Corporate Responsibility: The CEO’s View

By Pamela Babcock Oct 29, 2015
NEW YORK CITY—Want to get the CEO’s ear for a corporate responsibility initiative or a plan to create a more sustainable workforce? Then have an executional mindset and show that doing good can also be good for business, according to speakers at the recent Commit!Forum, an annual conference for executives presented by Corporate Responsibility Magazine.

“For me, the winning ticket is someone who can come and have a big idea that’s innovative and really pushes the envelope, coupled with an executional mindset,” Terri Ludwig, president and CEO of Enterprise Community Partners Inc., a Columbia, Md.-based nonprofit that brings affordable housing to underserved markets, told attendees Oct. 22, 2015.

“I hear a lot of good ideas all the time about things that can change the world,” Ludwig added. But, she said, “I need somebody who can really say, ‘I can make this happen in this way.’ ”

Another way to get attention is less positive, and that’s to have a “big whopping crisis,” said Jim Prokopanko, former president and CEO of The Mosaic Co., a major fertilizer maker based in Plymouth, Minn.

On Oct. 1, 2015, the company announced it had settled a federal lawsuit that amounted to nearly $2 billion to ensure proper handling, storage and disposal of 60 billion pounds of hazardous waste at Mosaic facilities in Florida and Louisiana. The waste is stored in tanks, ditches, ponds and piles that can reach 500 feet high and cover more than 600 acres.

“We faced that,” Prokopanko said. “And that really focused our mind to what we do in the communities.”

During the panel discussion, CEOs described how corporate social responsibility (CSR) and sustainability are helping lay the foundation for financial success, drive employee and community engagement, and develop the future workforce.

valued CSR Programs

Here’s a look at some of the initiatives CEOs were most proud of:

“12-for-Life” program. Wire and cable provider Southwire Co., based in Carrolton, Ga., directs a program called “12-for-Life” to help stem the high school drop-out rate.

Stuart Thorn, president and CEO of Southwire, said the company runs the program out of two factories staffed by students who work in the factory during the day. In exchange, the students get paid and time spent working counts toward their degree. The factory has classrooms with teachers and mentors. Since its inception in 2007, about 1,100 students have gone through the program and graduated. Forty percent have gone on to postsecondary education.

“That’s part of the good news, but we also make $3 million a year off the program because these kids are very productive [and] they’re part time, not full time, so they don’t get benefits,” Thorn said.

Changing how an energy company generates power. Ben Fowke, chairman of the board and president and CEO of Xcel Energy in Minneapolis, said a key goal is transforming the company’s generation fleet to move to methods that produce less carbon pollution while keeping “affordability and reliability in mind.” The company has reduced carbon by more than 20 percent since 2005.

Cutting water usage. At Mosaic, Prokopanko said he’s proud of a move to cut water usage. Prokopanko noted that the company’s phosphate operation in Florida uses 60 million gallons of water a day to make phosphate fertilizer, and that water then has to be treated, which is an additional expense.

A pilot program at one of its production facilities addressed things like “the little drips, the little spills” and steam leaks. After 18 months, water usage dropped from about 1,200 gallons per ton of finished phosphate to about 900 gallons, after an investment of only “a couple hundred thousand dollars” to do things like pinch off steam leaks and install variable flow facilities in restrooms. A side benefit is less wastewater to treat, adding to more potential savings.

How to Measure CSR

Speakers agreed that measuring everything from safety to greenhouse gas emissions and water use to employee engagement is critical, but can be challenging.

Southwire’s vision falls into five “buckets” and includes goals and measurements around things like “Building Worth,” or making money not just for shareholders but also for customers, employees and the communities in which it operates. It also has goals for “Growing Green,” such as to reduce energy use. Other goals fall into the “Living Well” bucket, which includes goals relating to employees and their health, safety and inclusion.

The company also measures goals under “Giving Back” and working with the community to create shared value, especially when it comes to education. Lastly, “Doing Right” covers things like ethics and includes goals around reporting, transparency, and employee training about ethics and hotlines.

At Xcel, Fowke said safety measurements are key, given the inherent dangers to employees working in the electric and gas industry. The company has a “Journey to Zero” safety campaign and in the last decade, has reduced the injury rate by more than 70 percent. Xcel also measures employee engagement through periodic pulse surveys and an annual survey.

“We want to know if employees feel the workforce is conducive to them,” if they feel the workplace is a safe place to work and if they “understand the values of the company,” Fowke explained.

Prokopanko noted how “devilishly difficult” it was when Mosaic first began collecting data with myriad systems seven years ago. The company has since begun using a single system to weave together data from its mines, chemical processing plants and about 9,000 employees.

"Everybody feeds into that so we, at any time of year, can see where we are in safety metrics and greenhouse gases and we can start responding,” Prokopanko said. Among other things, the company has goals to reduce waste, greenhouse gas and water usage by 10 percent by 2020.

Ludwig said that while Enterprise Community Partners is good at measuring output, like the fact that it has invested more than $18 billion to create or preserve nearly 340,000 affordable homes since its inception, she wishes it could dig deeper to measure “what are the outcomes for the families” and whether “you have changed a person’s life.”

Guard Against Risks

In closing, Fowke said that guarding mitigating risk is important. Organizations might cut corners to hit a budget target, or may not invest money into an aging pipeline system and then have an explosion.

Fowke said CEOs should create an environment where employees know “that we’re going to do the right thing and that we don’t cut corners.” Employees need to feel comfortable knowing that the CEO is there “to listen to bad news, and that I’m not going to shoot the messenger.”

Pamela Babcock is a freelance writer based in the New York City area.

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