Getting on Track

ISO 26000 is here. Are you ready? Maybe the better question is: Do you care?You should. ISO 26000:2010 — Guidance on social responsibility,1 published last November, has been touted as the new standard that can help manage social responsibility (SR) issues at your organization.

It’s similar to other familiar standards such as ISO 9001, which helps manage quality, and ISO 14000, which helps handle environmental issues. But it also has its differences.

ISO 26000 is not a certifiable management system like ISO 9001 and ISO 14000. It’s a guidance standard. And it wasn’t written by experts like you, who were already practicing quality and environmental management. It was written by experts drawn from society to represent seven core SR subjects: governance, human rights, labor practices, environment, operating practices, consumer rights and community rights.

The goal of ISO 26000’s authors was to write a standard to inform organizations of their social responsibilities and help them formulate an approach to address these seven areas of concern that can have a major impact on how an organization performs and ultimately affects the outside world.

ISO 26000 is an unprecedented standard that presents a unique opportunity for the quality community. But too few quality professionals realize the opportunities the standard offers them and their organizations.

It’s time for the quality community to wake up and take notice of what this standard represents, what SR issues it addresses and what influence quality can have on SR. After all, more and more of the business world is paying attention to SR. Quality should, too.

SR issues matter
CEOs already know SR issues aren’t just feel-good, politically correct topics. They are serious issues that must be addressed.

A recent survey of 933 CEOs of companies who signed the United Nations Global Compact—an international network of organizations focused on environment, labor and human rights issues—showed 93% believed environmental, social and corporate governance issues covered by the compact are important to their future success.

In addition, 81% of the surveyed CEOs said they believed they have fully embedded these issues into the strategy and operations of their companies.2

In contrast, a recent ASQ/Manpower survey of more than 1,000 quality professionals found that while 70% of respondents are familiar with their organization’s SR activities, only 28% viewed their organization’s SR efforts as being fully integrated into daily operations and decision making. Less than half (43%) responded that quality professionals are included in their organization’s SR efforts.3

Systemic approach lacking

Organizations that have already embarked on the SR journey have taken different approaches. Some have installed an SR officer, while others have created cross-functional SR teams. Many simply address SR issues as they arise.

But few have the systematic approach outlined in ISO 26000, and few SR officers have experience creating such a system or have the networks across their organizations to implement one.

There simply has not been time for the practice of SR to evolve—at least compared to how long it took to develop practices in quality and environmental management. But the new standard may offer quality professionals a once-in-a-lifetime opportunity to fold SR into their quality practices.

Unknowingly, you and your colleagues may already be grappling with many quality issues that are fundamentally rooted in SR issues. Now, you have the ISO 26000 standard to spell out core SR subjects and how they relate to quality issues you work with daily.

Organizational governance: This is defined as the system by which an organization makes decisions and implements change in pursuit of its objectives. Effective organizational governance is particularly critical because it enables an organization to take action on other core SR issues.

Many quality problems can be traced back to failures of organizational governance, which manifest as a lack of a robust quality program or lack of management support for oversight programs.

For instance, the Rogers Commission investigating the 1986 Space Shuttle Challenger explosion charged "there was a serious flaw in [NASA’s] decision-making process leading up to the launch." One of the commission’s recommendations was for NASA to develop a robust quality management system (QMS). Published "lessons learned" documents indicate the agency took this advice to heart, instituting the kind of QMS recommended in ISO 9001.4

More recently, the National Commission on the 2010 Deepwater Horizon Oil Spill and Offshore Drilling reported, "The well blew out because a number of separate risk factors, oversights and outright mistakes … most of … [which] can be traced back to a single overarching failure—a failure of management."5

BP has always had an aggressive SR program—including development of alternative energy systems—and highly sophisticated environmental and safety management programs. Yet, the spill resulted from cascading failures to follow the company’s own policies and programs—a fundamental quality failure and a failure of its SR program to have functioning organizational governance.

We hope none of you will have to deal with governance failings of such magnitude, but certainly you will have regular encounters with the failure to have a robust quality system that derives from shortcomings in an organization’s governance system. This may be why so many quality improvement projects fail to deliver on their promised results: They get lip service but not genuine management support.

Human rights and labor practices: Human rights includes civil and political rights, as well as economic, social and cultural ones. Labor practices encompass all of the policies and practices of work performed in support of an organization, including typical contract work used by companies such as Nike.

The Massachusetts Institute of Technology’s Sloan School of Management evaluated the human rights and labor practices of two comparable Nike suppliers in Mexico that produce T-shirts. Researchers found human rights concerns—such as forced overtime and discriminatory labor practices—at one plant. The second plant, however, had far less need for overtime (which was fully voluntary), and labor practices there included more training and greater opportunity for higher income.

Sloan’s analysis determined the underlying mechanisms driving the differences in the plant’s conditions involved quality. The second plant practiced lean manufacturing principles and employed multi-skilled, autonomous work groups. This yielded greater efficiency and quality, and plant managers were better able to schedule workload—avoiding excessive, forced overtime—and offered wage increases by sharing efficiency gains.

These practices were the outcome of the second plant’s having more frequent and more collaborative interaction with Nike quality professionals. The first plant’s relationships with Nike officials were more distant.6

Nike’s motivation in working closely with the first plant was to improve quality and delivery. As an outcome, not only did it improve quality and delivery, but also the plant’s human rights and labor practices.

Environment: The environment issue includes waste minimization, sustainable resource use, climate change mitigation, environmental protection, biodiversity and habitat restoration. While quality professionals often define waste as activities that add cost but do not add value, the definition also applies to raw materials and byproducts. Many organizations have found ways to reduce or eliminate waste of materials while adding value, such as improved product quality.

In the early days of pollution prevention, for example, Ford Motor Co. replaced trichloroethylene, a toxic solvent for degreasing, with soap and water. Not only did this change eliminate the waste toxic solvent (the water was recycled), but it also delivered a cleaner product.7

The environment is an SR issue in which it has already been accepted—and expected—that quality principles and environmental management come together to address situations. This reflects the benefits of engaging quality professionals in addressing environmental issues.

Fair operating practices: This issue has a broad scope that includes anticorruption, responsible political involvement, fair competition, promotion of SR in the value chain and the respect for property rights. For example, integrating SR into supply chain contracts and capacity building in the value chain are two areas in which organizations have been making progress and deriving benefits.

One example of fair operating practices is Starbucks’ establishment of Farmer Support Centers in Costa Rica and Rwanda. These centers provide local farmers resources and expertise to help lower production costs, reduce fungal infections, improve coffee quality and increase production of premium coffee. The centers also provide funding for loans that help farmers invest in their farms and make capital improvements, which increase their profits.8, 9

By helping to sustain local enterprises and strengthen their communities, companies can ensure a healthy supply of high-quality raw materials and employees.

Consumers: This core issue includes fair marketing and contracting, consumer health and safety, sustainable consumption, consumer service, data protection and privacy, access to essential services, and education and awareness.

Responding to consumer demand for environmentally sound products, General Electric (GE) created a division focused on developing green products and services. Its Ecomagination Division reached $18 billion in revenues in 2009—the size of a Fortune 150 company. GE now predicts revenues of Ecomagination products, which provide value to GE and society, will grow at twice the rate of its total company revenues in the next five years.10

This core issue on customers addressed in ISO 26000 seems to borrow from a fundamental part of ISO 9001: determine and review customer needs. This aspect not only supports an effective QMS, but it also delivers the information for improvement of products and the development of new products to meet changing societal needs.

Community involvement and development: Community involvement includes education and culture, employment and skills creation, technology development and access, wealth and income creation, health and social investment.

Alcoa, a leading producer of aluminum, exemplified this focus while working with local governments to locate a bauxite mine in the Amazon Rainforest, which had developed into a contentious issue. Alcoa undertook a wide variety of programs to protect and improve the region’s environment, society and economy. One of the initiatives is a partnership with the National Industrial Apprenticeship Service (known as Senai) to provide the local labor force with employment qualifications.

Alcoa has been offering technical courses and training to about 2,800 local people to create workers who can deliver high-quality services to the Alcoa mine, the industrial support network that will grow around the mine and the community services that will be required for the substantial city that will result.11

Organizations such as Alcoa recognize that although they have become global, they still are part of and have obligations to local communities. They also have realized the shared benefits from their support of education, health and economic development in their individual communities.

This brief look at the core SR subjects described in ISO 26000 shows a clear intersection of SR and quality. What sometimes is murky is what that intersection means to the quality community.

Leveraging the standard
What does ISO 26000 specifically offer to the quality community? How can quality professionals address social responsibilities? How can they become engaged in SR practices?

Every organization has social responsibilities that can be recognized and addressed in a variety of ways. This will affect the SR-quality interaction. Already, many high-profile companies have turned to SR to help them make critical business decisions.

For example, PepsiCo, the consumer products giant, found itself facing a future in which its major products would be under increasing pressure from health-conscious consumers who view PepsiCo products as non-nutritious. PepsiCo’s production capabilities were being threatened—with challenges in ensuring adequate supplies of water, fuel, electricity and labor. PepsiCo’s response was to integrate the goals of human well-being, talent and environmental sustainability into its business strategy.12, 13

With its focus on human well-being, PepsiCo is changing its portfolio of products to healthier snacks and drinks that combat the obesity epidemic. PepsiCo’s workforce sustainability efforts include community capacity building through educational programs for employees and their families.

With its focus on environmental sustainability, PepsiCo has set rigorous targets for reducing its consumption of water, fuel and electricity. Between 2006 and 2009, PepsiCo improved its water-use efficiency by more than 15%, and it plans to increase that to 20% by 2015. PepsiCo’s commitment was evidenced by CEO Indra Nooyi’s speech after accepting the 2010 Committee for Economic Development Business Statesmanship Award: "Being a good company doesn’t come at the expense of being a successful one." 14, 15

Different approaches

As the survey showed, the level of SR integration varies from organization to organization. The involvement of individual quality professionals in SR can also vary.

Here lies the golden opportunity for the quality professional: Regardless of the level of integration, the quality community already has the skills and networks to be able to use ISO 26000 and bring together subject matter experts to incorporate and integrate SR concepts into everyday operations and decision making.

In fact, higher levels of management at many corporations already expect quality executives to act as the "conscience" of organizations, even when social responsibilities are not overtly recognized.

Here are some ways quality professionals can use their abilities to incorporate and integrate SR into operations and decision making:

- For organizations that have established an SR function, policies and programs, internal quality professionals can ensure there is appropriate collaboration and integration of quality and SR programs.
- For organizations without SR functions, internal quality professionals can use ISO 26000 as a checklist to ensure vulnerabilities are addressed. Quality professionals should also seek opportunities to advocate for an organizational SR program.
- For all organizations, it will be critical to acknowledge and recognize existing SR performance, highlighting the relationships with quality, safety, environment, risk management and other management arenas.
- Professionals external to organizations—such as quality consultants—should consider SR issues in their analysis of quality problems and include SR issues in quality program development, regardless of whether they are specifically identified as SR. Management consultants, too, can begin to integrate SR issues into the management system.
- Organizations with SR programs already in place can use ISO 26000 as a confirmation of their programs.
- Regardless of the organization’s degree of SR awareness or implementation, participation by quality professionals in evaluating the potential benefits of ISO 26000 to the organization creates new opportunities for them to capitalize on the leverage that can result from the intersection of quality and SR.

ISO 26000 may mature simply as a useful guide for quality professionals. On the other hand, if full opportunities are recognized and seized, the intersection of quality and SR could be the lever that expands and strengthens the role of the quality profession.

References
1. ASQ/ANSI/ISO 26000: 2010—Guidance on social responsibility, ASQ Quality Press, 2010.
2. Peter Lacy, Tim Cooper, Rob Hayward and Lisa Neuberger, A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010, Accenture, 2010, https://microsite.accenture.com/sustainability/
research_and_insights/pages/a-new-era-of-sustainability.aspx.
3. ASQ and Manpower Professional, "Social Responsibility and the Quality Professional: The Implications of ISO 26000," white paper, Feb. 15, 2011, http://asq.org/2011/02/iso-26000/social-responsibility-and-the-quality-professional-the-implications-of-iso-26000.pdf.
4. The House Science and Technology Committee, "Report of the Presidential Commission on the Space Shuttle Challenger Accident," Oct. 8, 1986.
5. The National Commission on the 2010 Deepwater Horizon Oil Spill and Offshore Drilling, "Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling," Jan. 11, 2011, www.oilspillcommission.gov/sites/default/files/documents/
deepwater_reporttothepresident_final.pdf, p. 90.
6. Richard Locke and Monica Romis, "Beyond Corporate Codes of Conduct: Work Organization and Labor Standards at Two Mexican Garment Factories," working paper, Massachusetts Institute of Technology Sloan School of Management, August 2006, http://mitsloan.mit.edu/newsroom/pdf/conduct.pdf.
7. Environmental Pollution Protection Project, "Introduction to Pollution Prevention Training Manual," July 1995, www.epa.gov/ppic/pubs/intropollutionprevention.pdf.
8. Starbucks, "Supporting Farmers and Their Communities," www.starbucks.com/responsibility/sourcing/farmer-support.
9. Starbucks, "Starbucks Increases Commitment to Supporting Coffee Farmers and Communities; Announces New Environmental Initiatives," May 14, 2008, http://news.starbucks.com/article_display.cfm?article_id=46.
10. General Electric Ecomagination, www.ecomagination.com.
11. Alcoa, "Juriti—Sustainable Development in Amazônia," 2011, www.alcoa.com/brazil/en/custom_page/environment_juruti_faq.asp.
12. Andrea Newell, "PepsiCo Improves Products, Stabilizes Communities and Helps the Environment," TriplePundit, Feb. 25, 2011, www.triplepundit.com/2011/02/pepsico-sustainable-agriculture-project/comment-page-1.
13. PepsiCo, Sustainability Efforts, www.pepsico.com/investors/sustainability-efforts.html.
14. PepsiCo Chairman and CEO Indra Nooyi, acceptance speech for 2010 Committee for Economic Development Business Statesmanship Award, www.pepsico.com/assets/speeches/ced%20statesmanship%20award.pdf.
15. Deborah Merrill-Sands, "Principled Leadership: A Model for the ‘Reset’ Economy," Dmerrillsands’s Blog, Aug. 4, 2009, http://dmerrillsands.wordpress.com/tag/indira-nooyi.

Reference: QP