CORPORATE SOCIAL RESPONSIBILITY AND FIRM PERFORMANCE

Transcription

1 CORPORATE SOCIAL RESPONSIBILITY AND FIRM PERFORMANCE NOVEMBER A Managerial Perspective on the Porter Hypothesis: The Case of CO Emissions Part I and II Diane-Laure Arjaliès ESSEC Business School & Ecole Polytechnique Cécile Goubet Ecole Polytechnique Jean-Pierre Ponssard Ecole Polytechnique

2 Agenda The Porter Hypothesis.. Theoretical Framework.... Case Studies.... Next...

3 Agenda The Porter Hypothesis Theoretical Framework Case Studies Part II 3

4 The Porter Hypothesis WIN-WIN SITUATION (Porter, 99; Porter & van der Linde, 995) Stricter environmental standards can spur innovations which enhance competitiveness and contribute to make companies more profitable. Case studies versus empirical tests This research: Take a broader view based on how business strategy is affected by environmental regulation Part I model building Part II strategy versus sectoral constraints area of analysis : climate change and CO Part III the Porter hypothesis revisited and implications for public policy 4

6 Research Method and Design Scope: CO strategies in a limited number of large multinational companies Part I : DuPont, Lafarge, GDF-Suez, Unilever Part II : cement and chemical sectors Information sources: Carbon Disclosure Project Published company reports Interviews of managers on goals and procedures Interviews of financial analysts Method: Construction of ideal types 6

7 A Two-Stage Model of Strategic Choices CO Strategic Approach Beliefs Boundary No change No change STAGE STAGE Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and crossfunctional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 7

8 A Two-Stage Model of Strategic Choices CO Strategic Approach Beliefs Boundary No change No change STAGE STAGE Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and crossfunctional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 8

9 A Two-Stage Model of Strategic Choices CO Strategic Approach Beliefs Boundary No change No change STAGE STAGE Awareness/Risk Vision/Opportunities Integration of the climate policy strategy in the firm s vision Systematic review of portfolios activities including suppliers and clients relationships Diagnostic Interactive Compliance (regulation) approach Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and crossfunctional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations 9

10 Agenda The Porter Hypothesis Theoretical Framework Case Studies Part II

11 Application to Lafarge & DuPont DUPONT LAFARGE Headquarters location Wilmington, USA Paris, France Revenues $billion 3.5 billion 9 Employees 6 84 CO emissions (Mt) from CDP Posted Target in 8 5% for 5/4 (absolute value) % /99 (relative value)

12 Lafarge (III) CO Strategic Approach Beliefs Boundary Diagnostic Interactive No change STAGE Awareness/Risk LAFARGE Awareness/Risk Energy efficiency is a traditional core value No change No change in the portfolio of activities The Strategic Review Process is not Compliance approach (regulation) Incremental and local adaptation of energy efficiency programs Focus at corporate level on risks associated with ongoing and future regulation directly affected CO is integrated for plant decisions on fuel mix, yields ratios, additives (cement clinker ratio) Emissions are controlled for compliance with corporate goal Corporate is active on cap and trade regulations issues such as eliciting cement as an exposed sector for EU- ETS, free allocations, sectoral approaches...

13 Lafarge (I) Développement durable. Progrès social. Préservation de l'environnement. Ces enjeux sont au cœur de la stratégie de Lafarge depuis plus de 7 ans. Ouvrir la voie du développement durable La profonde conviction du Groupe? La performance économique ne peut s'envisager sur le long terme sans progrès social et sans protection de l'environnement. Seule la prise en compte des enjeux économiques, sociaux et environnementaux garantit la pérennité des activités de Lafarge. Depuis 833, la stratégie du Groupe s'appuie sur piliers : un développement industriel durable sur le long terme, des principes humanistes : les valeurs de respect, d'attention et d'exigence s'inscrivent dans les Principes d'action du Groupe dès 977, avant même l'apparition du concept de développement durable. Depuis 5, Lafarge figure chaque année parmi les multinationales les plus performantes en matière de développement durable, selon l'étude «The Global Most Sustainable Corporations of the World», créée en 5 à l'initiative de Corporate Knights Inc. Éthique & gouvernance Principes d action (P.D.F - 49 Ko) Global et autres organismes de notation Développement durable Voir la performance économique, les conséquences sociales de l'action de l'entreprise (au niveau des collaborateurs, des fournisseurs, des clients, mais aussi des communautés locales), les aspects environnementaux (comment rendre compatibles l'activité de l'entreprise et le maintien des écosystèmes). 3

14 Lafarge (II) 4

15 DuPont (III) CO Strategic Approach Beliefs STAGE Vision/Opportunities Integration of the climate policy strategy in the firm s vision DUPONT Vision/Opportunities New vision: holistic approach to sustainability industrial and for the first time market-facing goals Boundary Diagnostic Interactive Systematic review of portfolios activities including suppliers and clients relationships (Re)designing of the firm s position in the value chain targets setting Integration of environmental issues in strategic reviews Joint design and crossfunctional implementation of diagnostic and interactive systems Introduction of financial and symbolic motivations Major changes in the portfolio move from fossil fuel technology to green technology Partnerships along the value chain Change of organizational chart and control systems, Nomination of a VP Chief Sustainability Officer, Implementation of a Sustainable Growth Review for each business Cross-functional competence centers Local champions and awards 5

16 DuPont (I) 6

17 Dupont (II extract from Sustainability Report 8) 7

19 Research Questions What are the factors that determine business strategy on CO? Internal factors: corporate leadership, search for reputation, differentiation External factors: regulation, responsible investors, stakeholders pressure, NGOs Sectoral factors: technology, market forces Comparison within the same sector

20 From firm strategy to sector strategies (Sources: Rapports annuels d activités 9, rapports DD 9, sites internet et CDP) Cement Net emissions in 9 (Mt) Chemical industry Net emissions in 9 (Mt) Lafarge 9, DuPont 6, Holcim 89.3 Bayer 8, Cemex 39,7 Bayer Material 4,8 Italcementi 36,.3 Science,5 Heildeberg 5,8 Bayer Health Care, CRH 9,8 Bayer Crop Science 5,3 Titan 8,7 Rhodia 9,3 BASF 4,6 AkzoNobel 4.3 Dow Chemical

21 Cement firms have quite similar goals and results Entreprise Date d engagem ent Date cible / Année de référence Nature de la cible Objectif cible / Référence Obj/An Intensité Résultat 9 / Cible 9 Obj/An Absolue Résultat 9/ Cible 9 Lafarge /99 Intensité % % % /99 Valeur absolue dans les pays industrialisés %,5% 397% Holcim /99 Intensité % % % 5/99 Intensité 5% % Cemex 5 5/99 Intensité 5% % 5% Italcementi /99 Intensité %,% -49% 7 /99 Intensité 5%,% -% Heidelberg 3 /99 Intensité 5%,8% 37% CRH 7 5/99 Intensité 5%,6% 6% Titan 5 /99 Intensité 5%,6% 4% 9 5/99 Intensité %,9% 96%

22 Chemical firms have more variable results Entreprise Date d engagem ent Date cible / Année de référence Nature de la cible Objectif cible / Référence Obj/An Intensité Résultat 9 / Cible 9 Obj/An Absolue Résultat 9/ Cible 9 Basf 8 / Intensité 5%,4% % Dow Chemical 6 5/5 Intensité 5%,5% % Bayer material science 7 /5 Intensité 5%,7% 3% Bayer Heath Care 7 /5 Valeur 5%,% 5% Bayer Crop Science absolue 7 /5 Valeur 5% % 75% absolue DuPont 5 5/4 Valeur 5%,4% 47% absolue Akzo Nobel 9 5/9 Valeur absolue %,7% 9 5/9 Intensité ( à 5%) 5% 4,% Rhodia /99 Valeur absolue 3%,5% 74% Market facing goals: DuPont 5 MM$ in green products (8%), 736 M$ (3%)

23 Entreprises t CO [9-99] /99 t CO [9-] / ou [9-3]/3 CA [9- ] / Acquisitions majeures Lafarge % 3% 3% 994 : développement en Chine 998 : Redland (activités toitures) : Blue Circle (multinationale) 7 : Orascom (Moyen-Orient), Heracles Grèce) Holcim 4% 3% 56% 5 : développement en Inde 8 : développement en Chine 9 : ex-rinker (Australie) Cemex -3% 59% 99 : les deux plus gros cimentiers espagnols : Southdown (US) 5 : RMC (Europe et US) 7 : Rinker (Australie) Ventes majeures 8 : revente des activités de Redland 9 : Rinker (Australie) 3

24 Entreprises t CO [9-99] /99 t CO [9-] / ou [9-3]/3 CA [9- ] / Acquisitions majeures DuPont -78% -6% -7% Evolution de la chimie fossile à la chimie verte 997 : Pioneer (biotech) Bayer -43% 5% % Structuration sur Health Care, Food/Seed, Material Science 6 : Icongenetics (semences) 6 : Schering (contraception) 7 : Stoneville Pedigreed Seed 8 : Direvo biotech (semences) 9 : Athenix (pesticides) Rhodia -556% -8% -46% Portefeuille de type conglomérat (Rhône Poulenc) recentré sur la chimie de spécialité, industrie automobile, electronique et électrique, énergie etc Ventes majeures 998 : Conoco (pétrole) : vente activité pharmaceutique : Bayer Solar 5 : Imagerie médicale 6 : cellulose, silicone, polymères 4 : phosphates, ingrédients alimentaires 5 : CFC à DuPont 7 : cession Nylstar (fibres textiles synthétiques) 8 : cession Rhodia Organics 4

25 Some structural differences between the two sectors Sector cement chemical Natural resources Oil, coal, electricity, limestone, slag Oil, coal, electricity Green chemistry Portfolio flexibility monoactivity diversified Orientation of R&D process Products&process Structure of demand dispersed concentrated 5

26 Food for thought The vision opportunity stage provides a framework to debug the international stalemate on climate change negotiations - The challenge is in emerging countries - Industrial emissions are largely in the hands of multinational companies - The comprehensive approach elaborated in the nineties has loss in credibility - The sectoral approaches in which States and Companies coordinate actions have gained in credibility 6

27 THANK YOU A Managerial Perspective on the Porter Hypothesis: The Case of CO Emissions Part I and II Diane-Laure Arjaliès ESSEC Business School & Ecole Polytechnique Cécile Goubet Ecole Polytechnique Jean-Pierre Ponssard Ecole Polytechnique

28 Chemical firms focus more on the value chain Entreprises Lafarge Holcim Cemex Italcementi Heidelberg CRH Titan Valeur moyenne Changement climatique / Protection climat 3 5 CO ou GES 5 Total Nouveaux produits / Opportunités / Potentiel Clients Fournisseurs Marché(s) Total,4,9 3 8 Entreprises DuPont BASF Dow Chemical Bayer Akzo Rhodia Valeur moyenne Changement climatique / Protection climat CO ou GES Total Nouveaux produits / Opportunités / Potentiel 4 Clients Fournisseurs Marché(s) Total ,3 6, 8