Innovation + Responsibility

On Friday, in a nailbiter of a legislative session, the U.S. House of Representatives voted 219 - 212 in favor of the American Clean Energy and Security Act, aka Waxman-Markey, aka climate change legislation. As a founding member of BICEP - Business for Innovative Climate and Energy Policy - Sun was actively engaged and involved in discussions and debates that ultimately led to this bill's passage.  With great leadership from Ceres and unwavering participation from all the BICEP member companies (Sun, Nike, Starbucks, Timberland, Levi Strauss & Co., eBay, Symantec, Aspen Skiing Company, Gap, Inc., Seventh Generation, The North Face,
Clif Bar) we successfully brought a new business perspective to the climate change policy debate.

As the Waxman-Markey bill was being drafted, circulated and considered,
our coalition members met with scores of Representatives and staff
members - I even got the chance to represent BICEP at an Earth Day press conference hosted by Speaker Nancy Pelosi (D-CA). Our goal was to communicate to them that there exists a broad cross-section of
businesses - large and small, energy consumers, job creators, brand
stewards - that support sensible legislation, the goal of which is to promote economic and environmental progress.

Now the bill moves to the Senate, where its passage is again uncertain. But before we move on to this next phase, I'd like to take a moment to celebrate this milestone. When this bill was first introduced, there was doubt as to whether or not it could ever pass. And there was certainly doubt that it would pass on the aggressive timeline set forth by its principal sponsors, Congressmen Waxman (D-CA) and Markey (D-MA). Well, pass it did, although it was a close vote that went largely along party lines.

While there is still much work to be done to improve the bill that was finally passed late Friday afternoon, and while the debate rages on as to whether we are better off with no climate bill than the one that passed, I am proud of our company's leadership and participation on this topic. It was a pleasure to work so closely with Ceres and the other BICEP member companies as we tried to add our muscle (pun intended) to this important debate. I for one learned a great deal about "how our government really works" and

Have you seen SAP's latest sustainability report? If not, I highly recommend you check it out. This is one of the best reports I've seen, and sets a high bar for the technology industry in particular and reporting companies in general. (Full disclosure: I have met the Chief Sustainability Officer at SAP and have had occasional discussions with SAP employees about sustainability issues. That said, I actually learned about the publication of the report from a friend's Facebook status update.)

There are a few things I find particularly compelling about SAP's 2008 report.

*First of all, a simple design and depth and breadth of content is a difficult combination to successfully achieve, and SAP has done it.

*Secondly, and probably more importantly, SAP's use of its own products to collect, manage and report the data included in this report is a great example of what stakeholders are always asking companies to do - clearly demonstrate the link between what your company makes and sells, and sustainability. For SAP that means creating software applications that can be used to manage a company's social and environmental performance. That SAP uses its own sustainability report as a proof of concept is just plain smart. But you don't have to be a software company that can facilitate reporting in order to make the link. The link can be made in how a company makes its products - for example ensuring factory workers are well-treated and paid fairly, leading to reduced turnover and therefore cost savings. A company can connect its core business to sustainability through the way it offers its services - for example utilizing technology to cut down on business travel whenever possible, saving GHG emissions and also dollars.  A company can use its core assets to educate, enable and empower its customers to consider their impact on the planet and communities. You get the point.

*Third, SAP takes a bold step by allowing its corporate sustainability report to double as a product marketing brochure without sacrificing the integrity of the report itself (in my opinion).  The "Our Solutions" section of the SAP report, which is a synopsis of the sustainability challenges facing global businesses today and the corresponding SAP software products that can help businesses manage these challenges, is one of the better sustainability marketing efforts I have seen.

*Lastly, SAP again worked to create a report loaded with compelling interactive features that allow a visitor to do more than just read it, it allows one to manipulate the presentation of the data, take a survey about the report's content and participate in a dialogue with SAP about its overall efforts.  Although, as compelling as this interactivity is, time will tell how much that feature actually gets used (my recollection of the first report, which I lauded in this space when it was first released back in December 2008, was that participation in this part of the report was low).

SAP's report is certainly not flawless - I wish there was a way to more
easily interact with the content and leave comments and feedback
directly into the report, for example.  I also wish the report itself was more integrated throughout sap.com, with more places on sap.com pointing out to the report, just as many parts of the report point back to sap.com. But what fun would it be if SAP's report was perfect its second time out!? And lets face it, the real measure of a report is not in its presentation, but rather in the performance the report reveals.

That said, the importance of the presentation of this data cannot be overstated - SAP created a report that is designed to be inviting, which means more people are likely to actually read it, meaning more stakeholders are going to be informed of SAP's performance and therefore able to hold the company accountable, which hopefully leads the company to continue improving its business practices and processes in ways that maximize positive social and environmental progress and minimize negative social and environmental impact, all while continuing to improve financial performance. After all, isn't that why companies report in the first place?

Today The CRO Top 100 Corporate Citizens List was published and Sun showed up at number 60. This is our fourth year in a row on this list – we debuted at #70 (2006), fell to #71 (2007), kicked it all the way up to #19 (2008), and ended up at #60 on the 2009 list.  Actually, at first we ended up at #37 on the 2009 list, but then The CRO changed its methodology in late February (more on that later) and so our final spot was #60.

Sun is pleased when we show up on lists like these – there are hundreds of (in this case 900) companies who would love to be able to declare themselves a “top corporate citizen” and we are gratified that our commitment to sustainable business is recognized on this and other lists (most recently with a jump on Fortune's “World's Most Admired Companies” list. One category in which we improved was “social responsibility.”). That said, I am troubled by the methodology employed to compile this year's Top 100 Corporate Citizens list. I was troubled by the methodology last year, too, and I promised to revisit the issue.

I have two primary issues with the compilation of this year's list (to say nothing of the strangeness of The CRO's decision to change its methodology and category weightings three-quarters of the way through the process). First, by rewarding disclosure over performance, it is my opinion that this list values quantity over quality. The more you disclose, the better you do on this ranking, although this disclosure does not necessarily mean your "corporate citizenship" performance is better or worse than those who come before or after you on the list. I believe this accounts for the number of oil & gas and mining companies on the list (Exxon is ranked at #11!)  – much of their disclosure is legally required (And since the “Lobbying” category was removed entirely from this year's ratings, the amount of effort many companies employ so as to avoid such regulations is not even considered).

My second issue with the 2009 list is with the methodology itself (and the fact that the methodology used in the final list compilation is not the same as the methodology originally developed for this list. It changed some time between February 9, 2009 and March 1, 2009. I know this because I first received an email on February 9 sharing the preliminary results and the new categories and their relative weighting. I received another email the first week in March with a new ranking based on an entirely new methodology, which I talk about later in this post). The biggest grievance I have is with the neutering of the governance category. This was done in two ways: changing the weighting from 16% to 7% and removing CEO compensation as a factor in determining a company's governance “score.”

That's right – CEO compensation, a hot button governance issue, particularly as each day brings new headlines of exorbitant CEO pay and bonuses (at companies like Citigroup, #35 on the list) – is no longer a factor in determining the Top 100 Corporate Citizens. And by removing CEO compensation (as well as the age of board directors) as one of the factors, many companies on the list saw their governance ranking skyrocket – 50 of us tied with a ranking of “1” in this category. (Full disclosure: Sun's ranking before the removal of CEO compensation was 22 – a pretty good rank. After the removal we joined 49 others at #1.) Because of this 50-way tie, The CRO decided to reduce the weight of the governance category to 7%, effectively eliminating the category's relevance to the list at all.

When I asked The CRO about this change, the explanation I got was that the Black-Shoales model, used to determine the future value of stock options, is “a calculation that is virtually impossible to explain...”  Now look, my eyes definitely glossed over when I was "learning" Black-Shoales in my first year MBA finance class – it is difficult to explain and hard to understand. But you know what? So are things like normalized GHG emissions for the uninitiated. But we use these formulas because we know that evaluating these aspects of a company are important to understanding its overall “corporate citizenship” picture.

Let me also note that in reducing the governance weighting by nine percentage points, the CRO needed to redistribute the percentages to the other categories. One of those categories was philanthropy, which went from a 5% weighting up to 9%. So now the list is saying that how much money, product and services a company gives away (and not even accounting for the impact of such philanthropy) is a more important determinant of their “citizenship” than their good governance practices.

I can't wrap my head around a Top 100 Corporate Citizens List – even a list on which Sun appears – that effectively eliminates good corporate governance practices as a factor in its evaluation. In 2009, with our financial institutions buckling around us due at least in part to poor governance, how valuable is a ranking of companies that disregards the importance of this in evaluating a company's “citizenship”?

And how are companies like Sun supposed to use this list to help us improve our practices and our performance? If “tough” questions are removed – CEO compensation, lobbying activities, protection of human rights under oppressive regimes (and I believe many of these questions are the ones that get at a company's performance, not just disclosure) – stakeholders have one less lever to use as they try to drive companies toward – and hold us accountable for – more sustainable business practices. 

Today Sun took a big step forward (if I do say so myself) and published a mid-year update to our most recent CSR report. As any reader of this blog knows, my favorite topic these days is CSR reporting and my mission to answer the questions of why, how, when and for whom do we do it.  This mid-year update is motivated by a desire to increase our transparency as well as by a desire to help us get some answers to these questions.  How does this help us answer the "why, how, when and who" of reporting?

* First of all, it helps remind us that a primary reason we report is to be held accountable. More transparency enables better accountability, both internally and externally.

* This mid-year update also gives us an opportunity to consider going outside the "traditional" reporting framework that prevails among companies today, namely the annual CSR report that comes out three to six months after all the relevant data has been collected. It's kind of an experiment, I suppose.

* By updating outside the bounds of our regular reporting schedule - fiscal year (July 1 - June 30) data published in a late-October report - we can strengthen our internal processes. How? Well, we can make sure that the data we collect for our CSR reports is baked into our everyday processes, rather than just compiled in a mad dash at the end of the fiscal year. That  matters because it means the goals we set and the metrics we put in place to track our progress have a better chance of becoming a regular part of our how we do business.

* We get to gauge - and engage - our audience. The way it works now, you hear from us once a year in late October. Sometimes we hear from you. But with this mid-year update, we are hoping to spark more of an ongoing dialogue. We are hoping that this update, coupled with the comments feature in our 2008 CSR report - something we'll carry forward into future reports - will spark more of a conversation with and among the people who care about Sun, our values, and how we do business.

I hope you'll check out this update and, most importantly, provide your feedback using the public comments feature at the bottom of the page. We are doing our best to hold ourselves accountable - this is an important component of that - but we also hope and expect our stakeholders will hold us accountable, too.   This is part of the "Share" component of Sun's "Innovate Act Share" strategy. 

I am on a mission. I've been on this mission for a while now, but I keep getting sidetracked and distracted from it and next thing you know another year has passed and I haven't made any progress. But this year it's for real - this year my mission will be accomplished (can you picture the banner hanging from the aircraft carrier?).  The mission: to radically rethink and reshape CSR reporting at Sun.  I strongly question the utility of CSR reporting as it exists today.  When the chances of your CSR report winning awards increases with an increase in the report's length - forget the report's actual content! - it's time to take a step back.

In October 2008, Sun released our third CSR report and I'm quite proud of what we published. The report itself demonstrates Sun's progress in that it aligns more closely with the Global Reporting Initiative (GRI), contains more robust data, has more publicly stated goals, and a offers greater degree of transparency than we have had in past reports. We also cut down on the paper associated with our printed summary.  To pull it together we had an unprecedented number of internal stakeholders provide content, data and feedback. And our crack designers and Web team were able to build a site with easy navigation and - my favorite element - an instant stakeholder engagement mechanism.  So why change a winning formula?

Well, for starters, nobody is reading the thing. Okay, not nobody. But not very many people. I've lamented this fact before. I won't go into all the gory details here, but let me give you an idea of how low our 2008 report traffic has been since our launch in late October:

There have been about 4,500 page views of the report's home page. 4,500 total. Including employees. That means that even if every one of those views was a unique visitor (which it was not) and each of those unique visitors was a Sun employee (which it was not), less than 14 percent of Sun's employees have visited the site. And, that awesome comments feature we instituted, the one that was meant to engage our internal and external stakeholders in a conversation about our CSR reporting - well, we've had a whopping 10 or so comments since the report's launch. I won't even tell you the dollar-per-page view or dollar-per-comment that works out to!

Second of all, the blood, sweat and tears that go into pulling the report together might make your head spin. More than 40 Sun employees were involved in pulling together the content and publication of our 2008 report, not to mention Celery Design and Context, our two consultants on the project. I'm sure this is not unique to Sun, and I'm positive there is a better way to do it. This simply is not sustainable. And if your sustainability report is not sustainable...well, something is definitely out of whack!

We need to get back to basics and revisit whey we even publish a CSR report. In my view, we report in order to:

(1) Keep the pressure on ourselves to continually improve our sustainability performance
(2) Meet our customer and (internal and external) stakeholder
requirements for data, transparency and short- and long-term goals and
commitments
(3) Ensure that sustainability is a key part of how we continue to evolve into a better-managed, more efficient,
more engaged - and therefore more successful - company.

Can we meet these objectives without spending piles of money and without over-burdening our employees? Look, the reality may very well be that large numbers of people are never going to read our CSR report because other than the experts - SRI investors, NGOs, CSR die-hards - it's enough for folks to know we have a report. So what do we do for the rest of the people - the ones who want to dig their teeth in and really see what we are doing, where we are going and how we are getting there? Well, the way I see it we have two options:

(1) Keep doing the same kind of report and work harder to attract readers
or
(2) Do a different kind of report. Create something that will do what a CSR report is meant to do, namely keep the pressure on Sun to continually improve our sustainability performance, meet our customer and (internal and external) stakeholder requirements for data, transparency and ever-expanding goals and commitments, and ensure that sustainability is a key part of how we continue to evolve into a better-managed, more efficient, more engaged - and therefore more successful - company.

I'm going for option 2. Wish me luck!

And if you know of other companies that have gone for option 2, please let me know. I am looking for inspiration. I already found some at Cadbury's latest innovation in reporting, DearCadbury.com, as well as Timberland's unique approach.

SAP released its first sustainability report this week and the company deserves a hearty congratulations for doing so. It's always good to see new players joining the sustainability discussion and SAP is definitely coming to the table with an interesting perspective.

SAP's report is only 26 pages - it seemed a bit thin when I first opened the PDF and then I remembered that Sun's first report was just 34 pages (and that includes the front and back cover)! Hey, you have to start somewhere, right? I look forward to SAP's next report (ours went from 34 pages to 80+ and our most recent report topped out at 103 pages! I'm hoping those numbers go back down in future years, but more on that in a future post), which will surely be more robust with data and short- and long-term commitments and goals.

The most exciting (yes, I get excited about these things!) aspect of SAP's report was the stakeholder engagement piece. Along with the report itself, SAP introduced a few Web-based initiatives aimed at engaging a broad group of stakeholders in the company's sustainability efforts - a stakeholder survey and a community wiki.

I was quite intrigued by the real-time sustainability survey, which seeks stakeholder opinions on various sustainability issues. Not only can you vote on the topics you think are most important and relevant for SAP, you can also see how other people voted. So far more than 800 people have already responded to the survey to say that the top two sustainability issues are employee satisfaction and customer satisfaction (this makes perfect sense when you consider that without satisfied employees or customers, your company is not going to be viable, much less sustainable). SAP goes even further by disclosing who is actually participating in the survey. So far, most respondents have been employees and most have come from Asia, something I found rather interesting considering SAP's headquarters are in Germany. 

SAP also went out on a limb with its sustainability wiki, or, as SAP calls it, collaboration workspace. The company has created an online community for stakeholders to connect and network and share their ideas.  I think this is pretty cool!

We have something like this at Sun, but it's internal only (Sun employees can find it here).  We did try to incorporate stakeholder engagement in our most recent report by inviting readers to post their unmoderated comments directly in the report, and we are committed to responding to questions and ideas. But this community collaboration idea is interesting. I'm definitely going to be watching to see what kind of community develops there.

A most sincere congratulations to SAP on completing this first report and doing so in an innovative and engaging way - one that not only considers stakeholders, but also invites them to be a meaningful part of the company's sustainability journey.

I'm thrilled to report that today Sun launched our fiscal 2008 CSR Report.  The full report is available exclusively online.  And, in an effort to take transparency to a new level, we have added a comments feature to the report that allows readers to post comments directly on the page.  We won't censor the comments - we'll only be filtering them for inappropriate language or spam. I'm really hoping people who check out the report leave their comments - praise, criticism or general feedback. As a company, we get so much value out of the feedback our stakeholders provide.  This new feature of our reporting is a way for us to extend our stakeholder engagement efforts and receive valuable feedback from a much broader range of audiences interested in Sun's efforts to sustain our business, our communities and our planet.

I won't go into too much detail here, but I do want to point out some highlights of this year's report.

• Sun met (actually, we surpassed) our goal of achieving a 20% reduction of US GHG emissions over 2002 levels by 2012 (say that three times fast!).  In fact, we achieved a 23% reduction, and we did it in fiscal 2008! Now we've set a new goal to cover our global operations: To reduce Scope 1 and Scope 2 CO2 emissions from global operations by 20% over 2007 levels by 2015.
  


• We continue to make eco responsibility a core part of the products we make and sell, and this report has an update on our Eco Innovation efforts. 


• Employee participation in Worldwide Volunteer Week was up 84%!
  


• We were disappointed that we couldn't provide more information about our product takeback programs in this report. The good news is that we are working diligently to imprpove our processes so that future reports have more robust and reliable data. And, we set forth some meaningful goals that will keep us on track and continually improving.


• We have expanded our reporting to include more information about how we interact with our employees around the globe. From inclusion to learning and development to wellness to health and safety, we have provided a much richer picture of the kind of employer Sun is, and how we hope to become even better. 


• By studying employee work habits, we learned that in fiscal 2008, Open Work enabled Sun employees to drastically reduce travel time and miles driven.  Our study found that these employees saved an average of 107 hours of travel time - that's the equivalent of 13 extra days off! - and avoided roughly 52,000 metric tons of CO2.
  

I could go on and on...but I'd rather you read the report. Check it out and tell us what you think - either by emailing us (csr at sun dot com) or by posting your comments directly in the report itself. You can also post comments on this blog.

It seems to me that "sustainability" is quickly becoming the word du jour in the world of corporate responsibility.  More and more people and companies, including Sun, are replacing talk of "CSR" or citizenship or "eco" with talk of sustainability. But what does it mean? And is "sustainability" here to stay? Or is it just another moniker for a movement that, although it has made progress, has yet to gain a meaningful foothold in the business sector?

We've been batting around this notion of sustainability at Sun for a while now. I think we have had a sense - since the  beginning of our existence as a team - that sustainability is what we are working toward, but we didn't feel quite ready to use the "s" word. We were just getting started on our journey, and our short-term focus was necessarily on getting our house in order - from Eco Responsibility and Eco Innovation to Corporate Social Responsibility and Global Citizenship. I think we've done a pretty good job so far (if I do say so myself!). By no means is our work in these areas complete - not even close. But we are ready to look more medium- and long-term. We are ready to tackle the task of making all of these programs, in a word, sustainable.  Our CEO even appointed Dave Douglas - formerly our Vice President of Eco Responsibility - to be our Chief Sustainability Officer.

So what do we do with these other names that have been floating around our company for the past couple of years, several of which have gotten real traction with customers, employees and other stakeholders? We joined the conversation with our Eco Responsibility and Eco Innovation initiatives - using our innovation prowess to provide solutions for our customers - and ourselves - that meet our business needs as well as the needs of our planet. We quickly recognized that how we treat our planet is closely connected to how we interact with our communities - of employees, customers, partners, developers, neighbors, investors, policy makers - and our broader "corporate social responsibility (CSR) initiative - and annual CSR report - was born (and I got myself a job!). Recognizing the opportunity to combine our technology expertise with our talented workforce to drive positive change through volunteering and philanthropy, we added Global Citizenship to the mix. 

So, let me re-cap: we have Eco Responsibility, Eco Innovation, and Global Citizenship, and once a year we produce a Corporate Social Responsibility report that tells Sun's story in each of these - and several other - areas (are you still with me?). And now we want to elevate the conversation to one of sustainability. 

"Which," as one of my colleagues asked me recently when I used the word, "means what exactly? 

Sustainable Planet - Sustainable Communities - Sustainable Business...repeat
According to Wikipedia, "the term...has its roots in ecology," and in my experience, traditionally has been most commonly used when talking about the environment and natural resources. But in recent years, the definition seems to have evolved to be broader reaching (also from wikipedia): "Meeting the needs of the present without compromising the ability of future generations to meet their own needs."  And it is this definition that I believe has the most potential to inspire the business sector to action. 

Think about it: as a business, we want to meet the needs of  our company in the present - make money, grow, innovate, etc. - without inhibiting our ability to meet our business needs in the future. The sustainability of our company is our first priority. 

But the sustainability of our company is dependent on the sustainability of our planet. For example, if we - and our customers - don't have access to a reliable supply of energy and water, our products are worthless - creating our hardware and running them in datacenters require both.

And the sustainability of our business is also dependent on the sustainability of the communities where our employees live, where our products are made, sold and bought, and where our customers and other stakeholders invest and thrive.  For example, if we don't invest in educating a new generation of technologists in developed and emerging markets today, we risk becoming irrelevant in these markets in the future. No business can afford to take this risk.

It all makes sense, right? But it's not exactly pithy - without the long-winded explanation, will people really get it? (Will they get it even with the long-winded explanation!?)  And even if they do, what about Eco, CSR and all those other names we've been using with great success for the past two+ years? To be frank, I don't know.   But that shouldn't stop us from starting to socialize the "s" word. Naming a Chief Sustainability Officer is one step. Creating an employee sustainability network might be another. 

And if it doesn't catch on, well...does it matter? In the words of Romeo, "What's in a name?"

It's mid-July and I just sent off the first draft of Sun's 2008 CSR report to our external writing consultants (Context, a firm of brilliant minds out of the UK but with offices in the US as of recently) - which will be published some time in mid- to late-October. So I thought I would take a break from reporting, which has consumed my days, nights and weekends for the past month and a half, and reflect on the process.  I'm doing this in part because I think it might be interesting for people to hear how one company does it - the good, the bad and the downright silly - and also I think it will be therapeutic for me!  I do want to say at the outset, however, that Sun's reporting process is probably quite different from that at other companies. We are still relatively new to reporting - this is only our third report, and really our second with meaningful data that interested parties can track.  Because reporting is relatively new, we are still feeling our way around.  We have tried not to be constrained by "tradition" - how its' always been done.  At the same time, we have found ourselves hamstrung by some of our own traditions.

All this is to say we are still learning. And we are taking our growing body of experience, our stakeholder feedback (including yours if you'll give it to us!), and our penchant for doing things a bit differently, and constantly evolving our process. For now, though...this is how we do it.

STEP ONE: HEADS UP, THE OUTLINE, THE SCHEDULE
The first step in pulling together Sun's CSR report is really three steps - (1) letting my internal partners know it's that time of year again, (2) developing an outline to guide us through the early phases of the report writing process, and (3) crafting the schedule of deadlines and milestones that will drive our process from start to finish. So, first I send around an email to all my internal partners who contribute to the report. If you've seen one of these things (here's ours from 2007), you know how chock full of information they can be.  Well, that information comes to me from about 30 different Sun employees around the world. Each of them gets an email from me in (usually) March letting them know, "It's that time again!" (I believe that was the actual subject line of the email)  That email lets them all know the general timing of things, working backwards from our October publication date.

Once I let my partners know things are starting to move, I get down to writing the draft report outline.  Using the GRI guidelines, I look at what we were able to report on last year and what we might be able to add to our GRI reporting this year (It's an awesome color-coded spreadsheet, if I do say so myself!). In addition to the GRI, I use the previous year's report as well as all the information I had been gathering over the course of the fiscal year (I have an email folder named, "Future Reports," where I stash anything interesting that might be relevant to our CSR reporting effort). Then I set up one-on-one meetings with my partners.  The outline usually changes dramatically at this point - it gets much more detailed and in some cases completely transforms. For example, this year you'll see a significant change in the "Our People" section of our report.  This reflects a commitment on the part of Sun's human resources team to help us move toward "best practices" reporting in the area of our responsibility to our employees. The outline goes back and forth a few times, gets executive and legal sign off and we move on to the next step - sharing the outline with our internal and external stakeholders.

While all this is happening, there is a project manager (her name is Terri Bedel and she's brilliant and I know how lucky I am that I get to work with her!) who is doing the painful job of pulling together our report production schedule. She coordinates with me, the external writers, the internal editors, the design firm, the Sun.com team and anyone else who has their fingers in this project, and ends up developing a calendar that becomes our Bible for the next several months as we all work together toward the goal of finalizing and publishing Sun's annual CSR Report.

STEP TWO: STAKEHOLDERS
Sun has two "official" stakeholder teams - one made up entirely of employees, one of external experts from various fields, as well as investors and Sun customers.  We share our detailed, draft outline with both of these groups in an effort to get meaningful feedback to help us improve our reporting, both in terms of including the right information as well as pushing us on goals and metrics.  This year we hosted a conference call with our external stakeholder team, facilitated by our partner Ceres, in mid-May. Shortly after that, I held a conference call with our internal stakeholder team: Sun's Employee Sustainability Council (formerly Employee CSR Advisory Board). In September we'll meet with our stakeholders in person at our headquarters in California.  You'll be able to read about all the great feedback we got - positive, constructive and critical - in our 2008 final report.

STEP THREE(a): WRITE! also known as CALENDAR!
Now comes the task of turning a detailed outline into a first draft report.  This is probably the most difficult part of the entire process (along with data collection, but we'll get to that later).  Part of what makes it so challenging is that there are so many people who need to provide my team with the content, and for many of them, the CSR report is not on the top of their to do list. Not to mention the fact that the timing of our first draft tends to hit just at the close of Sun's fiscal year, which is also right around when people take their summer vacations. So the writing process is as much a calendaring process as anything else.

I try to get each of the content area experts to take the part of the outline that is relevant to their work and put some meat on the bones.  In some cases I conduct interviews with the content experts and from those interviews I flesh out the outline.  Regardless of how I get it...eventually I do get it.  To be honest, it can be a bit painful. And stressful, as I spend the entire month of June wondering if we are going to make our deadlines (we did). 

Once I have what I need, I turn it all into the first draft of the report outline. This year I had the good fortune of having a spectacular summer intern from the Haas MBA program (GO BEARS!) who helped me get the first draft together. Then we send the first draft off to our expert writing consultants. Their work is crucial to us having a good report. They don't just take the content we've given them and polish it, although that is part of what they do. They also flag for us where we may fall short and make suggestions for how we might improve our reporting.  They help organize the report so that it flows in a way that makes sense to the reader.

Then we get Sun's team of crack editors on the case. This team reviews the written report for consistency, clarity and brand appropriateness. In other words, they make sure the report sounds great and that it sounds like Sun! They are the final arbiters of what the report says. If you see it on the page, it's because our editors decided it's okay to be there! 

STEP THREE(b): DESIGN
While all the writing is happening, our design consultants, Celery Design Collaborative, are hard at work coming up with some possible designs for the report - designs that are ultimately approved by Sun's internal design team. What's great about Celery as a partner is that they, like Sun, are interested in pushing the envelope with CSR reporting.  We try to find new ways to bring the content to life for our stakeholders, and to take advantage of the fact that the report is Web-based, thereby opening up all kinds of possibilities. Of course we can't do everything we - or they - want us to do; we  have some constraints based on our corporate guidelines as well as where we are in our reporting. But for our next report we are looking forward to incorporating some very cool features (you'll just have to wait to see them) that we believe move us toward greater transparency and make the report itself more interesting to interact with. 

STEP FOUR: DATA
Once the fiscal year has closed we start collecting data for inclusion in the report. This part of the process can go on for a while, depending on how data processing happens in relevant business units. Sometimes the data we need for the report is not available to us until late August or early September.  So we have a lot of placeholders where charts should go. 

Sometimes the data we want for the report is not available to us at all.  We recognize that data is the heart of CSR reporting.  In fact, it's the heart of CSR, because without the data to tell us how we are doing, we can't put programs and practices into place to help us improve.  This quest for data - more, more relevant and more transparent - is constant. I trust that anyone who reads our 2008 report will notice much more data than in our 2007 report, with pledges of more data to come in the future as our systems and processes continue to be refined.

STEP FIVE: GOALS also known as NEGOTIATIONS
Whenever anyone asks me which of my business school classes was the most relevant for my current job I don't hesitate to answer, "Negotiations." Because as I develop the CSR report, I am constantly negotiating with people - whether it'deadlines, meeting dates and times or what content to include in the report. The most - and most interesting - negotiations happen around goal-setting.  Just as data is the heart of CSR, goals are the soul. Goals give us something to stretch for - they inspire us to be a better company. They allow our stakeholders to hold us accountable. 

Setting CSR-related goals can be tricky because we don't want goals just for the sake of having them. We want them to be meaningful. And in some cases we are just not in a position to set - and drive toward - meaningful goals.  So we negotiate. I'm a big fan of the goal to set a goal. Or the goal to provide data. This gives my internal partners time to think about how they can purposefully add CSR considerations to their strategic planning and implementation. Or it gives them time (and license) to put resources in place.

STEP SIX: REVIEW
Once we have gone back and forth and finalized our content (and design), we send the report around for internal review.  Content experts review and approve it, as does Sun's executive team and, of course, our legal staff.  This year the Corporate Governance and Nominating Committee of Sun's Board of Directors will also have an opportunity to review the draft report. Finally, our employee and external stakeholder teams will review the final draft.  Sun doesn't do third party assurance, and at present there are not plans to do so in the near future. We do recognize that more and more companies are securing third party assurance, and we are looking into alternatives to the costly practice of paying third party assurance firms. To be frank, we do not think this is the best use of our limited resources at this time.

STEP SEVEN: PUT IT ONLINE AND MAKE A PDF SUMMARY
The final phase of Sun's CSR reporting effort comes in September when the Web team starts turning our design and content into an actual online report.  You'd be shocked if you knew how much time and effort goes into getting this thing online.  We lock down the content in September and the report itself goes live in October (end of October this year) - most of that final month is spent refining the online version of the report.  During this time we are also busy creating a summary version of the report that can be printed or downloaded as a PDF file. As much as we'd love to eliminate the printed report altogether, there is some demand for having one. So we try to make it as small and short as possible, driving readers to the more robust Web-based report.

STEP EIGHT: GO LIVE!
Finally, what started as a bare-bones outline - an aspiration, really - becomes Sun's fiscal year Corporate Social Responsibility report, which can be downloaded from our Web site at sun.com/csr.

STEP NINE: DE-BRIEF
Once the report goes live - and after we've all taken a few days off! - we schedule some time to de-brief our process and consider ways to improve it for next time.  To be honest, we also spend at least a little bit of time patting ourselves - and each other - on the back.

STEP TEN: REPEAT

This week we are meeting with our external stakeholder team to get feedback on our CSR-related progress over the past year.  We will be getting feedback on our 2007 report, reviewing the 2008 report outline and updating the team on Sun's progress toward achieving some of the goals and commitments we set forth during our first meeting last May (you can read about it here).

One of the commitments we made during that initial stakeholder team meeting, which we formalized in our 2007 report, was to develop a human rights policy for our company. Several of our existing policies - like our Standards of Business Conduct and our Supply Chain Code of Conduct - touched on various aspects related to human rights. And as a signatory to the United Nations Global Compact, we have expressed our commitment to human rights principles (you can listen to a podcast I hosted with the UNGC's Executive Director Georg Kell). But we didn't have a stand-alone policy to outline our company's stance on the subject. Until now.

 It is with great pride that I tell you that you can now count Sun as a company with a formal human rights statement.  You can find it on our company Web site here and the full text is below.

On the eve of our next stakeholder meeting (literally - it's tomorrow), the creation of this policy is great evidence of the value of this kind of engagement. Certainly our stakeholder team tries to push us (sometimes out of our comfort zone)  to take actions they believe will best serve our business and our larger community of stakeholders. And though we are not able to always act on their feedback or suggestions, the process itself is a valuable component to our ongoing commitment to corporate responsibility.

Sun Microsystems Human Rights Policy

Sun Microsystems' human rights policy is based on our company's long-standing commitment to the highest standards of ethics and integrity, and a deep respect for all people.  A supporter of the UN Universal Declaration of Human Rights and a signatory of the UN Global Compact, Sun will continue to work to uphold the human rights of the people and communities where we purchase products and where our products are made, bought and sold.

Consistent with the core tenets of our Standards of Business Conduct, applicable to all Sun employees, and Sun's Supply Chain Code of Conduct to which all of Sun's top-tier manufacturing suppliers have committed to adhere, Sun's policies and practices are based on law and ethical principles related to the following:

* Non-discrimination
* Privacy
* Freedom of association, including the right of our employees and those of our business partners to freely join or not join associations of their own choosing,
* Fair wages and working conditions
* No child or compulsory labor

We require our employees and our principal suppliers to abide by these principles and we take steps to hold them accountable to these standards.  For more information, please read Sun's Standards of Business Conduct and/or Sun's Supply Chain Code of Conduct.
 

Sun's Board of Directors takes up CSR
In other news...Sun's Board of Directors recently voted to amend the Corporate Governance and Nominating Commitee's charter to include Corporate Social Responsibility. Specifically, the CGNC's new charter includes the following:

Reviews and reports to the Board on a periodic basis with regards to matters of
corporate responsibility performance, such as environmental, workplace
or stakeholder issues, as appropriate, and the company's public
reporting with regards to these topics.

I'm pretty excited about this development.  When we first raised the possibility of making a formal connection between CSR and Sun's Board of Directors, I was not sure how it would go. The Board has a serious role to play in the governance of our company, the committees are fairly small (2 - 3 people) and they have plenty to do already. Would our Directors see CSR as a worthwhile use of their time? To my delight, they do!

I'm still not sure how exactly it will play out. But I'm looking forward to working with them to continue to evolve Sun's CSR efforts.

Did you hear about the addition of a LEED Gold certified building to eBay's real estate portfolio? Libby Reder, who runs eBay's employee green team (and who is quoted in the article about the new building) is a business school classmate of mine and when I  saw Libby at a birthday party this weekend and she was aglow about the new building opening. "We're over 1,000," she beamed at me, referring to the number of employees (out of a total of 15,000) who are members of eBay's green team - the company's initiative to engage its employees in its various sustainability efforts.  I've been impressed with eBay's green team success.  And it has often left me scratching my head and wondering, "Where are we (let's face it, where am I!) going wrong?"

Anyone who reads this space knows that I spend a lot of time thinking about how to get our employees to connect to Sun's various social and eco responsibility efforts (here, here and here). Our team has established an internal advisory council (as of today there are about 45 employees - out of 34,000+ - who have signed up for this group), a Facebook group, online forums on SunWeb (our intranet), hosted an employee eco summit, etc. Not to mention the regular cadence of emails from Dave Douglas, our VP of Eco Responsibility, encouraging and empowering employees to put a green angle on their jobs. We use all these outlets to give Sun employees from around the globe an opportunity to plug directly into our team's work, offer their feedback and even run with projects of their own if they so choose.

A few months ago I started a Facebook group for Sun employees - the Sun Employee Sustainability Network.  To date, 125 employees - out of more than 6,100 Sun employees on Facebook - joined this group, which is only open to people in the Sun Microsystems Facebook network. Compare that to the 275 employees who joined the group, "Inclusion@Sun," which focuses on our company's efforts to create an inclusive workplace environment.  Then there is the Sun Microsystem Facebook Fridays group, which is made up of current Sun employees that are interested in connecting to our company's social media efforts.  This group has a whopping 1,200 members! (other Sun Facebook groups, like Friends of the Foundation, are open to anyone so they are not a perfect comparison).  Does that mean that 10 times as many Sun employees want to connect with each other and our company around social media news than want to connect with each other and our company around our efforts to be a more responsible, sustainable business?

I'm not sure this is true but I can't seem to crack this nut. Some of my hypotheses include:

1. The name: Maybe employees don't know what "Sustainability" is exactly. Should we just call it "Corporate Social Responsibility" (or CSR)? What about Eco Responsibility - that seems to have a lot of traction within Sun.  But at the same time, it feels so narrow. Then again, eBay calls it the "Green Team" and it works.
   
   
2. The size: We have 33,000 employees at Sun. That's more than 2x the number of eBay's employees.  I think this would mean that we would have more - not fewer - employees interested and engaged in our efforts.  Especially considering the global scope of our company.  But maybe there is something about our large size that prevents employees from participating in a centralized team of this nature.  That doesn't explain the nearly 1,200 folks in the Facebook social media community. But maybe it calls for more regional sustainability networks rather than one central network.
   
   
3. The demographics: I'm sure you've heard of Sun's Open Work program - if not, you can (and should) read about it here and here. It's an amazing program that allows more than 50 percent of Sun employees not to have an assigned office. That means we are able to work from the location that makes the most sense for us and the company on any given day (I am writing this from a coffee shop on Beverly Blvd. in Los Angeles, where I have been working all week (LA, not the coffee shop!)).  The location that makes the most sense isn't always one of Sun's campuses around the world. Sometimes it's a customer site, home, a coffee shop, a library, a hotel room - you get the point. Open Work has awesome environmental benefits.  But does it hinder our efforts to create a viable, active community of employees dedicated to Sun as a socially and environmentally responsible company?
   
   
4. The possibility: I suppose it is possible that Sun employees just are not interested in getting personally involved in our company's sustainability/CSR/Eco Responsibility efforts. I find it hard to believe, especially considering employees' high expectations for Sun as a "corporate citizen."  But then again, it is possible. People are busy, they have enough to worry about in their own lives - their families, the economy, the war in Iraq - and they are working their tails off to help Sun be successful - after all, all the environmental initiatives in the world won't matter if we can't be a successful, profitable company.  I tend not to think this is the case...but maybe I am way off.
   

Why does it even matter? you may wonder.  Well,  I believe our planet is facing an "all hands on deck" situation with respect to our environmental challenges.  And I believe strongly that as employees of large, global
companies we have an incredible opportunity to have a huge and positive
environmental impact by changing the way our companies operate
day-to-day, in addition to any individual actions we may take.

Does anyone have any insight you are willing to share?  I'm open to ideas, suggestions, help of any kind (pretty please!)!  You can post comments here or email me directly at csr at sun dot com.

Last week, as most of the world knows by now, the Olympic torch made its one and only US stop here in my beloved San Francisco.  The week started off with an inspiring protest action on the Golden Gate Bridge - after the bold protests in London and Paris, you knew San Francisco was not going to relinquish its well-deserved title of the world's hotbed of progressive activism! That being said, the San Francisco of 2008 seems more like the place people come to strike it rich than the place they come to live a life of political activism (who can afford to be a full-time activist in SF these days, anyway?).  So I wondered what kind of mass protest the Bay Area would be able to pull off, and it was with great anticipation and enthusiasm that I headed down to the Embarcadero to watch it all go down.

Full disclosure: I was planning on attending the protest anyway. My synagogue is part of a coalition of faith-based and other organizations seeking to raise awareness and action about the genocide in Darfur.  I wouldn't be able to join for the marching part (it's CSR report season for me and I couldn't take the whole day off!), but wanted to show my support for the cause. 

There were thousands of people lined up along the waterfront - many waiting for the protesters, many waiting (in vain it turns out!) for the torch itself. I saw all manner of homemade signs and banners, a sea of Chinese as well as Tibetan flags, and clever t-shirts with handwritten slogans.  And then I saw it. Hovering over the crowd in all its glossy glory - my first ever corporate-sponsored, pre-printed protest sign! 

What better to signify the San Francisco of today - the corporate excess that has come to define the Bay Area lifestyle and the activism that has long defined our fine city combine to create the perfect message vehicle for a San Francisco rally! Consumerism to clear your conscience (with no nod to the irony that consumerism itself has played a large role in China's place in today's world, both as a rising economic power and a target for progressive activism).

Yes ladies and gentlemen - San Francisco's big Olympic torch protest was brought to you in part by Credo (formerly Working Assets).

 

 
Initially these signs cracked me up, not only because they were like caricatures of San Francisco protest signs - "Another acupuncturist for a free Tibet;" "Another organic chef for a Free Tibet;" "Another vegetarian for a free Tibet." - but also because they reminded me of the signs I see at marathons and triathlons (sports that engage a large portion of the Bay Area population, myself included) with big corporate logos along side, "Go _____!" with the athlete's name lovingly written in the blank. 

It was one of those "only in San Francisco" moments for me. And it got me thinking: Was Credo's "sponsorship" of the protest march an innovative use of corporate responsibility as a business development tool? Or was it something else?

Certainly Credo's activist point of view is authentic - the company was founded on the idea that as a communications company, it had a unique capacity to help its customers express their citizenship through different kinds of activism and civic engagement.  But I wondered if Credo's full-fledged support of this march (the company also pre-printed signs that said, "CHINA: Listen to the Dalai Lama") would alienate as many customers as it might attract.

Like most difficult social issues, the ones associated with China and the Olympics (and all related issues) are not black and white. By coming out so forcefully on the side of one particular set of protesters - and ignoring all the other arguably legitimate protests, including the Darfur protesters and environmental activists - was Credo effectively telling those of us with nuanced or even different perspectives that it didn't really care for our business? If so, it's certainly that company's prerogative to do so. And some might argue that not only is it Credo's prerogative, it's shrewd marketing, too, because it reinforces the brand with the company's core consumers. In the competitive telecommunications market, keeping customers can be more valuable to your business than acquiring new ones.

Still, corporate sponsorship of a protest march targeting a government that is hoping to capitalize on the corporate spectacle that is the modern Olympic Games.  I don't know...does anyone else see the irony here? 

If I was better at math, things might have turned out differently for me.

"The corporate social responsibility movement is fundamentally changing the way we do business around the world and I want to re-focus my career in a way that will allow me to contribute to that change.  I want to promote business advocacy while encouraging global responsibility, with the end result being a re-definition of how we measure business success. I want to make the triple bottom line – people, planet and profits – a reality in American corporate culture.  I plan to do this by devoting my career to the field of socially responsible investing, empowering shareholders to use their influence to force companies to acknowledge and nurture the connection between corporate social responsibility and business success."  

That's the opening paragraph of my business school application essay. Then I took finance during my first year of business school and, well...I had to re-think things a little bit! But despite my inability to grasp Black Shoales or how to calculate a Beta, my interest in SRI and my belief in it as a tool for change persist to this day.

So it was with great interest that I read the Executive Summary of the Social Investment Forum's 2007 Report on Social Investing Trends in the United States (the SIF releases this trend report every two years).  Below are some key findings:

Socially Responsible Investing is Growing. Fast.
SRI is growing "at a faster pace than the broader universe of assets under professional management" in the United States.  Approximately one in nine dollars under professional management - 11% - are involved in SRI.

Since the 2005 report, assets under management that used one or more socially responsible investing strategies has increased from $2.29 trillion to $2.71 trillion.

Assets in socially and environmentally screened funds were up 13 percent, from $179 billion in 2005 to almost $202 billion in 2007.

Big Money has Big Dollars in SRI
The bulk of assets invested in socially screened investments comes from institutional investors (typically the most powerful and influential shareholders around) and high net worth individuals. 

Institutional investor assets in SRI were up 27 percent in 2007 to $1.88 trillion from $1.49 trillion in 2005.

High-net-worth clients had $39.5 billion invested in socially screened investments, up from $17.3 billion in 2005. 

The Future of SRI
SRI is continuing to grow and it's my belief that as investors become more and more hip to the shenanigans of the greediest sorts that run rampant on Wall Street and that are currently reverberating throughout our economy (because, you know, Enron wasn't enough of a wake up call!), SRI will become more and more popular.

How You Can Get In On the SRI Action
You don't have to be a high-net-worth individual or an institutional investor to be part of the socially responsible investing movement.  You know that money you put into your IRA every year? Direct it to a socially responsible mutual fund.  Check with your company's 401(k) plan - maybe you have an SRI option in there to which you can direct a portion (or all) of your investments. 

I'm pretty excited that Sun recently announced a new addition to our 401(k) plan. It's called a "brokerage window" and it allows employees to invest their 401(k) dollars into any mutual fund they want, including socially responsible mutual funds! I have been eager for Sun to provide me with an opportunity to direct my investments in a way that is consistent with my personal values and now I have one!

Do You Want a Copy of the Social Investment Forum Report?
If you are interested in seeing a copy of the Social Investment Forum's Executive Summary, post a comment below with your email address and I will send it your way. 

With all this talk of recession swirling about, and companies preparing for what may lie ahead, I am sure there is more than one person wondering what will happen to the corporate responsibility function. Will fears of - or actual - recession force companies to cut back on this area of the business and instead divert these resources into other key functions (or simply tighten the belt altogether)?  I suppose that if this question was being asked 10 or 15 years ago - before mainstream corporate people really understood the top- and bottom-line value CSR can bring to an organization - the answer might be yes. And I bet there are companies today who will cut back on their CSR "department" as a matter of economic necessity.  But my guess is that most companies will not. Because in 2008 companies are (finally) starting to understand that having a credible and productive corporate responsibility function is no longer a nice to have, it's becoming a license to operate.

Before I go on, I want to state a few caveats:

1) I am not sure what a recession will do to corporate philanthropy efforts, even at a company like Google. For a company like Patagonia, which has a corporate policy to donate 1% of sales revenue to environmental causes - philanthropy will be directly tied to sales and not the whim of possibly skiddish executives (although my guess is that at Patagonia this wouldn't be an issue anyway). My hope is that at the companies where recession (or recession fears) does impact philanthropy, the companies use it as an opportunity to get creative about what and how they give.

2) There are still quite a few companies at which CSR (or whatever they happen to call it) is not much more than a marketing program.  I am thinking these companies would reduce their CSR efforts because the companies still don't grasp the business benefits of CSR initiatives.

So why am I writing about this? Well, I think this question presents an interesting opportunity to collect some data that many in the CSR - and frankly anti-CSR - space have long lacked. The question is this:

What is the long-term impact of  CSR  on a company's performance?

I would argue that up until now, there has not been a quorum of credible CSR programs to enable anyone to answer this question. But the last few years we have seen an explosion of CSR initiatives - companies like Sun, GE and Brown-Forman have all formalized their corporate responsibility efforts - on top of a refining of CSR initiatives at early-adopter companies (like Nike, Starbucks, Vodafone, and others).  And many of these companies have embedded CSR so deeply into their operations and their brands, there is no way to let it go in tough economic times.

Here is what I propose:

Why don't  we choose a metric - stock price, revenue, profits - and use it to measure the performance of companies with CSR programs. We can do it over a five or ten year period and track and compare the performance of those companies that continue to use CSR as a key component of their overall business strategy and business operations against those that marginalize or, at worst eliminate, CSR efforts during challenging economic times.  It would be interesting to see if CSR has any measurable impact on a company's performance. I think this is a worthwhile exercise. I know it would not bear results for several years, but it could be an interesting tracking study.  I mean, why stop at five or ten years? We could go on forever. We can name it after me - I've always wanted something named after me! The Marcy Scott Lynn Sustainability Tracking Index. Hm, doesn't exactly roll off the tongue.

I feel pretty confident that the results of the study would show what I believe in my heart - that companies that truly embed corporate responsibility principles into their strategy and operations are better managed companies. Better managed companies do better in the marketplace. Therefore, companies with integrated CSR will do better in the marketplace.  I don't remember much from high school math but I think that's called a syllogism.  

Fortune's Most Admired Companies list for 2008 just came out and Sun made it this year! For the last couple of years we were listed as a "contender" - that means that we were ranked below #6 in our industry and so we were not considered to be ranked on the full list.  But this year we made it!  We are officially "Admired."

We rank #5 in the "Computers" category with a score of 6.39.  I'm not totally clear on the scoring, but Apple, which was ranked #1 in our industry (and overall), scored 7.42.  Now, I don't entirely understand that because Google, ranked 4th overall and second in their industry, had a score of 8.07 (and General Electric, which was 3rd overall, scored 7.85. Go figure). I'll leave the math to someone else and instead be happy that Sun made it onto the list this year and celebrate our continued progress in the marketplace of ideas.

Sun ranked #2 in our industry for "innovation" (behind Apple) and #3 for social responsibility (behind IBM and Xerox).  There are a few areas we didn't rank so high - namely around our financial performance. So hopefully as that continues to improve, so will our place on this list!

For more details about Sun's ranking, go here.

For more about the overall list, go here.