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CR and our business strategy
WPP businesses are at the interface between business and the consumer. Increasingly, the trust consumers place in a brand is being determined by the responsibility demonstrated by the brand owner. Never before has corporate responsibility (CR) been so close to the heart of business.
In a year when the global economy continued to suffer the consequences of practices in the financial sector and world leaders struggled to agree a plan for avoiding the forthcoming climate crisis, issues of responsibility weigh heavily on business. We anticipate increased scrutiny by consumers of the climate impact of their purchase decisions and a desire to see companies show leadership in tackling climate change.
Our leading multinational and national clients are responding to this agenda in their operations, products, supply chains and marketing. Serving the CR communications needs of our clients is a growing business opportunity for WPP companies. In addition there are a number of CR issues – both risks and opportunities – that we manage across our own businesses.
Our companies’ CR activity supports our business strategy in a number of areas. These include:
- Generating new business opportunities
Increasingly, leading companies require a partner to help them communicate their social and environmental agenda. Our CR program enhances our understanding of these issues and supports our businesses in competitive pitches.
- Attracting and retaining the best people
There is strong competition for talent in our industry and questions relating to CR are frequently raised by our people and new candidates during job interviews. The future generations that will eventually become our talent pool view CR issues as central to business. Creating a diverse company culture, adopting leading talent practices and demonstrating our commitment to social and environmental issues is key to our operating companies’ ability to attract and retain the best people. A diverse workforce also enhances our understanding of consumers in all markets.
- Enhancing our reputation
We reduce the risk of adverse publicity by ensuring that our work complies fully with regulations and marketing standards. We also carefully evaluate the risk associated with new commissions. Our pro bono work and support for charities and community organisations reinforces our reputation for making a positive contribution to society.
- Meeting investor expectations
WPP share owners continue to show interest in our CR practices and we aim to respond constructively to their requests for information. In 2009 this included requests for information from, or meetings with, the following organisations:
- Carbon Disclosure Project
- Dow Jones Sustainability Index
- Ethical Investment Research Service (EIRIS)
- Goldman Sachs
- Jupiter Asset Management
- LCF Rothschild
- Norges Bank Investment Management
- UN Principles for Responsible Investment
- Improving efficiency
Our climate change strategy is reducing costs associated with business travel and energy use. Investment in videoconference facilities enables an increasing number of meetings to be held without the cost and carbon footprint of flights.
CR issues in our supply chain and our environmental impacts beyond climate change are also important for WPP and its companies.
Paul Richardson, WPP’s Group finance director, is the Board director responsible for corporate responsibility. He chairs WPP’s Corporate Responsibility Committee, established in 2003. The committee is made up of senior representatives from our companies. Its role is to advise on policy. The committee met once formally in 2009 when the main topics discussed were:
- Client work-related risk
- The impact of sustainability on marketing
- Climate strategy
Paul Richardson provides an annual assessment of corporate responsibility risks and performance to the Audit Committee. This is in addition to the business and financial reporting risks process described in Internal control.
WPP’s Code of Business Conduct and CR Policy set out the standards we expect our companies and our people to meet in their work. They provide guidance in dealing with a wide range of ethical, social and environmental subjects. Both documents are publicly available on our website, www.wpp.com. The Code was strengthened during 2009 to incorporate key principles from the CR Policy and include guidance on avoidance of risks relating to client work. CEOs of each of our businesses complete an annual statement of compliance with the Code of Business Conduct.
We have established a set of key performance indicators (KPIs) relating to employment, social investment, environment and climate change. We report performance against these in our annual Corporate Responsibility Report.
CR data is collected quarterly through our Group financial reporting system. WPP’s internal audit function assesses CR risks relating to employment, marketing ethics and business ethics during reviews of Group companies.
We will publish our eighth Corporate Responsibility Report in June 2010. These reports provide a detailed account of our CR performance and are the benchmark for our sector. They are an attribute to our businesses during pitches. A summary of our progress is provided below.
|How we manage CR risk and opportunity|
|Issue||How it is managed||Aims|
|The social and environmental impact of our work for clients.||Opportunities to advise clients on marketing with a social or environmental dimension are identified by our companies.||To be a centre of excellence for environmental and social communication.|
|Risk to WPP’s reputation from undertaking controversial client work.||Upward referral within operating companies and to WPP ethical review meetings.||Protect WPP’s reputation by taking decisions at the appropriate level.|
|Marketing ethics, compliance with marketing standards, and increasing transparency about our marketing practices.||Managed by our operating companies with referral to Group directors as necessary.||Comply with all laws and industry codes governing marketing material. Improve standards and measurement in marketing practices.|
|Privacy and data protection are priority issues for all our companies and a particular focus for our research and digital agencies. Operating companies hold data on employees, clients and consumers.||Assisting our operating companies in developing principles on privacy. Our key digital marketing and research agencies have nominated senior executives to provide leadership on privacy and to work with other agencies in the Group.||Meet best practice standards, to contribute to the debate on privacy and to increase transparency for consumers on how their data is obtained and used.|
|Employment, including diversity and equal opportunities, business ethics, employee development, remuneration, communication and health and safety.||Human resources policies are set and implemented at operating company level. WPP’s chief talent officer assists the operating companies in attracting, developing and retaining talent.||Support our companies’ talent recruitment and retention through our reputation for corporate responsibility. Improve standards and measurement in employment.|
|Social investment, including pro bono work, donations to charity and employee volunteering.||Pro bono projects are agreed between WPP companies and the charities concerned. Many of our companies have long-standing relationships with their pro bono partners. WPP the parent company helps to co-ordinate pro bono projects involving multiple WPP companies or cross-Group collaborations.||To make a significant contribution to good causes through pro bono application of our marketing skills and direct donations to charity.|
|Climate change, including the emissions from energy used in our offices and during business travel.||Cross-functional Group-wide Energy Action Teams and a network of agency Climate Champions help implement our climate change strategy.||Reduce absolute CO2 emissions by 40% by 2020 (from 2006 level). Reduce per head carbon intensity to 1.2 tonnes by 2020 (from 2.6 tonnes in 2009).|