"Every time you do the right thing it's good for business."
Michael Crooke
former Chief Executive Officer
Patagonia
Corporate Responsibility Audit®
Auditing your company's level of corporate accountability reveals how well its does what it says it stands for. Whether we conduct the assessment or develop a custom framework for you to self-audit, our proven sustainability auditing process ensures that your practices, processes and systems reflect your core values, meet stakeholder expectations, and support the company's growth strategy.
As the basis of a public report or as an internal roadmap for organizational change, the Corporate Responsibility Audit® is a comprehensive and integrated assessment of corporate culture and operating practices across key corporate functions and business units. It provides a clear, objective picture of just how well a company is performing against its own values and standards, industry trends, the best practices of comparable companies, the expectations of key stakeholders, and the bottom line.
The Audit employs a systematic process of assessment, recommendations, and cost-benefit analyses to inform management of often hidden reputation and financial risks and viable and responsible solutions.
Practice areas assessed include:
- Quality management systems and supply chain management
- Environmental practices and energy conservation
- Human resources, labor relations, and human rights
- Community involvement
- Stakeholder collaboration
- Governance
Inherent in assessing a client's operating practices is an understanding of its corporate culture. Does the company's culture respect employees for their skills, intellect and varied experiences, and encourage them to be creative, self-directed, and do the right thing? In every company there are also subcultures, which can vary widely between departments and business units. Unless the corporate culture and subcultures are aligned over the business case for corporate responsibility, it's unlikely the company will sustain more progressive and responsible practices in the long run.
SmithOBrien Corporate Responsibility Audits have resulted in recommendations that identified:
- 5.9% rise in return on sales, by saving $8.5 million in reduced waste
- $450,000 in savings, by improving employee access to mental health benefits and therefore, reducing absenteeism 2%
- 25% increase in production capacity, by reducing EHS regulatory requirements and related production disruptions
- 7% rise in net profit, by saving $459,000 through improving job satisfaction in high turnover, dead-end jobs
- 2% increase in market share, by collaborating with a non-governmental organization (NGO) to open a new market segment
Supply Chain ROI
Our expertise at quantifying the financial effects on corporations of adopting responsible operational practices includes the supply chain. Corporations spend substantial resources on developing brand image and shareholder value, but their global reputation and earnings are inextricably tied to the labor, environmental, and human rights practices of partners and suppliers.
Implementing a sourcing strategy and supplier code of conduct, often the first steps toward reducing risk inside the supply chain, can be fraught with administrative and logistical problems, unreliable results, and costly reputation and financial consequences. In addition, successful sourcing programs often require frequent internal and independent supplier monitoring and incentives to achieve the desired results.
By upgrading purchasing and data collection systems, clients can regularly track and quantify the return on investment from implementing a supplier code of conduct. Clients can also track how their investment in improving the working conditions of their suppliers has affected the economies and sustainability of surrounding communities.
Shareholder Resolution Advisory Service
Quantifying the business case can be expensive. Moreover, the initial financial return from more responsible and sustainable practices is likely to be too small to compete with faster ways to reduce costs or add revenue. Yet, for many CEOs, “making a [shareholder resolution] go away,” often demonstrates the business case more than a costly analysis.
Shareholder advocacy continues to grow as a powerful force for positive change in the behavior of corporations. It’s the right of every shareowner to ask questions and seek to influence corporate practices. Shareholder resolutions—whether calling for the annual election of all board members or reduced executive compensation—are, at best, a costly management distraction and, at worst, a red flag to stock market regulators as well as investors.
While it’s impossible to predict the frequency of shareholder resolutions, they can be prevented by:
- Building goodwill through promptly responding to shareholder concerns and demonstrating a willingness to work with potential filers
- Carefully listening to their concerns and expectations
- Thoughtfully negotiating a mutually beneficial resolution
- Following through on agreements
Our knowledge of and reputation with shareholder activists and socially responsible investors has allowed us to mediate viable solutions quickly to most shareholder concerns before they are filed with regulators or appear in a proxy statement.
The results can:
- Increase the likelihood of a successful investment,
- Save the buyer (and its shareholders) millions of dollars by avoiding an acquisition that can damage corporate reputation, brand equity and financial performance, and
- Warn the buyer of what lies ahead and what is needed to successfully overcome the obstacles or exposure.
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