FW: Social and Environmental Risks

FYI

-----Original Message-----
From: Kilchrist, Shawn
Sent: Thursday, October 25, 2001 8:32 AM
To: Berggren, John; Gregorcyk, Vicky; Sutton, Lisa; Atwood, Mechelle; Barrett, Misty; Bromley, Paul; Sloan, Mary
Subject: FW: Social and Environmental Risks

As promised

-----Original Message-----
From: Iannarone, Lauren
Sent: Wednesday, October 24, 2001 5:55 PM
To: Kilchrist, Shawn
Subject: Social and Environmental Risks

Shawn:

Attached is a preliminary definition of social risk - let me know if it is not clear or needs to be further defined.

I thought you might be interested in the attached link to the UK's Institute of Internal Auditors magazine. There are several articles discussing social/environmental/reputation risk and role of the internal auditor. <http://www.iia.org.uk/knowledge/magart01.html<;

Thanks again for your help on this!

Regards,

Lauren

Social Risk: the risk associated with direct and/or indirect impacts of a company's business decisions and practices, business partnerships, products and services on its stakeholders and the communities where it operates.

Specific social risks that can impact one's ability to achieve business objectives include: child labor, security arrangements, indigenous land rights, labor rights, child labor, forced labor corruption, boycotts, shareholder resolutions, environmental justice, proactive dialogue and engagement with stakeholders (or lack of), freedom of speech, corporal punishment, public health

Stakeholder is defined as any individual, group, or organization able to affect, be affected by, or that believes it might be affected by, a decision or activity. This can include employees, activists, communities, indigenous populations, government, customers, investors

To provide an example - see below
Business Activity Social Risk
Business venture with government entity associated with repressive regime Forced labor, pension fund divestiture, NGO campaign, lawsuits
Operating in area of conflict Security arrangements, sanctions
Equity position in pulp, mining sector Indigenous land rights and compensation, migrant labor issues
Trading commodities with counterparties Ethical business practices and association of counterparties

Below is not an exhaustive list
Social risk can be assessed by:
Identifying and analyzing a corporation, business unit or project's stakeholders and their concerns
Identifying and analyzing the scope and level of influence that stakeholders can have on the objectives of the business and/or project
Including social assessment in due diligence and the environmental impact assessment
Identifying the lifecycle and impacts of a product or service or business decision on the communities and environment where the business activity occurs.

Social Risk can be managed by:
Establishing, disseminating and enforcing policies and procedures addressing human rights and environmental issues
Training managers to identify social/environmental risk
Establishing and implementing strategy for mitigating social and environmental impacts
Developing a stakeholder engagement strategy
Designating department/manager to manage social and environmental issues
Auditing facilities against set policies and procedures