, although the strictly values-based person—someone who is willing to forego some return on his or her investments to support programs that improve the environment or the lives of others—is probably only a small percent of the total market, they feel that their CSR work nevertheless attracts new depositors as there is evidence that people look at what a company is doing as a proxy for how they will be treated as customers. Dupont Canada believes its programs help develop new market opportunities for the company. For example, Dupont Canada’s public Sustainable Growth Report has actually brought in new consulting work. Corporate values: “the right thing to do”—The majority of companies interviewed identified CSR as being the “right thing to do”. In a number of cases, CSR was very much a part of the corporate identity. Husky Injection Molding sees itself as a leader in its industry

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and wants to maintain this position. Being a good corporate citizen is also a part of the personal values of the company’s president and CEO Robert Schad. At Home Depot, corporate social responsibility has its origins in the values of its co-founders who came from modest backgrounds and believed that a company should give back to the communities that support it. For VanCity, CSR is strongly rooted in its origins as a cooperative committed to working for the sustainable development of communities. The roots of Weyerhaeuser’s corporate culture extend back to the values of the founding families (Frederick Weyerhaeuser being the most prominent). A strong internal driver for the company from the outset was to build a good reputation as its name reflected personally on the family who founded the company. Meet changing stakeholder expectations—An important driver for many companies is the expanding definition of who constitutes a stakeholder and the changing nature of their expectations. Over the last decade, the definition of “stakeholder” has expanded beyond the traditional stakeholder group of governments, shareholders and employees to include environmental organizations, social activists, communities, suppliers, and other special interest groups. This expanded group of stakeholders has become more global in its reach and has a better understanding of business than ever before. More and more, stakeholders want not only to be informed of business’s activities and performance, but also to be involved in setting social and environmental performance objectives. VanCity has made understanding the expectations of its stakeholders and incorporating these views into governance and business planning processes the focus of its CSR work. Changing expectations are a key driver that is encouraging Teck Cominco and others in the mining industry to rethink how they do business. They are under pressure to demonstrate their relevance to society and their capacity to respect and protect values that are important to society. CPR is in the process of re-establishing communications with the communities that neighbour its tracks following years of little direct contact, which created a gap in understanding and increasingly vocal opposition to the rail company’s operations. This is driving an internal reassessment of the company’s role and relationship to the broader environment in which it operates. Cost savings/improve the bottom line—While few studies have been able to conclusively draw a positive correlation between an integrated approach to CSR and bottom-line performance, there are many examples of the business benefits that results from individual program areas that constitute CSR. While most companies interviewed reported that their CSR programs had resulted in cost savings, the majority of these were attributed to environmental programs. DuPont Canada, for example, has realized financial benefits through waste and energy intensity reductions. A partnership between the company and Collins and Aikman, an important customer, resulted in the establishment of recycle “loops” for “fluff” type waste. The project team conducted a comprehensive environmental assessment that alerted the team to an opportunity to divert 9 tonnes of “fluff” waste through recycling, annually. Cost reductions total approximately $15,000 annually. The contribution of investment in social programs to bottom line performance is less well understood. Syncrude’s CEO estimates that the success of its loss management program, which addresses environmental, health and safety, saves the company $150–200 million annually due to improved efficiencies, reliability and insurance costs. Most companies interviewed expressed a desire for more research into establishing the business case for CSR in financial terms.

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Improved relations with stakeholders / dispute resolution / issues management—Most companies cite improved relations with stakeholders as an outcome of their CSR activities. When stakeholders see that companies are open to hearing their concerns and working with them to address them, trust is built which is invaluable to resolving disputes and issues. CPR’s work to re-establish channels of communication with municipalities and communities is helping build the trust that will allow them to move from a situation where disputes are resolved through the courts at a cost to all involved, to a more collaborative approach where these can be addressed and resolved outside the courts. Often this approach leads to innovative solutions that might not have been thought of otherwise. Its demonstration of an eagerness to work with communities helped CPR with a major derailment at Red Deer, Alberta, in February 2001, where the mayor of the city stood up to defend the rail company by saying that the city shared some of the blame for having allowed residential neighbourhoods to be built so close to the rail tracks. Provide valuable input to strategic planning, as well as a better understanding of sustainability issues facing the company—A number of companies noted that stakeholder engagement was important to understanding sustainability issues. VanCity uses the AccountAbility 1000 standard, an international process for accountability, auditing and reporting which emphasizes stakeholder engagement as a means for aligning corporate values and activities with stakeholder expectations. By following the process, VanCity developed its Statement of Values and Commitments (SoVaC), the policy framework that guides the credit union’s business decisions. SoVaC is then used as the basis for its social audit and reporting processes which feed into business planning cycles to drive improvement in the organization’s CSR performance. In this way, VanCity incorporates the views of its stakeholders in its decision-making processes. Dupont Canada believes that collaborating with external resources (NGOs, community groups, government, etc.) will help them better understand sustainability issues and stakeholder expectations of their company. The company is currently developing an advisory council to build understanding of complex sustainability issues, enhance innovation and opportunity, and improve the quality and integrity of outcomes associated with Dupont Canada’s 2010 Sustainable Growth goals. Stimulate innovation and generate ideas—By examining their core businesses through the lens of corporate social responsibility, four companies found opportunity for innovation and developed new business prospects. VanCity has used its focus on values as a source of innovation. It was the first Canadian financial institution to offer socially responsibly mutual funds; a values-based credit card (where a percent of profits is used to fund environmental projects); self-reliance loans to small businesses without collateral; and, a number of products designed to remove barriers to financial services experienced by marginalized individuals. These innovative products have also helped create brand recognition for the credit union and enhanced its reputation. TELUS notes that employees who enjoy their work and feel that their employer respects and recognizes their contribution in the workplace tend to be more innovative and dedicated to developing solutions to problems. Dupont Canada believes that its Social Innovation Enterprise will assist the company with its product innovation. Dupont Canada believes it can learn a great deal from NGOs, especially in terms of the practice of collaboration, as a more intense form of stakeholder engagement. Product and service innovation at Dupont Canada rely heavily on collaborative processes among multi-disciplinary employees.

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Expedited permitting / Improved relations with regulators—Companies that demonstrate they are engaging in practices that satisfy and exceed regulatory compliance can develop better relations with regulatory agencies which can mean less red tape and scrutiny. A number of jurisdictions are beginning to recognize and reward companies that have demonstrated themselves to be socially and environmentally responsible by requiring fewer inspections and paper work, and giving these companies fast-track treatment when applying for operating permits and other forms of governmental permission. All but two companies interviewed noted a link between their CSR activities and improved relations with regulators and governments. Home Depot notes that its reputation of giving back to communities and of being a good neighbour has helped the company obtain permits to open new stores, an obvious advantage for a company that is planning to open 600 new stores over the next three years. Husky recently expanded into Vermont, USA, a state with a particularly tough regulatory environment. By demonstrating the company’s Purpose and Values, the company believes it had an easier time obtaining the necessary permits than might have been the case otherwise. Syncrude and Teck Cominco observe that the increased trust and respect they have developed with regulators has helped make regulatory processes more effective and efficient. CPR’s work to develop local dispute resolution mechanisms in cooperation with the Federation of Canadian Municipalities and the Canadian Association of Municipal Administrators will avoid the need for governments to intervene by imposing top-down solutions 6.2 Risks of Not Adopting CSR

The principal drivers for companies to adopt or embrace CSR have been covered in depth in the discussion above. Several business risks of not adopting CSR were also identified as almost all of the drivers discussed above involve some element of avoiding risk. For example:

Canadian Pacific Railway launched a process to re-engage communities at the local level for resolving disputes as a means of avoiding intervention of the courts and the imposition of government regulations which can add to the costs of doing business. CPR noted that another rail company had had to put plans to open an intermodal terminal on hold, perhaps indefinitely, for failing to engage communities effectively;

Marine Harvest believes that improving stakeholder dialogue will also work to reduce misconceptions of the sector that have hampered growth for the company in the past (consumer boycotts, government moratoriums, etc.); and

Syncrude estimates that its failure in 1993 to proactively engage residents in one of its development applications cost the company $1.5 million in delays and wasted effort in its development plans.

All ten companies interviewed identified clear risks to their business of not adopting CSR. One example from each company is provided below.

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Husky—Given recent air quality crises in Toronto and other parts of southern Ontario, Husky feels it is only a matter of time before regulators are forced to react and pass strict legislation related to air emissions. Companies that are not prepared will be forced to manage the crisis and will have to expend time and money getting up to speed with the leaders who are already meeting and exceeding compliance. Husky is going well beyond compliance to manage its air emissions to avoid this business risk.

Marine Harvest/Nutreco—Nutreco has had to address many international issues (consumer boycotts, seven year moratoriums, First Nations treaty disputes, etc). It recognizes very clearly that the long-term security of the company’s business depends on its social license to operate from communities, regulators, NGOs, consumers and other stakeholders. Nutreco believes that improving stakeholder dialogue will work to reduce misconceptions of the sector that have hampered growth in the past. Therefore the company is investing a lot of time and resources into managing the business risks resulting from not engaging stakeholders effectively.

TELUS—TELUS minimizes business risk using design-for-environment. TELUS took a proactive measure (e.g., installing new fuel management/monitoring system for all fuel storage tanks) even when short-term costs to the company were extremely significant. TELUS indicated that the investment has already paid off in terms of preventing harm to the environment and avoiding remediation costs and fines associated with previous spills.

Weyerhaeuser—Weyerhaeuser recognizes that Aboriginal communities can directly influence the company’s access to resources and are part of the potential workforce. Their needs and perspectives are therefore extremely relevant to the company’s decision making. Aboriginal communities are a source from which Weyerhaeuser draws employees, suppliers, customers and contractors, so the ability to build and maintain effective working relationships makes good business sense. Weyerhaeuser is placing a lot of emphasis on improving its relations with Aboriginal communities because of this obvious business risk.

DuPont Canada—DuPont Canada listed a number of risks associated with not adopting CSR: reputation, employee retention, missed business opportunities or growth in new markets, competitive advantage, and financial performance. The company did not elaborate on any of these in significant detail or provide specific examples. Generally speaking, DuPont tends look at CSR in terms of the opportunities that can be realized from sustainable growth. Teck Cominco—A key driver for Teck Cominco in advancing its CSR program is the perceived lack of progress in the sector in addressing environmental and social impacts of mining and metals production and use. Teck Cominco wants to avoid the business risk associated with being a “laggard”, which it sees as being significant to investors, the financial community, the government and NGOs. VanCity—Primary motivators behind advancement of CSR measures in financial services sector that relate to risk avoidance include: shareholder activism; reputation risk; threat of

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default; lender’s liability; threat of financial loss; genuine concern for environmental impacts; value creation opportunities; and, risk appraisal. Syncrude—Syncrude believes it is avoiding business risk by providing a good quality of life and work environment for employees. As the sector has some difficulty attracting and retaining qualified, skilled employees, this will increase employee morale and productivity, and will make the sector more attractive for new graduates. Labour shortages is a potential business risk in the industry. Canadian Pacific Railway—In addition to the risks associated with poor stakeholder engagement practices (discussed above) the potential for significant accidents involving the transportation of dangerous goods is a real business risk for CPR in terms of reputation and cost. Home Depot—Consumer interest in the environmental consequences of the products they use has grown, which has led to the growth of a large industry to provide environmentally preferable products. If Home Depot does not respond to this demand by offering environmentally preferable products, it faces the risk of losing business to other competitors.

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Table 6: Business Value of CSR

Company Benefits & Drivers

TELUS Weyerhaeuser Syncrude Husky Nutreco Teck Cominco

VanCity CPR

Dupont Canada

Home Depot

Maintain or improve corporate reputation and brand image √ √ √ √ √ √ √ √ √ √

Compliance with government regulation √ √ √ √ √ √ √ √ Earn and maintain social licence to operate √ √ √ √ √ √ √

Improve reputation with financial community: investors, bond agencies, insurance agencies and banks

√ √ √ √

Reduce business risk (e.g., project cancelled, spill, PR disaster) √ √ √ √

Attract & maintain skilled employees √ √ √ √ √ √ Employee morale & productivity √ √ √ √ √ √ √ Competition for access to resources √ √ √ Access to markets/customers √ √ √ √ √ √ √ √ Corporate Values “the right thing to do” √ √ √ √ √ √ √ √ √

Meet changing stakeholder expectations √ √ √ √ √ √ Cost Savings / Improve the bottom line √ √ √ √ √ √ √ Improved relations with stakeholders / dispute resolution / issues management √ √ √ √ √ √ √ √

Provide valuable input to Strategic Planning, and an understanding of sustainability

√ √ √

Stimulate innovation, and generate ideas √ √ √ √ Expedited permitting / Improved relations with regulators √ √ √ √ √ √ √ √

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7 Change Management: Success Factors and Challenges

This section describes the success factors and challenges identified by case study companies as they implement CSR. Table 8 at the end of the section summarizes the success factors for implementing CSR within their organizations. Challenges are discussed as they relate to success factors, since success can be attributed to overcoming challenges.

The success factors identified by participating companies can be loosely organized according to the conceptual model shown in Figure 1 below, which proposes that there are five key ingredients to effect complex change, such as CSR, within an organization. These are that change requires a combination of:

an overarching vision that clarifies the direction in which the organization needs to move. Senior management or CEO commitment is important for ensuring that this vision is embedded within the organization;

internal skills needed to make the transformation, including supporting tools and information;

incentives for changing behaviours to align with the vision and new objectives of the organization. Related to this is the notion of obtaining employee buy-in;

adequate resources assigned to the change effort;

and an action plan that lays on in concrete terms how the change will move forward with responsibilities assigned.

Figure 1 shows the effects of missing elements on the change process. For example, without a clear vision, the transformation process can dissolve into a list of confusing and incompatible projects that can take the organization in the wrong direction or nowhere at all. These five elements are by no means the only way to understand the many factors that can contribute to success in transforming an organization, but they represent one framework for organizing the many success factors identified by the companies interviewed on their journey towards CSR.

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Figure 1—Managing Complex Change

Vision Skills Incentives Resources Action Plan Change

Skills Incentives Resources Action Plan Confusion

Vision Incentives Resources Action Plan Anxiety

Vision Skills Resources Action Plan Gradual Change

Vision Skills Incentives Action Plan Frustration

Vision Skills Incentives Resources False Starts

Source: Modified from Adams, Kingsley and Smith

Vision and High Level Commitment to CSR

All companies interviewed recognized that having a vision and high-level commitment were necessary for transforming their organizations and integrating CSR into the way they conduct business. High-level commitment provides leadership for the change process, ensures that the needed resources are made available, and that any barriers to change, such as lack of incentives or skills, are addressed. Two companies had board-level committees responsible for stewarding their CSR activities. For some companies (Husky, Weyerhaeuser, VanCity and Home Depot) commitment to CSR originated in the personal beliefs of their founders that being socially responsible was the “right thing to do”. For others, senior management commitment to CSR was a relatively new phenomenon, which had been brought about by external pressures from stakeholder groups or a recognition of the business benefits of CSR. These companies noted that senior management commitment can be reinforced by external recognition and awards that tell company leadership that it is doing the right thing. Involvement of senior management in external CSR-related events, either as presenters or participants, also serves to increase levels of enthusiasm for CSR. These activities were particularly useful in obtaining buy-in from those members of senior management who were not 100 percent on board.

Seven out of ten companies had developed some sort of vision for the company—expressed through either a vision or value statement or a set of environmental and social policies—that clarified its role in, and responsibility to, society. Six companies noted that stakeholder engagement processes were important in helping them define their vision and policies and for providing important input into managing performance improvements. All companies supplemented their visions, values or policy statements with guiding principles such as codes of business conduct / ethics or specific commitments for living out their values. For VanCity, a crucial step in its journey towards embedding CSR into its core business activities was the development of its Statement of Values and Commitments, which articulates how

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the credit union will live up to its values and mission. SoVaC provides the credit union with a vision of CSR and a framework for aligning internal activities and behaviour with that vision.

Companies differed in how they communicate their vision or values. For some companies, commitments are reflected in one vision statement or policy, whereas other companies refer to a number of high-level guidance documents as providing the basis for their CSR activities. Table 7 summarizes the format or means of expression that each company uses to communicate its CSR commitments and values to internal and external stakeholders. Table 7: How Companies Communicate their CSR Vision and Values Company How Vision or Values is

Communicated Specific Comments

Canadian Pacific Railway

Corporate Values Statement and Code of Business Ethics.

Values Statement outlines the company’s main commitments, grouped in 5 major areas. 3 areas deal explicitly with company’s relationship to communities.

DuPont Canada

Direction Statement (used for more than 15 years) and now DuPont’s Sustainable Growth Mission

Direction Statement is foundation of CSR commitment. Goals, pursuits and metrics (econ, env, and social) for 2010 have been developed to help DuPont Canada meet its Sustainable Growth Mission.

Home Depot Canada

Home Depot Values (“Values Wheel”). Home Depot does not have a formal CSR policy or vision. However, its Values Wheel spells out its commitment in important CSR areas and provides a focus for the companies CSR-related work.

Husky Injection Molding

Purpose and Values Statement Statement contains 5 core values which influence all corporate strategies and guide behaviour of employees

Nutreco Canada / Marine Harvest

Nutreco Credo and Code of Ethical Conduct

Credo outlines company’s understanding and acceptance of its responsibilities towards people and planet. Code of Ethical Conduct lays out requirements and expectations of company and employees.

Syncrude Vision and Values Statement Values are supplemented by 8 guiding principles that outline expected behaviour of employees.

Teck Cominco

Charter of Corporate Responsibility and Code of Business Practices: EH&S

The Charter contains 6 commitments which guide the company’s activities (strategic), and the Code consists of 11 policy statements designed to help implement the commitments outlined in the Charter (more operational).

TELUS Expressed through various policies on health, safety, ethics, community investment and environment.

In company reports, TELUS has outlined its commitment to CSR as being responsible to communities, environment and its people.

VanCity Financial

Statement of Values and Commitments (SOVAC)

SOVAC provides coherent framework for business decisions and commits to

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Table 7: How Companies Communicate their CSR Vision and Values Company How Vision or Values is Specific Comments

Communicated

continuous improvement of the credit union’s social, environmental and economic performance. SOVAC also establishes scope and boundaries for its social audit process.

Weyerhaeuser

Company Values (developed 10 years ago) have now been translated into the company’s Road Map for Success. Weyerhaeuser also has a code of ethics and business conduct called Our Reputation, A Shared Responsibility.

Road Map sets out company’s business goals and commitments (covers economic, environmental and social goals). The Road Map is intended to provide direction for all employees, also used as management tool to guide and communicate company vision.

Developing Corporate CSR Vision and Values

Most companies acknowledged that they have had corporate values statements and other numerous policies in place for decades, in some cases since their inception (e.g. health and safety policies, human resources policies, etc.). However, the incorporation of CSR principles or fusion of social and environmental commitments together with economic business objectives has been a relatively recent occurrence. Each company interviewed is at a different point in its journey and at a different stage of incorporating CSR into its core business objectives. A number of companies have begun to move toward formally integrating and monitoring progress towards social, economic and environmental commitments in the 00s. Weyerhaeuser’s Road Map for Success and DuPont Canada’s Sustainable Growth Mission, goals, and pursuits were developed around 2000. VanCity also created its Statement of Values and Commitments policy framework in 2000. Teck Cominco developed its comprehensive Charter of Corporate Responsibility in 2001. The individuals responsible for developing these values statements or visions also vary from company to company. At Husky, the company’s Purpose and Values were developed by senior managers and then communicated to employees. For DuPont, the parent company developed the Direction Statement (15 years ago), and the overall Sustainable Growth Mission (in 2000-2001). DuPont Canada however built upon the pursuits and metrics set out by the parent company and added supplementary pursuits and metrics it felt were important to live out its own Sustainable Growth Mission. All business units at DuPont Canada were involved in the development of these pursuits and metrics. Nutreco headquarters developed the Nutreco Credo and overarching CSR objectives to guide each company, yet each company has the autonomy to work towards its own CSR priorities. VanCity and CPR involved as many employees as possible in the development of their corporate wide CSR commitments. Communicating Vision and Values to Employees and Other Stakeholders

Each company acknowledged that there needs to be both formal and informal methods of communicating the company’s CSR vision or values to internal and external stakeholders. Husky places significant emphasis on the fact that living out the Purpose and Values is a responsibility of every employee and these values are introduced to prospective employees in

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the interview stage, even before they are hired. Several companies (Home Depot, Syncrude, Nutreco) indicated that they also introduce the corporate CSR values or vision to employees early on, for example during training for new employees. Syncrude even prints its corporate Vision and Values on the backs of employee identification cards as a means to integrate CSR into all core business practices. Most companies identified that they use other methods -- CEO addresses, newsletters, websites, and CSR or sustainability reports -- to communicate high-level CSR vision and strategies to employees and that it is not enough to simply present the vision or values and expect employees to begin integrating them into daily routines. Companies recognize that it will take time to convey the messages properly, and provide necessary tools, in order for employees to incorporate the vision and values into their business practices. Methods of communicating corporate wide CSR vision or values to external stakeholders (shareholders, media, regulatory authorities, public interest groups, etc.) identified by companies interviewed include corporate reports, websites, newsletters, and presentations at conferences or other meetings such as annual meetings. Nutreco launched a unique initiative to help communicate its corporate wide CSR commitments. Nutreco’s utilizes Corporate Reputation Officers (CSROs), who seek to ensure that all aspects of the company’s business practices are fully communicated through continuous dialogue with all stakeholders. Benefits of Having Corporate Vision or Values

Companies identified several benefits of having a corporate wide CSR vision or values statement. These are described below: Several companies indicated that developing corporate vision or values statements was a good exercise to go through as it is represented an opportunity for employees and executives to get together to discuss key issue areas for the company. Once these are determined, it is easier to decide where to allocate time and resources and keeps employees and management focused on common end goals (even when key individuals come and go). For Teck Cominco, the development of its Charter of Corporate Responsibility came at an important time, during the merger between Teck Corporation and Cominco Limited. The shared development of the Charter ensured that the business objectives of the two companies were aligned, and that the new company integrated existing CSR programs andpolicies. For VanCity, the development of its Statement of Values and Commitments (SOVAC) influenced the company to think about what being a socially responsible corporation means. The company was in the midst of trying to develop an ethical policy when it realized it needed to define its underlying values, what it stood for, before developing more specific policies or action plans. For VanCity, all CSR activities flow from SOVAC. The majority of companies agreed it was also beneficial to have a corporate wide CSR commitment to ensure consistent, responsible, corporate behaviour across all operations, especially for companies who operate globally. These high level statements or policies outline expectations of employees and the company as a whole, regardless of where they operate. This idea of consistency is also important if leaders of business units or departments do not share the same commitments or philosophy on CSR. Having a corporate wide statement or commitment holds all employees and managers accountable.

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The other major benefit of formalizing a company’s commitment to CSR through vision or values statements is moving away from a more ad hoc approach to improving social, environmental and economic performance to a situation where these values and commitments become more integrated into the way these companies conduct business. Three companies, DuPont, Weyerhaeuser and VanCity have taken steps to integrate environmental and social commitments into overall business objectives. The goals, pursuits and metrics associated with DuPont’s Sustainable Growth Mission are quite similar to the goals outlined in Weyerhaueser’s Road Map for Success. Both provide the companies with a framework or direction for all employees and is used as a management tool to guide and communicate the company vision. More importantly, these two companies review these frameworks (Sustainable Growth Mission, Road Map for Success) to evaluate progress towards the company’s commitments each year. Success for these companies is not defined on profits alone, but on achieving or making progress towards other social and environmental commitments. VanCity utilizes a social audit process, based on AccountAbility 1000, to continually improve its performance at living up to its CSR commitments. Action plans and performance targets are outlined in the social audit, and progress towards these (results of audits) is integrated into the business planning process. Imbedding CSR commitments or values into overall corporate business objectives is a definite challenge, but these companies are rising to meet the challenge.

Skills, Tools and Information

Most companies (eight out of ten) identified skills and tools among the success factors of their CSR programs. Surprisingly, few explicitly identified specific tools or training programs as a means for developing the needed skills, although all companies had these in place. Four companies (Teck Cominco, Weyerhaeuser, Husky, CPR) mentioned that success depended to some extent on hiring people with the right skills, especially when these skills were innate (e.g., interpersonal skills) and could not be easily taught. Three companies (Syncrude, VanCity and CPR) spoke of the value of external benchmarking activities and participation in external CSR-related events where they can share success stories with their peers and implementation challenges. Two companies (VanCity and Teck Cominco) use their sustainability reports as an internal management tool to drive performance improvements along the triple bottom line.

Six companies mentioned that success in managing improvement in CSR performance requires setting measurable targets within fixed timetables and clear responsibilities. To work, targets assigned to individuals need to be realistic and achievable. At TELUS, it has been at times difficult to get commitment from employees to meet targets if they feel that the targets are not achievable and that, by not meeting the targets, they will lose points or it will reflect badly on their performance evaluations. This points to the importance of consulting broadly within the organization when setting targets to ensure that there is buy-in for the targets and that those responsible for meeting the target feel they are reasonable and doable. All companies were struggling with defining meaningful and measurable indicators of social performance. For some companies, CSR goals can come in conflict with the performance goals of employees. For example, at Home Depot, this has made it difficult to get buy-in on CSR programs from store and middle managers if their performance is judged on bottom line results.

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Most companies interviewed have solid environmental management systems in place, which have the benefit of a well-developed and well-accepted set of indicators for measuring performance. The majority of companies interviewed do not have equivalent metrics to measure social performance. Without meaningful social indicators it is difficult for companies to monitor performance and incorporate targets into business plans and accountability systems. VanCity which employs a social audit process to manage its social, economic and environmental performance notes that, even when measures have been defined, collecting the needed data is time- and resource-intensive and that companies need help in developing data collection systems that are more efficient.

Incentives, Motivational Factors and Employee Buy-In

Seven of the ten companies interviewed reported that corporate recognition programs, bonus or profit-sharing schemes and accountability systems made an important contribution to the success of their CSR efforts. For example, Husky introduces its Purpose and Values when interviewing potential new employees, which helps ensures that the majority of Husky employees are already supportive and have bought in to the company’s CSR approach to doing business before they even start working for the company. Companies who view their supply chains as part of their own overall performance (Syncrude and Teck Cominco) also use recognition programs to encourage improvement in the performance of their suppliers. CPR’s board of directors introduced environmental performance targets in bonus systems of members of the executive team, and has introduced community relationship development objectives into the business plans of each service area of the company. These service areas must work with the company’s CSR group to resolve two community issues by year’s end. VanCity’s Accountability Report, which reviews the company’s performance relative to its CSR commitments and sets out new commitments for the coming years, clearly assigns each target or action plan to an individual in the organization. As noted above, targets assigned to individuals must be realistic and achievable. Syncrude uses a gain-sharing program to encourage its employees to exceed its EHS targets.

Seven companies operate internal training programs geared towards increasing employee’s awareness and understanding of the company’s vision, values and policies and their relationship to the company’s core business practices. These often include presentations by the CEO and president to further drive home the importance of CSR to the company’s business objectives and helps promote buy-in among employees. Regular communications is an important tool for maintaining the momentum of any change initiative and for increasing understanding of how a company’s vision and values relate to the day-to-day activities of employees. VanCity uses corporate-wide memos, email, voicemails and newsletters to link any initiative or activity discussed in these communications to the credit union’s Statement of Values and Commitments. Three companies (VanCity, CPR and Syncrude) involved their staff in developing their visions and values, which ensures employee buy-in at an early stage.

A majority of companies (eight of ten) identified other activities that help motivate staff and increase the level of enthusiasm for their CSR objectives. TELUS, Syncrude and VanCity all have CEOs who are champions of CSR and use speaking engagements or visits to business

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units and company departments to repeat the message that CSR is good for business. They also take a personal interest in making sure that their employees have the resources and encouragement they need to make change. Sharing success stories and celebrating small wins were also identified by companies as important to maintaining enthusiasm and momentum for CSR among employees, and provides an opportunity to learn from each other’s experiences.

A challenge noted by Teck Cominco and CPR related to changing old habits. Teck Cominco has encountered resistance from project managers as it tries to implement its commitment to using local suppliers and contractors. A natural tendency among people is to use the suppliers and subcontractors that have delivered in the past and with whom they have usually developed good personal relations. Teck Cominco is addressing this by ensuring that procurement staff are brought in early in the mine development process so that they understand the needs and capacities of the community and help educate local suppliers in terms of meeting the needs of the company. For CPR the challenge lies in changing a corporate culture that has been around for more than 120 years and which has for the greater part of its existence been successful without any need to engage in communities. This is compounded by a relatively “old” work force whose average age is 47 years that is set in its ways.

Resources

While no company explicitly identified adequate resources as a success factor, a number expressed concern that not enough resources were made available. CPR, Home Depot and TELUS noted that their CSR programs were in-need of more resources.

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Table 8. Organizational Success Factors Identified

Company Success Factor Identified

TELUS Weyer-haeuser

Syncrude Husky Marine Harvest/Nutreco

Teck- Cominco

VanCity

CPR

Dupont Canada

HomeDepot

High-level Commitment and Vision Senior Management / CEO Commitment √ √ √ √ √ √ √ √ CSR part of governance mandate of company √ √ Values, Vision or Policy Statements √ √ √ √ √ √ √ Recognition for company for good practice—serves to reinforce senior

commitment, that company is doing the right thing √ √ Involvement of CEO, president or senior management in external CSR-

related events—to increase senior management commitment √ √

Values or policy statement translated into clear commitments, expectations or guiding principles such as a codes of business conduct and ethics √ √ √ √ √ √

Formalized stakeholder engagement program / Early stakeholder engagement √ √ √ √ √ √

Skills, Tools & Information Having the “right” people (committed, understand the issues, interpersonal

skills) √ √ √ √

Exposure to different functions in career development to “build holistic employees” √

Sharing best practice among companies / benchmarking / success stories √ √ √

Reporting as an internal tool for managing performance √ √ Various training programs (mainly EH&S) √ √ √ √ Setting measurable targets √ √ √ √ √ √ Performance indicators √ √ √ √ √ √ External benchmarks & guidelines √ Incentives / Motivational Factors / Employee Buy-In Employee Recognition Programs (awards, badges, letters from president) √ √ √ Accountability measures for senior management / responsibility clearly

assigned √ √ √ √ Performance incentives (e.g., gain-sharing) √ √ √ Publishing CSR report as a tool for increasing internal awareness & buy-in √ √ √ Awareness-raising programs geared at employees understanding company

V l CSR h b fi d i √ √ √ √ √ √ √

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Table 8. Organizational Success Factors Identified

Company Success Factor Identified

TELUS Weyer-haeuser

Syncrude Husky Marine Harvest/Nutreco

Teck- Cominco

VanCity

CPR

Dupont Canada

HomeDepot

Values, CSR approach, benefits and expectations Regular communication from CEO to staff on CSR √ √ Having an internal champion—truly committed √ √ √ Share success stories internally motivates staff, shares how-to √ √ √ √ Expose employees and management to stakeholders √ Involvement of staff in development of corporate values √ √ √ CSR firmly a part of corporate identity √ √ √ Resources Adequate resources assigned to CSR programs √ √ √ √ √ Action Plan—Systems and Programs Expectations of employees is clear √ √ Build objective it into business plans slowly √ Management culture views mistakes as an opportunity to learn and improve

programs and policies √ √

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8 Role of Government in Supporting CSR

The ten companies interviewed were all asked how they thought the federal government could support organizations with the implementation of CSR. Table 9 summarizes the main roles that were identified by two or more companies. Any other recommendations that were suggested by only one company can be found in individual company case studies.

Table 9: Potential Roles of Government % of

Companies indicating

Act as a role model—communicate what government is doing 50%

Clarify what CSR means: expectations; make sense of competing terms & standards 40%

Disseminate best practices (e.g., through case studies) 50%

Help level the playing field, to give leaders competitive advantage—e.g., set minimum standards without being prescriptive; enforce regulations 20%

Recognize companies that are leaders in CSR / provide incentives 50%

Promote interdepartmental cooperation and coordination—avoid duplication 30%

Help brand Canada as a leader in CSR 20%

Help define the business case for CSR 30%

Develop and / or support programs that help companies with CSR (e.g., roundtables on CSR; partner with organizations already working in this area, help with developing CSR metrics, etc.)

50%

Encourage public reporting on economic, social and environmental performance 20%

Act as a role model—Half of the companies interviewed indicated that they thought the federal government should be a role model for CSR. Teck Cominco felt that if companies are expected to be better citizens then governments should also meet these same expectations. Husky Injection Molding felt that the government could be a better environmental role model and is pleased with recent priority the government has placed on meeting the targets set out in the Kyoto Protocol. VanCity also felt that government should develop its own CSR programs and follow leading companies (e.g., develop a set of values, specify commitments for how to live out those values, etc.).

Clarify what CSR means—Four companies suggested that the government could help them figure out what exactly CSR means and help clarify what the expectations of

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organizations are under the umbrella of CSR. Dupont Canada believes there is confusion among corporations who are trying to differentiate between competing terms such as sustainability, sustainable development, and corporate responsibility, among others. Weyerhaeuser feels that there may also be a role for national governments to work together on CSR with other international bodies to establish a global CSR standard or code of ethical business conduct so that companies would be clear on what is expected of them and have one internationally accepted code to meet. Disseminate best practices—Half of the companies interviewed believed that government could support organizations in the implementation of CSR by publishing best practice case studies. Disseminating best practice case studies on eco-efficiency and CSR helps companies like TELUS convince its management that there is a business case for CSR. Home Depot and Weyerhaeuser also felt that publishing additional company case studies on CSR helps other companies learn how other companies are tackling similar issues that they are facing. Help level the playing field, build convergence on minimum standards to give leaders competitive advantage—Some companies felt that being socially responsible could put them at a competitive disadvantage vis-à-vis free-riders. At some level, there is a need for a set of minimum standards to level the playing field. Marine Harvest noted that the poor performance of some businesses in the industry tarnished the reputation of the sector as a whole, making it very difficult to enter into constructive dialogue with stakeholders. Dupont Canada feels that government has a role in creating conditions that give competitive advantage to those companies that go beyond compliance. Dupont Canada agrees that regulations are needed in some cases but questions whether it is really worth having regulations when little to no enforcement occurs. Companies that see themselves as leaders do a lot of work to comply with, and go beyond, regulations, while others that put in minimal or no effort to comply with regulations and get away with doing nothing. This puts companies that go the extra mile at a competitive disadvantage. Weyerhaeuser also recognizes that regulations are good in some cases to even out the playing field but cautions that regulations need to be outcomes-based and not too prescriptive. Provide incentives/recognition to CSR leaders—To also support the implementation of CSR practices within companies, 5 companies felt that the federal government should recognize those companies that demonstrate high levels of performance and consistently go beyond compliance. Nutreco suggested that “companies are like people, they need and enjoy getting recognition for hard work. Recognition is the best incentive”. VanCity gave a specific suggestion to expand the Ethics in Action awards across Canada, which rewards and recognizes companies that are good corporate citizens. Currently, the awards program only operates in western Canada. Dupont Canada also believes that positive feedback and recognition go a long way in terms of employee morale, and it also creates an environment where employees want to continue looking for ways to be better corporate citizens. Syncrude felt that governments should provide incentives to companies that go beyond compliance in the form of tax breaks or other financial benefits. Other companies also raised the idea of financial incentives but indicated that government should work together with industry sectors to determine sector-specific incentives.

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Promote interdepartmental cooperation and coordination—Three of the companies interviewed indicated that if the federal government is going to proceed with a CSR strategy or national plan, than the departments should continue to work together and develop a common understanding and approach. Nutreco suggested that better coordination and cooperation among departments could help free up time and resources that the company could then devote to strengthening business operations as well as to being a better corporate citizen. Teck Cominco also reaffirmed this by saying that departments need to be on the same page with respect to a CSR strategy to avoid duplication and overlap. Help brand Canada as a leader in CSR—Two companies (VanCity and Nutreco) suggested that there are great opportunities for the federal government to brand Canada as a leader in CSR. Nutreco put forward the idea that if Canada as a nation marketed itself as a CSR leader, Canadian companies could promote their products or services as CSR friendly and develop competitive advantage internationally. VanCity felt that creating a Canadian brand of CSR would simply be the right thing to do. The Government of Canada could get the word out and be a role model for the rest of the world to model. Developing this type of national CSR image would also provide incentives to attract other companies that are good corporate citizens to Canada. Help define the business case for CSR—Most companies interviewed expressed the desire to have a business case that ties investment in CSR programs to business value. While many companies have strong CEO commitment to CSR and therefore a less pressing need the business case, they all recognized that having the business case would allow them to push the envelope further. The business case is particularly important in times when profits are down and all programs come under scrutiny. TELUS noted that CSR and sustainability are viewed as a way to manage risk, and that having a solid business case could help change the existing mindset to view CSR in terms of business opportunities. Develop and / or support programs that help companies with CSR—Many ideas emerged for specific programs or support that companies need. In an overarching sense, Home Depot suggested that government could coordinate round tables with companies to come up with a national CSR strategy for Canada. More specifically, CPR mentioned that any help with developing CSR metrics and indicators would be valuable, as well as opportunities to be involved in benchmarking studies. VanCity suggested that the government could partner with associations/organizations that provide tools and resources for implementing CSR, and specifically noted that any guidance on how to collect data (especially social indicators as the area is so new) would be helpful. Encourage public reporting—CPR feels that the government can do a lot to encourage more companies to report on their environmental, economic and social performance, without over-regulating on CSR. VanCity also felt that the government should promote more companies to report and offer support to build capacity for reporting. VanCity has learned that reporting is a good internal management tool and that government should get the word out that reporting is more than just a PR tool or a means to increase transparency.

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9 Conclusion

This study was conducted in a changing landscape of how stakeholders view the role of the corporation in society. The case studies support the view that stakeholders are taking a broader perspective of corporate responsibility that incorporates not only economic performance, but also environmental and, increasingly, social performance factors. Recent corporate failures have also illuminated the importance of corporate governance practices. At the same time, corporate social responsibility approaches, tools and concepts are becoming increasingly important to companies who want to maintain or increase their competitiveness in the global marketplace. There has been an explosion of definitions and implementation guidance on CSR. While many companies, governments and other policy organizations are taking proactive approaches to CSR, it is clear from this study that implementing CSR approaches within companies represents a significant change management challenge. While the business case may be becoming clearer, implementation of CSR requires more exploration. The drivers for CSR identified by companies in this study provide important information that will help determine the best approach for Canada to take on CSR. However the case studies also illustrate that interpretations of CSR vary. Different terms such as sustainable growth, corporate responsibility, core values are used to describe activities that fall under the scope of CSR. Work is needed to develop a broader understanding of CSR, and perhaps some measure of consensus on the scope of corporate responsibility. Organizations such as Canadian Business for Social Responsibility and the Conference Board of Canada have initiated work to develop some consensus on the meaning and scope of CSR, which will be helpful for defining what the appropriate roles of different sectors of society should be in advancing CSR. This study was an opportunity to solicit views and experiences from companies operating in North America so that decision makers can better understand the drivers, challenges and benefits of implementing CSR. It also helped identify opportunities (e.g., for training and the development of programs to support implementation) for the Canadian government to facilitate the adoption of best practices by companies further behind on the learning curve. However, the study also demonstrates that even leading companies can benefit from programs that support implementation of CSR. The recommendations from the case study companies on the role of government (see Section 8) are relatively straightforward and they provide guidance to government on the direction governments should take in fostering CSR within Canadian industry. The case studies provide compelling stories and evidence of the importance and benefits of adopting CSR. There is an opportunity to utilize this information to address some of the recommendations on the role of government in CSR. In particular, the case studies are particularly relevant for the dissemination of best practices and the development of the business case for CSR.

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Finally, it should be noted that this study focused exclusively on the positive aspects of CSR. It’s intent was not to take a critical look at the role of industry in society. For example, the case study companies were not challenged on specific negative impacts of their operations, rather the focus of the case studies was on what the companies thought they did well. A critical analysis of what they did not do so well would provide some balance to the results of this study.

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Appendix 1: General CSR Interview Outline 1. Introductions 2. Overview of CSR project & purpose of interview 3. Opening Before getting into the details of Corporate Social Responsibility (CSR) within the company,

could you tell us briefly about your role and responsibilities, and how you came to be in this position?

4. The Journey Perhaps a starting point would be for you to describe "the journey" toward CSR in

________________ (the company)? How did your involvement in CSR begin? What major steps has your organization taken in its evolution towards CSR policy and

programs? What were the significant turning points?

5. Vision and Policy What is the formal company vision and policy toward CSR?

How was this vision and policy developed?

What does CSR encompass for the company (i.e., community relations, employees

relations, environment, governance & accountability, supplier relations etc)? 6. CSR Program Areas The following are program areas for CSR where companies are active. Please think about which you think are best practice areas for your company and select 2-3 to discuss in detail during the interview. Please do not feel limited to examples provided in table below. For the program areas you select to talk about, please consider the following questions. Describe the company’s activities in the areas (identified above). How have they

evolved?

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Have there been any business benefits accruing from this decision? What are they? Can they be documented and demonstrated? What about the costs?

What have been the challenges? How were these overcome? How could they be

overcome? MAIN AREAS OF CSR IN WHICH THE COMPANY IS ACTIVE ( )

Communities & Broader Society

• Local hire • Local purchasing • Philanthropy and priority issues • Health issues (clean drinking water

etc) • Education • Work Schedules Tailored to Local

Needs • Community Consultation • Supplier Diversity • Emergency Response Programs • Indigenous Peoples Programs • Human Rights Monitoring • Community Development

Programs • Social Impact Assessment • Substance Abuse/Family Violence

Employees

• Workplace Diversity (Esp. in Management)

• Work-Life Balance (flex time, job sharing etc.)

• Profit Sharing/Share Options • Full Benefits for Part-time

Employees • Training/Career Advancement • Incentive Programs • Employee Participation in

Decision-Making • Occupational Health and Safety • Employee Satisfaction Surveys • Collective Bargaining • Employee Assistance Programs

Customers / Stewardship • Product Stewardship Programs • Labeling Programs • Health and Environmental

Information on Products & Services• Involvement of Customers in

Product Development • Customer Screening • Communication with Customers on

Company’s Standards (e.g. procurement)

Shareholders • Here we are looking for any

information on activities or programs that the company implements to involve shareholders in non-financial matters. As well, any information on how the company makes information available to minority shareholders (those not holding majority of voting shares or having significant influence over board decisions) that allows them to effectively participate in company decisions.

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Governance / Code of Conducts • Code of Ethics • Support Systems for Code of Ethics • Accountability Systems • Investment Screening (HR, Env’t,

etc)

Stakeholder Engagement • Surveys • Advisory Boards • Joint Committees • Web-based communications • Town Hall Meetings

Environment • Design for Environment

(Development of Eco-Efficient Products)

• Greenhouse Gas Programs (Measurement, Reporting, Trades, Off-Set Projects)

• End-of-Life Mgmt (Product Take-Back, Recycling,)

• Alternative Energy Programs (Purchasing, R&D)

• Green Procurement Program • Resource Efficiency Programs

(Water, Materials, Energy) • Internal Recycling Programs • Emissions Management (Air, Land,

Water) • Toxics/Hazardous Waste

Management • Transportation & Distribution

(Logistics, Employee Transportation, Information Technologies)

• Environmental Evaluation of Capital Investments/Projects

• Industrial Ecology/By-Product Synergy Programs

Public Reporting • SD Data Integrated into Annual

Reports • Separate Environment Reports • Separate SD/CSR Reports • Any Combination of Soc, Econ,

Env’t • Web-site • Reports tailored to local facility • VCR reporting • Various reports to Government

Suppliers

• Supplier screening (Env’t, Working Conditions, Child Labour)

• Supplier Communications • Supplier Audits – Internal or Third

Party • Supplier Training/Working with

Suppliers to Improve Performance

Other?

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7. Change Management Overall, what do you feel have been or will be the main organizational challenges for

your company as it implements or broadens its CSR activities (these could be internal as well as external)?

How has the company had to change to implement CSR activities and how did the

company go about realizing these changes? (Also how will the company have to change in the future?)

8. Role of Government/Other Organizations What role can the government or other organizations play to assist companies with the

implementation of CSR? 9. Wrap-Up What do you feel have been the overall benefits of the initiatives the company has

undertaken so far? Do you feel that having this CSR strategy and undertaking the aforementioned

initiatives/programs has helped or will help the company gain competitive advantage? Other future opportunities?

What do you think the trends will be for companies with respect to adopting CSR

practices? Overall, what will be driving this trend? Are there any additional questions you feel we could have asked?

On behalf of the company, or yourself, would you like to add any final comments?

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Appendix 2: Company Contacts

Company Contact(s) Interviewed Position

1

Weyerhaeuser

Dave Larsen 2nd. Floor 925 West Georgia Vancouver, B.C. V6C 3L2 [email protected]

Vice President Government & Public Affairs

2

DuPont Canada

Jennifer Hooper 505 Front Road Kingston, Ontario K7L 5A1 Canada [email protected] Colleen Brydon Research & Business Development Box 2200 Streetsville Mississauga, ON L5M 2H3

Rhonda Carlin Research & Business Development Box 2200 Streetsville Mississauga, ON Canada L5M 2H3 [email protected]

Director, Corporate Safety, Health & Environment Manager Social Innovation Enterprise Corporate Business Sustainability Resource

3

Nutreco/Marine Harvest Canada

Vivian Krause 1100-1200 West 73rd. Ave. Vancouver, BC V6P 6G5 [email protected]

Business Unit Corporate Development

4

Syncrude

Jim Carter Barbara Shumsky PO Bag 4023

President and COO Manager, Government & Public Affairs

[email protected]

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Mail Drop 1000 Fort McMurray, Alberta Canada T9H 3H5 [email protected]

5

Teck Cominco

Dave Parker 600-200 Burrard Street Vancouver, B.C. V6C 3L9 [email protected]

Manager Regulatory and Public Affairs

6

Husky Injection Molding

Dirk Schlimm 500 Queen Street South Bolton, Ontario Canada L7E 5S5 [email protected]

Vice President Human Resources

7

VanCity

George Scott [email protected] Tim Reeve 183 Terminal Avenue Vancouver, BC Canada V6A 4G2 [email protected]

Senior Vice President, Corporate & Marketing Values Alignment Manager

8

CPR

Tyra Henschel [email protected] Mark Seland Suite 500 Gulf Canada Square 401 - 9th Avenue SW Calgary, Alberta Canada T2P 4Z4 [email protected]

General Manager, Communications & Public Affairs Public Affairs

9

TELUS

Patricia Mackenzie Corporate Environment 32W-10020 100 Street

Assistant Vice President Environment

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Edmonton, Alberta T5J 0N5 [email protected]

10

Home Depot

Mary-Alison Pejskar 426 Ellesemere Road Scarborough, ON Canada M1R 4E7 [email protected] Cathi Cahn Atlanta, Georgia, USA [email protected]

Community Affairs Manager, Canada Manager-Community Relations

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Appendix 3: External Viewpoints

During the main interviews, case study companies were asked to provide the names of stakeholders that the researchers could contact for external viewpoints on participating companies. Where these were provided, follow-up interviews were conducted, from which the quotes that follow were taken. On Home Depot’s work in the community…

Home Depot is a fantastic partner. There is a great fit between Home Depot and Habitat for Humanity which is founded on a common belief that well-run NGOs can make a difference in addressing social and environmental issues and commitment to creating affordable housing in Canada. Home Depot supplies Habitat for Humanity with merchandise for its re-stores, and donates cash and volunteer hours to building affordable housing.

David Hughes, President & CEO, Habitat for Humanity

They have had tremendous support from Home Depot. Home Depot is one of those companies that is really committed to action at the community level. Home Depot has seen the big picture of how they can leverage their support to promote outdoor activities at the local level in Canada. Go for green is very happy with the support and work they have done with Home Depot.

Steve Grundy, Go For Green

Nutreco/Marine Harvest’s Commitment to Partnering with First Nations Communities …

“What really makes the relationship work is the respect that Marine Harvest gives to the Kitasoo First Nation. The success of the relationship is partly a result of the time and effort that the company and the First Nation have taken to learn about each other prior to signing a business agreement”.

Chief Percy Starr, Band Manager and Chief Councilor of the Kitasoo/Xai’ xais Nation.

“Marine Harvest Canada is a leader in CSR among aquaculture companies in BC and is committed to exploring solutions to the challenges facing the sector. All businesses have some impact on communities and the environment. Marine Harvest Canada works hard at understanding the impacts they are responsible for and look for ways to mitigate those impacts. The company has developed an effective partnership with the Kitasoo First Nation that appears to work well for both parties. The partnership has helped turn around the economy of Klemtu where many other coastal communities continue to struggle with higher rates of unemployment.”

Jim Lornie, Mayor of Campbell River, BC, and a commercial fisherman

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On Syncrude’s Approach to Aboriginal Relations and Work in the Community According to Chief Jim Boucher of Fort McKay First Nation, Syncrude made a concerted effort to ensure that community elders had a say in how the land was reclaimed and in the species planted. Chief Boucher believes that “a major success in terms of developing the relationship is hard work and dedication on both sides. It’s not something that happens accidentally.”

“Syncrude is a fine example of a company which truly balances economic, environmental and social imperatives, resulting in a region which is rich in collaborative stakeholder relationships, strong economically and monitored environmentally. It is a pleasure to work with Syncrude”.

Patricia Pelton, CEO, Northern Lights Regional Health Authority, Fort McMurray

These stakeholder verifications affirm that Syncrude is actively living out its Commitments to a Way of Life, designed to assist the Aboriginal communities of northeastern Alberta to maximize participation in the oil sands development. On CPR’s relationship with Federation of Canadian Municipalities… Someone close to the issues at the Canadian Federation of Municipalities was contacted. He commended CPR for taking a lead in an area that was not popular among its industry peers--i.e., to approach the Federation of Canadian Municipalities to work on proximity issues and dispute resolution mechanisms. He noted that the company had brought the issue now to the industry level in the form of an MOU with the Railway Association of Canada. VanCity Credit Union A member of VanCity Credit Union was contacted. She said she was “happy with the service that VanCity provides. They are very accessible to other groups. Services are made available in a number of different languages. At Gay Pride, they (VanCity) advertised with positive images of gay and lesbian couples”. VanCity is “good at extending lines of credit to people in need”. A user of VanCity’s business service was also contacted. She has been a member of VanCity for 10 years, is the manager of a restaurant that is also a caterer and meal provider in the downtown eastside of Vancouver and which serves that community and employs members of the community. She indicated that VanCity helped her set up a project to provide meals to the "subsidized market". They helped her with set-up, marketing, etc. She had very positive things to say about her experience with VanCity. “They (VanCity) are very community focused”.

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Teck Cominco

“Teck-Cominco has been instrumental in the community's mitigation of the anticipated "boom-bust" cycle that is associated with the opening and closing of the Pend Oreille Mine. This planning process, along with Teck-Cominco's open communication with the community, is actually benefiting us in ways beyond our initial goals. The positive impacts of the Selkirk Community Teck-Cominco Planners will continue for many years, and hopefully serve as a model for others in a similar circumstance.”

Jane Reed, Mayor, Metaline Falls, Washington

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