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July 14, 2011
ICCR Launches Initiative to Improve Social Sustainability Measures
    by Robert Kropp

The Social Sustainability Resource Guide argues for a focus on long-term impacts of corporate activities in communities, and emphasizes a multi-stakeholder approach in addressing social issues.

Of the three pillars of ESG, environmental and corporate governance issues have been addressed more frequently and with greater success by companies and investors, in large part because successful outcomes can be more easily measured. Social issues, on the other hand, have tended to gain less attention, even though—as the recently published Millennium Development Goals Report 2011 states—"accelerated action on the goals requires economic growth that is sustainable, inclusive and equitable…achievement of the MDGs will require a rejuvenated global partnership."

Recognizing that few companies devote as many resources to social impacts as they do to the environment, the Interfaith Center on Corporate Responsibility (ICCR) has published a document which, according to Rev. David Schilling, the director of human rights for ICCR, "is a platform for learning and sharing experiences to help move the needle on how to measure social sustainability impacts, and for working collaboratively to deal with the huge Millennium Development Goals (MDGs) areas."

The Social Sustainability Resource Guide (SSRG) states, "While a number of companies have implemented sustainability initiatives, few measure the social impacts of their operations and programs in communities." The Guide seeks to provide direction for corporate implementation and measurement of social sustainability programs.

"We want to know, and companies want to know, if what they're doing is having an impact," Schilling told "We have more than 3,000 companies that are engaged in some sort of sustainability reporting, but how do we know what's being effective?"

There are, of course, many reasons for companies to intensify their efforts relating to social sustainability. Their reputations, and even their licenses to operate, can be contingent upon how effectively they address community relations. Their business operations benefit as well, when social issues relating to education, health, and poverty show improvement.

Yet how can the effectiveness of corporate activity relating to social issues be measured? On issues pertaining to the environment, progress can be measured by such quantitative concepts as reduced greenhouse gas (GHG) emissions and cost savings through improved energy efficiency. However, such a quantitative perspective is inadequate when it comes to social issues. As the Guide states, "There needs to be a shift in focus from counting (the number of employees trained or the number of bed nets distributed) to capturing outcomes and long-term impacts."

Using the example of the distribution of malaria nets in Africa, Schilling said, "It's not enough simply to report the number of nets distributed. Tracking over time, do malaria rates go down? In the longer term, does life expectancy go up?"

"All of us—companies, nongovernmental organizations, investor groups—are struggling with how to measure impact," Schilling continued. "The challenge for all of us is to get away from short-term sustainability projects to longer-term relationships that develop community sustainability over time."

At the heart of the Guide is its emphasis on multi-stakeholder collaboration. When corporate social responsibility (CSR) initiatives originate from within companies themselves and fail to take into the account the interests of local individuals, community groups, and nongovernmental organizations, "adequate baseline information regarding social context, and consensus about overall goals and outcomes" will be missing, according to the report.

Instead of merely focusing on corporate performance, the Guide continued, CSR efforts need to account for the impacts of their efforts on community well-being and sustainability, as reported by those who are most affected.

"The social sustainability process has to be multi-party and collaborative," Schilling said. "Answers will not be found by a company devising its own key indicators and applying them to where it has operations. When we're developing measurements, those communities that are most impacted need to be part of the process."

The Guide also contains a number of case studies indicating that while examples of effective social sustainability may as yet be comparatively rare, successful implementation has occurred. In Nigeria, starting in 2005, Chevron replaced the traditional oil company paradigm of "development dumping," or companies alone deciding what communities need, with a Global Memorandum of Understanding (GMOU) process. Chevron's efforts, the Guide stated, succeeded because "local community members were involved from start to finish." Local people were employed for projects in their communities, and community members supplied Chevron contractors with materials.

In the Philippines, PepsiCo partnered with the Wholistic Transformation Resource Centre (WTRC) to form WaterHope, an initiative for bringing safe, clean drinking water to poor communities. The water is more affordable than alternatives on the market, and WaterHope provides free drinking water to schools, churches, health clinics, and public transport stations.

To measure the success of the outcomes of WaterHope, the partners adapted the model created by the London Benchmarking Group (LBG), whose framework helps companies develop benchmarks and measure impacts on community investments. WaterHope has led to the creation of some 150 associated microenterprises, and also initiated health and education community development programs.

A time-tested strategy for strengthening communities that has often been employed by sustainable investors is shareowner activism, and the reports details how Domini Social Investments engaged with the US steel company Nucor to address slave labor in its Brazilian pig iron supply chain. As a result of Domini's engagement, Nucor committed to a number of policies to ensure that its supply chain was free of forced labor, and also agreed to publish annual progress reports on the implementation of its policies.

The Guide concludes with a number of recommendations for investors, companies, nongovernmental organizations (NGOs), and governments; however, as Schilling said, "This resource is not the end of the story. Investors can't do it alone, companies can't do it alone, and governments can't do it alone."

Schilling told that ICCR is scheduling a series of webinars for members, companies, other key stakeholders, and mainstream investors as well, perhaps through collaboration with the PRI Clearinghouse of the United Nations' Principles for Responsible Investment Initiative (PRI).

"It's important to not just reach the ICCR family but the broader community of mainstream investors as well," Schilling observed.


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