Corporate Social Responsibility (CSR) is becoming an increasingly important area for all companies, particularly those with a high environmental impact. Some vehicle manufacturers have incorporated CSR it into their core strategy, but the picture varies widely. PSA Peugeot Citroen (PSA) stands out as relatively far advanced in this area. Susan Brown interviewed the head of CSR for PSA, Thérèse Martinet, Director for Environment and Sustainable Development, PSA Peugeot Citroen.
Where vehicle manufacturers traditionally publish ‘environmental reports’, PSA abandoned this policy in 2001, in favour of a broader disclosure of a range of sustainability strategic actions and achievements, via a dedicated website. That website has been up and running since 2004 and now provides rolling updates of CSR goals and achievements covering not just the environment, but also human resources, safety, and ‘corporate citizenship’, among others.
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The development of the CSR reporting strategy and the website was part of a wider formalised corporate strategy that set out three main challenges relating to the use of cars, that should become core to PSA’s corporate strategy, explained Thérèse Martinet.
Those three challenges are greenhouse gases, road safety and urban mobility.
PSA’s core strategy prioritises these three challenges as issues that the company should address to be successful. In this lies one of the most important aspects of a successful CSR strategy. It may seem obvious, but CSR is not just about reporting, it is about acting in a socially responsible way. This means putting CSR at the heart of corporate strategy.
Martinet explained that PSA decided to build its CSR reporting around the three issues above, but not to limit reporting to just those three areas. The company added in reporting on areas such as purchasing and human resources.
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By GlobalDataTo pursue efforts to develop solutions to the three challenges, PSA adopted a series of action plans. These are revised each year and usually run for a period of around three years. “It’s a challenge for a company to set up targets, to share them internally and to progressively integrate them into process decisions,” said Martinet. “By focusing on an action plan we have integrated more and more departments and increasingly that has impacted our core business.”
Martinet gave the example of purchasing. “We are now at the stage where buyers have to integrate CSR criteria into their job. They have to ensure suppliers are able to respect our social and environmental programme.” Purchasers are required to work with suppliers to enable them to meet PSA’s requirements.
What are the benefits of a good CSR strategy? According to Martinet a direct result of the strategy is the fact that PSA has one of the lowest average CO2 emissions levels amongst vehicle manufacturers – an issue that has risen to the fore in recent weeks. Where some vehicle manufacturers will have to change gear to reduce CO2 emissions, PSA says it has anticipated demands and has a strategy in place to continuously reduce them. Some 46% of PSA cars sold in Europe emit less than 120g CO2/km, according to Martinet.
Another direct result is that PSA has set up a worldwide social agreement with 35 trade unions in ten countries. “We are deploying this in other countries but it has been a real success and helped considerably in our dialogue with employees,” said Martinet.
PSA has not identified concrete economic benefits. All Martinet can say is that it is helping the company to better understand the needs of the future and anticipate future requirements.
Will we see a day when vehicle manufacturers will announce that they will aim to make their manufacturing businesses carbon neutral? This is not unrealistic, said Martinet, but the clear focus has to be on reducing the greenhouse gas impact of a car during its use since that is when most emissions are generated.
According to the Institute for Lifecycle Environmental Assessment, manufacture accounts for around 10% of carbon emission during its life, a figure that Martinet estimated at around 5%. Nevertheless PSA is taking action across its plants and CO2 emissions in its French plants have been reduced by around 40% in the last ten years.
A forthcoming action plan target will be a specific target to reduce CO2 emissions from its manufacturing operations. Several manufacturers already have targets but they are not particularly challenging. For example GM is aiming for 8% reduction by 2010 compared to 2005, and Toyota aiming for 10% reduction by 2010 compared to 2005. It should be noted, however, that Toyota produces half as much CO2 per vehicle as GM.
So what does Martinet think are the core strengths of PSA’s approach? “We have some strengths and some original approaches,” said Martinet. “Firstly, transparency of what are the main challenges. This is very much sewn in to our industrial strategy and we made a decision to disclose this. This differs from a ‘checklist’ approach.”
Secondly, Martinet cites consistency. The CSR strategy means that core principles are in place throughout the whole business. As an example one of the principles that the company adheres to is that innovation and new technology must be useful. “We only develop products that customers can buy, and this leads our innovation strategy. This is the most efficient strategy.”
It is interesting to note that one of Alan Mulally’s early findings when he took over as CEO of Ford was that there is a lack of consistency. “I’ve never seen a company with the lack of consistency of purpose as Ford,” he told Automotive news.
Thirdly another success is the priority action plan. This is considered a real success because it allows PSA to measure progress.
PSA is listed in two SRI (socially responsible investment) indices. They are the FTSE4Good and the SAPI/Eurozone. In addition it has received an A Rating from corporate ratings agency RepuTex.
So how will the strategy develop in future years? According to Todd Cort of csrnetwork, which published the Accountability Rating 2006, ranking PSA first amongst vehicle manufacturers, all vehicle manufacturers fall down in terms of the ‘validation’ of their CSR reporting.
“Vehicle manufacturers have not yet bought in to the idea of independent assurance.” By this he means the independent auditing of what companies say in their reports, as well as what they don’t say. PSA’s environmental data is audited by PricewaterhouseCoopers but that is all. Cort says that many companies consider this area a waste of money because no-one is asking for it, but adds that for companies to be accountable, they have to be able to verify that.
PSA falls down on another area too – according to csrnetwork PSA needs to improve its stakeholder engagement. Cort is looking for companies to identify a range of stakeholders, and engage with them, whilst understanding why. Martinet says that PSA has increased its list of stakeholders but does not disclose contacts on a regular basis. Indeed, she agrees that this is an area in which PSA can progress.
As somebody who regularly asks questions of vehicle manufacturers, such as how many models are produced per plant, I can probably draw up my own index of which companies are engaging with stakeholders, and which are not. I can confirm that PSA is one of the better companies in this area.
As for the future, a recent report by Citigroup concluded that PSA is one of the companies that stand to benefit from tightened CO2 emissions rules. Perhaps, because of its CSR strategy and its willingness to listen to stakeholders, PSA has anticipated the trend, and brighter days are ahead, after all.
Susan Brown
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What is CSR?
Corporate Social Responsibility (CSR) is about how businesses align their values and behaviour with the expectations and needs of stakeholders – not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company’s commitment to be accountable to its stakeholders.
CSR demands that businesses manage the economic, social and environmental impacts of their operations to maximise the benefits and minimise the downsides.
Key CSR issues include governance, responsible sourcing, eco-efficiency, environmental management, stakeholder engagement, labour standards, employee and community relations, social equity and human rights.
CSR is not only about fulfilling a duty to society; it can also bring competitive advantage. Through an effective CSR programme, companies can:
- improve their access to capital
- enhance their brand image
- increase sales
- attract, retain, motivate and develop employees
- sharpen decision-making
- improve risk management
- reduce costs.
Source: csrnetwork
