CORPORATE SOCIAL RESPONSIBILITY: NORTHWESTEL SERVICING THE RESOURCE SECTOR by Paul Gruner B.Sc. Hans., University ofNorthern British Columbia, 2000 PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION UNIVERSITY OF NORTHERN BRITISH COLUMBIA August 2011 © Paul Gruner, 2011 UNIVERSITY of NORTHERN BRITISH COLUMBIA LIBRARY Prince George, B.C. Table of Contents 1.0 Abstract 4 2.0 Introduction 6 3.0 Literature Review 8 3.1 Why Adopt Corporate Social Responsibility Programs 8 3.2 Corporate Social Responsibility Within the Supply Chain 11 3.3 Marketing Corporate Social Responsibility 12 3.4 How to Develop a Successful Corporate Social Responsibility 14 Program 4.0 3.5 Financial Impacts of Corporate Social Responsibility Programs 17 3.6 Negative Aspects of Corporate Social Responsibility Programs 19 3.7 Resource Sector and Corporate Social Responsibility 21 Northwestel Case Study 22 4.1 NWTel background 23 4.2 Demographics 24 4.3 Methodology for Case Study 24 4.4 Competitive background 25 4.5 Current Corporate Social Responsibility Activities 26 4. 5. 1 Community 26 4. 5. 2 Health and Safety 27 4. 5. 3 Environment 27 4. 5. 4 Aboriginal Affairs 28 Proposed Corporate Social Responsibility Activities 29 4. 6. 1 Governance 29 4.6.2 Environment 29 4.6 Author: Date: Title: Revision: PaulGruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 2 4.7 4.8 4.6.3 Community 30 4.6.4 Aboriginal Affairs 31 Reporting Corporate Social Responsibility Activities 33 4.7.1 Governance 34 4.7.2 Customers 34 4.7.3 Environment 35 4.7.4 Health and Safety 35 4.7.5 Employees 36 4.7.6 Community 36 4.7.7 Aboriginal Affairs 38 NWTel Business Case Summary 39 5.0 Conclusion 40 6.0 References 44 7.0 Appendices 59 7.1 Terms and Definitions 59 7.2 NWTel's Operating Area 61 7.3 SWOT Analysis 62 7.4 Porter's 5 Forces Analysis 63 7.5 Comparison Matrix of major Canadian Telephone Companies 68 Annual CSR Reports with NWTel recommendations 7.6 Map of NWTel within the Horn River Basin (Fort Nelson, 76 North East British Columbia). 7.7 Active Mineral and Oil and Gas areas within Yukon and North 77 East British Columbia Within NWTel's Operating Area 7.8 Active Mineral and Oil and Gas areas within Northwest Territories 78 and Nunavut Within NWTel's Operating Area Author: Date: Title: Revision: PaulGruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 3 CORPORATE SOCIAL RESPONSIBILITY: NORTHWESTEL SERVICING THE RESOURCE SECTOR by Paul Gruner Abstract A case study of Northwestel (NWTel), a telecommunications company operating in Northern Canada (North East British Columbia, Yukon, Northwest Territories and Nunavut) that provides telecommunication services to both the mining and oil and gas sector, is examined. First an analysis of what is currently being performed for CSR initiatives is reviewed followed by a comparison with the three largest telecommunication providers in Canada (Bell Canada Enterprises, Telus Corporation and Rogers Communications) with the initiatives undertaken by NWTel and finally recommendations on additional CSR initiatives and a formal annual CSR report to be developed by NWTel on an annual basis reporting the various CSR initiatives and metrics. It is hypothesized that the development of a formalized CSR program and subsequent annual report will provide an additional competitive advantage for NWTel when competing to provide telecommunication services within both the mining and oil gas services located within their traditional operating area. 2.0 Introduction Corporate Social Responsibility (CSR) is a broad topic, which has continued to gain interest within both the academic and business world (Basil and Erlandson, 2007). CSR represents the continuing commitment by an organization to behave ethically and contribute to economic development, while improving the quality of life of the employees and their families, as well as of the local community and society at large (Holmes R, and Watts P, 1999). The ethics of business activities are becoming increasingly important. Companies are ever more evaluated on their ability to meet not only the customer's needs but also the various needs of employees, NGOs, the local community representatives and other interest groups (Andersen and Pedersen, 2006). The World Business Council for Sustainable Development (2008) found that the current priorities of CSR are human rights, employee rights, environmental protection, supplier relations and community involvement. Businesses are expected to move beyond just their legal requirements and embrace responsibility to achieve best practices. Ideally CSR policy would be a self-regulating model whereby organizations would actively monitor and measure their adherence to local laws, ethical standards, and international norms. Taking a proactive role in best practices in working with stakeholders. Simply put CSR is the deliberate inclusion of public interest into corporate decision-making and the upholding of the triple bottom line of Profit, People and Planet (three Ps). Author: Date: Title: Revision: PaulGruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 6 The practice of CSR is subject to much debate and criticism. Proponents argue that there is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the years. However, it essentially is titled to aid to an organization's mission as well as a guide to what the company stands for and will uphold to its consumers (Carroll and Buchholtz, 2002). Companies are also recognizing that their actions in purchasing and supply chain management strongly effect their reputation and sustainability (Castka and Balzarova, 2008). There is not a great deal of research that has been conducted on CSR activities within the natural resource sector specifically within the oil and gas and mining sectors. This research project focuses on CSR initiatives as a competitive advantage for oil and gas and mining service companies. With increasing pressure on exploration and production companies to increase their CSR activities it is hypothesized that service companies serving the mining and oil and gas exploration and production companies will be able to create a competitive advantage for themselves by adopting CSR activities to enhance the CSR within the supply chain. Author: Date: Title: Revision: PaulGruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 7 This paper will examine CSR theory, what makes a successful CSR program, how CSR can be used as a competitive advantage by service companies in the resource sector, specifically oil and gas and mining sectors and finally examine Northwestel a company that provides telecommunications services to both the oil and gas sector and mining sector and how it can more effectively align its current CSR activities to create a competitive advantage within these resource sectors. 3.0 Literature Review 3.1 Why Adopt Corporate Social Responsibility Programs There are a number of reasons why a corporation would want to adopt a CSR program within their day-to-day business operations. Willard (2006) outlines seven bottom-line benefits: • Easier hiring of top talent: Attracting people whose values resonate with company sustainability values and who want to work in that kind of company • Higher retention of top talent: Since employees caring about a company's environmental and social good works want to stay with it longer • Higher productivity from employees: Energized by contributing to the success of a firm doing worthwhile work Author: Date: Title: Revision: Paul Gruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 8 • Reduced expenses in manufacturing: Through eco-efficiencies, dematerialization, recycling, process redesign, and waste reduction • Reduced expenses and commercial sites: Through eco-efficiencies in energy and water usage, and increased employee stewardship of consumables • Increased revenue: As green consumers are attracted to the company's products, services are expanded , and new markets are opened • Reduced risk and easier financing: Through risk avoidance, lower insurance premiums, better loan rates, and higher attractiveness to investors. One of the primary reasons to adopt CSR practices is to gain a competitive advantage. As Porter and Kramer (2006) stated when done strategically and deliberately CSR, "can be much more than a cost, a constraint, or a charitable deed, it can be a source of opportunity, innovation and competitive advantage". CSR effectively becomes a defining factor for the organization to differentiate themselves from competitors and better position themselves in their perspective sector. Lamberti and Lettieri (2008) in their longitudinal study on CSR as a corporate strategy found that CSR has successfully been used as a means to reshape corporate strategy to manage uncertainty regarding products and firm 's behaviour. For those companies that operate in sensitive sectors such as mining and oil and gas a strong CSR program and recognition for it should enhance public image. For many companies CSR becomes their defining attribute. A public image that they live by and are recognized for Author: Date: Title: Revision: PaulGruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 9 as their brand. This allows them to create a distinction from competitors that can only be met through the creation of similar programs. This is difficult to do based upon community targeted CSR initiatives and the relationships that are formed, (Vasanthakumar Bhat, 2008) Research has been conducted to determine how effective CSR can be in supporting companies that have little other competitive position in the market place. Berens et al. (2007) in their research examined under what conditions a good CSR can compensate for a relatively poor corporate ability. Their study determined in general weak corporate ability can to a certain degree compensated by a strong CSR. Therefore corporate entities that are struggling to create a unique, distinct brand and differentiate themselves from competitors have the opportunity to define themselves through their CSR programs (Bilgin, 2009). Maxfield (2007) study confirmed the notion that CSR activities can be a competitive advantage, however are more financially effective if they are linked more to innovation functions as opposed to public relations, marketing, human resource management, etc. It is important that the CSR initiatives are appropriate to the market intended. French et al. (2005) examined the stakeholder relationships across FTSE Companies and found that telecommunication and extraction companies are more adept at identifying and prioritizing their stakeholders and linking CSR programs to business and social outcomes. Sacconi (2004) makes the statement that in order for stakeholders to value the CSR initiatives by a firm they must recognize the value of the CSR initiatives. Author: Date: Title: Revision: PaulGruner 10 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final First mover advantage is important when developing CSR programs. Replicating existing competitors and their programs will not garner the same recognition as having CSR initiatives that are unique and recognized as such. CSR programs therefore need to continuously evolve to ensure that they remain unique and the value recognized (Lamertz and Sirsly, 2008). Studies have been conducted on when companies will not adopt CSR initiatives. Detomasi (2007) stated that a major factor in whether a corporation instills CSR initiatives is dependent upon the political climate that the corporation is operating in. If they are operating in a climate that requires greater exposure for stakeholder engagement, environmental practices, regulated markets they are more likely to adopt CSR. Moon goes on further to state that many companies are less concerned with their reputations as they are not branded, do not serve end customers or are less fearful of regulatory interference and therefore CSR initiatives are less likely to be adopted (2007). 3.2 Corporate Social Responsibility within the Supply Chain Little research has been conducted on the adoption of CSR programs within the value chain in supporting the vendor's public image. As companies become more closely tied with their suppliers the lines are blurred on who is producing the end product or service. Author: Date: Title: Revision: PaulGruner 11 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Recently oil and gas companies were criticized for the lack of oversight concerning environmental and safety practices by their service companies that were servicing them. As a result the Certificate of Recognition (COR) was brought into effect that provided standards for safety and environmental practices, which involves regular audits to maintain the certification. Many service companies quickly found that the COR certification became a necessity to secure contracts and service awards. HaddockFraser and Fraser (2008) found similar results that the closer a company is within the value chain helps to explain the adoption and implementation of corporate environmental reporting within certain contexts. There can be challenges in controlling codes of conduct in global supply chains. It is difficult to enforce codes of conduct in global supply chains due to geographic location, political atmosphere, legal requirements, etc. All of these issues can ultimately result in agency problems that may result in non-compliance (Andersen and Pederson, 2006). For those resource companies operating within North America and more specifically Canada this risk is mitigated substantially due to geographic presence and certification such as COR which provides standard level for quality and content. 3.3 Marketing Corporate Social Responsibility Just like any promotional program marketing and specifically targeted marketing is important to actualize the value of the initiatives undertaken. CSR initiatives are no Author: Date: Title: Revision: PaulGruner 12 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final different. Companies that have structured CSR programs will realize greater value in their initiatives through active marketing of the CSR initiatives that they have undertaken (Acikdilli and Jahdi, 2009). Through research conducted by Johnston et al. (2009) where the researchers conducted over 400 surveys the companies that had an active marketing program involving their CSR initiatives achieved higher value then those that were not active in promoting their CSR initiatives. It is important to note however that the specific marketing practices are dependent upon the industry and products and or services being sold. One important note to marketing CSR initiatives by the corporation is the education of what initiatives are being undertaken. Dolincar and Pomering (2008) noted that CSR initiatives do influence purchasing behaviour however are limited notably because most consumers have limited knowledge of what CSR is, what initiatives the firm is involved in and to what affect. The other issue with marketing CSR initiatives is the perception created . The CSR initiative will ultimately create value for the corporation if the end consumer believes in the sincerity of the initiatives. It is important for those, "sin industries" such as the oil and gas sector can be difficult as the public is often very skeptical (Acikdilli and Jahdi, 2009). Van de Ven (2008) warns that when marketing CSR initiatives firms need to be careful to ensure that they portray themselves with sincerity. Mitchell (2003) further expands on this stating that the, "the challenge of Author: Date: Title: Revision: Pau!Gruner 13 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final social responsibility: tackling trust, complexity and engagement all at the same time. In this context, the process is the message". Companies that are involved in the resource sector have to be willing to take the time to reap the returns of their CSR efforts. Initial responses from stakeholders can be that of skepticism, which the CSR efforts being undertaken are only for the sake of the corporation. For those companies that have been involved in negative events if they have a strong CSR brand they can rely on this to help through the, "negative" public image that was created. When such events occur and companies wish to rely on their CSR initiatives to win back public support the duration of the CSR initiatives are important. The longer the company has been and can show involvement in CSR the more effective the communication is (Grobben and Vanhamme, 2008). A recent example is that of British Petroleum (BP) that had the uncontrolled oil spill in the Gulf of Mexico. Prior goodwill developed through their CSR practices and the CSR initiatives undertaken during the event to mitigate the publish backlash. 3.4 How to Develop a Successful CSR Program There are a number of key steps that lead to a higher success in developing a CSR program. First and foremost, like implementing any other program within an organization it involves a structured change management process (Lindgreen, 2008). This includes an internal marketing campaign to educate and get buy in from Author: Date: Title: Revision: PaulGruner 14 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final employees, particularly those that have the greatest amount of impact with the CSR initiatives. The engagement of key stakeholders is important to achieving successful results. Mclaren (2008) states that in order for companies to build solid CSR credibility they must engage a host of players from suppliers and shareholders to consumers and environmentalists. It is important that senior managers when implementing and managing CSR initiatives focus on the end results of the activity and prevent the key internal stakeholders from viewing the CSR as merely a new means of advertising the company (Calabrese and Lancioni , 2008). Senior Managers need to understand where the greatest value will be derived when implementing CSR programs. This can be through contributions, collaboration or internalization (Husted, 2003). Without the buy in of senior management, CSR initiatives can be seen as extra work and non-value added to the organization. This can result in a lower priority for the CSR program and can ultimately jeopardize the initiatives undertaken when perceived higher priority initiatives. Setting metrics is also a key aspect of developing a successful CSR program. Without these organizations struggle to achieve significant results. The development of CSR targets and measurements assist internal stakeholders in understanding their involvement with the CSR initiatives. However it is important that those metrics and measures that are set are, "clear and meaningful. .. and that vague and literally meaningless principles are best only for facilitating hypocrisy" (MacDonald and Norman, Author: Date: Title: Revision: PaulGruner 15 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 2003). When developing and reporting the CSR metrics there is significant value in a variety of metrics and research approaches including both quantitative and qualitative methods (Juscius, Montanari and Murray (1986). Kaplan and Norton (1993) advocate for keeping a scorecard to measure performance and set strategic direction with CSR initiatives. With the maturity of CSR programs and gaining further credibility the development of metrics will be increasingly more important especially if standardized third party certification and audits become more prevalent (Snieska, 2008). When setting CSR initiatives identifying the target group and meeting their needs is important to achieving the desired value of the initiatives. Kramer and Porter (2002) recommend a context-focused approach. By giving to areas that improve their longterm competitive potential and systematically apply their distinctive strengths to maximize the social and economic value created by their philanthropy. There will always be a blend of programs which are more global in nature such as the, "United Way Campaign" or Red Cross programs that are well recognized by bother internal and external stakeholders however it is also important to development programs that are geographically specific to the operating area that a company does business in. If there are unique needs that a specific community has or residents of that community greater value will be gained by having initiatives that are specific to that (Russell and Russell, 2009). Author: Date: Title: Revision: PaulGruner 16 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Lastly like any other initiative involving change management, corporations that embark on implementing CSR initiatives must recognize the period of time to achieve notable results. Zadek (2004) states that it takes years to take an organization from average to model corporate citizens. In this process companies often go through several stages starting with defensive where they are defending their actions and ultimately their brand all the way to corporate leaders to whom they are benchmarked against. Companies cannot expect to have and be recognized for their CSR initiatives right away. There is a need for a business case and as highlighted above baseline measures and continuous metrics to measure results over time. If the required results are not being achieved regular reviews are needed to determine what if any changes are needed. 3.5 Financial Impacts of Corporate Social Responsibility Programs Formalized CSR programs that are marketed correctly should not only provide a competitive advantage but should also result in the ability of the firm to charge premium price points and additional savings beyond what are currently being recognized. Social Responsibility (SA) 8000 registration/certification is a series of behavioral standards that represent a comprehensive and potentially global, corporate social responsibility registration system that provides a standard of socially responsible treatment of workers. Miles and Munilla (2004) suggest that this standard will impact Author: Date: Title: Revision: Pau!Gruner 17 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final pricing, allowing a premium pricing policy due to a, "CSR" product differentiation strategy. A strong CSR strategy and a robust leadership development capability reinforce the critical values of an organization, and provide a lever to drive employee engagement and performance (Guarnieri and Kao, 2009). CSR ultimately can be the driving force to bring about change within the organization and a focal point for employee engagement resulting in higher overall performance. An additional aspect that corporations can gain from employees is a greater emphasis on customer focus and overall customer satisfaction. With higher levels of engagement attained employees will be more attentive to the end customer and their overall customer satisfaction (Bhattacharya, 2009). With emphasis on CSR initiatives focused on environmental practices companies striving to increase their efficiency and reduce their waste will ultimately reduce their consumption of materials whether it be disposable goods such as paper, energy. Mullen and Peters (2008) found that CSR initiatives resulted in little short-term gain however cumulative benefits over time were notable both financially and sustainability of the business. The researchers argue that the long-term benefits can be enough to substantially outweigh short-term costs and initial expenditure. Author: Date: Title: Revision: PaulGruner 18 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Not surprisingly Stanwick and Stanwick (2000) found that higher performing firms (financially) had higher levels of environmental policies/commitments as compared with low performing firms. Orlitzky et al. (2003) echo these findings. The researchers performed a meta analysis over 30 years and determined that a correlation existed between financial performance and CSR initiatives with an emphasis being on the reputation of the firm and the subsequent brand value. Khare and May (2008) looked at the relationship between financial performance and CSR for publicly traded Canadian firms. Their findings found a positive relationship between CSR initiatives and the financial health of the corporation. It is interesting to note that it was the firms that were most successful that had the highest return raising the question is it only the more successful firms that are able to afford CSR activities and does it become more of a sustainability strategy as compared to competitive advantage. 3.6 Negatives of Corporate Social Responsibility There are negative aspects of CSR initiatives that have been identified. The financial cost of CSR initiatives is often highlighted as the biggest negative of CSR. Cruz (2006) found that CSR initiatives can have a negative return on investment if not managed effectively. Author: Date: Title: Revision: Pau!Gruner 19 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final The second issue often highlight about CSR is more for global companies. Due to the global nature of many of their brands it is often difficult to differential generic CSR initiatives (Bhattacharya et al., 2007). It is important for larger more global firms to ensure that they have some targeted CSR initiatives and market accordingly to increase their effectiveness. A third issue for CSR is that a set standard has not been accepted for monitoring and measuring CSR programs. In a study conducted by Mueller et al. (2009) found that after reviewing the major standards set in place to monitor CSR initiatives (ISO 14001, SA 8000, FSC and FLA) that there are deficits with all of the standards thereby putting into question the legitimacy of those standards. It becomes increasingly difficult at times to gain recognition for CSR initiatives. Lastly is the legitimacy of CSR initiatives. In many cases CSR initiatives are undertaken for compliance reasons. Sacconi (2004) states that the only way a corporation will have any incentive towards CSR initiatives is unless there are penalties in place for noncompliance and even then it is a calculated decision on whether the penalties are less then the cost of implementing the CSR initiative(s). Yakabuski (2008) in his article asks the question are resource based companies doing enough to mitigate the environmental impacts that they are having through their CSR initiatives and found that this falls short. There is a negative perception against resource-based companies and the impact that they have on the environment. Darnton and Saha (2005) interviewed resource based Author: Date: Title: Revision: PaulGruner 20 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final companies and found that they expressed concern for the environment however it was not their principle motivation for going green. In fact, the results suggest that it was a reactive response to pressures from government legislation, NGOs, customers, and other stakeholders. It was also considered to be an opportunity to gain more business, reduce costs, to enhance overall corporate image. 3.7 Resource Sector and Corporate Social Responsibility Although not a great deal of research has been conducted on CSR practices within the resource sector and specifically the mining and oil and gas sectors. The research that has been conducted has found that resource companies tend to be overly focused on the environmental aspects of CSR (Korhonen, 2006). In addition, resource companies were far less likely to emphasize their CSR initiatives as a corporate advantage (Guenther et al., 2007). Guenther et al. (2007), go on to state that both industries lacked proper reporting methods, reported roughly a third of what they should be reporting and had no plan to improve reporting. In order for Service Companies to have better CSR initiatives the large Exploration and Production Companies will need to improve their own internal standards and processes as it comes to CSR initiatives and monitoring. Korhonen (2006) argues that the environmental aspect of CSR must evolve beyond the current model and move beyond just the downstream impacts but also to, "ask what Author: Date: Title: Revision: PaulGruner 21 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final principle mechanisms upstream are the underlying causes of these negative environmental impacts". For resource-based companies to be successful in setting CSR programs in place they must ultimately work within their supply chain. The supply chain for most oil and gas and mining companies are fairly extensive. The resource companies would increase the risk to their public perception in working with service companies that did not uphold the same level of standards. Environmental accidents, Safety infractions, poor hiring practices, etc. will all be cascaded onto the resource company when doing business with the supporting service companies. It is in the best interest of the resource companies to ensure the CSR initiatives and standards are at an acceptable level (Gurhan-Canli et al., 2006) 4.0 Northwestel Case Study The following section reviews a local telecommunications service company Northwestel (NWTel) that sells telecommunications products and services to both the mining and oil and gas sector within its operating area. The case study will examine: • Current status: What current CSR initiatives that NWTel is undertaking; • Gaps: What gaps exist when comparing to the three largest telecom service companies in Canada; • Suggested reporting metrics: How NWTel would report their CSR initiatives and metrics to the public. Author: Date: Title: Revision: PaulGruner 22 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.1 NWTel background For over 60 years, Northwestel has served the largest operating area in the Western hemisphere and played a large hand in transforming communications in Northern Canada. There are over 500 employees that work throughout the region serving 96 communities. NWTel's operating area covers (Refer to Appendix 8.2): • Yukon • Northwest Territories • Nunavut • Parts of North East British Columbia • Parts of Northern Alberta Northwestel is the primary telecommunications provider within Northern Canada and offers a full suite of services including: • Telephone • Internet • Television • Mobile Phones • Business Solutions The company is broken up in three major divisions targeting specific market segments which includes: • Residential customers • Small business customers Author: Date: Title: Revision: PaulGruner 23 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final • 4.2 High-value customers Demographics: Approximately 50% of NWTel's operating area is First Nations (refer to table 1.0 for a breakdown of the aboriginal demographics within NWTel's operating area): Table 1.0: Aboriginal demographics break down Geographic Location First Nations Population Percent 30,320 7,580 25% 40,000 19,200 48% Nunavut 29,325 24,930 85% NE BC 7,500 2,500 33% Total 107,145 54,210 51% Yukon Northwest Territories 4.3 Total Population Methodology for Case Study To perform the case study a number of measures were taken. First a SWOT analysis was developed to review NWTel's Strengths, Weaknesses, Opportunities and Threats are in targeting the Resource sectors (Oil and Gas and Mining within its operating area (refer to Appendix 7.2). An analysis of Porter's 5 Forcers was then conducted (refer to Appendix 7.3). Author: Date: Title: Revision : PaulGruner 24 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Finally a best practices analysis was conducted reviewing the three major telecommunication firms operating in Canada: • Bell Communications • Telus Corporation • Rogers Communications A matrix was developed comparing the various variables measured within their 2007 CSR reports to determine best practices and provide a framework for a proposed Corporate Social Responsibility program for Northwestel (refer to Appendix 8.6). The matrix contains all of the metrics that the three companies measure and report publicly. In addition the matrix also provides a review of what Northwestel is currently conducting for Corporate Social Responsibility practices and what is currently tracked. The matrix also proposes additional Corporate Social Responsibility factors and justification for their inclusion . 4.4 Competitive background Northwestel distributes its service through 2 main forms: • Terrestrial: Terrestrial technologies are made up of both fiber and radio transmission. Author: Date: Title: Revision: PaulGruner 25 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final • Satellite: Not connected to a terrestrial network and acts independently through a satellite network. For NWTel terrestrial network there is little competitive threat existing from the external environment. NWTel has invested heavily in developing a terrestrial network throughout 60% of its operating area (refer to Appendix 7.2 for a map of NWTel's terrestrial network). Competition does exist in North East BC: • Oil and Gas: NWTel caters to the oil and gas sector in the Fort Nelson/Horn River area (refer to Appendix 8.7 for an operations map of Fort Nelson and Horn River Basin HRB) area). The HRB experiences competitive forces predominantly from service providers distributing bandwidth from Alberta 's Supernet network. Substantial competitive threats exist for NWTel for its' satellite services from both resellers of satellite services located locally and primary service providers that own their own satellite networks: • Mining Sector: Most of the mining sector that is active throughout NWTel's operating area (Refer to Appendix 8.8 and 8.9 for mining activity throughout NWTel 's traditional operating area); • Remote Communities: Communities located in parts of the Northwest Territories and all of Nunavut requires satellite technology to deliver telecommunication solutions. Author: Date: Title: Revision: PaulGruner 26 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.5 Current Corporate Social Responsibility Activities 4.5.1 Community Currently NWTel has a department that is specific to community endeavors, specifically: • Corporate sponsorship with defined criteria; • Scholarship program (general) • Local hiring and training 4.5.2 Health and Safety NWTel has recently been certified with the Certificate of Recognition (COR) for all of their business units (various geographies). COR is an occupational health and safety accreditation program that verifies that a fully implemented health and safety program is in place and being followed. The objective is to provide industry employers with an effective safety and health management system to reduce incidents, accidents and injuries as well as their associated human and financial costs. As a result of this certification specific programs need to be in place and maintained with the appropriate statistics kept. 4.5.3 Environment Mandatory environmental programs and monitoring are in place to meet legal requirements for both Federal and Territorial requirements. Additional reporting occurs Author: Date: Title: Revision: PaulGruner 27 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final to meet and maintain the COR certification. These include site assessments, spill reporting, etc. 4.5.4 Aboriginal Affairs In addition to having a community affairs department there is a separate department that is mandated on aboriginal affairs throughout NWTel's operating area. The Aboriginal Affairs department performs the following: • Employment opportunities within NWTel for aboriginal people; • Training and developmental opportunities for aboriginal people; • Scholarships specific to aboriginal people; • Internal training on aboriginal awareness • Development of mutually beneficial joint venture opportunities (refer to table 2.0 for a brief description of existing NWTel joint ventures). Author: Date: Title: Revision: PaulGruner 28 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Table 2.0: Existing NWTe/ Joint Ventures Joint Venture 4.6 Industry targeted Location Description Proposed Corporate Social Responsibility Activities The matrix in Appendix 8.6 shows that NWTel is already conducting the majority of CSR initiatives that the other three major telecommunication firms in Canada are reporting in their annual CSR reports. It is however recommended that NWTel develop additional initiatives. Author: Date: Title: Revision: PaulGruner 29 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.6.1 Governance • CSR Assessment: Once NWTel has an official, structured CSR program having a recognized third party review/audit will add further credibility to the CSR program. 4.6.2 Environment • Climate change (C02 efficiency): Development of a C02 baseline and subsequent reduction program will provide: o Positive environmental impact which is highlighted by resource companies within their operating area; o Possible cost reductions dependent upon what initiatives are undertaken (reduction of driving) • • Recycling does occur but a structured program does not exist: o Provides additional elements of reducing impacts on the environment. o Easily implemented and measured. Paper consumption: A program does not currently exist to reduce paper consumption, it would however: o Provides additional elements of reducing impacts on the environment. Author: Date: Title: Revision: PaulGruner 30 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final o Reduce internal costs through reduced paper usage and potentially increased efficiency. 4.6.3 Community • Employee volunteer hours: Currently there isn't a structured plan in place for tracking employee volunteer hours: o Matching of volunteer hours for a certain number could be implemented and tracked. Shows commitment to specific communities and involvement. 4.6.4 Aboriginal Affairs There are a number of reasons to enhance the current Aboriginal Affairs initiatives as they relate to the overall CSR activities undertaken by NWTel: 1. As stated earlier in the report, Aboriginal content within NWTel's operating area makes up approximately 50% of the population. Having a targeted program that is in alignment with their needs will help develop strategic partnerships; 2. Resource companies look to develop strong partnerships and relationships with aboriginal groups to gain access to their traditional lands to conduct their business operations (oil and gas/mining exploration and extraction). Author: Date: Title: Revision: PaulGruner 31 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Recommended initiatives include: • Training and development programs: Assist Aboriginal communities with training and development to assist them in gaining meaningful employment with NWTel. This serves a number of purposes including: ' . : o Staffing remote communities which can be difficult to do and; Building sustainability within the communities. o • Leadership oversight: Provide senior management representatives to service on Aboriginal boards, specifically Economic Development Corporations: o This assists aboriginal economic ventures with capacity building, corporate governance and strategic development. o • In addition it provides development opportunities for NWTelleaders. Continued development of Joint Venture Partnerships: There are currently three active Joint Venture partnerships between Aboriginal groups and NWTel. It is recommended that additional strategic Joint Ventures be developed to assist NWTel in positioning the company with resource sector development within its operating area . Appendix 8.8 and 8.9 provides a map of NWTel's operating area and the resource, "hot spots" for both oil and gas and mining are taking place. It is recommended that NWTel develop Joint Ventures and strategic partnerships Author: Date: Title: Revision: Pau!Gruner 32 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final : with Aboriginal bands that reside in those areas. These strategic partnerships can then be leveraged to target the resource companies operating within the geographical area that the Joint Venture(s) operate within. • Infrastructure/service development in Aboriginal communities: Additional infrastructure and services can be deployed in Aboriginal communities. This can be developed through active partnerships with Aboriginal communities and funding from third party sources (Government) for the subsequent development of the required infrastructure and ongoing cost of service. This provides the following value: o Services for Aboriginal communities to assist with: health, education and economic development; o Provides NWTel with additional infrastructure to leverage for potential resource customers operating in the area; o Additional revenue opportunities from services sold ; o 4.7 Development of sustainability within the aboriginal communities. Reporting Corporate Social Responsibility Activities As detailed in Appendix 8.6, which provided a review of best practices of CSR reporting within the telecommunications industry within Canada, NWTel has an opportunity to Author: Date: Title: Revision: PaulGruner 33 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final develop similar reporting metrics. The following recommendations are specific to the resource sectors of oil and gas and mining and not as a complete CSR report: 4.7.1 • Governance CSR Assessment: Once the CSR program is implemented and structured third party audit results can be published to provide credible oversight. 4. 7.2 Customers • Service/network access: Provides a review of current service and network access along with new infrastructure implemented. Demonstrates investment into NWTel's operating area; • Service reliability: Important element for HVC customers that a reliable network is being maintained; • Privacy and data security: Ensures that data being transferred is secure from third party viewing. Author: Date: Title: Revision: PaulGruner 34 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4. 7.3 Environment • Climate change (C02 efficiency): Base metric and subsequent year over year results along with what initiatives were undertaken to reduce C02 emissions. • Recycling: Base metric and subsequent year over year results along with what initiatives were undertaken to increase the amount of recycling occurring. • Paper consumption: Base metric and subsequent year over year results along with what initiatives were undertaken to decrease the amount of paper consumption. 4. 7.4 Health and Safety • All required health and safety metrics can be pulled from the annual COR metrics already required, these would include: o Lost time accidents; o Average #of days lost to workplace-related accidents o Mandatory safety training o COR Safety program maintenance (compliance) Author: Date: Title: Revision: PaulGruner 35 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.7.5 Employees • Diversity: Overview of what diversity initiatives undertaken during the year; • Workforce profile (Women, members of visible minorities, aboriginal peoples, persons with disabilities): Standard reporting of annual results. Provides validation of diversity initiatives undertaken during the year. • Number of people employed by major region: Standard reporting of the gross number of people employed by geographical region. Provides evidence of local hiring and training initiatives. 4.7.6 Community • Community Investment: What number of dollars were spent overall and in which communities if material, particularly in those communities that large resource opportunities exist. • Employee donations: Value of employee donations provided • In-kind donations: Value of in-kind donations to match employee donations Author: Date: Title: Revision: PaulGruner 36 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final • Volunteer time by employee: Number of hours volunteered per employee. Provide a breakdown for specific communities/areas, particularly where resource opportunities exist. Highlight company initiatives that exist to assist employees with volunteering. • Support of local vendors within operating areas: Gross value of materials and services acquired from operating area. Where material provide breakdown for regions particularly where resource opportunities exist. Highlight company initiatives undertaken to assist local service providers in servicing NWTel and their needs. • Capital expenditures: Year over year metrics of capital spent. Shows an investment in infrastructure to improve overall service, reliability and coverage. • Community (boards): Number of boards that NWTel employees are sitting on and involved with. Number of hours provided on an annual basis. • Scholarships distributed: Number and value of scholarships distributed to students undertaking education from within NWTel's operating area. • Student employment: Number of students employed on an annual basis. Author: Date: Title: Revision: PaulGruner 37 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.7.7 Aboriginal Affairs A separate section (Which can be treated as an independent report) is recommended to highlight Aboriginal initiatives: • Aboriginal Hiring: Number of Aboriginals working for NWTel year over year with an explanation of variance whether it be an increase or decrease. • Aboriginal scholarships: Number of scholarships and value distributed over the year. Highlight what initiatives were undertaken to increase the number of scholarships per year. • Aboriginal Joint Ventures: Highlight existing Aboriginal Joint Ventures along with an overview of new Joint Ventures developed during the current year. Provide overview of what each joint venture provides including value to the community, services offered, etc. • Aboriginal community development: Overview of which initiatives were undertaken specific to individual communities. • Aboriginal procurement: Value of procurement from Aboriginal vendors. What initiatives were undertaken to increase procurement from aboriginal vendors. Author: Date: Title: Revision: PaulGruner 38 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 4.8 NWTel Business Case Summary NWTel is currently conducting the majority of required CSR initiatives: 1. In relation to the three large telecommunication companies operating in Canada; 2. Meet the expectations of resource companies , which assists with the creation a competitive advantage for the company. It is recommended that a greater emphasis be placed on the Aboriginal component of the CSR program as: 1. Aboriginal populations makes up approximately 50% of NWTel's customer base; 2. Both oil and gas and mining companies require strong relationships and strategic partnerships to conduct their required business operations. Where NWTel can gain the greatest value in leveraging their CSR initiatives is in the development of a published report that can be distributed through both their website and directly to HVC customers highlighting the initiatives that they are undertaking. Author: Date: Title: Revision: PaulGruner 39 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Currently NWTel does very little to leverage the various initiatives that they are undertaking. 5.0 Conclusion Service companies that embark on CSR initiatives should be prepared to conduct themselves transparently. Anderson and Pedersen (2006) suggest the following in making CSR effective within supply chain management for suppliers to follow: Direct sanction, goal congruence, trust between partners, third party monitoring and reliance on reputation. Cruz and Wakolbinger (2008) agree with the fact that CSR can potentially decrease production inefficiencies, reduce cost and risk and at the same time allow companies to increase sales all of which can increase overall profitability however they do note that as the overall investment in CSR initiatives increases the return on investment decreases. It is therefore very important to set metrics and understand the values that are being derived from CSR programs and initiatives. Roberts (2003) In her paper discusses four supply network characteristics that are strong indicators to success in introducing and managing an ethical sourcing code of conduct: • Number of links between supply network member that is enforcing the code of conduct and the supply network Author: Date: Title: Revision: PaulGruner 40 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final • How complex the stages are within the supply network • How vulnerable is the reputation for each supplier • What is the power that each member of the supply chain holds Salam (2009) found in his study that purchasing with an emphasis on CSR within the supply chain does not have a meta-standard to follow and therefore allows for a significant amount of freedom to implement social responsibility frameworks. Majumdar and Nishant (2008) in a paper focused on Indian manufacturing suggest that CSR initiatives assist companies to enhance their reputation in the communities that they are working on. This is important for oil and gas and mining resource companies involved in large plays with surrounding communities. In terms of the NWTel case study, the company has the opportunity to further leverage its effectiveness with CSR initiatives by targeting those communities that have the highest probability of have resource developments occurring. For those resource companies that value and contract with suppliers who have CSR programs there are steps that they can take to increase the overall CSR value. Boyd et al. (2007) argues that an increase in monitoring suppliers will necessarily increase CSR compliance and may ultimately damage buyer-supplier relationships. Demand by the buyer of goods and services to engage in CSR initiatives acts as an additional incentive (Baden D. et al., 2009) Author: Date: Title: Revision: PaulGruner 41 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Carter C. and Jennings, M (2002) found in their study that increased involvement by purchasing managers in socially responsible activities leads to improved trust in and commitment to suppliers and to increased supplier performance. Redmond et al. (2007) found that small to mid sized businesses recognize the value of CSR initiatives in particular reduction of environmental waste however do little to minimize their footprint. Coughlan and Sweeney conducted a study examining different sectors and their reporting of CSR initiatives. The oil and gas sector was very focused on environmental reporting with little emphasis on other CSR factors (2008). It has been noted that diminishing returns do occur over time from CSR initiatives and therefore it is important that firms continuously re-evaluate the CSR initiatives that they are undertaking (Mullen and Peters, 2008). Further research needs to be conducted within the resource sector and within other industries. The same CSR initiatives are required in various industries with various backgrounds (Kovacs, 2008). There is also need to further the research of CSR initiatives and how and if they are being implemented by international companies. Aguilera and Williams (2007) comparative perspective on CSR raises questions on the CSR actions of international companies and whether they uphold the same CSR practices internationally as they do domestically. In a study conducted by Welford (2004) he found that Asian countries are Author: Date: Title: Revision: PaulGruner 42 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final lagging behind their European and North American Counterparts as it relates to overall CSR initiatives. It is notable however that Japan in particular has been putting best practices as it relates to CSR initiatives particularly with an emphasis on ethics, bribery and corruption (Welford, 2005). In conclusion, CSR is increasingly becoming a way of doing business as opposed to innovative or best practice (Bek et al., 2006 and Maurrasse and Jones, 2007). The issue of corporate citizenship is not going away and there is a need to focus on successful engagement to deliver maximum impact and minimize reputational risk. Service companies catering to the resource sector must start to formulize structured, measured CSR programs to ensure their competitive positioning going forward. 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Corporate Social Responsibility in Europe and Asia: Critical Elements and Best Practices. JCC 13, Spring 2004. Willard, B. The Next Sustainability Wave: Building Boardroom Buy-in. New Society Publishers. Canada, 2005. Yakabuski, K. The Kindness of Corporations. The Globe and Mail. July 2008. Zadek, S. The Path to Corporate Responsibility. Harvard Business Review, 125- 132, December 2004. Author: Date: Title: Revision: PaulGruner 58 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final 7.0 Appendices Appendix 7.1: Terms and definitions Canadian Radio-television and Telecommunications Commission (CRTC): The federal regulator for radio and television broadcasters and cable-TV and telecommunications companies in Canada. Certificate of Recognition (COR): COR is an occupational health and safety accreditation program that verifies a fully implemented safety & health program which meets national standards. The objective is to provide industry employers with an effective safety and health management system to reduce incidents, accidents and injuries as well as their associated human and financial costs. Customer Satisfaction (CSAT): A measure of how satisfied customers are with the overall service provided Fibre Network: Transmits information by light pulses. Making it useful and efficient for transmitting large amounts of data between computers or many simultaneous telephone conversations Author: Date: Title: Revision: PaulGruner 59 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final High Value Customers (HVC): Customers that are beyond individual consumers and small business in size. These are typically made up of Government agencies, Oil and Gas and Mining customers Microwave Network: Technology of transmitting information or power by the use of radio waves. Considered to be part of the terrestrial network. Satellite Network: Internet access provided through satellite transmission. Terrestrial Network: A method of transmitting data through either a fibre network or radio network Author: Date: Title: Revision: PaulGruner 60 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final Author: Date: Title: Revision: - a.• \!I itw•-• \t'.. """'"'":r'""" ~ ~-- H•ll/A'J" AtMIIIUt ~ ~~fl· Ctt•fkNd Paul Gruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Sector Final ~ · " '·'"-......... e.., .r.-'Y"""il\ C.l!lllbtk%rc ~v-••• ......, I ~-.....,~ - l rlln/~Yolaw'Itlll w._. -· ~ Otlfm ~ il ..... .....!.. Cwl~ l..... . · =. ~· ....~¥~~~~~ ~ .. ~In<. ........... .......... 1\ilha .• a-- Cot.... . :..oopii,Wtl • I:!!' ~'\ ~-· I....U: ~ ,......::::,.~ i\ 'ilodC..W At-tf~M" ~~ lowQJrf)IQitylfUIJQQradlo low~~r.oo !ll9'-!llgO.JI- _ _, Abtt Of* Uliw - ---.~ng.,.. - .....- .._... Appendix 7.2: NWTel's Operating area '""' rrte"" ~­ ,.'14' ~ .,.....,...., C1y.» Allot~ l'r":ll.lt PQ l'rr "-"" • lqalult 11\.,1,' I'~~~ ~ 'fr':"<(" 0"'- " 61 Appendix 7.3: SWOT Analysis for NWTel • Well positioned within its northern • operating region • Technical staff available to respond to background on satellite technologies • technical issues throughout operating area • Does not possess strong technical Acts as a reseller resulting in lower margins • Lacks sector credibility for providing Ability to provide all necessary telecommunications to resource products and service to meet industry sectors (mining and oil and gas) requirements • High cost of service in comparison to some competitors (predominantly capital costs) • Threats: Resource sector boom primarily mining • Local resellers throughout operating is taking place within their traditional area grow in size and threaten NWtel's operating area - large incremental market position opportunities • Large national international companies Develop technologies and services become more aggressive in NWTel's required by resource sector traditional operating area Leverage existing CSR initiatives and develop new ones specific to the • Alberta Supernet penetrating the Horn River Basin operating area; resource sector Author: Date: Title: Sector Revision: Paul Gruner 62 August 20,2011 Corporate Social Responsibility: Northwestel Servicing the Resource Final Appendix 7.4: Porter's 5 Forces (Satellite) Author: Date: Title: Sector Revision: Paul Gruner 63 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Final Access to distribution Absolute cost advantages Learning curve advantages Mid channels • Larger companies are able to take Mid advantage of economies of scale and internal expertise. High Expected retaliation by • Number of options exist for distribution • Technology is difficult to implement and maintain • A substantial number of competitors already Mid exist within this market space incumbents Government policies: Number of competitors Rate of industry growth Low Mid • Not a high number of competitors exist. • Growth is increasing within the natural Mid resource sector as demand for natural resources increases. Intermittent industry • Low, it is a largely unregulated space. • Can occur, however not in the foreseeable Mid future for this market space. overcapacity Exit barriers Diversity of competitors Mid Mid Informational complexity and • Dependent upon if they are a primary or a reseller of services. • Several local competitors (resellers) and larger primary competitors. • High , technology is complex. Mid asymmetry Author: Date: Title: Sector Revision: 64 Paul Gruner August 20, 20 11 Corporate Social Responsibility: Northwestel Servicing the Resource Final Fixed cost allocation per • Once infrastructure is in place to offer Low service bandwidth can easily be increased. value added • Required to gain product recognition and Level of advertising Mid expense • More on direct selling through account executives. • High fixed costs with lower variable costs Economies of scale brand equity High • Initial infrastructure has the high cost. Far less so for a reseller. Sustainable competitive advantage through • Improvisation created through marketing High initiatives more then through product improvisation Buyer concentration to firm concentration • Number of buyers increasing with high Mid commodity demands. ratio Degree of dependency upon existing channels • Resellers are more restricted then primary Low sellers. of distribution Bargaining • Due to higher initial capital costs. leverage, particularly in Mid industries with high fixed costs • Dependent upon size of operation and Author: Date: Title: Sector Revision: Paul Gruner 65 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Final demand required. • Would have to pay for upgraded onsite Buyer switching costs relative to firm switching premise equipment and project • Would also result in disrupted service on site costs Buyer information availability Ability to backward integrate through transition (intrinsic cost) Mid • Moderate level of information available. • Not likely within satellite locations Low • Higher probability for terrestrial and connecting to Alberta infrastructure. Availability of existing substitute management. Mid • Competitor products readily available High products Buyer price sensitivity • Price sensitivity does exist Mid factors (CSR) Differential advantage (uniqueness) of • Dependent upon value placed on intrinsic • Most service offerings are the same, differentiated primarily by quality of service, Mid reliability and cellular access. industry products Supplier switching costs relative to firm switching • Costs higher for firm then supplier as firm pays for equipment on their own site. Mid costs Degree of differentiation of • Mid Inputs differ moderately along with ratio of inputs inputs Author: Date: Title: Sector Revision: Paul Gruner 66 August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Final Presence of substitute inputs Mid firm concentration for variety of inputs • Number of supplier concentration is lower Supplier concentration to • Number of producers and distributors exist Low then firm concentration overall ratio • Industry still has a fairly high level of Employee solidarity (e.g. Mid unionized workforce. labor unions) • Suppliers of satellite solutions have become Threat of forward integration by suppliers relative to the threat of vertically integrated within their value chain. High backward integration of firm . • Cost of bandwidth for resellers is high Cost of inputs relative to selling price of the High compared to selling price. • Highest cost input for service . product. Author: Date: Title: Sector Revision: 67 Paul Gruner August 20, 2011 Corporate Social Responsibility: Northwestel Servicing the Resource Final Author: Date: Title: Revision: Customers Governance J' J' E-Billing (percentage of billing) Product take back I .I .I .I I J' J' .I J' .I .I .I .I I J' J' J' ./ .I TBD .I .I Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final J' Responsible procurement .I .I .I .I I Service reliability Lervice/Network access CSR Assessment I Management systems ethics Corporate Governance and business CSR Reports. I I I J' J' .I .I J' .I Appendix 7.5: Comparison Matrix of major Canadian Telephone Companies and what is reported within their annual 68 Author: Date: Title: Revision: Environment ./ ./ ./ ./ ./ ./ ./ ./ Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final ./ ./ High-risk site assessment ./ Water consumption ./ ./ ./ ./ Wireless device recycling ./ Environmental site assessment ./ Paper consumption ./ ./ Recycling ./ ./ ./ ./ ./ Climate change (C02 efficiency) ./ ./ ./ ./ ./ ./ ./ CRTC Complaints Privacy and data security respond) Call center response (Time to Customer response (technicians) Customer satisfaction ./ ./ ./ ./ ./ 69 ! I Author: Date: Title: Revision: Safety Health and ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final '-- Mandatory safety training Short/Long term disability costs workplace-related accidents Average # of days losts to Lost time accidents laws/regulations non-compliance with environmental Monetary value of significant fines for environmental laws/regulations # of incidents of non-compliance with Use of conference calls (avoid travel) ./ Energy consumption ./ ./ Contaminated sites ./ ./ ./ Halon removal Spills and releases ./ ./ ./ ./ ./ ./ ./ 70 Author: Date: Title: Revision: Employees ./ ./ Corrective action taken with ./ ./ ./ ./ ./ ./ TBD ./ ./ Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final employee by type ./ Grievances and arbitrations major region ./ Number of people employed by ./ ./ equivalent team member Overall days lost per full-time ./ ./ ./ Investment in learning ./ Employee satisfaction ./ ./ ./ Engagement Index ./ ./ ./ Team member recognition spend ./ Average Voluntary Turnover ./ Diversity ./ ./ Compensation CORE safety program maintenance ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ 71 l!ll I ' Author: Date: Title: Revision: Community ./ ,/ ,/ Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final operating area ./ ./ ,/ ,/ ,/ ,/ Volunteer time by employees ,/ ,/ ,/ Capital expenditures ,/ In-kind donations ,/ ,/ ,/ ,/ Employee donations ,/ ,/ Support of local vendors within ,/ Community investment breach of ethics policy ./ ./ ,/ Number of concerns considered to be ./ ,/ ./ ,/ Complaints to ethics line Formal learning courses disabilities) aboriginal peoples, persons with members of visible minorities, Workforce profile (women, Ill! 72 --------- ,/ ,/ ,/ ,/ ,/ ,/ Author: Date: Title: Revision: Society Human Rights Financial ./ ./ ./ ./ ./ ./ Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final practices behavior, anti-trust and monopoly # of legal actions for anticompetitive regulations non-compliance with laws and Monetary value of significant fines for compliance with laws and regulations #of significant fines for non- rights of aboriginal people # of incidents of violations involving ./ #of incidents of discrimination ./ ./ Gross revenue ./ ./ Student employment EBITDA ./ Scholarships distributed ./ ./ Community (Boards) ./ ./ ./ ./ ./ ./ ./ ./ ./ ./ 73 I Author: Date: Title: Revision: Relations Aboriginal ... ./ Aboriginal procurement Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final development ./ ./ Aboriginal community First Nations Joint Ventures ./ Aboriginal scholarships ./ ./ ./ ./ Aboriginal Hiring anti-corruption policies and practices standards of business conduct and Percentage of employees trained in corruption analyzed for risks related to Percentage of business units ./ ./ ./ ./ ./ ./ 74 Author: Date: Title: Revision: CORE Program • The Certificate of Recognition Program (COR™) is an occupational health and safety accreditation • and financial costs. management system to reduce incidents, accidents and injuries as well as their associated human The objectives of COR™ are to provide industry employers with an effective safety and health program that verifies a fully implemented safety & health program which meets national standards. Core CSR metrics/activities valued by HVC oil and gas companies. • Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final Blue Highlights These are typically made up of Government agencies , Oil and Gas and Mining customers 75 High Value Customers: Customers that are beyond individual consumers and small business in size. • * HVC Customer Satisfaction : A measure of how satisfied customers are with the overall service provided • *CSAT Proposed CSR metrics that are currently being tracked internally reporting them. CSR metrics that are proposed to either be reported (currently tracked) or begin tracking them and • • * NWTel Tracked Propose * NWTel Author: Date: Title: Revision: 59'0" 30" 122" 3]" 121' 76 Northwestel Sites Bell Mobility Sites Current customer sites Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final 123" Green: Blue: Other: Appendix 7.6: Map of NWTel within the Horn River Basin (Fort Nelson, North East BC). __ ""~"'hi ....... .,,. .-.:,.-..... __..,._ ..,.. ~ --- ...... ......,........ ....... ~~ ~ ..,] ~---~-*' go- "' ~ -, .. 1---- . - - - .• . - . J v .,':'~~ z"'f'!t!P""\ M { ·' ~ "'--..:.:.~~ - -- '"" -·: · s: ----... ....... , . ,.,., " \;.. .......-~---- -.... --·-~ --!.~ ~~ ~- ~,.- ' r-~~-, "'-----.-.....--J .--~ . -..:::;; ·......___,. ,.- . ~-:: -v ~--........ ~ -~ ~~ August L:S, LUll Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final AL#tl,_. MI.~ • ' - .)­ ,.'-' Oil .,..,,.J O..:u. A;t ~ · ~---~ -..... if"-MiQY'ttW ~ ......... ..........,.. iii~~·- Date: Title: Revision: t!i;} ---- ,.,....,.. , ~ ~.,...,., ---~-~~ ~ ~~~~~ --- _...,_,. .. .. __..__ - ~ .... ---- «, O<::'CA J'V' ., , ~""' NORTH"'\J\TEST T E.R..:RITOR.IES to,~ --..-~ ""-.- ...,..~~- ( 1'. -· - -.. - - ......._ and Northern BC ~·-r •-•~ ·· •-•nil',...'·'""~ ·· ~ ~ ~ ~--::-~.::=--·- VVit.hin Yukon Act:iiva Mi n e r a l , Oil a nd G a s A reas Appendix 7.7: Active Mineral and Oil and Gas areas within Yukon and Northern BC 77 .. ( ~-l I . .,_"'-.'•_,.._ Author: Date: Title: Revision: A _ l . x. ----..- . 11-21 1'"'!:'J \ -r •• \ ' . ' .,., lj (t ... l .:=•. • [;I • : A......_ ....._ M ••• ,........,.. tiCIILCih Cn .. . ..4,. ' ~ -~ ·· UVlUJC ~~-- \ L ---J (7 - . h.., . 78 '"' .l"'-~ ~·•:::...::::;:........::-:---_. . - '-, "'~~'y / . ~, ~-... . ,4; _, .£!<. ""] L )' i - .;·- .: ,. ____ - . : : :. p ~- -· . ,;;;;::-- ·- \_ ............... ,) ~ ' j, y -- .;,; - - ', . ,.,..,., .,.,~.... "".-- \ . ~ ~.•'~ \ .. ~~" .. - ~·· ··· ti A'\Il r • -~ < " . --=-~ ...............~.... · - - -"·~- ----\~ . "· , & Paul Gruner August 23, 2011 Corporate Social Responsibility as a Competitive Advantage- Oil and Gas/Mining Service Companies Final ~:::~---~~~~ ...,..~~- '' /_)Q · ~ ,.:,• .. ... '::.,...::c.,"'~•~,~. '?ft: ~ • ~ ,....><... -,<., -~----:.~ --<:-::; . . . .-., ~ i ~......--~c v----r--~.... ~--- :_- . (!.a,. .- <.._ 8"t- C5" ·p_~-- ~ ~/ . · ~r~ ~~~~. ::-:-~ .. e ~ " . . - · :,- -·.~ ~\_ -"'-'.--J c. . : \} ' 't 1 ~'-., """'-~ . --..'::_- ~~ .~~ \ . :;';.\ ~"' ''""- ~ ':}.--.J -- ~~"" -, ·-r"'Mr'--<~: -• . ~~· "~~' , ::.:...~~~· =-= . · ~~-~~~ J ···-~ ' :=::::\-----' - . ....,..~ ~. ~ ~ ~ '~ 0 'i~~.{ ~-· ~ ~-.::~~.Jfi. ~ ~~ . ~-~r -m- ~ -. ~ ~·· .:-~· -·l~ ~ -~·e.· - - ~ ··- ~ - ~-~ ~rtfi~ _ ...~ ·~ -~ ~~ ~- ~- " \ _.....,__n.-.... ~~:~,~ \~ ·- -~ ~~ ~ . \ Active Mineral .and Diamond Areas W ithin Northwest Territories and N u n avut Appendix 7.8: Active Mineral and Oil and Gas areas within Yukon and Northern BC