© RAF Feb 2007

UN Global Compact Progress and Values Workshop Module 1 – From Principles to action

Environment Principles 7 -8-9

Ravi Fernando – Strategic CSR Futures/MAS

© RAF Feb 2007

Sustainable development-The World Business Council for Sustainable development

“Organizations must address major social and environmental issues as part of their business strategy because ultimately

it makes good business sense. A business ‘s long term competitiveness – its license to operate, innovate, and

grow- will depend on how it embraces societal challenges.”

–Bjorn Stigson –President -WBCSD

© RAF Feb 2007

• Corporate Social responsibility

“The continuing commitment by business to behave ethically & contribute to economic development while improving the quality of life of the workforce & their families as well as of the community & society at large.”

• Strategic CSR"Strategic investment in sustainable CSR initiatives, which

supports the achievement of an organization’s strategic vision and goals,while impacting its employees, the communities in which it operates and the cause it champions in society"

© RAF Feb 2007Sustainability is the responsibility of all!

International Panel on Climate Change (IPCC) – Feb 2007• Humans are responsible• Temperatures + 1.8 – 4C• Sea levels will rise by 28- 43cmBy end of the century

© RAF Feb 2007

Hotel Marques De Riscal

Rioja, Spain

The Four SeasonsNew York

Hotel Unique Sao Paulo, Brazil

Heritance Kandalama,

Sri LankaThe VigiliusMountain Resort South Tyrol, Italy

Burj Al ArabDubai

The Grand HyattShanghai, China

“Magnificent Seven – icons of modern hotel design”

The Observer (UK) - April 9 2006

© RAF Feb 2007

© RAF Feb 2007

Case study – Heritance Kandalama

• First environmental hotel project in Sri Lanka.

• Initially, the development was met with much public debate as many people living in the relatively pristine and undeveloped region were opposed to any tourism development, as the area is sensitive with respect to nature and culture.

• It was designed and built in a way that complements and enhances the natural environment, while providing the guests with an magnificent view of the surrounding environment.

• Heritance Kandalama is now an internationally recognized example of environmental best practice.

© RAF Feb 2007

Principle 7

Business should support a precautionary approach to environmental challenges.

Design

• Hotel designed into and around the surrounding rock outcrops (including pools and patios).

• Passive solar cooling design utilizing building shading through overhangs, sod roof (retrofit of existing design inprogress).

• Day lighting design throughout

• Open concept design to minimize cooling loads.

© RAF Feb 2007

Principle 7

Materials

• Reclaimed wood products used in construction.

• Minimal use of wall paints.

• Design ensures materials with natural texture.

Water

• Rainwater collection tanks have been introduced with a view to installing more in the future.

• Low flush toilets and fixtures.

• Wastewater generated by the hotel is treated and recycled withina modern and well-maintained on-site wastewater treatment. This is then recycled for irrigation purposes.

• Grey water from filters and softeners in the water treatment plant is collected and used to spray the gravel to reduce the distribution of dust.

© RAF Feb 2007

• Indigenous plants are grown in the hotel nursery and distributed to a network of schools for tree planting initiatives.

• Collaborative partnerships are in development with the Department of Forest Conservation and the government to declare the forest around the hotel as a conservation forest.

• In-house nursery continues to produce indigenous plants for the reforestation program that operates on the 50-acre hotel property and areas outside.

• Kandalama has been central to the rehabilitation of approximately 230 ha of tropical forest.

Principle 8

Undertake initiatives to promote greater environmental responsibility

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Sewage treatment plant

- From sludge to fertilizer…

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Composting

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Principle 9

Encourage the development and diffusion of environmentallyfriendly technologies.

Within the next two years, hotel management expects to meet 40% of its energy requirements through solar energy.

Lamps that are used for more than four hours per day have been replaced with energy efficient fluorescent lamps.

The replacement of incandescent lamps in all public areas with compact fluorescent lamps has saved 75,000 kWh per year.

Key tag activated master switches have been introduced to guest rooms to save energy.

Drivers and guides are instructed to have the engines of the vehicles switched off when the vehicle is parked and awaiting the arrival of guests.

© RAF Feb 2007

Principle 9

• An eco park has been established to demonstrate environmental best practices such as waste sorting out, sewage treatment, nursery, compost pits and library. It is open for public viewing.

• The hot water system of 80 guest rooms using electric heaters has been modified to use steam from the boiler as the heating medium saving 86,500 kWh per year.

© RAF Feb 2007

• ISO 22000 – 1st hotel chain in Sri Lanka

ISO 14001 – 1st in Sri Lanka

First in Asia to win the Green Globe 21 standard

First hotel in the world to win LEEDS (Leadership in Energy and Environmental Design)

Green Leaf PATA award for environment education

Presidential Award for sustainable management

CIMA Community Leader award

PATA Gold award for the concept of eco park

Gold medal for environmental commitment from Thomson

World Travel Market Environmental Company award

Award from Sri Lanka Association for the Advancement of Science

SAGA award for best food & services in the Southeast Asian region.

Redefining industry benchmarks

© RAF Feb 2007

Our Commitment

DevelopmentConservation

Sustainability

© RAF Feb 2007

UN Global Compact Progress and Values WorkshopSpain, February 2007

Module 1 • Key Lessons from developing Strategic CSR in the

Apparel and Plantation sector in South Asia

Ravi Fernando – Strategic CSR Futures/MAS

© RAF Feb 2007

Key Lessons

1)Identify ‘Right’ Strategic CSR program & align with the Global agenda – UNGC/MDG

2)Develop a competitive Strategic CSR framework and program

3) Build alliances for Credibility

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Global Compact –Cluster strategy

•CHEMICAL•COMMERCE & DISTRIBUTION

•CONSTRUCTION MATERIALS

•INDUSTRIAL CONGLOMERATES•METALS & MINING•MACHINERY•PAPER & FOREST PRODUCTS•PLANTATION SECTOR

•TEXTILE, APPAREL & LUXUARY GOODS

•EDUCATION

•FINANCE & INSURANCE

•INTERNET & E-COMMERCE

•IT CONSULTING & SOFTWARE

•MEDIA COMMUNICATIONS & ENTERTAINMENT

•AGRICULTURE

•FOOD & DRINK

•HEALTH CARE SERVICES & SUPPLIES

•PERSONAL CARE & HOUSEHOLD

•PHARMACEUTICALS & BIOTECHNOLOGY

Global compact -Sector clusters

Goal 8”Partnerships“Strategic CSRGlobalPartnership

Goal 7Goal 3Goals 2Goals 1/4/5/6MDG Goals

Environmental sustainability(Tourism/Mfg./Oil/ Automotive)

Women’s Empowerment(Apparel mfg. Fashion Brands)

Education

(Banking & Finance/ITCommunication)

Poverty/ Hunger & Health(Healthcare,Consumer Goods & services)

FOCUS CLUSTERS

© RAF Feb 2007

The Business CaseIndustry• Manufacturing predominantly dependant on female labor 80%• Perception- All Apparel is Manufactured in Sweatshops!!• Consumers demand ethical sourcing• Child labour rampant 18-20% in Asia.• Letters of appointment 80% of Chinese companies don’t

Pregnancy testing • 12-16hour work days

At MAS• 92% of 34,000 employees are women make Lingerie for • No sweatshop conditions & no child labor (18 yrs +)• 20 years of credible employment practices-Transport,AC

facilities,Food

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Employees within MAS;• Career Advancement

Skill and knowledge building training programsIT ,English language,Leadership

• Work-life Balance initiativesSport, Talent & Skill development,Social skills and poise

• Rewarding Excellenceof high-achievers in academics, sports, science, commerce, arts & culture quarterly and the annual “Empowered women of the year award”in each of our plants

Helping Women go beyond their circumstances

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Go beyondGo beyond and its Alignment with Global Forcesand its Alignment with Global Forces

Relevant to Principles 1&6Support & Respect

protection of int’l human rights Elimination of

discrimination in respect to employment & occupation

•AAFA Award for Excellence in Social Responsibility, Women’s Issues

Relevant to MDG #3

Promote Gender equality & empower women

•INSEAD Case study on Go Beyond

•World Business Oct. 2006 Cover

© RAF Feb 2007

•The Business Case -Tea plantation Industry

• Tea plucking dependant on female labor 90%• Perception- Plantation workers are exploited• Consumers demand ethical sourcing• Child labour –an issue in major tea producing nations• Freedom of association an issue • At Kelani Valley Plantations• 16,000 employees,but responsible for 60,000 in the plantations • No child labor (16 yrs +)• 15 years of credible employment practices • 5-7 perches of land for every employee to build a house• Manages –Hospitals,Medical centers,Day care centers..

© RAF Feb 2007

© RAF Feb 2007

Lesson 2 – Strategic CSR Framework

• Develop a Competitive Strategic CSR framework and program

© RAF Feb 2007

MAS Holdings Strategic CSR Framework

Focus –Champion of Women Empowerment in the apparel sector

EmployeesGo beyond

CommunityWomen & YouthGap Go Beyond

SocietyChampion Women's

Empowerment in industry

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Lesson 3 – Build a Coalition for Credibility

• Build credibility in your target markets with your strategic partners

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Global Alliances

UN Agencies USA Europe

•Women’s Edge•UNGC

•UNDP

•UNEP

•ILO

•CCN

•LOLA

NGOs

•World Vision

•Habitat for Humanity

•Stanford

•HARVARD

© RAF Feb 2007

Module 2

Defining Progress

• Vision / Leadership/Priorities/Policies • Internalization to activation • Strategy• Stakeholders

© RAF Feb 2007

164,496.00Ford Motor35

186,597.00Finland32

195,645.20General Motors31

203,401.00Greece30

212,777.30South Africa29

213,199.00Exxon Mobil28

241,832.50Poland27

250,557.30Saudi Arabia24

257,641.50Indonesia23

258,681.00Wal-Mart Stores22

290,109.50Austria21

301,949.80Turkey20

691,876.30India10

979,764.20Canada9

1,649,329.00China7

2,002,582.00France5

2,140,898.00United Kingdom4

2,714,418.00Germany3

4,623,398.00Japan2

11,667,510.00United States1

GDP/Sales ($ million)Country/Corporation

Source: Ranking based on corp. revenue data from Fortune Magazine, October 1, 2005; and GDP data from World Bank World Development Indicators (WDI) Report 2005.56,844.49Bangladesh69

60,704.00Altria Group67

63,859.00Berkshire Hathaway66

64,816.00Home Depot65

65,149.34Ukraine64

67,752.00Verizon Communications63

68,394.96Peru62

73,061.00Hewlett-Packard60

81,300.00American Intl. Group57

89,131.00Intl. Business Machines54

94,104.94Chile53

94,713.00Citigroup52

96,114.84Pakistan51

97,383.93Colombia50

99,468.00ConocoPhillips49

112,937.00ChevronTexaco43

117,548.40Israel42

117,775.80Malaysia41

134,187.00General Electric40

163,004.70Hong Kong, China37

GDP/Sales ($ million)Country/Corporation

Why the private sector?

© RAF Feb 2007

© RAF Feb 2007

ECO LABELS FAIR TRADE LABEL ETHICAL MANUFACTURE

M&S

© RAF Feb 2007

The Champion of Women’s empowermentin Global apparel industry

“The Ethical Bra” –World Business Oct 2006

STRATEGY FOUNDATIONPURITYVERTICALITYUN GC COMMITMENT THE HOME FOE EVERY WORKER CAMPAIGN

© RAF Feb 2007

Winners 2006

© RAF Feb 2007

Acrobat Document

World Business October 2006

© RAF Feb 2007

Go Beyond Strategic CSR (Co-Branded Program Intention)

•Go Beyond Annual Awards Ceremony

•Getting More out of Life

•Empowering women in Entrepreneurship

•Youth in Sustainable lifestyles

•Empowering women in Sport

•Sustainable Manufacture

MAS Go Beyond

•Fashion & Glamour Scholarships

•Beauty culture

•Personal confidence

• Health & Hygiene-Getting more out of life

•English- City & Guilds (UK)

•IT- Gate way

Planed

Unilever Go Beyond Gap Go Beyond Addidas Go Beyond M&S VS Go Beyond

Activated

© RAF Feb 2007

Feel

Goo

dFe

el G

ood

Subject Area Specific TopicsHygiene • Hygiene as a means of healthy living

• Maintenance of good health• Preventing illness• Protection of healthGroup work

Healthy Living • Healthy lifestyle• Healthy diet• Stress management• Menopause• Women’s health issues• Healthy work environment• Improving productivityGroup work

ReproductiveHealth & ChildCare

• Reproductive health• Sexual relationships• Family planning• Contraception• Sub-fertility• Child birth, child care• Popular myths about pregnancy & child birthGroup work

© RAF Feb 2007

Look

Goo

dLo

ok G

ood

Subject Area Specific TopicsBuildingConfidence

• Building confidence through feeling good• Realising skill potential• Exercising the mind• Setting personal goals• Self empowerment through leadership• Social etiquettePersonality Test, Mind games

Skin Care &Grooming

• Understanding different skin types• Grooming routines• Body odour• Dress sense (colour matching / body shapes, etc.)• Saree Drape

Group work – game on matching outfits,demonstrations on grooming

Hair Care • Healthy hair (oiling, dandruff, split ends, etc.)• Home remedies• StylingGroup work – experimental hairstyles

© RAF Feb 2007

• Advancing academic talent & inculcating sustainability• Supports Community University entrant & potential sporting talent • Sustainable development education– UNEP YXC in all community schools

• Advancing Women’s entrepreneurship-• Entrepreneurship development programs

• Rewarding excellence in the community• “Woman of Achievement in the Community”• Best School activating Sustainable development

© RAF Feb 2007

Launch of the Gap Inc.Gobeyond Program

Gap Go Beyond new.exeMay 2006

© RAF Feb 2007

Our Vision for go beyond…to be the “Intel” inside in apparel

• A go beyond label on every garment we make

• “Made by an Empowered Woman at MAS”

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1,550

87

223

187

68

2,44515,377

Sri Lanka – Tea Plantations and CSR

Worker Community -912,000Workers - 310,000Households - 192,300

© RAF Feb 2007

The Valley Range

© RAF Feb 2007

UN Global Compact Progress and Values Workshop

Module 3 – Managing Process

Ravi Fernando – Strategic CSR Futures/MAS

© RAF Feb 2007

The Complex influences impacting Organizational performance

Political Influences –Policy & Infrastructure

Product Markets

Supplier Markets Capital Markets

Organization-Vision -Innovation -Leadership -Offering -Op.ExcellenceSo

ciet

yEnvironm

ent

Strategic CSR Strategic CSR

Competition

Global Influences–Media/NGOs/Activists/UN/WTO/Religion Terrorism

Market InfluencesLabour/legal

•Corporate Engagement - Cosmetic / Regulatory driven / Strategic

© RAF Feb 2007

Multitude of Benefits from Improved Reputation

What benefits does your company reap from building and maintaining its corporate reputation? % of respondents

Source: “Corporate Reputation Watch 2004”; Hill & Knowlton and Economist Intelligence Unit (July 2004)

59%

51%

44%

38%

30%

26%

21%

19%

10%

Ability to recruit and retain employees

Ability to facilitate strategic transactions partnerships

Ability to generate additional sales

Ability to charge premium prices

Enhanced stock performance

Strengthened public and government relationsBetter protection against market fluctuations & competitive attacksLower costs through bargaining power, productivity &

reduced riskAbility to make acquisitions

© RAF Feb 2007

Global Companies are the Least Trusted Organizations

on Societal IssuesTrust in institutions to operate in best interests of society:% indicating “trust”

68

65

52

50

49

43

38

NGOs

UnitedNations

Nationalgovernment

Trade orlabor unions

Domesticcompanies

Press /media

Globalcompanies

Source: “Corporate Social Responsibility Monitor 2004”; GlobeScan Inc. (November 2003 – February 2004)

© RAF Feb 2007

Internalize UNGC principles & Strategy with Top Management and ……

• Internally Win the ‘Minds’ first…then the Hearts!

© RAF Feb 2007

Process…..

• Thereafter, all the Managers/Asst Managers (60) were requested to confirm in writing - that they understand the ’10 Principles’ and committed to upholding them in the estates

assigned to them.

• Awaited till we received confirmation in entirety to apply for the membership - Feb’06.

• Membership was accepted in Mar’06.

© RAF Feb 2007

Process

• Followed by a detailed Memo from the MD to all the Managers + a bound copy containing ’10 Principles of GC – Nov’05– How & why we choose to join the GC– What happens when we get membership– The UN does not audit– How will KVPL maintain membership– What you need to do

• Managers were given about 3-4 weeks to study the principles and to raise any concerns.

© RAF Feb 2007

© RAF Feb 2007

Unveiling ceremony

• Global Compact plaque is being unveiled by then Deputy Chairman of Hayleys (Now Group Chairman/CEO), Mr Tanky Wickremeratne & Executive Chairman of Mabroc Teas, Bandula Jayasekera in the presence of Prof Klaus Leisinger, Special Advisor on Global Compact to the UN

Secretary General.

© RAF Feb 2007

Unveiling ceremony

• Every participant was given a table top plaque on the ’10 Principles of Global Compact

• A plaque on the ‘Ten Principles of Global Compact’ is displayed in all the offices/factories of the both companies.

© RAF Feb 2007

Issue 3 Volume 2006

New Companies Embrace UN Global Compact at Seminar

• During a Global Compact seminar conducted in Colombo by Professor Klaus M. Leisinger, Special Advisor to UN Secretary General Kofi Annan on the Global Compact, one of Sri Lanka’s leading tea producers, Kelani Valley Plantations Limited (KVPL), and its marketing associate Mabroc Teas pledged compliance with and support to the Global Compact. Both companies are members of the Hayleys Group, a Sri Lankan multinational named as the country’s best corporate citizen for the past two years. A plaque bearing the ten principles of the Global Compact, as well as the signatures of the Executive Chairman of Mabroc Teas and Managing Director of KVPL, was unveiled at the seminar.

© RAF Feb 2007

Rewarding ExcellenceStory of T N S Kumari

© RAF Feb 2007

All our hotels are equipped with an environmental management system (EMS)

As an employee driven initiative, EMS identifies impacts, selects significant aspects and implements programs to address them.

how do we view the environment

how can we improve

what must be improved

are we succeeding how will we do it

who does what

© RAF Feb 2007

“The challenges of globalization are too interconnected for any one sector to address alone. Business has a vital role and a clear

responsibility to join hands with other sectors to find solutions to social inequality, corruption and environmental degradation. This

helps create stable and inclusive economies. Supporting such progress makes good business sense, and it makes good development sense.”

GEORG KELL- EXECUTIVE DIRECTOR, UN GLOBAL COMPACT OFFICE- 26th January 2007