Stakeholder dialogue

How do you give a global corporation a social conscience?

"We have thousands of suppliers in hundreds of countries. Can we really ask them all to meet the same set of social standards? And how are we supposed to check that they do?"

"How far are we expected to go to protect human rights in a country where the government doesn’t?"

"It would be unthinkable for a woman to work in an ABB factory in this country. So how do we prove that we don’t discriminate on grounds of gender?"

At the beginning of 2001, ABB published the first version of its corporate social policy. Simultaneously, we launched our most ambitious program yet of stakeholder consultation.

There followed several months of focused debate on five continents, as we road-tested the policy and considered how to implement it.

Some tricky moral dilemmas emerged, as the moral certainties of ABB’s new policy came up against some of the gray areas of the real world.

Most countries where ABB has a major presence took part in the global consultation. ABB managers and workers met local stakeholders in 34 countries. The range of stakeholders represented was impressive - including national and international non-governmental organizations (NGOs), trade unions, central and local government, academics, the media, religious groups and business partners.

From paper to practice
ABB intends to implement the policy throughout its global organization and by doing so help raise quality of life wherever we have a presence. We realize this will take time. We are at the start of a long journey, but our plans are laid.

The policy (see page 50 for the complete text) was published in February 2001 to stand alongside ABB’s environmental policy, itself nearly a decade old. The policy defines standards and goals for us to achieve and we are now developing guidelines and indicators to measure our performance.

ABB’s social policy is drawn from unimpeachable sources: the United Nations Universal Declaration of Human Rights, the International Labor Organization’s fundamental principles on rights at work, the OECD Guidelines for Multinational Enterprises, and the Social Accountability 8000 (SA 8000) standard, an auditable standard for the protection of workers’ rights developed by the Council on Economic Priorities Accreditation Agency.

ABB’s social policy

1. ABB in society
2. Human rights
3. Children and young workers
4. Freedom of engagement
5. Health and safety
6. Employee consultation and communication
7. Equality of opportunity
8. Mobbing and disciplinary practices
9. Working hours
10. Compensation
11. Suppliers
12. Community involvement
13. Business ethics

(See section "Policies and organization" for the complete text)

Dialogue in Sweden Roundtable dialogue on our social policy with stakeholders in Sweden – a country where ABB is playing a leading role in several initiatives, including the United Nations Global Compact.

Dialogue in Austria Another form of stakeholder dialogue, this time in Austria, where the ABB employees at the venue were invited to witness the dialogue and participate in the discussions.

Commitment to dialogue
The first of 13 principles in the social policy commits ABB to open dialogue with stakeholders; it was therefore fitting to use stakeholder dialogue to evaluate the policy. The countries we visited were chosen to represent as diverse a range of culture, geography and development as possible.

Initially, we asked the discussions to focus on two main areas:
1. Does the social policy cover all the issues it should? What should be added and which issues are most important?
2. How do we put the social policy into practice? How can we measure compliance and progress?

After the first round of dialogue, countries could proceed to a second round, in which they were asked to identify the principles that should have the highest priority in their country and those where ABB was most vulnerable to criticism. By the end of 2001, 11 countries had progressed to this second stage.

Countries participating in stakeholder dialogue

---

Europe	Africa/ Middle East	Americas	Asia/Pacific
Austria	United Arab Emirates	Argentina	Australia
Czech Republic	Egypt	Brazil	China
Estonia	South Africa	Canada	Japan
Finland		Colombia	South Korea
France		U.S.	Malaysia
Germany		Venezuela	Singapore
Greece			Thailand
Hungary
Italy
Latvia
Norway
Poland
Portugal
Romania
Sweden
Switzerland
Turkey
United Kingdom

---

Countries highlighted have completed a second round of dialogue.

Variety of participants
Countries were encouraged to hold the stakeholder dialogues as round-table discussions, with an independent facilitator. This was the most common format, though input also came from one-to-one meetings, emails and exchanges of letters.

ABB employees, including senior managers and operational staff, were always involved in the dialogues. Indeed, in one country all employees at the venue witnessed the dialogue as a participating audience. An average of three external stakeholder groups were represented at each meeting.



The right scope
Almost all the consultation dialogues - 30 out of 34 - concluded that the scope of ABB’s social policy was right; it did not need to be extended or reduced. But in four countries, suggestions for expanding the policy were made. The issues that were raised included:

• Assessments of the direct and indirect social impacts of products and services
• Policies for working in zones of conflict
• Protection of indigenous peoples whose communities and ways of life are threatened by development
• Abuse of human rights by security forces assigned to protect ABB’s property and employees
• Standards for corporate governance
• Public reporting of all taxes and fees paid to government officials and departments
• The social policy should apply to joint ventures and minority investments
• Permanent, full-time employees should be protected against being replaced by lower-paid casual employees with less or no employment rights

Some of the stakeholder dialogues concluded that the social policy was too inward looking, too focused on employee matters. They recommended more consultation with local communities and concrete commitments to define and participate in projects for the benefit of the local communities.

The dialogues themselves generated many invitations for ABB to join various local initiatives.



What’s important?
In the first round of stakeholder dialogues, all 13 principles of the social policy drew comments – some many more than others. The most discussed principle was community involvement, followed by health and safety and equal opportunities. Working hours and compensation drew the least comments (see graph 2).

In the second round of dialogue, stakeholders were asked which of the principles should receive the highest priority in implementation and which were the ones on which ABB was most vulnerable to criticism (see graph 3).

While the sample size is small (based on second round dialogues in 11 countries to date), it is notable that the principle of greatest concern was the social performance of ABB’s suppliers, rather than ABB itself. This was followed by health and safety and equality of opportunity – areas which ABB has already prioritized for closer attention.



How to measure performance?
When it came to putting the social policy into practice, almost all the dialogues revealed the need for a clearly defined and planned implementation process. The social policy needs support from the top and the principles need to be integrated into organizational structures and business processes. In only two countries was it considered necessary to adapt the policy to local conditions.

Measurement of performance was the most frequently raised concern. Quantifiable indicators must be defined to gauge performance and year-on-year improvement. The current lack of such indicators was perceived as a policy weakness.

Reporting should be done country-by-country to be meaningful; the diversity of the countries in which ABB operates would make it very difficult to consolidate data into global indicators.

Hand in hand with quantifiable indicators was the need for objectives and targets for each principle in the social policy. Other comments included the need for annual reports and external audits.



Keep talking
Our first experiment in stakeholder dialogue on a global scale has been very valuable. All parties have appreciated the opportunity to get involved.

The comments on the social policy itself will serve as the basis for a second version of the policy, planned for 2003.

The number of comments on implementation, measurement and reporting also indicate that stakeholders want to see verifiable reports of ABB’s social performance and check what progress is made over time. A number of projects are now being initiated as a result of these comments. Specialized teams, led by the respective group function owners of the social policy principles, are developing implementation guidelines and relevant indicators to measure continuous performance improvement.

Stakeholder consultation on the social policy will be completed in all of the 43 countries initially invited to participate. In 2002, we will also begin round-table stakeholder dialogues about ABB’s environmental policy and our "common efforts" participation.

Finally, our experience affirms that stakeholder dialogue is a vital part of a company’s social policy. By addressing the concerns of stakeholders, it confers and strengthens the social license to operate - a crucial factor in achieving sustainability.