Dow Jones Sustainability Index - A Case Study on Emerging Markets

Dow Jones Sustainability Index – A Case Study on Emerging Markets by Silvana Pintão Master’s Dissertation in Management Supervisor Professor Doctor Cristina Chaves 2014 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management ii Bibliographic Note Silvana Isabel Rosado Pintão was born in Santa Maria, Estremoz on January 11th, 1991. She followed her studies in the city. In 2009, she has graduated from Escola Secundária Rainha Santa Isabel de Estremoz, after studying Socioeconomics Sciences. In 2009, Silvana joined the Nova Business School to pursue a Bachelor’s degree in Management. She has successfully graduated in 2012. During the three years studies of its Bachelor’s degree, Silvana spent one semester studying in Lithuania as part of Erasmus Program. To continue with her academic education, Silvana has enrolled the Master in Management developed jointly by the Faculty of Economy from University of Porto and Kedge Business School (previous Euromed). As part of her degree’s requirements, Silvana did her internship at Intelling, where she is currently working as industry analyst. This dissertation is the final work in order to accomplish the referred Master’s degree. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management iii Acknowledgments First, I would like to thank Professor Cristina Chaves for all support and time dedicated to the development of this dissertation. She has demonstrated incredible dedication and patience, accommodating herself to overcome the difficulties imposed by the distance. Additionally, I would like to thank Professor João Ribeiro for his support and incentive to achieve the double degree, making all efforts to help us to succeed. I wish to acknowledge the help provided by all the companies that accepted to participate in this study, especially to Duratex and the Sustainability Department staff. They were very helpful and showed unequaled support and excitement for this work. I would also like to thank Guillaume for all support and motivation demonstrated in the last two years of work. He never let me give up; this dissertation would not be possible without him. Finally, I would like to thank to my parents who have made several efforts in the last years to give me the opportunity to continue with my studies. Thank you João and Patrícia for being there always it is necessary. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management iv Abstract Environmental questions have emerged some time ago and over time its importance has grown. These questions started to be assessed also in the business world, as the pressure to achieve better results and comply with better practices has been growing. Consumers and partners are becoming more demanding about the negative impact some companies may create to the planet and society. To respond to these needs, companies have begun to integrate in their strategies policies of Corporate Social Responsibility (CSR) to reduce their negative impact in the world. This new vision of the reality may influence the companies’ performance, either directly or indirectly. Several approaches to evaluate this impact have surged, some in the form of sustainability indices. The Dow Jones Sustainability Index (DJSI) is one of these indices that analyses companies from the entire world and all industries for its sustainable performance. DJSI Emerging Markets include only companies from emerging markets. Emerging markets have a special importance in the worldwide economy, but are usually wrongly associated with depreciative practices. Still, companies playing in a global world are able to incorporate these questions in their strategies. We intend to develop a case study about companies included in the Dow Jones Sustainability Index Emerging Markets in 2013. With this paper, we want to contribute to a better understanding on how these companies develop their efforts to promote sustainability. We want to assess if the companies feel conditioned for developing their activities in an emerging market and how the recognition transmitted by the inclusion in the Index affected them. We also want to measure the employees’ engagement and knowledge about the company’s good practices. Key-words: Sustainable development, sustainability, corporate sustainability, Dow Jones Sustainability Index, emerging markets Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management v Table of Contents 1. Introduction ............................................................................................................. 1 2. Sustainability in Business ....................................................................................... 3 2.1. Sustainability, Sustainable Development, Corporate Social Responsibility and Corporate Sustainability ............................................................................................... 3 2.2. Sustainability in the company ............................................................................ 7 2.2.1. The impacts of sustainability on companies’ performance – Empirical studies of corporations listed in sustainability indexes and emerging markets ...... 11 2.2.1.1. Measuring the impacts of sustainability .………………………17 2.3. Sustainability in companies from emerging markets ....................................... 18 3. Reporting on Sustainability and Sustainability Indices .................................... 23 3.1. Dow Jones Sustainability Index ....................................................................... 27 3.1.1. Dow Jones Sustainability Emerging Markets Index ................................. 29 4. Case study: Analysis of companies included in the DJSI Emerging markets . 30 4.1. Universe and sample ........................................................................................ 30 4.2. Methodology and collection of information .................................................... 34 4.3. Descriptive analysis of the results .................................................................... 37 4.4. Statistical Hypothesis Test ............................................................................... 44 5. Duratex .................................................................................................................. 50 5.1. Company’s presentation ................................................................................... 51 5.2. The sustainability strategy ................................................................................ 51 5.3. Duratex Statistical Hypothesis Test ................................................................. 62 6. Conclusion ............................................................................................................. 64 7. References .............................................................................................................. 66 8. Annexes .................................................................................................................. 76 Annex 1 – Dow Jones Sustainability Index ................................................................ 76 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management vi Annex 2 – Email inviting to participate in the study .................................................. 78 Annex 3 – Questionnaire ............................................................................................ 79 Annex 4 – Interviews’ questions ................................................................................ 84 Annex 5 – Questionnaire Results................................................................................ 85 Annex 6 – Variables’ aggregation .............................................................................. 97 Annex 7 – Test of Hypotheses .................................................................................. 104 Annex 8 –Duratex ..................................................................................................... 121 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management vii Table of Figures Text: Figure 1 - Venn Diagram of Sustainable Development .................................................... 5 Figure 2 - DJSI Emerging Markets Sustainability Performance vs. DJSI World ........... 20 Figure 3 - Existing trends and drivers in key emerging markets – by region ................. 22 Figure 4 - Distribution of responses during the collection period .................................. 38 Annexes: Figure I-1Structure of the RobecoSAM Corporate Sustainability Assessment ........... 76 Figure I-2 - Representation of Emerging Market Companies in the DJSI World Since Launch ............................................................................................................................ 76 Figure I-3DJSI Emerging Markets– Selection ............................................................. 76 Figure VIII-1 - Duratex Sustainability Strategy Lines of Action ................................. 134 Figure VIII-2 - Duratex Sustainability Goals ............................................................... 134 Figure VIII-3 - Duratex Corporate Sustainability Structure ......................................... 135 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management viii Table of Tables Text: Table 1 - Summary of empirical case studies verifying the effects of corporate sustainability ................................................................................................................... 16 Table 2 - Positive and negative responses ...................................................................... 31 Table 3 – Participants details .......................................................................................... 33 Table 4 - Questionnaire's Structure ................................................................................. 35 Table 5 - Interview's structure ........................................................................................ 35 Table 6 – Aggregation of Variables ................................................................................ 45 Table 7 - Summary of the results of the Statistical Hypothesis Test .............................. 47 Table 8 - Summary of the results of the Duratex Statistical Hypothesis Test ................ 62 Annexes: Table I-1 - Dow Jones Sustainability Emerging Markets Index ..................................... 77 Table V-1– Distribution of the responses by participants .............................................. 85 Table V-2 – Localization of responders ......................................................................... 85 Table V-3 - Age of responders ....................................................................................... 85 Table V-4 – Qualifications of responders ....................................................................... 85 Table V-5 – Job of responders ........................................................................................ 86 Table V-6 – Did you receive any training in Sustainable Development (SD) and/ or Corporate ........................................................................................................................ 86 Table V-7Does your company provide (or provided in the past) any kind of information / training in Sustainable Development (SD) and/ or Corporate Social Responsibility (CSR)? .................................................................................................... 87 Table V-8 - What is the main content of the training provided by your company? ....... 88 Table V-9 – Do you know if your company develops sustainability measures? ............ 89 Table V-10 - What type of sustainability measures does your company develop? ........ 89 Table V-11 - Have the principles of sustainable development been implemented into product ............................................................................................................................ 90 Table V-12 – Are you involved in the sustainability measures developed by your company? ........................................................................................................................ 90 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management ix Table V-13 – Do you believe your contribution is relevant for the company's sustainable ........................................................................................................................................ 91 Table V-14 – Do you believe your contribution for the practices implemented by the company are contributing to the environment and society improvement? ..................... 91 Table V-15 – Do you know if your company has any board committee to deal with .... 92 Table V-16 – If yes, please could you tell us, the Corporate Social Responsibility Committee's main role and responsibilities .................................................................... 92 Table V-17 – Do you participate at board meetings where sustainability is discussed? 93 Table V-18 –Do you know if company has any external advisory group that advises on ........................................................................................................................................ 93 Table V-19 – How frequently do managers and employees discuss sustainable development .................................................................................................................... 93 Table V-20 – How does this dialogue happen? .............................................................. 94 Table V-21 – How does your company promote its sustainability corporate values internally? ....................................................................................................................... 94 Table V-22 – How does your company promote externally its sustainability corporate values? ............................................................................................................................ 95 Table V-23 – How does your company check the awareness and compliance level with sustainability corporate values internally? ...................................................................... 95 Table V-24 – How does your company make sure that other parties in its supply chain embrace ........................................................................................................................... 96 Table VI-1 – Age ............................................................................................................ 97 Table VI-2 – What is your job within the company? ..................................................... 97 Table VI-3 - Did you receive any training in Sustainable Development (SD) and/ or Corporate Social Responsability (CSR)? ........................................................................ 97 Table VI-4 - Does your company provide (or provided in the past) any kind of information / training in Sustainable Development (SD) and/ or Corporate Social Responsability (CSR)? .................................................................................................... 98 Table VI-5 - What type of sustainability measures does your company develop? ......... 98 Table VI-6 - What is the main content of the training provided by your company? ...... 99 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management xvi Table VIII-18 – Cramer Test for Involvement of responder within company's sustainability measures * Training in SD and/ or CSR provided by the company Crosstabulation ............................................................................................................. 128 Table VIII-19 – Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation .......................... 129 Table VIII-20 – Chi-Square Test for Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation ............................................................................................................. 129 Table VIII-21 – Cramer Test for Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation ............................................................................................................. 129 Table VIII-22 – Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ..................................................................................... 130 Table VIII-23 – Chi-Square for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ............................................. 130 Table VIII-24 – Cramer for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ..................................................................................... 130 Table VIII-25 – Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ................................................................... 131 Table VIII-26 – Chi Square Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ....................................... 131 Table VIII-27 – Cramer Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation ............................................. 131 Table VIII-28 – Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation ................ 132 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management xvii Table VIII-29 – Chi-Square Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation ............................................................................................................. 132 Table VIII-30 – Cramer Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation ...................................................................................................................................... 132 Table VIII-31 – Board Existance * Knowledge about board's main role and responsibilities Crosstabulation .................................................................................... 132 Table VIII-32 – Chi-Square Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation ...................................................................... 133 Table VIII-33 – Cramer Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation ............................................................................. 133 Table VIII-34 – Board Existance * Job of responder Crosstabulation ......................... 133 Table VIII-35 – Chi-Square Test for Board Existance * Job of responder Crosstabulation ............................................................................................................. 133 Table VIII-36 – Cramer Test for Board Existance * Job of responder Crosstabulation ...................................................................................................................................... 134 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 1 1. Introduction The concept of sustainable development was for the first time officially defined by the United Nations in 1987 in the Brundtland Report (WCED, 1987), but it has much older origins, with several experts discussing similar ideas before. United Nations defined sustainable development in the World Commission on Environment and Development Report (1987) as the capacity to satisfy the current needs without compromising the satisfaction of next generations’ needs, therefore it must be endured in all countries, developed or developing. According to this definition, the sustainable development should consider economic, social and environmental factors. Either because the law has enforced it or because they decided to do it voluntarily, companies have incorporated sustainable behaviors in their strategies and activities that reflect the increasing importance of environmental and social questions to business. As sustainable worries become more present in the companies routine, sustainability is not anymore seen as only an obligation, but also as a key differentiator for the company. Several sustainability indices have emerged in the last years that recognize the companies’ efforts and reward them with the promotion of their positive results. The Dow Jones Sustainability Index (DJSI) was considered by the United Nations Environment Program Finance Initiative as the most rigorous Index in the evaluation of the stock performance of the world's leading companies in terms of economic, environmental and social criteria (UNEP, 2008). The Index is developed cooperatively by Dow Jones Index and RobecoSAM (Dow Jones Sustainability Index (a), 2013). The indices are developed through a best-in-class approach; it includes only companies that fulfill certain sustainability criteria better than the majority of their peers. No industries or countries are excluded (Dow Jones Indices, 2013). The DJSI has in its family the DJSI Emerging Markets Diversified that includes 20 emerging market countries and makes a global selection of the highest scoring companies in terms of relative Total Sustainability Score from RobecoSAM’s annual Corporate Sustainability Assessments (RobecoSAM & S&P Dow Jones, 2013). Emerging markets represent an important part of the global economy (ECB, 2013); they are expected to lead global growth in the next 10 years, and to provide important opportunities for investors, according to current research (BlackRock, 2010, Ernest & Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 2 Young, 2013). As competitiveness has increased, companies need to do more and find a way to differentiate themselves from the competition. The need to comply with standards and minimize differences and the wish to be different are leading these markets to change their positioning and increase sustainable considerations. Sustainability emerges as a need for growth (Nkamnebe, 2011). This dissertation proposes to develop a case study including several companies from emerging markets that were included in the Dow Jones Sustainability Index in 2013. The objective is to try to understand how companies from emerging markets face sustainability and what type of measures they have been developing to include sustainable worries in their strategies. It is also important for us to understand if sustainability is a reality for the majority of the company’s employees or only a concept known by the top management and related positions. In addition, we would also like to understand how the inclusion in the DJSI affected the company. This dissertation is organized as follows. A literature review is made in section 2 covering the concept of sustainability and sustainable development, and their application in companies. After covering literature that supports the development of a sustainability strategy by corporations, we have started to focus on our object of study – companies from emerging markets. Several empirical studies covering corporate sustainability in the emerging markets and corporate sustainability leaders’ performance are also reviewed. In section 3, a literature review of studies supporting the sustainability reporting initiatives developed by companies is made. Although, the importance of reporting and consequently inclusion in sustainability indexes has been already referred in previous sections, in this section we find important to introduce a more detailed presentation of the the Dow Jones Sustainability Index. In section 4, the methodology used in this dissertation is explained. We have conducted interviews and questionnaires with employees from 12 companies included in the DJSI Emerging Markets in 2013. The results obtained from the questionnaire and Hypotheses Tests are presented. Finally, in section 5, a case study about Duratex, a Brazilian company included in the DJSI Emerging Markets in 2013, is built. We develop a descriptive analysis of the sustainability strategy of Duratex. Section 6 concludes. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 3 2. Sustainability in Business Sustainability and sustainable development in a business context have been strongly discussed among the scholars. Several definitions can be found in the literature to describe sustainability and other concepts in this scientific area. Although general concordance about the basics of what should involve sustainability, there is not a universal concept or model and companies usually adapt their own. Also there is a huge discussion about the consequences of a company’s implementation of sustainable measures among its practices. Despite the several studies made over the years, there still is not concordance among scholars about the benefits or not from these practices. However, more and more organizations have been pushing for more sustainable practices and companies have been developing more friendly approaches, either direct or indirectly related to their core business. 2.1. Sustainability, Sustainable Development, Corporate Social Responsibility and Corporate Sustainability Sustainability and sustainable development are not new concepts; they exist and shape companies’ reality for long time. The notion of sustainability has been traced to the thirteenth century (Nkamnebe, 2011). In the eighteenth century, Malthus in its systematic theory of population, presented the roots for the formation of the concept, but the definition of sustainability appeared in the environmental literature only in the 1970s (Kamara et al., 2006 in Nkamnebe, 2011). Meadows et al. (1972) defended that sustainability should address the challenges implied by the population growth. Although the concept of sustainability has been discussed for years within the international community, there is still no consensus about its definition and what it really implies to companies. Though, it is common sense that a sustainability definition should include two contrasting objectives: preserving the existing ecosystems and meeting the economic needs (i.e., welfare indicators should equal the threshold) of all humans (Gatto, 1995). Sustainability is also linked to the idea of continuity and persisting, meaning that a definition of sustainability should concern short-term, and in particular, long-term (Costanza & Patten, 1995). "The core of the idea of sustainability is the concept that current decisions should not damage prospects for maintaining or Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 4 improving living standards in the future" (Pearson (1985) in Brown et al.1987, p. 716). Therefore, it is agreed that sustainability involves the reconciliation of three important dimensions: social, economic and environmental (United Nations, 2005). These three elements should be equally assessed; disregarding one of them would threat the whole sustainability (Dyllick & Hockerts, 2002; Kahuthu, 2006 in Ciegis et al., 2009). The three fundamental pillars of sustainability were first mentioned in the Rio de Janeiro Conference on Environment and Development in 1992 (Dyllick & Hockerts, 2002; United States Department of Economic and Social Affairs (DESA), 1992 in Zink, 2005). These three pillars have been used to develop standards and certification systems, requiring compliance within these three areas (Manning et al., 2011; Reinecke et al., 2012). In what concerns companies, sustainability can be defined as: “Sustainability is a company’s capacity to prosper in a hypercompetitive and changing global business environment. Companies that anticipate and manage current and future economic, environmental and social opportunities and risks by focusing on quality, innovation and productivity will emerge as leaders that are more likely to create a competitive advantage and long-term stakeholder value.” (RobecoSAM & S&P Dow Jones, 2013, p. 7) Directly related to sustainability is the concept of sustainable development (SD). Similarly to what happens with sustainability, there are several definitions; economic literature offers over 100 definitions (Jacobs, 1995 in Ciegis et al., 2009), but none of them refers all the aspects of the concept and provide perfect understanding of it (Ciegis et al., 2009). Again, as it happens with sustainability, there is a general acceptance about what sustainable development should include: “sustainable development should ensure the production while preserving the environment as well as the development and stabilization of economic and social behavior” (Schulz et al., 2001 in Zink, 2005, p. 1046). This means, to achieve sustainable development the three dimensions of sustainability should be harmonized. They are interrelated and therefore should not be considered independently (Sage, 1999; Waas et al., 2010). The Venn in Figure 1 is an exemplification of this equilibrium. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 5 Figure 1 - Venn Diagram of Sustainable Development Source: Parkin et al., 2003, p. 19 The most well-known definition of sustainable development was proposed by the United Nations in the Bruntland Commission (WCED, 1987, p. 37): “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs (…) Thus the goals of economic and social development must be defined in terms of sustainability in all countries - developed or developing (…).” Other definitions may be mentioned including different characteristics: “[…] Sustainable development, in essence, involves progress towards development that simultaneously takes economic, environmental and social elements into account. It also requires temporal and spatial depth.” (Ricart et al., 2005, p. 20) And may also be regarded as: “A system of affairs that secures continuous and indefinite provision of welfare for society through the implementation of practices which satisfy human needs and, at the same time, take into consideration ethical and environmental issues which are left aside in the normal functioning of the economy” (Argyris & Tsaliki, 2005, in Nkamnebe, 2011, p. 219) These definitions, like most of publications, define SD as much an economic necessity, as an environmental and social necessity (Wilson, 2003). However, most definitions focus on the role of companies in sustainable development (environmental, social and economic performance), they do not clarify why corporations should care about these issues (Wilson, 2003). Still, many corporations and businesses have shown their support for the principles of sustainability and sustainable development. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 6 Other concepts have emerged in the literature that defend / claim for corporations to include and support SD and implement more sustainable strategies, such as Corporate Social Responsibility (CSR) and Corporate Sustainability. CSR has been discussed among scholars once the role of business in society has become an unavoidable issue with the emergence of the thematic of sustainability. The definitions of CSR are many, but little is the agreement on what CSR really means and what are its consequences (Lantos, 2001, O’Dwyer, 2003, Valor, 2005 in Wilson, 2003). Additionally, not all these definitions refer to the same (Dahlsrud, 2006). However, similarly to the previous concepts, there is some level of agreement on what CSR should consist and include. CSR principles are based in the belief that corporations have an “ethical obligation” to include social and environmental concerns in business operations and in the interactions with stakeholders (Commission of European Communities, 2001; Wilson, 2003). More, CSR should be voluntary by definition, meaning that companies should not only fulfill legal expectations, but also going beyond compliance and investing more into human capital, the environment and the relations with stakeholders. (Commission of European Communities, 2001; Carroll, 1979, COM, 2001, Windsor, 2006 in Halme et al., 2009). According to Dahlsrud (2006), CSR should include five dimensions: the environmental dimension, the social dimension, the economic dimension, the stakeholder dimension, the voluntariness dimension. CSR can be defined as: “A socially responsible corporation should take a step forward and adopt policies and business practices that go beyond the minimum legal requirements and contribute to the welfare of its key stakeholders.” (Frooman, 1997, p. 227, in Tsoutsoura, 2004, p. 3) Or:“CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” (Ashridge, 2005, p.3, in Baskin, 2006, p. 7) Some authors have defended that CSR is “an intermediate stage” to achieve corporate sustainability and sustainable development, the ultimate stage where companies try to balance the Triple Bottom Line (van Marrewijk, 2003; Figge & Hahn, 2004; Skare & Golja, 2012). Corporate Sustainability appears as a more comprehensive concept that includes elements of other concepts: sustainable development, CSR, stakeholder theory and corporate accountability theory (Wilson, 2003). According to Wilson (2003), through the conjugation of these four concepts, corporate sustainability Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 7 emphasizes on environmental, social and economic performance, and the public reporting: “Sustainable development sets out the performance areas that companies should focus on, and also contributes to the vision and societal goals that the corporation should work toward, namely environmental protection, social justice and equity, and economic development. Corporate social responsibility contributes to ethical arguments and stakeholder theory provides business arguments as to why corporations should work towards these goals. Corporate accountability provides the rationale as to why companies should report to society on their performance in these areas.” (Wilson, 2003, p. 5) In a simple way, RobecoSAM & S&P Dow Jones (2013) define corporate sustainability as “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.” Perrini & Tencati (2006, p. 298) describe it as “A sustainability-oriented company is fully aware of its responsibilities towards the different stakeholders and adopts methods and tools that allow it to improve its social and ecological performance. (…) A sustainability-oriented company is one that develops over time by taking into consideration the economic, social and environmental dimensions of its processes and performance.” 2.2. Sustainability in the company Over the years, the discussion among the academic community about the inclusion of sustainability into corporations’ strategy and their responsibility to get involved with its values and principles has been very extensive. Since those times, when discussions about sustainability in the business world were still in its early stages, there were already supporters in favor and against corporate sustainability. Several theories were developed to support both sides. Today, these theories are still used to justify or not the adoption of a more sustainable behavior by corporations. The main theory beyond the opponents of the incorporation of sustainability concerns in corporations’ strategy is the trade-off hypothesis developed by Milton Friedman in the 1960s (van Marrewijk, 2003; Salzmann et al., 2005). According to this theory, “the social responsibility of business is to increase its profits” (Friedman, 1962 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 8 in van Marrewijk, 2003). Therefore, business organizations should pursuit profit maximization as its focal goal in order to maximize their shareholders wealth, the only ones to which they (companies) are responsible and should answer for. In addition, Friedman also formulated that such responsibilities (e.g. socially and environmental responsible activities) do not belong to the domain of organizations and should be a task for governments (Foley, 2000 in van Marrewijk, 2003; Salzmann et al., 2005). Thus, corporations would be concerned with social and environmental issues only to the extent that they contribute to the purpose of their business: creation of long-term value for the shareholders/owners of the business. To become involved in social and environmental topics brings extra expenses and decreases the earnings of the firm, compromising the main objective of the company (profitability). Consequently, in the short term, the company could then be in a disadvantageous position compared to a company which is not involved in sustainable activities. Other theories, based on similar believes, were developed such as the managerial opportunism hypothesis (Preston & O’Bannon, 1997 in Salzmann et al., 2005) and negative synergy (Preston & O’Bannon, 1997 in Salzmann et al., 2005). These theories argument that the involvement in sustainable activities has a negative impact on the company’s financial performance (Vance, 1975, Moore, 2001 in Tsoutsoura, 2004; Salzmann et al., 2005). On the other hand, several theories supporting sustainability and its adoption by corporations have emerged in the last years. Among the most well-known are: the stakeholder theory, the supply and demand theory of the company, the social impact hypothesis, societal approach, legitimation theory (Salzmann et al., 2005; Saleh et al., 2011). The scholars behind these theories urged for the need of the implementation of sustainable strategies and pointed positive effects and benefits for enterprises. The stakeholder theory was formulated by R. Edward Freeman and it claims that corporations’ responsibilities go beyond shareholders only and that they have responsibilities to a larger group of shareholders 1 (Freeman, 1984 in Salzmann et al., 2005). According to this theory, the company’s objective is to create sustainable wealth 1 Freeman defined stakeholders as those groups without whose support the organization would cease to exist” (Freeman, 1984, p. 13 in Zink, 2005). Therefore, a shareholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives.” According to this definitions, stakeholders are “individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and therefore its potential beneficiaries and/or risk bearers” (Post et al., 2002, in Zink, 2005). Groups of stakeholders include customers, shareholders, employees and society as a whole. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 15 suppliers, thus attracting better employees and more consumers (Orlitzky et al., 2003; Wagner, 2010; Skare & Golja, 2012). It may also help to attract a positive response from institutional investors (Mahoney & Roberts, 2007). Corporate sustainability creates a reputation that a firm is reliable and honest (McWilliams & Siegel, 2000), thus financial improvement is not directly linked to corporate sustainability itself, but associated to reputation or image status gained through corporate sustainability. Adams et al. (2012) studied the impact of corporate sustainable efforts in brand loyalty and corporate reputations in firms included in the DJSI in the year 2008 and 2009. The results showed that the adoption of sustainable behaviors can help to build brand loyalty and corporate reputations in the long term. Moreover, it could be also positively correlated to long-term shareholder wealth maximization. Furthermore, benefits associated to an improved brand image include less risk of negative rare events (Tsoutsoura, 2004), socially responsible companies are more transparent and have less risk of bribery and corruption. They may also implement stricter and, thus, more costly quality and environmental controls, but they run less risk of having to recall defective product lines and pay heavy fines for excessive pollution. Some sustainable initiatives can dramatically reduce operating costs. Companies perceived to have a strong sustainable commitment often have an increased ability to attract and to retain employees (Turban & Greening 1997 in Wagner, 2010), which leads to reduced turnover, recruitment, and training costs. Companies that improve working conditions and labor practices also experience increased productivity and reduced error rates (Tsoutsoura, 2004). Although corporate sustainability can be associated with a series of bottom-line benefits (Tsoutsoura, 2004), these ones are not always immediate, costs and benefits may have different timeframes; the costs are immediate, while the benefits need a longer period to be realized. Corporate sustainability is recognized to create long-term value (Bebbington, 2001; Sage, 1999). Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 16 Table 1 - Summary of empirical case studies verifying the effects of corporate sustainability Relationship studied Source Details Research object Timeframe Results Sustainable performance and financial performance Lu et al. (2014) 84 empirical studies Between 2002 and 2011 Inconclusive Lapinskiene (2011) Measurement of stock market performance Dow Jones group indices and Stoxx600 family indices on the period From January 2005 to March 2011 Negative Skare and Golja (2012) Analysis of the impacts in total revenue, net income, net operating income 45 CSR corporations listed on DJSWI and 45 non CSR corporations (meaning not being listed on DJSWI) Between 2006 and 2008 Positive Saleh et al. (2011) Analysis of the relationship between CSR and CFP 200 Malaysian Between 1999 and 2005 Positive Ortas et al. (2012) Analysis of the impact of normative and mimetic pressures associated with GC/GRI membership 207 public firms from six Latin American countries 2008 Positive Lapinskiene (2011) Analysis of the relationship between stock market performance and corporate sustainability Analysis of the data of Dow Jones group indices and Stoxx600 family indices Period from January 2005 to March 2011 Negative Lourenço et al. (2012) Analysis of the relationship between Corporate Sustainable Performance (CSP) and stock prices 600 firms from Canada and the United States of America in the Dow Jones Global Total Stock Market Index (DJGTSM), some of those were listed DJSI North America and other did not 2009 Positive Humphrey et al., (2012) Analysis of the impacts of ESG (environmental, social and governance practices) on performance and risk. 256 UK companies included in the Sustainability Asset Management Group GmbH (SAM) Between 2002 and 2010 Inconclusive Murray et al. (2005) Explore whether stock market participants in the UK exhibit any discernible reaction to the social and environmental disclosures. 100 companies selected from the Times 1000 in the UK Between 1988 and 1997 Inconclusive Ricart et al., 2005 Analysis of the relationship between corporate governance and sustainable development 18 leaders in their market sectors included in the DJSWI 2002 Positive Tsoutsoura, 2004 Analysis of the relationship between corporate social responsibility and financial performance 422 between included in the S&P 500 index Between 1996 and 2000 Positive Adams et al. (2012) Examine the impact that the pursuit of sustainability has on the financial performance of a firm 107 companies included DJSI and 107 companies included in the S&P 500 Between 2008 and 2009 Inconclusive Mahoney & Roberts, 2007 Analysis of the relationship between CSP and financial performance (FP) (using ROA and ROE) and institutional ownership 1198 observations of the CSP ratings for companies listed on the TSE 300 Between 1996 and 1999 Positive McWilliams & Siegel, 2000 Analysis of the relationship between CSP and financial performance, through measurement of R&D intensity 524 firms, obtained from KLD data and Compusta Between 1991 and 1996 Neutral Sustainable performance, reputation and brand image López et al., 2007 Analysis of the differences in the performance between firms that develop sustainability and companies do not develop 102 firms belonging to the DJSI and to the Dow Jones Global Index Between 1998 and 2004 Positive Wagner, 2010 Analysis of the link of corporate sustainability performance with economic performance 2478 observations from financial databases and Kinder Lydenberg Domini Between 1992 and 2003 Inconclusive Melo, 2009 Analysis of the effects og CRS on the creation of competitive advantages, measured through risk, ROA and R&D Intensity 54 corporations/brands in the KLD database Between 2001 and 2003 Positive Yoon et al., 2006 Analysis of the relationship between CSR and image promotion 128 students 2006 Positive Orlitzky et al., 2003 Analysis of the relationship between CSP and CFP (Corporate Financial Performance) (and reputation) 52 studies, yielding a total sample size of 33,878 observations 30 years Positive Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 17 2.2.1.1. Measuring the impacts of sustainability To improve performance and maximize the effects of the implementation of corporate sustainability, companies need to measure the impacts of sustainability actions and their consequences on organizations’ performance. In order to make effective decisions, it is necessary to better understand the drivers of both costs and revenues and the actions that they can take to affect them and how they affect overall profitability (Epstein & Roy, 2001). Organizations and their managers must know the impact of company products, services, processes and other activities on either the external or internal environment (including the various stakeholders) or on the company (Epstein & Roy, 2001). Therefore, sustainable initiatives should be associated with specific sustainability performance indicators (Epstein & Roy, 2001). Several instruments for the management of corporate sustainability have been created, for instance Environmental Management Systems (EMS) under ISO 14001 or EMAS, systems for the management of social aspects under SA 8000 or Occupational Health&Safety Standard (OHSAS) according to OHSAS 18001 (Bieker, 2002). These instruments provide managers and enterprises with guidance as they choose, design, and implement their sustainable strategy to help managers in making decisions to improve corporate value creation (Epstein & Roy, 2001). Companies, which implement environmental strategies and policies, can use several quantitative indicators to measure their impacts through the measurement of mass, energy and pollutant flows (e.g. emissions of greenhouse gases or other air pollutants, total energy input, water availability/stress (state) and water use (pressure)) or different specifications of environmental performance, linked to end-of-pipe or pollution prevention orientations (Lenzena et al., 2004; Wagner, 2005). But, another relevant part of the impact of the implementation of sustainable strategies by organizations, and which might be very difficult to measure (quantify), is stakeholders’ reaction. Stakeholders may affect revenues and costs and long-term corporate performance on many levels (Epstein & Roy, 2001). As presented in the last section, companies gain competitive advantages through stakeholder relationships (e.g. customers with their loyalty; employees with their commitments and efforts). The advantage stakeholders provide has been recognized as a driver of strategic success (Epstein & Roy, 2001). Consequently, it is relevant for companies to identify and Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 18 include in their assessments the key stakeholder groups that are the primary drivers of their strategy 3 . Organizations need to develop their strategies in line with their most relevant relationships, customizing their approaches. 2.3. Sustainability in companies from emerging markets “Emerging markets are countries that are restructuring their economies along marketoriented lines and offer a wealth of opportunities in trade, technology transfers and foreign direct investment. Emerging markets is used to describe a nation´s social or business activity in the process of rapid growth and industrialization.” (Schouwstra, 2011) The term emerging market (EM) refers to a “developing” country, facing strong economic, political and social changes (Baskin, 2006). These regions are characterized by rapid growth driven by a fast industrialization and cheap value added production. According to Schouwstra (2011), a large number of these countries are political instable and are experiencing institutional and regulatory changes that led to an increase in market liberalization and privatization. These are large economic markets, which proportionate their investors with huge returns; but still they usually present lower-thanaverage per capita income and huge inequality with poor distribution of resources amongst their large populations. These particular markets present several environmental and social problems, such as low levels of education, lack of protection of property rights, lack of transparent judicial systems and enforcement of the law and corruption (Center for Knowledge Societies, 2008; Schouwstra, 2011). According to the MSCI (Morgan Stanley Capital International) Emerging Market Index, there are 23 emerging markets: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates (MSCI Research, 2013). 3 One of the most applied and appropriate conceptual framework for sustainability management is the Balanced Scorecard (BSC) (Bieker et al., 200, Figge et al., 2001, Orssatto et al., 2001 in Bieker, 2002). This tool was developed by R. Kaplan and D. Norton in the early 1990s and it helps companies to better manage intangible assets (e.g. intellectual and organizational capital). BSC aims at integrating such intangible assets, non-financial assets (e.g. environmental and social ones) in the management system in a more efficient way (Bieker et al., 2001 in Bieker, 2002). Other essential aspect of the BSC is the integrations of “relevant” stakeholders of the company in its evaluation. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 19 EMs (Emerging Markets) have received lots of attention, as they attract large industries and are responsible for enormous growth. According to the IMF (International Monetary Fund), in 2012, emerging markets accounted for almost all of global growth (IMF, 2012). Due to its enormous potential, these areas have evolved into a robust investment opportunity, increasingly attracting investment flows from developed markets (Dow Jones Sustainability Index, 2013). These are markets with strong international components that involve several players from different realities (clients, suppliers, investors, partners, competitors and others). However, emerging economies’ growth is facing challenges, such as resource scarcity and a rapidly rising population on a larger magnitude than experienced by the economies that developed at the beginning of the 20th century. Considering the emerging markets importance in the business world and increasing challenges faced, there is a need to evaluate the reality in these markets. For far the largest part of corporate sustainability literature and frameworks reflects the reality of North America, Europe and Australia examples (Jamali & Mirshak, 2007). This is reflected directly in the theories created, which are embedded with their values and models of business and society (Quazi & O’Brien 2000 in Colwell & Beckman, 2007; Halme et al., 2009). Little is known about the corporate sustainability initiatives hold in emerging markets, both on the part of multinational firms and national firms (Colwell & Beckman, 2007; Lourenço & Branco, 2013). Additionally, these markets are frequently associated to depreciative stereotypes and assumptions regarding sustainability, such as the belief that economic wealth is more important than environmental or social concerns (Colwell & Beckman, 2007; Lourenço & Branco, 2013). Most work has been country specific (Baskin, 2006), and covers multinational companies. Few studies cover activities undertaken by local firms in emerging markets (Muller & Kolk, 2009). The lack of research covering emerging markets and sustainability has contributed to the establishment of corporate sustainability concepts and theories according to the reality of developed countries. Emerging countries are characterized by less than favorable contextual conditions for corporate sustainability (Jamali & Mirshak, 2007), such as weak institutions and governance, and social gaps beyond the provision of government or NGOs, leading corporate sustainability to be promoted by private sector. Many companies in these regions still lag behind in terms of sustainability strategies, but they are not so far away Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 20 from the reality in developed countries in some aspects. For instance, Baskin’s (2006) finding indicates that there is not a vast difference in CSR reporting between leading companies in high-income OECD (Organisation for Economic Co-operation and Development) countries and their emerging market peers. Also RobecoSAM (2013) claims the resemblances among these two realities: in Figure 2 is possible to see that the difference in practices across social, economic, and environmental dimensions between the DJSI World and DJSI Emerging Markets is remarkably narrow. Particularly along social dimensions such as stakeholder management and labor practice indicators, leading emerging market companies have reached the standards of industrialized nations (Dow Jones Sustainability Index, 2013). For instance, Muller & Kolk (2009) study covering companies in the Mexican auto industry indicated that corporate sustainability activities and levels are comparable to what is known about corporate sustainability in developed country. Figure 2 - DJSI Emerging Markets Sustainability Performance vs. DJSI World Source: Dow Jones Sustainability Index, 2013 But corporate sustainability in EMs usually assumes a different reality than the one known in developed countries, corporate sustainability activities are less formalized in terms of corporate sustainability benchmarks (Saleh et al., 2011) and promoted through philanthropy or charity 4 (Jamali & Mirshak, 2007), have the form of an economic contribution 5 and are related to traditional and spiritual values 6 . Frynas (2005) found that in emerging markets philanthropic activities of companies fill the gaps left by the governments’ regulation; while in western countries governments’ have been the main 4 E.g. social investment in education, sport sponsorships, and public health, and other community services, etc. 5 E.g. work opportunities, knowledge transfer, paying taxes, etc. 6 E.g. associated with “socialism”, catholic values. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 21 boosters for a corporate sustainability policy (Zink, 2005). Weak governance and regulatory systems have limited corporate sustainability take-up (Kemp, 2003 in Baskin, 2006). Nevertheless, in the last years local governments and global NGOs have been raising awareness for the need to apply sustainability practices to the operations of companies (Dow Jones Sustainability Index, 2013). According to Jamali & Mirshak (2007), some companies do not recognize issues such as workplace safety, corruption, tax fraud as corporate sustainability questions that need to be addressed. Formal corporate sustainability is utilized by large national and multinational corporations, and particularly those that have recognized global brands or have international status, as a growing number of investors are asking about corporate responsibility and sustainability (Colwell & Beckman, 2007; Saleh et al., 2011; Dow Jones Sustainability Index, 2013). These companies try to conform to global standards, but if the significance of context is large, then there will be a move away from standardized corporate sustainability practices for local branches or operations in line with local conditions (Halme et al., 2009). Still, corporate sustainability adoption has been increasing in emerging markets. Between 2010 and 2012, the Total Sustainability Scores of companies in EMs increased 23%, confirming the trend towards long-term thinking and improved sustainable practices (Dow Jones Sustainability Index, 2013). This might be justified by the increasing awareness about sustainability and pressure for more sustainable practices. According to Baskin (2006), emerging economies have been facing biosphere pressures, which are associated with environmental sustainability; legitimacy pressures, which are associated with societal values; and market pressures, which are associated with the traditional business priority of maximizing value and returns. These pressures arrive, for instance, through the form of increasing costs, market-constraining regulation, NGO pressures, consumers’ boycott of products, employee attitudes, and attraction of investors. The study of Perez-Batres et al. (2010) covering Latin American firms also found a positive result between companies’ engagement with sustainability and institutional (normative and mimetic) pressures. However, this has happen in many senses, with countries evolving differently and diverse levels of sustainability registered. Scholars have referred that these differences are the result of the contextual pressures affecting emerging markets (Chambers et al., 2003, Gutierrez, 2004 in Baskin, 2006). For instance, Baskin (2006) in its study covering the BRICS (Brazil, Russia, India, China and South Africa) concluded that corporate sustainability is most likely to Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 22 be found in emerging markets where it is internally driven, with high levels of poverty/inequality, an active and informed civil society, companies with global aspirations, and the lack of autocratic political options for organized business. This is in line with the findings of Paine (2003), although not referring specifically to emerging markets, the author identified the following key conditions for the development of corporate sustainability: information is free-flowing; authority is decentralized and widely dispersed; members of the society have economic freedom; stakeholders are educated and well-informed about their choices of consumption, employment and investment; society expects companies to behave ethically, and has effective legal and regulatory systems to enforce basic ethical norms. Baskin (2006) summarized the current state of corporate sustainability in a number of emerging markets and its drivers: Figure 3 - Existing trends and drivers in key emerging markets – by region Source: Baskin, 2006, p.62 Although it has been implied before the increasing need that companies have to get involved with sustainability, and consequently communicate and report on their sustainability initiatives and results; we believe it is necessary to reinforce the importance of reporting initiatives, such as sustainability indices. Thus, in the next section, literature that supports sustainability reporting is reviewed. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 23 3. Reporting on Sustainability and Sustainability Indices Over the years, demand and pressures for more sustainability reporting have increased from both private and public organizations (Tsoutsoura, 2004; Murray et al., 2005; Ricart et al., 2005; Ioannou & Serafeim, 2011; Guziana, 2012). Financial markets, which power and importance have been growing, have demonstrated an increasing interest in non-financial matters and therefore are beginning to support social and environmental disclosure (Thielemann, 2000, Mackintosh et al., 2000 in Murray et al., 2005). Also governments have been increasing the requirements for disclosure of social and environmental data in corporate report (Murray et al., 2005). But a large part of companies have been disclosing this type of information voluntary, as the revelation of social and environmental data may impact on shareholders' decisions, as it has been mentioned before (Murray et al., 2005; Lin, 2009). In fact, evidence suggests that disclosure about sustainable activities has become a common practice for large companies in developed markets 7 (KPMG, 2008 in Lin, 2009). Disclosure is frequently done through the corporate annual report (Mueller et al., 1994 in Murray et al., 2005) or as a stand–alone report (Lin, 2009; Jones et al, 2005, O’Dwyer & Owen, 2005 in Guziana, 2010). Several authors have discussed the positive effects for companies from disclosure about their sustainable strategy (Bieker, 2002; Belkaoui, 1976, Frankle & Anderson, 1978, Jaggi & Freeman, 1992 in Murray et al., 2005; Guziana, 2010; Wagner, 2010). Disclosure can be used to promote the company’s results and a channel of communication with stakeholders (Bieker, 2002). Positive results were found between advertising and providing feedback to interested stakeholders (about the sustainable performance) and the improvement of the company’s financial performance (Murray et al., 2005; de Boer, 2003, Karl & Orwat, 1999, Riley, 2001 in Wagner, 2010). Advertising the company’s results allows stakeholders, such as consumers, nongovernmental groups or regulatory agencies, to achieve a certain level of knowledge about the company’s sustainability-related activities. Moreover, if the company does not develop this element, positive effects may be reduced. Additionally, advertising can also become a means of differentiation (Shapiro, 1983, Fisman et al., 2008 in Wagner, 7 According to the Global Reporting Initiative (GRI), only 44 firms followed GRI guidelines to report sustainability information in 2000. By 2010, the number of organizations releasing sustainability reports, mostly on a voluntary basis, grew to 1,973 (Ioannou & Serafeim, 2011). Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 24 2010). Amongst the several benefits associated to communicating about the company’s sustainable strategy are: recruitment of more innovative and motivated employees; enrichment of the company’s reputation and brand; increasing sales; attraction of new investors (Turban & Greening, 1997 in Wagner, 2010)… These benefits were already mentioned before as benefits of the implementation of corporate sustainability; however, here they are mentioned in a more specific context. Additional research has shown other positive effects linked to sustainability reporting. For instance, findings suggest that sustainability reporting brings transparency and change corporate behavior (Ioannou & Serafeim, 2011). Reporting can help the companies to change the way they conduct business, creating new competitive advantages that leads to higher economic value (Porter & Kramer, 2011 in Ioannou & Serafeim, 2011). Companies reporting on their sustainability strategy are also found to implement more ethical practices, contributing to decreasing levels of corruption (Ioannou & Serafeim, 2011). Several initiatives have emerged to answer this increasing need for sustainability reporting some international, some national. Examples include GRI (Global Reporting Initiative), Greenhouse Gas Protocol, the Institution of Chemical Engineers’ Sustainable Development Progress Metrics, the Green Environmental Management Initiative (GEMI) (Lenzena et al., 2004; Perrini & Tencati, 2006; Ioannou & Serafeim, 2011). These are tools for helping companies to provide both qualitative and quantitative information about their activities. However, the large number of schemes has generated some problems with multiplicity, complexity and the absence of a clear reference framework (Perrini & Tencati, 2006). Consequently, cases of fraudulent behavior, unfair communication and untrue results have been found (Perrini & Tencati, 2006). Some academics have considered the Global Reporting Initiative (GRI) as the best framework for voluntary reporting of environmental and social performance by businesses and other organizations worldwide (Szejnwald et al., 2009 in Guziana, 2010). The increasing interest in sustainability disclosure has been also reflected by the growing number of external sources of reference (e.g. sustainability indices), which provide further insight into corporate sustainability performance (Lapinskiene, 2011; Searcy & Elkhawas, 2012 in Lourenço & Branco, 2013). Sustainability indices facilitate the exchange of information between the firms and stakeholders and play an important role in fostering the sustainable performance of firms. Examples of sustainability- Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 31 interview in order to provide more information about the project and the necessary steps for the successful exchange of information between both parts, if they accepted to participate in the study. Table 2 - Positive and negative responses From the 81 companies invited, only 12 companies accepted to participate in this study and give feedback about their sustainability strategies, either by answering the questionnaire or through an interview, or even both. This sample is built through a selfselection, once the companies themselves identified their desire to participate or not in the research (Saunders et al., 2009). Only data from those who accepted to participate was collected. To drive conclusions about the population, it is extremely important to build a sample. However, in a research project like this, it is frequent to have low taxes of response (Saunders et al., 2009). The number of negatives responses and nonparticipation from companies in the study may cause several issues, including a biased sample. There were several reasons for companies do not participate in this study. According to Saunders et al. (2009), non-response can occur due to four factors:  Refusal to respond without giving a reason;  Ineligibility to respond because they do not meet the research requirements;  Inability to locate respondent;  Inability to make the contact despite the knowledge about the responder’s location. However, once we analyzed our results and the reasons why companies did not participate in this study, we concluded that the four conditions referred by the authors did not all match the situations we have found. Although there were some refusals to contribute to the research, companies justified their decision. Also all the contacted companies satisfied the requirements to participate in the study (inclusion in the DJSI Emerging markets). Moreover, in all companies it was possible to locate a contact detail. Thus, e-mails inviting for participation were sent to all the companies. Period Number of invited companies Number of positive responses Percentage of positive responses Number of negative responses Percentage of negative responses 19th May – 11th August 81 12 15% 69 85% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 32 In the case of this particular study, we could split the negative answers in four categories:  The company rejected the request;  The company requested information, but it did not concluded the process;  The company accepted the request, but it did not conclude the process;  The company did not answer the request. Some companies rejected the invitation to participate in this research, but their rejection was justified:  The company claimed that it does not participate in surveys and academic projects due to logistics issues 15 , or the company only accepts to participate in a limited number of projects annually. At the date of our request, they had already reached that number;  At the date of the contact, the company was not cooperating with the DJSI anymore and preferred not to participate, even if it was included in the index at the relevant moment (September 2013, last review at the moment of our information request to the DJSI Academic Requests) 16 ;  The company refused to participate because the information requested as part of the participation in the study is confidential and considered a source of competitive advantages for the company;  The company is a holding company and it does not have the capacity to participate as the sustainability strategies are implemented by its subsidiaries independently. Additionally, some companies showed interest in our project and requested inclusive more details about the research and its objectives, but did not give us more feedback. Other companies have accepted to participate in the project, but unfortunately it was not possible for several reasons (e.g. schedule’s impossibilities; late response). 15 The reason mentioned was that it receives too many requests annually and it does not have capacity to answer all of them, choosing not to participate in any. 16 Quarterly reviews are done to the index, which originates new additions and deletions from the DJSI Emerging Markets. “Changes that result from the quarterly review are announced at least 1 week prior to the implementation date, which is on the third Friday in March, June, September, and December and become effective on the next trading day” (Dow Jones Sustainability Index (b), 2013, p. 19). Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 33 Finally, a largest number of companies did not answer to our requests, we never had any type feedback from them 17 . The Table 3 summarizes the previous information and quantifies the number of cases founded. Table 3 – Participants details Over the months of working, since contacts have started to be made, we established several attempts to contact companies (by email) and managed to increase slightly the number of companies participating in our study. Despite continuing attempts, a large number of companies did not participate in this research (85% of our universe). Neuman (2005 in Saunders et al., 2009) suggests that an “active response rate” should be calculated using the following formula: Using this method, we have an “active response rate” equal to 15%. Neuman (2005 in Saunders et al., 2009) suggests response rates of between 10% and 50% for postal questionnaire surveys and up to 90% for face-to-face interviews. In our case, face-toface interviews were not feasible, because we are dealing with companies spread all over the world, with long geographical distance. We have employed both questionnaires and (phone / Skype) interviews, achieving a 15% active response rate. Yet, in a study of this kind, involving large international companies, with such different activities and located in different continents, far from our workplace, the result was not surprising. 17 This last reason for the non-participation of companies could be included in the first situation pointed by Saunders et al. (2009): “Refusal to respond without giving a reason.” However, we consider Saunders et al. (2009) refer to explicit rejection to participate. In our case, we did not receive any feedback from companies and therefore, we cannot assume there was a refusal for participating in the study. Invited companies Companies accepted the request Number of negative responses Interview Questionnaire Both Rejected the request Requested information but did not concluded the process Accepted the request but did not conclude the process Did not answer the request 81 3 4 5 5 5 6 53 100% 4% 5% 6% 6% 6% 7% 65% Total 12 69 15% 85% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 34 Still, in this case, we consider 15% of responses (12 companies) a very satisfactory rate 18 . Looking at these results, it is crucial to mention the limitations of the results obtained. Besides the low rate of response, the sample may also be biased in several ways (e.g. lack of control on the questionnaires’ distribution, very different rates of participation amongst companies). 4.2. Methodology and collection of information For the elaboration of this case study, we used more than one method to collect data and information about the sustainability strategies being implemented by the companies. We have collected, what we call, “quantitative” information through questionnaires, and “qualitative” information through interviews and company reports and webpages. The combination of multiple qualitative and/or quantitative methods and use of several sources of data is referred in the literature as triangulation (Saunders et al., 2009, Olsen, 2004). “Triangulation helps to ensure that the data are telling you what you think they are telling you” (Saunders et al., 2009, p.146). This might be particular relevant, due to the limitations of our sample size and particular characteristics (no control over the distribution of questionnaires). The first tool used to collect primary data was an electronic questionnaire (Annex 3). Questionnaires were sent to companies, directly to our contact person in the company, by email to be distributed amongst the company’s employees. It was intended that employees could access the questionnaires through an online platform. Advantages of this method include the collection of information in a predetermined order (deVaus, 2002 in Saunders et al., 2009). Therefore, the results obtained could be standardized, facilitating their analysis and comparison between variables (Saunders et al., 2009). The main structure and some of the questions were based on the questionnaire from Ricart et al. (2005), which includes only open questions. However, in order maximize the number of answers and decrease the complexity of the questions, our questionnaire was prepared to include mainly closed questions. This method also helps to the treatment of the collected data. Still, we tried to expand responders’ options by introducing the possibility of choosing multiple answers. We also included different type of variables: attribute variables to collect data about the respondents’ 18 For instance, the study conducted by Ricart et al. (2005) covered 15 companies included in the DJSI in 2002. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 35 characteristics; behavioral variables to collect data about the responders’ and companies’ actions relating to sustainability; and opinion variables to record how respondents feel and what they think about the corporate sustainability strategy developed by the company (Dillman 2007 in Saunders et al., 2009). The questionnaire’s structure is presented in Table 4. Table 4 - Questionnaire's Structure Structure 1 Biographical data 2 Sustainability Qualifications 3 Sustainability Awareness 4 Sustainability awareness within the company 5 Employee’s Engagement 6 Company’s Sustainability Structure 7 Sustainability Dialogue 8 Communication about company’s values Although questionnaires may be used as the only data collection method, it may be opportune to link them with other methods (Saunders et al., 2009). Thus, we also conducted semi-structured interviews with people in charge and employees working directly with sustainability issues. Semi-structured interviews are referred to as “qualitative research interviews” (King 2004 in Saunders et al., 2009) and the researcher (interviewer) has a list of themes and questions to be covered, although these may vary from interview to interview (Saunders et al., 2009). Hence, some questions may be omitted in some interviews or the order may be altered, depending on the flow of the conversation (Saunders et al., 2009). The Table 5 summarizes the structure followed during interviews 19 . Table 5 - Interview's structure Structure 1 The relevancy of sustainability for the company 2 Definition of sustainability strategy 3 Internal assessment of results 4 External assessment of results 5 Context: Company from emerging market 6 DJSI Inclusion 19 The transcript followed during the interviews is available in Annex 4 – Interviews’ questions. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 36 Semi-structured interviews are most suitable in situations where the questions are either complex or open-ended, or the order and logic of questioning may need to be varied (Easterby-Smith et al. 2008, Jankowicz 2005 in Saunders et al., 2009). Interviews are better designed to comprehend “participants’ understanding of the phenomenon, its meaning to them, and what they consider relevant” (Dexter 1970, McCraken 1988 in Colwell & Beckman, 2007). Our case study falls in these situations, as it is our aim to explore the complex reality of corporate sustainability behind emerging markets and how companies regard that reality. We could not have feedback on how companies “see” the emerging markets reality and how it affects their sustainability strategies through the collection of quantitative data. Furthermore, according to Saunders et al. (2009) managers are more likely to agree to be interviewed, rather than to complete a questionnaire. In our contact with the companies, we could confirm this; several companies have accepted to answer questions during a phone conversation, but refused to answer the questionnaire. Amongst the reasons pointed, we can mention the following: questionnaires are time consuming for employees; administration of questionnaires would demand a long and bureaucratic process to be accepted by the internal management; it is not part of the company’s policies to share questionnaires from outsiders. Besides questionnaires and interviews, we also used public sources (e.g. company reports and websites) to collect secondary data and contrast it with the results from the questionnaires and interviews. As already mentioned, we faced some data quality issues, since the sample is small and not representative of the universe. Thus, this sample is for various reasons biased. The quantitative data collected through the questionnaires may be biased; questionnaires were delivered through company members and we cannot guarantee there was not a selective process to collect the answers. For instance, some employees may not read in English. Also, the questionnaires answers came mainly from one company, biasing even more the sample. Other issues may be related to validity and generalizability. In most of the cases, companies accepted to give feedback through the collection of one or two responses 20 . Therefore, the conclusions driven from the data collected by the questionnaires cannot be generalized as the reality of corporate sustainability as seen by the employees of 20 They did not have capacity to deliver the questionnaire massively amongst their staff. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 37 companies included in the DJSI Emerging Markets. Also the findings from qualitative research are based on the use of a small and unrepresentative number of cases. Nevertheless, given the absence of studies in this area, we consider that it was worthy to treat the information statistically, as present in the following sections. We hope that our work helps to give an overview about the sample studied and build a starting point for further studies. 4.3. Descriptive analysis of the results In this section a descriptive analysis of the most relevant results of the questionnaire 21 is developed. The responses collected are present in Annex 5. The questionnaire was meant to be distributed amongst employees of companies listed in the Dow Jones Sustainability Emerging Markets 22 , through our contact person in the company. The objective of this questionnaire was to collect data that would allow us to drive conclusions about the engagement and knowledge level of the companies’ employees with the corporate sustainability strategy being implemented at this moment by their employers. We find important to understand if employees participate in sustainable initiatives and feel involved with those initiatives. As mentioned before, employees are one of the most important stakeholders of companies, being a source of competitive advantages in the long-run (López et al., 2007; Bebbington, 2001; Sage, 1999). Nowadays, it is essential to guarantee that corporate sustainability is more than a bureaucratic process or a marketing strategy, in which some companies may even develop a green washing process. For the success of corporate sustainability, it is essential to implement a sustainable strategy and share this strategy within employees, involving them in sustainable initiatives. Companies that sincerely want to change corporate culture and improve social and environmental performance must show their individuals they are an integral part of their sustainability performance (Epstein & Roy, 2001). For instance, if the evaluation of employees’ performance is based solely on short-term profit or revenue contributions, employees may boycott sustainable 21 In several multiple-choice questions, it was possible to select more than one option and consequently a large number of combinations emerged. In this analysis we will refer only to the main conclusions and most relevant results. However in Annex 14, all detailed results are presented. 22 The questionnaire was distributed in English, Portuguese and Spanish. Companies warned us about the difficulties to distribute questionnaires in English, as a large number of employees would not be able to answer it. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 38 initiatives as they recognize that trade-offs on the social and environmental issues are acceptable and the implementation of sustainability strategy becomes more difficult (Epstein & Roy, 2001). They are an important part for the success of the implementation of a sustainability strategy and therefore, the positive results associated (Saleh et al., 2011). In total, 151 responses were collected between 18th June 2014 and 11th August 2014. The rate of responses was very irregular throughout the period with two main peaks. These peaks happened when the Company 2 shared the questionnaires with its employees the first time and again when a second request was sent. Other companies also received reinforced requests to share the questionnaire once again and to incentive employees to answer. However, the results were not as successful as in the case of Company 2. The distribution of the responses collection period is presented in Figure 4. Nine of the companies that accepted to participate in our study shared the questionnaire 23 . Company 2 contributed to 77% of the responses. Participating companies’ details are summarized in Table V-1 - Annex 5. Annex 5 includes all the tables and figures with the results found with our questionnaire. Until the end of the section 4.3, the tables mentioned are available in Annex 5 (except in the case of specific indication). Figure 4 - Distribution of responses during the collection period The section 1 of the questionnaire includes questions about biographical details of the responders. The results show that: 51% of the responders are 25-26 years old, 22% are 36-45 years old and 18% are 18-25 years old (Table V-3); a large part of the 23 Companies’ names have been encrypted (from 1 till 9). 0 5 10 15 20 25 30 35 18/06/2014 20/06/2014 22/06/2014 24/06/2014 26/06/2014 28/06/2014 30/06/2014 02/07/2014 04/07/2014 06/07/2014 08/07/2014 10/07/2014 12/07/2014 14/07/2014 16/07/2014 18/07/2014 20/07/2014 22/07/2014 24/07/2014 26/07/2014 28/07/2014 30/07/2014 01/08/2014 03/08/2014 05/08/2014 07/08/2014 09/08/2014 11/08/2014 Number of answers Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 39 responders has university studies, 49% have an under-graduation/ bachelor and 44% have a master degree (Table V-4); also 58% of employees perform an administrative position and 28% perform management positions (Table V-5). These results show our sample is constituted by a young population, highly educated and performing higher level positions. Moreover, we also questioned responders about their location (country), however as it could be possible to identify the companies with the information available, we decided to convert those results into continents. Most part of the respondents were in Latin America (80%) and North America (13%) (Table V-2). Section 2 includes questions about the respondents’ sustainability qualifications. Employees are questioned about their trainings in the sustainability area and how those trainings were achieved (related to their personal path or provided by the company/ employer). The results from the first question show that 32% of the responders had training on sustainability delivered by the company, while 19% said they had training either during their university studies and by the company and 16% said their only training was achieved during university studies (Table V-6). Answers to this question also showed that 12% of the responders did not have any training 24 . The next question’s results show that 20% of the responders received information about sustainability initiatives formally and 19% only received that information informally; while 19% says that received information about sustainability practices both formal and informally. Only one responder said his employer did not provide her / him with information or training about sustainability (Table V-7). Regarding the main content of the information or training about sustainability provided by companies: 25% said they received information about general sustainability, the policies and practices being implemented by the company and the company’s achievements in the sustainable area; and 15% said they received only specific information to the company’s policies and practices. The results show that the largest part of the respondents has some knowledge about corporate sustainability and companies provided them with multiple types of information about the subject, either in a general context or directly related to the company’s activities (Table V-8) 25 . 24 These results show us that the most part of respondents has training in sustainability issues provided by the company; this might be a bias of the sample. Some companies might have chosen target employees to answer the questionnaire. 25 Lack of professional knowledge and skills may create resistance to corporate sustainability adoption (Colwell & Beckman, 2007). Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 40 Section 3 inquires about sustainability awareness, more specifically if the respondents know about the development and implementation of a corporate sustainability strategy by their employer. Not surprisingly, 94% of the responders said they know about this strategy (Table V-9). Due to the characteristics of our sample, it is not possible to generalize that the largest part of employees know about sustainability in companies, but this is still an incentive for further development of corporate sustainability. From here, the number of participants in the questionnaire were reduced to 142 (the number of responders who said they knew about the corporate sustainability strategy developed by the company). In section 4, questions cover “Sustainability awareness within the company”. Employees were questioned about their knowledge regarding the sustainability measures being developed by the company. Our objective was also to understand what type of sustainability measures are implemented (environmental or / and social) and if sustainability measures are implemented internally or / and externally. According to the results, 15% of employees said their employers implement environmental measures internally that affect the core business, while 9% identified that the company develops, internally and externally, both environmental and social measures that affect and do not affect the core business (Table V-10). Thus, employees clearly identified mainly environmental measures being implemented by companies in all the possible cases (internally / externally, affecting and not affecting core business). This may be an indication that companies in this sample prioritize their environmental strategies, rather than their social strategies; or companies communicate more about this subject (e.g. it is easier to assess performance of environmental goals through quantitative methods, such as measurement of pollutant emissions, usage of water) and employees have more knowledge about environmental policies than social policies being implemented. Also the majority of the responders say their employers apply sustainability measures both internally and externally jointly. Some curious results were registered in this answer: 5% of employees said their companies develop external measures regarding natural issues in addition to internal measures, although they have not selected any of the internal measures option; also 3% of employees answered their companies developed internal options jointly with the option “Supports third parties causes (e.g. voluntary work, recycling) only. Sustainability is not promoted internally.” This last result may suggest that employees are confused and uncertain about the measures being implemented by the companies. Still in this section, 96% of the responders referred that Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 47 To verify how strong is the relationship between these variables, it was calculated the Cramer’s V (Table VII-4 in Annex 7). The higher the Cramer’s V number, the greater the strength of association:  0 - 0.30= no relationship to weak relationship  0.31 - 0.70= moderate relationship  0.71 - 1.0= strong relationship For this test Cramer’s V is 0.248, meaning although there is a relationship, it is week. Table 7 - Summary of the results of the Statistical Hypothesis Test Group Test Variables P-value Cramer’s V Result 1 1 Train x Age 0.001 0.248 Variables are related 2 Train x Qualification 0.011 0.255 Variables are related 3 Tain x Job 0.092 - Variables are not related 4 Train_Comp x Age 0.193 - Variables are not related 5 Train_Comp x Qualification 0.93 - Variables are not related 6 Train_Comp x Job 0.534 - Variables are not related 2 7 Inv_Sust x Age 0.001 0.3 Variables are related 8 Inv_Sust x Qualifications 0.008 0.271 Variables are related 9 Inv_Sust x Job 0.0005 0.262 Variables are related 10 Train x Inv_Sust 0.13 - Variables are not related 11 Train_Comp x Inv_Sust 0.009 0.226 Variables are related 12 Inv_Sust x Cont_Train 0.12 - Variables are not related 13 Inv_Sust x Sust_Meas 0.047 0.287 Variables are related 14 Inv_Sust x Cont_Imp 0.13 - Variables are not related 15 Inv_Sust x Cont_Soc 0.024 0.241 Variables are related 16 Cont_Imp x Cont_Soc 0.0005 0.336 Variables are related 17 Inv_Sust x Dialogue_Sust 0.084 - Variables are not related 18 Inv_Sust x Comm_Values 0.628 - Variables are not related 19 Inv_Sust x Evaluation 0.729 - Variables are not related 20 Cont_Imp x Evaluation 0.004 0.463 Variables are related 21 Cont_Soc x Evaluation 0.592 - Variables are not related 3 22 Board x Board_Role 0.0005 0.463 Variables are related 23 Board x Board_Part 0.74 - Variables are not related 24 Board x Job 0.0005 0.282 Variables are related 25 Board_Part x Inv_Sust 0.073 - Variables are not related Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 48 Through the analysis of the Hypothesis Tests’ results and once several relationships were found (or not), we could have conclude: Group 1 In this group, the relationship between the training in sustainability and the characteristics of employees were analyzed to verify if there is a pattern between employees which have more or less training in this field; as well as if companies prioritize sustainability training to different employees. As expected, these results show companies are not differentiating amongst their employees to provide them training. Moreover, it was found a relationship between age and training, and qualification and training. The sample is constituted mainly by young and high-qualified employees, which may indicate these populations are getting more involved in sustainability. But more research would be needed to verify this last conclusion. Group 2 The results found in this group allow us to drive some conclusions about characteristics of employees engaging with the sustainability measures. First there is a relationship between employees’ engagement and their age, qualification and job / positions. These results may indicate that employees’ level of awareness about sustainability and the company’s sustainability strategy is still not homogeneous amongst all employees. Then, it was also found a relationship between employees’ engagement with the company’s sustainability strategy and: the type of training provided by the company; the sustainability measures developed by the company; evaluation about awareness internally. These results might indicate that trainings about sustainability promoted by the company help to increase employees’ engagement with corporate sustainability; as well as the implementation of internal measures, which employees apply every day in their daily tasks rather than external initiatives. Moreover, the existence of an evaluation process may also help to improve employees’ awareness and engagement, as they can understand the company takes sustainability seriously and their performance has impacts in the company’s results. And more the company cares about those impacts. However, it was not possible to find a relationship between other variables that we could expect to be related to each other. For instance, it would be expected that employees with higher levels of training in sustainability matters would feel more Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 49 engaged with corporate sustainability; or that the internal communication about the subject would also affect positively employees’ engagement. Group 3 The results indicate that responders not only know about the existence of a sustainability-related board, as they can also identify their main responsibilities and tasks. Howerver, the employees’ knowledge about the board’s existence does not imply their participation at the board meetings. Still, more qualified employees (our sample is constituted by high qualified employess) may have a deeper knowledge about the board’s existence, according to test 24 results. Finally, it was not found a relationship between employees’ participation at the company’s sustainability board and their engagement with sustainability, as it was expected, once just a minority of the responders participates at board’s meetings. Once again, we would like to highlight the limitations of these results. As we have emphasized before, unfortunately, our sample is small and is biased. Therefore, the results driven from these tests cannot be generalized as the reality of companies included in the DJSI Emerging Markets in 2013. Moreover, additional research would be needed to confirm the conclusions achieved in this study. Still, these results might help companies to understand better what variables affect their employees’ awareness and engagement with their corporate strategy. They might also use the results as an indicator to identify points where they could improve. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 50 5. Duratex As focus of our case study we have chosen Duratex, the company which was most cooperative with this study (identified as Company 2 in the previous analysis). In total, 116 Duratex employees answered to our questionnaire, representing 77% of our sample; therefore, consisting in the more representative results in our sample, which is inevitably biased. In July 2014, at the time the questionnaire was conducted, Duratex had 10.886 employees, but only 3.263 had access to an email account and could have answered the questionnaire. To distribute the questionnaires, we have worked directly with the Corporate Sustainability Department. According to this department, 332 questionnaires were sent 26 . Additionally to the information collected with our questionnaires, we also conducted an interview with the Corporate Sustainability Department (Annex 8), which provided us valuable information about the company’s sustainability strategy regarding the main points of our analysis. This was a semi-structured interview in which we tried to follow the structure previously presented and assess the main points there indicated, but the speakers could speak freely and conduct the flow of conversation as wished. Moreover, we also used public information provided by the company through its website (http://www.duratex.com.br/) and its sustainability dedicated website (http://www.duratex.com.br/Sustentabilidade); its Annual and Sustainability Report, as well as its Platform 2016 Report.In this section, we will conduct a descriptive analysis of the company’s sustainability initiatives and how its corporate sustainability strategy is formulated, while comparing to the results obtained with our questionnaires to the company’s employees, information provided by other companies 27 and more general conclusions presented in the bibliographic research. 26 This number of target employees accounts for a response rate of 35%; although this sample accounts for 1% of the total employees and 4% of all employees that could have accessed the questionnaire online. 27 We have also conducted interviews with other companies that provided us valuable information about their sustainability strategy. We will use now these informations to compare with Duratex strategy and the conclusions found in the bibliographic research. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 51 5.1. Company’s presentation Duratex is a Brazilian company that manufactures wood panel, metal fittings and sanitary ware in the Latin America. The company was created in March 31, 1951. The company is a private-sector, publicly-traded Brazilian company with its control shared by the conglomerate Itausa - Investimentos Itaú and Companhia Ligna de Investimentos, which together with the respective controlling shareholders, hold 40 % and 20 % of the share capital. The company is headquartered in Sao Paulo, Brazil. Duratex concentrates its operations in Brazil but it has also a 80% stake in Tablemac, a Colombian wood panel producer. Additionally, Duratex also has subsidiaries in the United States (Duratex North America) and in Europe (Duratex Europe). Duratex has several brands: Deca, Hydra, Durafloor and Duratex; and exports its products to more than 30 countries, and has a portfolio of more than 30,000 clients. According to the company, Duratex is one of the tenth largest in its operational sector, and the market leader in Brazil and the Southern Hemisphere in laminated flooring with the Durafloor brand, and in metal fittings and sanitary ware with the Deca and Hydra brands. Duratex includes sustainability issues directly in its business model, both in its operations and in the communities where it is present. The company’s sustainability strategy includes compliance to legislation, risk monitoring, environmental preservation and social responsibility. Sustainability is also seen as one of the company values. 5.2. The sustainability strategy Definition of sustainability strategy Duratex has been involved with sustainability questions for some years now, as part of Itausa Holdings, which managed the environmental strategy for the industrial arm of the group. But only in 2010, corporate sustainability has acquired a more formal shape and only in the second half of 2013 (July) it acquired the form it has today. In 2010, it was created the Sustainability Committee with the objective to develop mechanisms for integrating sustainability into Duratex's management process. At this moment, it has started a process of diagnostic to assess the sustainability needs of the company. This process involved consultations with internal and external Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 52 stakeholder groups through the development of a Stakeholder Panel. Additionally, it was also created a Sustainability Commission 28 , which was constituted by several managers and directors of the different areas of the company. In 2011, Duratex has redefined its Mission, Vision and Values, which include Sustainability. In 2012, the company developed a second Stakeholder Panel, a Employees Panel, as well as interviews with top management, which included the feedback from senior management, employees, and experts and opinion leaders on various subjects, such as sustainability, capital markets, communication, third sector, the environment and corporate governance. This Panel included 22 professionals from senior management (including 17 managers and five members of the Board), 48 employees and 25 specialists. From here, it was developed the Platform 2016, which includes Duratex’s objectives and proposed activities in the medium term (between 2013 and 2016). As our literature research has shown, when defining a corporate sustainability strategy it is very important not to forget that the company is not an isolated institution, instead it is inserted in the society and impacts several groups of stakeholders (e.g. employees, suppliers, customers, etc.). Moreover, the company is also impacted by these stakeholders. The Stakeholder Theory (Wilson, 2003; Ricart et al., 2005; Salzmann et al., 2005; López et al., 2007; Saleh et al., 2011), which is one of the main supporters for corporate sustainability, argues that companies have responsibilities with their stakeholders and should help to improve their welfare. Consequently, the involvement of different stakeholders when defining a sustainability strategy is crucial for the company, because only with the feedback from its stakeholders (internal and external), it will be possible to define an appropriate and more effective strategy that satisfies their needs. The “Platform Sustainability 2016” includes the guidelines and goals for Duratex’s actions on sustainability issues up to 2016. The company prioritizes with this strategy the integration of environmental, cultural and economic aspects. Duratex Corporate Sustainability Strategy is based on three lines of action: Dialogue and Relations, Environmental Management and Performance, and Transparency and Responsibility in Business (Figure VIII-1 –Annex 8). This strategy includes the integration of sustainability into the day-to-day work practices of the business divisions, 28 The Commission was extinguished in 2013, after the establishment of the sustainability platform. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 53 and the incorporation of social and environmental issues in decision making. Furthermore, Duratex is also engaged to enhance its relationships with internal and external stakeholders and expand the dialogue with different groups. Duratex Sustainability goals are summarized in Figure VIII -2 – Annex 8. It is believed that the incorporation of corporate sustainability by sustainable leaders must go behind “superficial” activities. Although external activities (e.g. donations) are noble and an important contribution; companies, which are sustainability leaders, should be incorporating sustainability deeper into their core business. Sustainability is not only about creating positive impact, but also about reducing negative impacts. While developing their activities, companies impact in several ways society and environment, sometimes originating adverse consequences. However, through a more sustainable strategy, companies can reduce the impact of their activities. This can only be achieved when sustainability is incorporated in processes, products and services. Duratex is an example in this matter. Its activities involve the use of natural resources (e.g. wood) and have several environmental impacts, which if they do not do anything to reduce, in the long term, may be catastrophic. Through its sustainability strategy, Duratex had compromised to develop greener processes of production and products in order to reduce their adverse impact (e.g. reduction of water consumption). Another important point of our analysis is the existence of a corporate sustainability structure. Duratex governance structure for the sustainability strategic planning process consists of a Sustainability Director, a Sustainability Area, and the Sustainability Committee and SubCommittee (Figure VIII-3). The Sustainability Committee is composed of Executive Board Directors, Board Members, including independent members, an external expert and representatives of the controlling shareholders. The CEO of the Executive Board and the Chairman of the Board are invited to attend all meetings. The main role of the Sustainability Committee is to encourage the development and implementation of systems to integrate sustainability issues into corporate strategy and management processes. The existence of a formal structure to work with sustainability may serve as an indication of the importance of sustainability for the company and how deep sustainability is incorporated in the company’s strategy. As it happens with other business units, the development of corporate sustainability is demanding and therefore, for its correct implementation, it is necessary to establish a formal structure in the company that works side by side with the core business units. In this case, a formal Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 54 body with a high level of importance (reporting directly to the company’s CEO) exists at the center of the formulation of the business strategy. Stakeholders, both internal and external, can find here a guarantee of the central role of sustainability in the company. Additionally, the results of questionnaires have shown employees generally know about the existence of the Corporate Sustainability Board and their role. For employees, understanding sustainability is a key part of the company’s business, it is crucial to increase their engagement with this strategy, as they can see sustainability is a longterm commitment and they should not only focus on the short-term benefits. Also, companies can use this strength in future recruitments to attract new talents as new managers become more aware of the role of sustainability in business. Initiatives developed Duratex’s “Platform Sustainability 2016” includes the development of both Social and Environmental policies. According to our personal motivations, the focus of our analysis is the environmental policy and the activities Duratex has been developing in this area. Environment – Environmental Policy Duratex Environmental Policy (Annex 8) specifies the company’s positioning regarding environmental matters and the company’s compromises in order to reduce its environmental impacts. Over the years, Duratex has developed several initiatives, such as:  Eco-Efficiency: Preserving natural resources, materials recovery, effluent and residue treatment, forest management.  Emission Inventory: Quantification of greenhouse gas emissions into the atmosphere, based on recognized methodologies and protocols.  Environmental Investments: The company makes several investments in environmental protection (effluent treatment, residue destination, forest preservation, environmental actions, water treatment, exhaust systems, and environmental liability activities).  Environmental Indicators: Most Duratex industrial and forestry units have indicators for energy and water consumption, wastewater generation, atmospheric emissions, residues. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 55  Biodiversity: Duratex carries out a number of biodiversity monitoring actions to find out more about, and verify the levels of diversity of flora and fauna in the forestry areas. Processes and Products Duratex sustainability strategy includes also the implementation of sustainable principles in its processes of production and products. Two different divisions constitute the company: Deca Division and Wood Division. Deca Division has a range of resource-saving products with over 150 items, such as washbasins, urinals, flushing systems, showers and electronic faucets with timers, which enable saving water and energy. Wood Division includes the company’s plants. Duratex has 163,000 hectares of planted forests and deploys ongoing programs for identifying and monitoring local biodiversity. Duratex intends to develop efficient management of natural resources, continuous process improvement, and a strict policy of minimizing environmental impacts. In addition to incorporate sustainability in its processes, sustainability leaders can also contribute for the creation of more sustainable products, reducing the impact created during the life cycle of their products. Environmental impacts are not only created during the manufacturing process, they occur also during the usage of the products and ultimately at the destruction of the products. More responsible companies can also put in place measures that help to reduce these impacts, such as recovering the products at the end of their life to give them a more sustainable end than consumers could do. Other innovations, such as the ones put in place by Duratex that help to decrease water consummation are also an example of how companies can position themselves to develop more sustainable products differentiating them from competition, while decreasing the negative impact of the usage of such products. Innovation is seen as a source of competitive advantages, using innovation in order to develop more sustainable products can help to develop competitive advantages even further. For instance, by developing more sustainable products companies can target a new type of consumers who are attracted by this type of products. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 56 Internal communication channels As argued before, employees are a very important group of stakeholders for companies; they are also considered as an important asset and a source of revenues and costs. Therefore, it is essential that while implementing a corporate sustainability strategy companies get their employees involved. According to literature, if employees do not engage with the sustainability strategy, they may boycott sustainability activities in order to maximize short-term results. This may occur for instance if employees feel their remuneration is based on short-term results, rather than long-term performance. Benefits driven from sustainability may take some time to emerge, although costs are felt immediately. Other possible costs associated with a bad management of human resources are related to recruitment and retention of talents. Employees must fit in with the company’s culture, if sustainability is part of that culture, it is crucial to attract the right people. An effective communication of the sustainability strategy is a key element to get employees involved and attract the most qualified people. Companies should communicate their sustainability values during recruitment processes and clarify their sustainability strategy and goals to employees. Companies should also implement measures to increase their employees’ knowledge about sustainability, such as, trainings and seminars. By increasing their understanding of sustainability and what is being done, they can get more involved and appreciate the results obtained. Moreover, it is also important to communicate on sustainability achievements. To communicate about the company or their personal sustainable achievements is a good way to motivate them to continue and improve their performance. Duratex has developed several channels to communicate with its employees:  Duratex Ombudsman  Code of Ethics  This is Who We Are Program with our Mission, Vision and Values  Bulletin Board, Intranet, slide shows on TV, videos, communication campaigns and celebration and recognition events  Education and Training Programs  Sustainability Portal, internal channel with information on the subject, polls, and space for comments Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 63 Table 8 - Summary of the results of the Duratex Statistical Hypothesis Test Group Test Variables P-value Cramer’s V Result 1 1 Train x Age 0,003 0,254 Variables are related 2 Train x Qualification 0,039 0,251 Variables are related 2 7 Inv_Sust x Age 0,006 0,309 Variables are related 8 Inv_Sust x Qualifications 0,018 0,281 Variables are related 9 Inv_Sust x Job 0,002 0,262 Variables are related 11 Train_Comp x Inv_Sust 0,005 0,284 Variables are related 13 Inv_Sust x Sust_Meas 0,026 0,331 Variables are related 15 Inv_Sust x Cont_Soc 0,052 0,039 Variables are related 16 Cont_Imp x Cont_Soc 0,0005 0,408 Variables are related 20 Cont_Imp x Evaluation 0,008 0,343 Variables are related 3 22 Board x Board_Role 0,0005 0,522 Variables are related 24 Board x Job 0,0005 0,294 Variables are related As expected, the same relationships than before are found for the specific case of Duratex. Thus, relationships found indicate that the company does not discrimine between employees regarding communication and training in sustainability, as well as employees are informed and participate in the corporate sustainability strategy, independently of their position, age or qualifications. Duratex may be able to use these results to improve its strategy regarding the involvement of employees with corporate sustainability. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 64 6. Conclusion For long time, sustainability has been discussed. But in the last century, this discussion has gained momentum, as more adverse effects have become visible (e.g. increasing levels of pollution, deflorestation, usage of child workforce, etc.). Several of these negative consequences are strongly related to companies’ main businesses, such as intensive manufacturing or exhaustive usage of natural resources. Consequently, it has emerged a strong debate on if companies should or not include sustainability worries in their strategies. Theories and arguments have emerged supporting both positions. Despite arguments against, sustainability has been developed by companies either because legislation has obliged them, as pressures around this subject increase; or because corporations start to understand the advantages related to the adoption of more sustainable practices. Organizations have found several benefits from the adoption of corporate sustainability, such as attraction of green investors and consumers, reduction of costs (e.g. through reduction of water waste), brand image and reputation improvement. As corporate sustainability has become more and more a reality amongst world leaders and the community has demanded the improvement of sustainable practices, it has also arisen the need to report and communicate on corporate sustainability initiatives. This need is also related to the fact that several corporations have developed the so-called “greenwashing.” This consists in companies that would develop an image related to sustainability and claim the implementation of sustainable practices, instead of developing them for real. To answer to this increasing need for more assessment of companies’ sustainable practices and more reliable communication on these issues, several reporting initiatives have developed, as well as rankings and indexes that reward leaders for their best practices. In line with these developments, it was created the Dow Jones Sustainability Index (DJSI), which has become a reference amongst sustainability indexes. The DJSI promotes an assessment based on environmental, social and economic performance, selecting only the best 10% of all companies qualified for its evaluation. The strict processes of evaluation and severe policies (e.g. immediately exclusion from the index if irregularities are found) have contributed to turn the DJSI in a quality stamp for Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 65 companies involved with sustainability and a guarantee for investors looking to invest in more sustainable organizations. Despite the increasing adoption of corporate sustainability around the world, emerging markets have been stereotyped for their depreciative practices regarding environment and social problems. Consequently, organizations in these markets have been excluded from sustainability assessments. However, the reality might be very different and a growing number of companies from emerging markets have been positioning increasingly as sustainable organizations. Some of these organizations are even market leaders in corporate sustainability. Since its creation, the DJSI has included in its ranking companies from emerging markets. Over the years, the number of companies from these markets has kept increasing, originating the creation of a dedicated index, the DJSI Emerging Markets in 2013. This dissertation covers companies included in the DJSI Emerging Markets in 2013. The methodology used includes the combination of quantitative (i.e. questionnaires) and qualitative information (i.e. companies’ public information about sustainability). The questionnaires covered companies’ employees (a key stakeholder group for companies) and its main objective was to evaluate the employees’ engagement with the company’s sustainability strategy. Results have shown that employees recognize the company’s sustainability strategy and they engage with that strategy. Moreover, employees recognize that sustainable measures are implemented internally and affect their work. A case study about Duratex, a Brazilian company that has showed to have an exemplar corporate sustainability strategy, was also developed. Research covering emerging markets is scarce. Due to its recent creation, studies including companies listed in the DJSI Emerging Markets are not available 31 . Therefore, more research about this subject is needed to drive further conclusions. Besides, our sample presented several limitations and it was biased, conclusions here driven cannot be expanded to the general reality of companies included in the DJSI Emerging Markets. Further research would be needed to confirm the results found, as well as expand conclusions. It would also be interesting to look for different relationships and target other key stakeholders (e.g. investors, customers). 31 At the time of the elaboration of this dissertation, we could not find studies covering companies included in the DJSI Emerging Markets, specifically. 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Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 79 Annex 3 – Questionnaire Section 1 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 80 Section 2: Section 3: Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 81 Section 4: Section 5: Section 6: Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 82 Section 7: Section 8: Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 83 Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 84 Annex 4 – Interviews’ questions 1 – The relevancy of sustainability for the company  When has the company started to develop a more sustainable strategy?  How did emerge this need? 2 – Definition of sustainability strategy  How does the company define its sustainability policies and strategy?  How is that process (definition of the sustainability strategy) developed?  Who are the people involved in the process (only top-management or other employees also get involved)? 3 – Initiatives developed  What type of initiatives does the company develop (internal and / or external)? 4 – Internal communication channels  How is the sustainability strategy communicated to the employees?  What are the communication channels used? 5 – External communication channels  How is the sustainability strategy communicated to external stakeholders?  How does the company ensure external stakeholders (e.g. suppliers, partners) comply with its sustainability policies?  What are the consequences if external stakeholders do not comply with the company’s sustainability policies? 6 – Internal assessment of results  How does the company evaluate the results resulting from sustainability policies?  Can the company measure these results? How? 7External assessment of results  Does the company have an external source to evaluate sustainable performance?  What is that source?  How frequent is the assessment developed? 8 – Context: Company from emerging market  How does belonging to an emerging market influence the company sustainability strategy? (If it does, of course.) 9 – DJSI Inclusion  What is the importance (for the company) of belonging to the DJSI?  Did something change since the inclusion in the Index? What?  Does the company measure the impacts of belonging to the DJSI? How? Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 85 Annex 5 – Questionnaire Results Table V-1– Distribution of the responses by participants Companies Sector Number of responses Percentage Company 1 Materials 2 1% Company 2 Materials 116 77% Company 3 Capital Goods 18 12% Company 4 Materials 2 1% Company 5 Food, Beverage & Tobacco 3 2% Company 6 Diversified Financials 1 1% Company 7 Automobiles & Components 6 4% Company 8 Telecommunication Services 1 1% Company 9 Materials 2 1% Total employees answering to the questionnaire - 151 100% Table V-2 – Localization of responders Continent Number of responses Percentage Latin America 121 80% North America 19 13% Asia 9 6% Africa 2 1% Total 151 100% Table V-3 - Age of responders Age Number of responses Percentage 18-25 27 18% 26-35 77 51% 36-45 33 22% 46-60 12 8% + 60 2 1% Total 151 100% Table V-4 – Qualifications of responders Qualification Number of responses Percentage Secondary / Middle School 3 2% Undergraduated / Bachelor Degree 74 49% Master Degree 66 44% Other 8 5% Total 151 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 86 Table V-5 – Job of responders Job Number of responses Percentage Topmanagement 5 3% Management 42 28% Administrative 87 58% Nonadministrative 3 2% Other 14 9% Total 151 100% Table V-6 – Did you receive any training in Sustainable Development (SD) and/ or Corporate Social Responsability (CSR)? Type of training Number of responses Percentage Training promoted by your company 48 32% University studies + Training promoted by your company 29 19% University studies 24 16% No, I didn't receive any training 18 12% University studies + Training promoted by your company + By your own initiative 13 9% By your own initiative 8 5% University studies + By your own initiative 4 3% Other 4 3% Training promoted by your company + By your own initiative 3 2% Total 151 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 87 Table V-7Does your company provide (or provided in the past) any kind of information / training in Sustainable Development (SD) and/ or Corporate Social Responsibility (CSR)? Type of information provided Number of responses Percentage Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. 30 20% Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 29 19% Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 28 19% Seminars for all the employees of the company are/ were provided. 16 11% Seminars for all the employees of the company are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. 10 7% Seminars exclusive for management employees are/ were provided. 5 3% Seminars exclusive for management employees are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. 5 3% Seminars for all the employees of the company are/ were provided. + Seminars exclusive for management employees are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. 5 3% Seminars for all the employees of the company are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 5 3% Seminars for all the employees of the company are/ were provided. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 4 3% Other 3 2% Seminars exclusive for management employees are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 2 1% Seminars for all the employees of the company are/ were provided. + Seminars exclusive for management employees are/ were provided. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 2 1% Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. 2 1% Seminars exclusive for management employees are/ were provided. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 1 1% Seminars for all the employees of the company are/ were provided. + Seminars exclusive for management employees are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 1 1% Seminars for all the employees of the company are/ were provided. + Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 1 1% Some information about sustainable policies and behaviors to be adopted is/ was formally divolged / distributed among the employees. + Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees. 1 1% No, my company does not promote these trainings. 1 1% Total 151 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 88 Table V-8 - What is the main content of the training provided by your company? Type of information provided Number of responses Percentage Theoretical information about sustainability and CSR in a general context. + General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption + racism awareness…). + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 38 25% Policies and practices (specific to the company activities) that should be adopted by the company and its employees. 23 15% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 21 14% Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 11 7% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). 11 7% Policies and practices (specific to the company activities) that should be adopted by the company and its employees. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 10 7% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. 8 5% Theoretical information about sustainability and CSR in a general context. 7 5% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 6 4% Theoretical information about sustainability and CSR in a general context. + General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). 4 3% Theoretical information about sustainability and CSR in a general context. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 3 2% Theoretical information about sustainability and CSR in a general context. + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 3 2% Theoretical information about sustainability and CSR in a general context. + General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). 2 1% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Other 2 1% Theoretical information about sustainability and CSR in a general context. + General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. 1 1% Theoretical information about sustainability and CSR in a general context. + General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). + Policies and practices (specific to the company activities) that should be adopted by the company and its employees. + Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). + Other 1 1% Total 151 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 95 Table V-22 – How does your company promote externally its sustainability corporate values? Means to promote sustainability corporate values externally Number of responses Percentage The company frequently promotes its values publicly (e.g. marketing, advertising). + The company promotes its achievements (e.g. inclusion in the Dow Jones Sustainability Index). + The company adapts its message specifically to each type of stakeholder (e.g. clients, partners, suppliers…). 43 30% The company frequently promotes its values publicly (e.g. marketing, advertising). + The company promotes its achievements (e.g. inclusion in the Dow Jones Sustainability Index). 29 20% The company promotes its achievements (e.g. inclusion in the Dow Jones Sustainability Index). 23 16% The company frequently promotes its values publicly (e.g. marketing, advertising). 13 9% The company promotes its achievements (e.g. inclusion in the Dow Jones Sustainability Index). + The company adapts its message specifically to each type of stakeholder (e.g. clients, partners, suppliers…). 13 9% The company adapts its message specifically to each type of stakeholder (e.g. clients, partners, suppliers…). 8 6% Other 5 4% I do not know. 4 3% The company frequently promotes its values publicly (e.g. marketing, advertising). + The company adapts its message specifically to each type of stakeholder (e.g. clients, partners, suppliers…). 3 2% The company frequently promotes its values publicly (e.g. marketing, advertising). + The company promotes its achievements (e.g. inclusion in the Dow Jones Sustainability Index)., Other 1 1% Total 142 100% Table V-23 – How does your company check the awareness and compliance level with sustainability corporate values internally? Means to check awareness and compliance internally Number of responses Percentage There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. 47 33% The company promotes internal/ external auditing to verify compliance. 22 15% I do not know. 18 13% Employees are rewarded for their practices. + The company promotes internal/ external auditing to verify compliance. 11 8% Employees are assessed about their knowledge of these values. + The company promotes internal/ external auditing to verify compliance. 8 6% Other 8 6% Employees are rewarded for their practices. 6 4% Employees are assessed about their knowledge of these values. 5 4% Employees are assessed about their knowledge of these values. + Employees are rewarded for their practices. 5 4% Employees are assessed about their knowledge of these values. + Employees are rewarded for their practices. + The company promotes internal/ external auditing to verify compliance. 5 4% Employees are assessed about their knowledge of these values. + Employees are rewarded for their practices. + The company promotes internal/ external auditing to verify compliance. + There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. 2 1% Employees are rewarded for their practices. + The company promotes internal/ external auditing to verify compliance. + There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. 1 1% Employees are rewarded for their practices. + There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. 1 1% The company promotes internal/ external auditing to verify compliance. + I do not know. 1 1% The company promotes internal/ external auditing to verify compliance. + There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. 1 1% There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. + Other 1 1% Total 142 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 96 Table V-24 – How does your company make sure that other parties in its supply chain embrace its sustainability values? Means to check compliance externally Number of responses Percentage I do not know. 46 32% Verification is informal, the company only confirms that stakeholders understand its values. 20 14% The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). 17 12% The company requires its stakeholders to share with them relevant information about its sustainable practices (e.g. sustainability reports). 16 11% The company requires its stakeholders to share with them relevant information about its sustainable practices (e.g. sustainability reports). + The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). 14 10% Other 12 8% Verification is informal, the company only confirms that stakeholders understand its values. + The company requires its stakeholders to share with them relevant information about its sustainable practices (e.g. sustainability reports). + The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). 6 4% Verification is informal, the company only confirms that stakeholders understand its values. + The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). 4 3% Verification is informal, the company only confirms that stakeholders understand its values. + The company requires its stakeholders to share with them relevant information about its sustainable practices (e.g. sustainability reports). 4 3% The company requires its stakeholders to share with them relevant information about its sustainable practices (e.g. sustainability reports). + The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). + Other 1 1% Verification is informal, the company only confirms that stakeholders understand its values. + I do not know. 1 1% Verification is informal, the company only confirms that stakeholders understand its values. + The company requires its stakeholders to comply with minimum standards according to its values (e.g. promoting auditing activities to verify the standards followed). + Other 1 1% Total 142 100% Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 97 Annex 6 – Variables’ aggregation Table VI-1 – Age Age Number of responses Percentage Age* Number of responses Percentage 18-25 27 18% 18-25 27 18% 26-35 77 51% 26-35 77 51% 36-45 33 22% 36-45 33 22% 46-60 12 8% + 46 14 9% + 60 2 1% Total 151 100% Total 151 100% This table illustrates how the different variables were aggregated: “46-60” and “+ 60”. The two categories originated a new one “+46”. Table VI-2 – What is your job within the company? Job Number of responses Percentage Job * Number of responses Percentage Top-management 5 3% Management 47 31% Management 42 28% Administrative 87 58% Nonmanagement 90 60% Nonadministrative 3 2% Other 14 9% Other 14 9% Total 151 100% Total 151 100% This table illustrates how the different variables were aggregated: “Top-management” and “Management”; and “Administrative” and “Non-administrative.” In the first case a new category was created entitled “Management”, while in the second case a new category emerged as “NonManagement.” Table VI-3 - Did you receive any training in Sustainable Development (SD) and/ or Corporate Social Responsability (CSR)? Training Training * Number of responses Percentage University studies Training promoted by the employee Both 36 45 24% 30% By your own initiative Training promoted by your company Training promoted by the employer 48 32% No, I didn't receive any training No, I didn't receive any training 18 12% Other Other* 4 3% Total 151 100% This table illustrates how the different variables were aggregated: “University studies” and “By your own initiative” were aggregated as “Training promoted by the employee”, once both categories refer to trainings that the employees did out of the company environment. Every time one of these options was selected alone or combined were “Training promoted by the employee”. The similar happened to “Training promoted by your company” that was renamed as “Training promoted by your company”, because the training acquired result from the company initiatives. Answers from employees that chose both alternatives were aggregate under the name “Both”. The “No, I didn't receive any training” remained without any change. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 98 Table VI-4 - Does your company provide (or provided in the past) any kind of information / training in Sustainable Development (SD) and/ or Corporate Social Responsability (CSR)? Training Training * Number of responses Percentage Seminars for all the employees of the company are/ were provided. Formally Both 72 46 48% 30% Seminars exclusive for management employees are/ were provided. Some information about sustainable policies and behaviors to be adopted is/ was formally divulged / distributed among the employees. Informally 29 19% Sustainable policies instructions and CSR practices information are/ were informally communicated to the employees No, my company does not promote these trainings. + Other Other* 4 3% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “Seminars for all the employees of the company are/ were provided.” and “Seminars exclusive for management employees are/ were provided.” were defined as a formal type of training and therefore aggregated as “Formally”. Every time one of these options was selected alone or combined were “transformed” into “Formally”. The similar happened to “informal” type of training. Answers from employees that chose both alternatives (one formal and one informal) were aggregate under the name “Both”. Table VI-5 - What type of sustainability measures does your company develop? Measures Measures * Number of responses Percentage Environmental responsible measures are included in the company's strategy (e.g. reduction of CO2 emissions) and affect the company's core business. Measures are applied internally Both 48 70 32% 46% Environmental responsible measures are promoted internally (e.g. reduction of water consumption) but do not affect the company's core business. Social responsible measures are incorporated in the company's strategy (e.g. topmanagement opportunities are offered to both women and men) and affect the company's core business. Social responsible measures are promoted internally (e.g. labor rights) but do not affect the company's core business. Support external causes regarding social issues (e.g. abandoned children), in addition to internal policies. Measures are applied externall y 1 1% Support external causes regarding natural issues (e.g. biodiversity), in addition to internal policies. Supports third parties causes (e.g. voluntary work, recycling) only. Sustainability is not promoted internally. Other Other* 32 21% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “Environmental responsible measures are included in the company's strategy (e.g. reduction of CO2 emissions) and affect the company's core business”, “Environmental responsible measures are promoted internally (e.g. reduction of water consumption) but do not affect the company's core business” and “Social responsible measures are incorporated in the company's strategy (e.g. top-management opportunities are offered to both women and men) and affect the company's core business” and “Social responsible Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 99 measures are promoted internally (e.g. labor rights) but do not affect the company's core business.” were aggregated into “Measures are applied internally” because these options referred to internal measures applied by the company. Alternatively, options that referred to measures applied externally only, were aggregated as “Measures are applied externally”. Answers from employees that chose both alternatives (one internal and one external) were aggregate under the name “Both”. Table VI-6 - What is the main content of the training provided by your company? Content Content * Number of responses Percentage Theoretical information about sustainability and CSR in a general context. General information about sustainability Both 22 83 15% 55% General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…). Policies and practices (specific to the company activities) that should be adopted by the company and its employees. Specific information to the company sustainability strategy 44 29% Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index). Other Other* 3 1% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “Theoretical information about sustainability and CSR in a general context.” and “General information about how to act in a sustainable manner and situations in which employees should apply the examples (e.g. reduce water consumption, racism awareness…).” were aggregated as “General information about sustainability”, once both categories refer to general information that is provided by the company. Every time one of these options was selected alone or combined were “General information about sustainability”. The similar happened to “Policies and practices (specific to the company activities) that should be adopted by the company and its employees.” and “Communication about the company’s results and achievements (e.g. inclusion in the Dow Jones Sustainability Index).” that were aggregated as “Specific information to the company sustainability strategy”, because both refer to information directly related to the company sustainability strategy. Answers from employees that chose both alternatives were aggregate under the name “Both”. Table VI-7 - Are you involved in the sustainability measures developed by your company? Involvement Involvement * Number of responses Percentage Yes, my daily job includes sustainability subjects that influence my work. Yes 125 83% Yes, even if my work is not directly affected by the measures, I comply with general sustainability guidelines (e.g. reduction of paper and water consumption). Yes, I participate in several external activities organized by the company (such as voluntary work or campaigns involving social and / or environmental issues). No, even if I know about the sustainability measures, my work does not reflect them. No 15 10% No, I know about the measures, but I do not get personal involved. No, I do not agree with the measures developed. Other Other* 11 7% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 100 This table illustrates how the different variables were aggregated: answers that referred to “yes” options were aggregated into “yes”. Alternatively, options that referred to negative answers were aggregated as “No”. Table VI-8 - Do you believe your contribution is relevant for the company's sustainable improvements? Contribution Contribution * Number of responses Percentage Yes, all jobs (together) contribute to a more sustainable result. Group contribution Both 45 38 30% 25% Yes, I believe my job is important for more sustainable results. Individual contribution 57 38% Yes, I believe my work is determinant for the company results, including regarding sustainability. No, I do not believe my contribution is relevant. Other* 11 7% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: answers which referred the importance of contribution of all jobs together was reclassified as “Group contribution”, while answers that referred the importance of contribution individually were grouped as “Individual contribution”. Answers from employees that chose both alternatives (group and individual) were aggregate under the name “Both”. Table VI-9 - Do you believe your contribution for the practices implemented by the company are contributing to the environment and society improvement? Contribution Contribution * Number of responses Percentage Yes, because I believe the company's measures contribute to a better society and environment. Company contribution Both 77 45 51% 30% Yes, because I believe my personal contribution helps to build a better society and environment. Individual contribution 15 10% No, I do not believe my contribution is relevant. + Other Other* 14 9% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: answers which referred the importance of contribution of the company’s measures was reclassified as “Company contribution”, while answers that referred the importance of contribution individually were grouped as “Individual contribution”. Answers from employees that chose both alternatives (company and individual) were aggregate under the name “Both”. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 101 Table VI-10 - Do you know if your company has any board committee to deal with sustainability issues? (For instance, a Corporate Social Responsibility Committee.) Knowledge Knowledge * Number of responses Percentage Yes, constituted by only executive members. Yes 124 82% Yes, constituted by only nonexecutive members. Yes, constituted by non-executive and executive members. No, there is no board committee to deal with sustainability. No 18 12% Other Other* 9 6% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: answers that referred to “yes” options were aggregated into “yes”. Alternatively, options that referred to negative answers were aggregated as “No”. Table VI-11 - If yes, please could you tell us, the Corporate Social Responsibility Committee's main role and responsibilities. Knowledge Knowledge * Number of responses Percentage To plan the company sustainable strategy. Yes 95 63% To discuss how sustainable policies will be implemented. To assess results achieved by the company. To ensure that stakeholders comply with the company corporate values. I do not know. No 23 15% Other Other* 33 22% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: answers that identified the Corporate Social Responsibility Committee's main role and responsibilities were aggregated into “yes”. Alternatively, options that referred “I do not know.” answers were aggregated as “No”. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 102 Table VI-12 - Do you participate at board meetings where sustainability is discussed? Participation Participation * Number of responses Percentage Yes, every time there is a meeting. Yes 24 16% Yes, at least to half of the meetings. Yes, at least at one meeting per year. No, I do not participate. No 115 76% Other Other* 12 8% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: answers that referred to “yes” options were aggregated into “yes”. Alternatively, options that referred to negative answers were aggregated as “No”. Table VI-13 - How does this dialogue happen? Dialogue Dialogue * Number of responses Percentage The company always invites the employees to share their opinion (e.g. inform supervisor when appropriate). Indirect dialogue Both 44 24 29% 16% There are specific moments of evaluation of sustainability practices (e.g. questionnaires). Meetings are organized between the sustainability board and employees. Direct Dialogue 40 26% Other Other* 43 28% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “The company always invites the employees to share their opinion (e.g. inform supervisor when appropriate).” and “There are specific moments of evaluation of sustainability practices (e.g. questionnaires).” were defined as an indirect type of dialogue and therefore aggregated as “Indirect dialogue”. Every time one of these options was selected alone or combined were “transformed” into “Indirect dialogue”. The similar happened to “direct” dialogue (Meetings are organized between the sustainability board and employees.). Answers from employees that chose both alternatives (one direct and one indirect) were aggregate under the name “Both”. Table VI-14 - How does your company promote its sustainability corporate values internally? Communication Communication * Number of responses Percentage Corporate values are communicated during recruitment process. Formally Both 92 40 61% 26% Employees receive formal training (e.g. seminars, conferences, etc.). Informal communication (e.g. coworkers share between them the different ideas of the corporate values). Informally 4 3% Other Other* 15 10% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “Corporate values are communicated during recruitment process.” and “Employees receive formal training (e.g. seminars, conferences, etc.).” were defined as a formal type of communication and therefore aggregated as “Formally”. Every time one of these options was selected alone or combined were “transformed” into “Formally”. The similar happened to “informal” communication. Answers from employees that chose both alternatives (one formal and one informal) were aggregate under the name “Both”. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 103 Table VI-15 - How does your company check the awareness and compliance level with sustainability corporate values internally? Assessment Assessment * Number of responses Percentag e Employees are assessed about their knowledge of these values. Formally 62 41% Employees are rewarded for their practices. The company promotes internal/ external auditing to verify compliance. There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time. Informally 48 32% Other Other* 41 27% Total 151 100% *Other – Different answers were considered as errors for SPSS data treatment purposes. This table illustrates how the different variables were aggregated: “Employees are assessed about their knowledge of these values.”, “Employees are rewarded for their practices.” and “The company promotes internal/ external auditing to verify compliance.” were defined as a formal type of assessment and therefore aggregated as “Formally”. Every time one of these options was selected alone or combined were “transformed” into “Formally”. The similar happened to “informal” assessment (“There is not a formal verification, but employees can inform the appropriate responsible about issues or questions at any time.”). Answers from employees that chose both alternatives (one formal and one informal) were aggregate under the name “Both”. Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 104 Annex 7 – Test of Hypotheses Table VII-1 - Age of responder * Training in SD and/or CSR Crosstabulation Training in SD and/or CSR * Age of responder Crosstabulation Count Age of responder Total 18-25 26-35 36-45 +46 Training in SD and/or CSR Training promoted by the employer 6 23 11 8 48 Training promoted by the employee 15 16 5 0 36 Both 2 28 12 3 45 No, I didn't receive any training 4 8 3 3 18 Total 27 75 31 14 147 Source: SPSS® Table VII-2 - Chi-Square Test for Age of responder * Training in SD Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 27,231a 9 ,001 Likelihood Ratio 29,454 9 ,001 Linear-by-Linear Association ,719 1 ,396 N of Valid Cases 147 a. 6 cells (37,5%) have expected count less than 5. The minimum expected count is 1,71. Table VII-3 - Cramer's V Test for Age of responder * Training in SD Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,430 ,001 Cramer's V ,248 ,001 N of Valid Cases 147 Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 111 Table VII-27 – Chi-Square Test for Training in SD and/ or CSR provided by the company * Involvement of responder within company's sustainability measures Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 6,973a 2 ,031 Likelihood Ratio 9,372 2 ,009 Linear-by-Linear Association 4,782 1 ,029 N of Valid Cases 137 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 2,74. Source: SPSS® Table VII-28 – Cramer’s V Test for Training in SD and/ or CSR provided by the company * Involvement of responder within company's sustainability measures Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,226 ,031 Cramer's V ,226 ,031 N of Valid Cases 137 Source: SPSS® Table VII-29 – Content of the training provided by the company * Involvement of responder within company's sustainability measures Crosstabulation Content of the training provided by the company * Involvement of responder within company's sustainability measures Crosstabulation Count Involvement of responder within company's sustainability measures Total Yes No Content of the training provided by the company General information about sustainability 15 4 19 Both 74 5 79 Specific information to the company sustainability strategy 34 6 40 Total 123 15 138 Table VII-30 – Chi-Square Test for Content of the training provided by the company * Involvement of responder within company's sustainability measures Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 4,419a 2 ,110 Likelihood Ratio 4,233 2 ,120 Linear-by-Linear Association ,015 1 ,904 N of Valid Cases 138 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 2,07. Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 112 Table VII-31 – Sustainability measures developed by the company * Involvement of responder within company's sustainability measures Crosstabulation Sustainability measures developed by the company * Involvement of responder within company's sustainability measures Crosstabulation Count Involvement of responder within company's sustainability measures Total Yes No Sustainability measures developed by the company Measures are applied internally 41 7 48 Measures are applied externally 0 1 1 Both 64 5 69 Total 105 13 118 Source: SPSS® Table VII-32 – Chi-Square Test for Sustainability measures developed by the company * Involvement of responder within company's sustainability measures Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 9,700a 2 ,008 Likelihood Ratio 6,106 2 ,047 Linear-by-Linear Association 1,662 1 ,197 N of Valid Cases 118 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is ,11. Source: SPSS® Table VII-33 – Cramer’s V Test for Sustainability measures developed by the company * Involvement of responder within company's sustainability measures Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,287 ,008 Cramer's V ,287 ,008 N of Valid Cases 118 Source: SPSS® Table VII-34 - Involvement of responder within company's sustainability measures * Responder contribution's relevancy for the company's sustainable improvements Crosstabulation Involvement of responder within company's sustainability measures * Responder contribution's relevancy for the company's sustainable improvements Crosstabulation Count Responder contribution's relevancy for the company's sustainable improvements Total Group contribution Individual contribution Both Involvement of responder within company's sustainability measures Yes 35 55 35 125 No 9 2 2 13 Total 44 57 37 138 Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 113 Table VII-35 – Chi-Square for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for the company's sustainable improvements Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 9,312a 2 ,010 Likelihood Ratio 8,681 2 ,013 Linear-by-Linear Association 5,800 1 ,016 N of Valid Cases 138 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 3,49. Source: SPSS® Table VII-36 – Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Count Responder contribution's relevancy for society and environment sustainable improvements Total Company contribution Individual contribution Both Involvement of responder within company's sustainability measures Yes 68 11 43 122 No 8 4 1 13 Total 76 15 44 135 Table VII-37 – ChiSquare Test for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 7,810a 2 ,020 Likelihood Ratio 7,464 2 ,024 Linear-by-Linear Association 2,745 1 ,098 N of Valid Cases 135 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 1,44. Source: SPSS® Table VII-38 – Cramer's V Test for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,241 ,020 Cramer's V ,241 ,020 N of Valid Cases 135 Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 114 Table VII-39 – Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Count Responder contribution's relevancy for society and environment sustainable improvements Total Company contribution Individual contribution Both Responder contribution's relevancy for the company's sustainable improvements Group contribution 33 7 5 45 Individual contribution 32 7 15 54 Both 11 1 25 37 Total 76 15 45 136 Source: SPSS® Table VII-40 – Chi-Square Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 30,759a 4 ,000 Likelihood Ratio 31,607 4 ,000 Linear-by-Linear Association 26,562 1 ,000 N of Valid Cases 136 a. 2 cells (22,2%) have expected count less than 5. The minimum expected count is 4,08. Source: SPSS® Table VII-41 – Cramer’s V Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,476 ,000 Cramer's V ,336 ,000 N of Valid Cases 136 Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 115 Table VII-42 – Involvement of responder within company's sustainability measures * Dialogue about sustainability between company and employees Crosstabulation Involvement of responder within company's sustainability measures * Dialogue about sustainability between company and employees Crosstabulation Count Dialogue about sustainability between company and employees Total Indirect dialogue Direct Dialogue Both Involvement of responder within company's sustainability measures Yes 41 34 23 98 No 3 5 0 8 Total 44 39 23 106 Source: SPSS® Table VII-43 – Chi-Square Test for Involvement of responder within company's sustainability measures * Dialogue about sustainability between company and employees Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 3,465a 2 ,177 Likelihood Ratio 4,949 2 ,084 Linear-by-Linear Association ,452 1 ,501 N of Valid Cases 106 a. 3 cells (50,0%) have expected count less than 5. The minimum expected count is 1,74. Table VII-44 – Involvement of responder within company's sustainability measures * Communications about its sustainable values internally Crosstabulation Involvement of responder within company's sustainability measures * Communications about its sustainable values internally Crosstabulation Count Communications about its sustainable values internally Total Formally Informally Both Involvement of responder within company's sustainability measures Yes 83 3 35 121 No 9 1 3 13 Total 92 4 38 134 Source: SPSS® Table VII-45 – Chi-Square Test for Involvement of responder within company's sustainability measures * Communications about its sustainable values internally Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 1,211a 2 ,546 Likelihood Ratio ,930 2 ,628 Linear-by-Linear Association ,061 1 ,805 N of Valid Cases 134 a. 3 cells (50,0%) have expected count less than 5. The minimum expected count is ,39. Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 116 Table VII-46 – Involvement of responder within company's sustainability measures * Evaluation of awareness and compliance Crosstabulation Involvement of responder within company's sustainability measures * Evaluation of awareness and compliance Crosstabulation Count Evaluation of awareness and compliance Total Formally Informally Involvement of responder within company's sustainability measures Yes 55 44 99 No 6 3 9 Total 61 47 108 Source: SPSS® Table VII-47 – Chi-Square Test for Involvement of responder within company's sustainability measures * Evaluation of awareness and compliance Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2-sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square ,414a 1 ,520 Continuity Correctionb ,086 1 ,770 Likelihood Ratio ,424 1 ,515 Fisher's Exact Test ,729 ,391 Linear-by-Linear Association ,411 1 ,522 N of Valid Cases 108 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 3,92. b. Computed only for a 2x2 table Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 117 Table VII-48 – Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Count Evaluation of awareness and compliance Total Formally Informally Responder contribution's relevancy for the company's sustainable improvements Group contribution 8 19 27 Individual contribution 31 18 49 Both 22 10 32 Total 61 47 108 Source: SPSS® Table VII-49 – Chi-Square Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 10,797a 2 ,005 Likelihood Ratio 10,897 2 ,004 Linear-by-Linear Association 8,566 1 ,003 N of Valid Cases 108 a. 0 cells (0,0%) have expected count less than 5. The minimum expected count is 11,75. Table VII-50 – Cramer’s V Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,316 ,005 Cramer's V ,316 ,005 N of Valid Cases 108 Source: SPSS® Table VII-51 – Responder contribution's relevancy for society and environment sustainable improvements * Evaluation of awareness and compliance Crosstabulation Responder contribution's relevancy for society and environment sustainable improvements * Evaluation of awareness and compliance Crosstabulation Count Evaluation of awareness and compliance Total Formally Informally Responder contribution's relevancy for society and environment sustainable improvements Company contribution 35 26 61 Individual contribution 4 6 10 Both 20 16 36 Total 59 48 107 Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 118 Table VII-52 – Chi-Square Test for Responder contribution's relevancy for society and environment sustainable improvements * Evaluation of awareness and compliance Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 1,053a 2 ,591 Likelihood Ratio 1,048 2 ,592 Linear-by-Linear Association ,009 1 ,924 N of Valid Cases 107 a. 1 cells (16,7%) have expected count less than 5. The minimum expected count is 4,49. Source: SPSS® Table VII-53 – Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Count Knowledge about board's main role and responsibilities Total Yes No Board Existance Yes 94 16 110 No 1 7 8 Total 95 23 118 Source: SPSS® Table VII-54 – Chi-Square Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 25,294a 1 ,000 Continuity Correctionb 20,859 1 ,000 Likelihood Ratio 19,140 1 ,000 Fisher's Exact Test ,000 ,000 Linear-by-Linear Association 25,080 1 ,000 N of Valid Cases 118 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 1,56. b. Computed only for a 2x2 table Source: SPSS® Table VII-55 – Cramer’s V Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,463 ,000 Cramer's V ,463 ,000 N of Valid Cases 118 Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 119 Table VII-56 – Board Existance * Responder's participation at Board meetings Crosstabulation Board Existance * Responder's participation at Board meetings Crosstabulation Count Responder's participation at Board meetings Total Yes No Board Existance Yes 24 99 123 No 0 16 16 Total 24 115 139 Source: SPSS® Table VII-57 – Chi-Square Test for Board Existance * Responder's participation at Board meetings Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 3,773a 1 ,052 Continuity Correctionb 2,531 1 ,112 Likelihood Ratio 6,486 1 ,011 Fisher's Exact Test ,074 ,040 Linear-by-Linear Association 3,746 1 ,053 N of Valid Cases 139 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 2,76. b. Computed only for a 2x2 table Source: SPSS® Table VII-58 – Board Existance * Job of responder Crosstabulation Board Existance * Job of responder Crosstabulation Count Job of responder Total Non-Management Management Board Existance Yes 67 47 114 No 16 0 16 Total 83 47 130 Source: SPSS® Table VII-59 – ChiSquare Test for Board Existance * Job of responder Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Exact Sig. (2-sided) Exact Sig. (1-sided) Pearson Chi-Square 10,332a 1 ,001 Continuity Correctionb 8,623 1 ,003 Likelihood Ratio 15,607 1 ,000 Fisher's Exact Test ,001 ,000 Linear-by-Linear Association 10,252 1 ,001 N of Valid Cases 130 a. 0 cells (0,0%) have expected count less than 5. The minimum expected count is 5,78. b. Computed only for a 2x2 table Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 120 Table VII-60 – Cramer’s V Test for Board Existance * Job of responder Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi -,282 ,001 Cramer's V ,282 ,001 N of Valid Cases 130 Source: SPSS® Table VII-61 – Responder's participation at Board meetings * Involvement of responder within company's sustainability measures Crosstabulation Responder's participation at Board meetings * Involvement of responder within company's sustainability measures Crosstabulation Count Involvement of responder within company's sustainability measures Total Yes No Responder's participation at Board meetings Yes 24 0 24 No 98 15 113 Total 122 15 137 Source: SPSS® Table VII-62 – Chi-Square Test for Responder's participation at Board meetings * Involvement of responder within company's sustainability measures Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 3,578a 1 ,059 Continuity Correctionb 2,346 1 ,126 Likelihood Ratio 6,158 1 ,013 Fisher's Exact Test ,073 ,047 Linear-by-Linear Association 3,551 1 ,059 N of Valid Cases 137 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 2,63. b. Computed only for a 2x2 table Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 127 Table VIII-11 – Chi Square Test for Involvement of responder within company's sustainability measures * Qualifications of responder Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 8,161a 2 ,017 Likelihood Ratio 8,051 2 ,018 Linear-by-Linear Association 7,754 1 ,005 N of Valid Cases 103 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is ,25. Table VIII-12 – Cramer Test for Involvement of responder within company's sustainability measures * Qualifications of responder Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,281 ,017 Cramer's V ,281 ,017 N of Valid Cases 103 Table VIII-13 – Involvement of responder within company's sustainability measures * Job of responder Crosstabulation Involvement of responder within company's sustainability measures * Job of responder Crosstabulation Count Job of responder Total NonManagement Management Involvement of responder within company's sustainability measures Yes 52 30 82 No 12 0 12 Total 64 30 94 Table VIII-14 – Chi Square test for Involvement of responder within company's sustainability measures * Job of responder Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 6,448a 1 ,011 Continuity Correctionb 4,874 1 ,027 Likelihood Ratio 10,030 1 ,002 Fisher's Exact Test ,008 ,007 Linear-by-Linear Association 6,380 1 ,012 N of Valid Cases 94 Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 128 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 3,83. b. Computed only for a 2x2 table Table VIII-15 – Cramer test for Involvement of responder within company's sustainability measures * Job of responder Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi -,262 ,011 Cramer's V ,262 ,011 N of Valid Cases 94 Table VIII-16 – Involvement of responder within company's sustainability measures * Training in SD and/ or CSR provided by the company Crosstabulation Involvement of responder within company's sustainability measures * Training in SD and/ or CSR provided by the company Crosstabulation Count Training in SD and/ or CSR provided by the company Total Formally Informally Both Involvement of responder within company's sustainability measures Yes 39 21 31 91 No 11 0 2 13 Total 50 21 33 104 Table VIII-17 – Chi-Square Test for Involvement of responder within company's sustainability measures * Training in SD and/ or CSR provided by the company Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 8,377a 2 ,015 Likelihood Ratio 10,588 2 ,005 Linear-by-Linear Association 6,446 1 ,011 N of Valid Cases 104 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 2,63. Table VIII-18 – Cramer Test for Involvement of responder within company's sustainability measures * Training in SD and/ or CSR provided by the company Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,284 ,015 Cramer's V ,284 ,015 N of Valid Cases 104 Source: SPSS® Source: SPSS® Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 129 Table VIII-19 – Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation Count Sustainability measures developed by the company Total Measures are applied internally Measures are applied externally Both Involvement of responder within company's sustainability measures Yes 35 0 49 84 No 7 1 3 11 Total 42 1 52 95 Table VIII-20 – Chi-Square Test for Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 10,413a 2 ,005 Likelihood Ratio 7,319 2 ,026 Linear-by-Linear Association 2,766 1 ,096 N of Valid Cases 95 a. 3 cells (50,0%) have expected count less than 5. The minimum expected count is ,12. Table VIII-21 – Cramer Test for Involvement of responder within company's sustainability measures * Sustainability measures developed by the company Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,331 ,005 Cramer's V ,331 ,005 N of Valid Cases 95 Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 130 Table VIII-22 – Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Count Responder contribution's relevancy for society and environment sustainable improvements Total Company contribution Individual contribution Both Involvement of responder within company's sustainability measures Yes 54 9 28 91 No 7 4 1 12 Total 61 13 29 103 Table VIII-23 – Chi-Square for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 6,514a 2 ,039 Likelihood Ratio 5,918 2 ,052 Linear-by-Linear Association 1,507 1 ,220 N of Valid Cases 103 a. 2 cells (33,3%) have expected count less than 5. The minimum expected count is 1,51. Table VIII-24 – Cramer for Involvement of responder within company's sustainability measures * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,251 ,039 Cramer's V ,251 ,039 N of Valid Cases 103 Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 131 Table VIII-25 – Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Count Responder contribution's relevancy for society and environment sustainable improvements Total Company contributio n Individual contribution Both Responder contribution's relevancy for the company's sustainable improvements Group contribution 30 6 4 40 Individual contribution 28 6 9 43 Both 3 1 16 20 Total 61 13 29 103 Table VIII-26 – Chi Square Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 34,271a 4 ,000 Likelihood Ratio 32,465 4 ,000 Linear-by-Linear Association 26,683 1 ,000 N of Valid Cases 103 a. 1 cells (11,1%) have expected count less than 5. The minimum expected count is 2,52. Table VIII-27 – Cramer Test for Responder contribution's relevancy for the company's sustainable improvements * Responder contribution's relevancy for society and environment sustainable improvements Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,577 ,000 Cramer's V ,408 ,000 N of Valid Cases 103 Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 132 Table VIII-28 – Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Count Evaluation of awareness and compliance Total Formally Informally Responder contribution's relevancy for the company's sustainable improvements Group contribution 6 19 25 Individual contribution 24 14 38 Both 8 8 16 Total 38 41 79 Table VIII-29 – Chi-Square Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2sided) Pearson Chi-Square 9,291a 2 ,010 Likelihood Ratio 9,652 2 ,008 Linear-by-Linear Association 3,963 1 ,047 N of Valid Cases 79 a. 0 cells (0,0%) have expected count less than 5. The minimum expected count is 7,70. Table VIII-30 – Cramer Test for Responder contribution's relevancy for the company's sustainable improvements * Evaluation of awareness and compliance Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,343 ,010 Cramer's V ,343 ,010 N of Valid Cases 79 Table VIII-31 – Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Count Knowledge about board's main role and responsibilities Total Yes No Board Existance Yes 63 14 77 No 0 7 7 Total 63 21 84 Source: SPSS® Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 133 Table VIII-32 – Chi-Square Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2-sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 22,909a 1 ,000 Continuity Correctionb 18,753 1 ,000 Likelihood Ratio 21,455 1 ,000 Fisher's Exact Test ,000 ,000 Linear-by-Linear Association 22,636 1 ,000 N of Valid Cases 84 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 1,75. b. Computed only for a 2x2 table Table VIII-33 – Cramer Test for Board Existance * Knowledge about board's main role and responsibilities Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi ,522 ,000 Cramer's V ,522 ,000 N of Valid Cases 84 Table VIII-34 – Board Existance * Job of responder Crosstabulation Board Existance * Job of responder Crosstabulation Count Job of responder Total Non-Management Management Board Existance Yes 50 30 80 No 15 0 15 Total 65 30 95 Table VIII-35 – Chi-Square Test for Board Existance * Job of responder Crosstabulation Chi-Square Tests Value df Asymp. Sig. (2-sided) Exact Sig. (2sided) Exact Sig. (1sided) Pearson Chi-Square 8,221a 1 ,004 Continuity Correctionb 6,577 1 ,010 Likelihood Ratio 12,644 1 ,000 Fisher's Exact Test ,002 ,002 Linear-by-Linear Association 8,135 1 ,004 N of Valid Cases 95 a. 1 cells (25,0%) have expected count less than 5. The minimum expected count is 4,74. b. Computed only for a 2x2 table Source: SPSS® Source: SPSS® Source: SPSS® Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 134 Table VIII-36 – Cramer Test for Board Existance * Job of responder Crosstabulation Symmetric Measures Value Approx. Sig. Nominal by Nominal Phi -,294 ,004 Cramer's V ,294 ,004 N of Valid Cases 95 Figure VIII-1 - Duratex Sustainability Strategy Lines of Action Source: Duratex (2013, p. 7) Figure VIII -2 - Duratex Sustainability Goals Source: Duratex (2013, p. 8) Source: SPSS® Dow Jones Sustainability Index – A Case Study on Emerging Markets - 2014 Master in Management 135 Figure VIII -3 - Duratex Corporate Sustainability Structure Source: Duratex (2013, p. 5) Duratex Environmental Policy Management  Make use of natural resources, raw materials and inputs necessary for production processes in a rational and sustainable manner;  Develop and offer products that enable rational use of natural resources;  Prevent pollution and environmental risks in its activities, and take action to reduce greenhouse gas emissions through innovative technical solutions, mitigating their impact;  Comply with the legislation applicable to its activities, products and services, meet voluntary commitments undertaken by the organization, and establish procedures to ensure that inputs of illegal origin are not utilized;  Protect biodiversity, springs and watercourses, and conserve cultivated soil. These are measures inherent to management of forest plantations;  Perform residue management in a manner that is convergent to the concept of reduction, recycling and reuse; Continuous Improvement  Seek continuous improvement of its environmental performance through management models, periodical evaluation of results, innovation and technologies;  Ensure incorporation of practices and processes aimed at the occupational health and safety of employees in the company's activities;  Implement training programs and qualification that lead to the adoption of safe and healthy behavior and respect for the environment;  Establish management tools specific to the nature and size of each principle in all of the organization's business units; Communication  Maintain communication channels with stakeholders regarding environmental, social, product and service aspects;  Document and publicize the scope and results achieved in meeting the social and environmental commitments undertaken voluntarily by the company.