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Has the Games raised the bar for business?

Sensemaking / Has the Games raised the bar for business?

Corporates fought for the chance to work on London 2012 but can the experience create a new league of leaders? Robin Yapp looks for signs of more sustainable business.

20 Jul 2012

Corporates fought for the chance to work on London 2012. So, will it leave them ahead of the game? Robin Yapp looks for leadership.

With an expected global television audience of around four billion, it's no wonder that some of the world's biggest companies signed up to sponsor the Games, while others scrambled to supply goods and services. The association of the Games with certain sponsors is, for some, a large blot on its green aspirations, provoking lively debate about the role and value of corporate sponsorship [see 'Sponsorship: greenwave or greenwash?']. A question much less pondered, but arguably more significant in the long term, is whether the Games offers business an impetus for change. Can companies be transformed for the better by their involvement, and does this set a template for the future? Can major global events colour the corporate playing field a deeper shade of green?

Some observers are deeply sceptical. Duncan Cowan Gray, Olympics programme manager at BioRegional, which helped draw up the sustainability framework for the London bid, is among them. "The corporates have not been improved hugely by [the Olympics]", he says, adding, "It's not surprising, because most of them are much bigger than London 2012 in budget or corporate reach."

But for Phil Cumming, Corporate Sustainability Manager at LOCOG, the proof is in the practice. "Take mattresses", he says – pointing to one of the essential furnishings for the Olympic Village. Ramler UK, the supplier of furniture, fixtures and equipment, originally proposed to source 17,500 mattresses and 6,300 mattress extensions manufactured in China. One of LOCOG's goals was to buy 'home grown' wherever possible, and so it sent Ramler back to the drawing board with CompeteFor, an independent brokerage service set up to give SMEs in London better access to business opportunities at the Games. CompeteFor will outlive the Games, and other public sector organisations are already using it.

But back to beds. Ramler ended up giving the job to Horatio Myers, a company based in Huntingdon, just 68 miles up the road from the site. And where the springs and foam sprung from was just the start. Ramler also had to provide LOCOG with details of its plans to reuse the mattresses after the event. The majority will go to other major events, student accommodation, hire and rental companies, or be sold to the general public. Any spoilt ones (nerves could run high!) will be transported to a recycling centre in Milton Keynes by vehicles on return journeys. The steel content will be collected by local metal recyclers; polyester, foam and plastic will be reprocessed; natural fibre will go to compost, and the remaining 5-10% of material will be sent for energy recovery. Thanks to the stipulations imposed by the Games, a whole new approach to sourcing and re-use has been designed, tested and proven.

Charged with procurement decisions worth millions of pounds, LOCOG had tremendous power to sway its suppliers, and the sectors in which they operate. But wielding this power effectively was no easy task. Without any tried and tested guidelines to help major event providers navigate their way through conflicting priorities – from cost to carbon to community benefits – they had to chart their own course.

Of course, the 2010 Winter Olympic and Paralympic Games was also making inroads into this new territory. The Vancouver Organising Committee created a questionnaire to assess the sustainability of suppliers, giving preference to Aboriginal-owned and inner-city companies – but LOCOG was already embarking on its own assessments process as this was being prepared. Other showcase events, such as the Glastonbury Festival, make a song and dance of their green credentials, but have yet to publish a supply chain assurance mechanism that others can draw upon.

LOCOG's search for a useful precedent drew a blank – and so inspired the creation of a new British standard, known as BS 8901. This is the world's first certifiable management system standard on sustainability, specifically designed for the events industry. All relevant Games suppliers have been encouraged, and in some cases required, to work towards full compliance with the standard, and LOCOG itself was independently certified to the standard in 2011.

This is something that all future Games will be able to use

It was clear that an international standard for events management would be needed if any of the learning was to be passed on, and so LOCOG also supported the creation of ISO 20121. This certifiable management system standard was launched on 15 June 2012, and is something that all future Games, and any other world events, will be able to use.

It's a big step forward – but it still has its detractors within the industry. Some are concerned that there's no mandate to use the new standard. Fiona Pelham, Managing Director of Sustainable Events Ltd and chair of the committee that developed ISO 20121, responds that there is "real potential" if the big players and client organisations insist on compliance. Another concern, though, is whether 'compliance' will mean the same thing across the board. There are three different levels for claiming compliance: you can a) certify yourself, b) ask someone with an interest in your organisation to review what you're doing, or c) have a full independent audit by a competent third party. Pelham says the first option is intended to encourage businesses to strive to improve without significant expense – but critics worry that it could equally encourage companies to self-certify with little intention or effort to change their ways.

Overall, though, Cumming insists that placing high demands on suppliers has been a driver for companies to make positive changes. Suppliers were required to go beyond 'tick box action', he says. LOCOG insisted on checking the sustainability credentials of the supplier, the product and the location where products associated with the Games were produced. Factories, for example, were reviewed against the requirements of the Ethical Trading Initiative (ETI) Base Code and local law by specialist auditors. This meant that official licensees seeking approval for London 2012 merchandise were prevented from using 39 factories in 2011 alone until corrective actions had been taken and verified by an auditor. The majority of these factories were in China and typical breaches of the ETI Base Code or local law identified included inconsistent payment of wages, excessive working hours, and poor standards of health and safety.

So what about the media reports alleging that workers in some factories producing clothing for Games sponsors adidas and others had been systematically mistreated? LOCOG acknowledges that it is clearly not possible to provide a full guarantee that no issues exist at production sites used for the Games: no company could provide such a guarantee. However, Cumming believes that it has taken supply chain engagement and management further and deeper than any previous major event organiser and perhaps many brands. "The reality", says Cumming, "is that any brand will find it very difficult to control conditions in factories that are locally managed. The challenge is further compounded for an organisation like LOCOG which is temporary and generally several steps removed from the factory."

Distance from suppliers is no excuse for inaction, and LOCOG recognised this. It developed an innovative Complaints and Dispute Resolution Mechanism for those who feel the LOCOG Sustainable Sourcing Code has not been properly implemented. The aim is to resolve any allegations, rather than simply confirm or rebut them, by putting sustainable remedial measures in place, within agreed timescales. Alongside product and environmental considerations, this process can also be used to address workers' rights. It's based on principles for non-judicial grievance developed by the United Nations Secretary General's Special Representative on Human Rights, Professor John Ruggie, and wide stakeholder consultation, and is supported by an independent Stakeholder Oversight Group.

LOCOG understands that it is the first organisation in the world to have this type of mechanism in place. So, how has it been used? The first instance arose early in 2012 following allegations about poor working conditions at overseas factories used by licensees to produce London 2012 branded items, including merchandise. While some actions, such as transparency in wages and working hours, will take time to deliver, there have been some immediate improvements as a result. In one case, a Chinese worker in a licensee factory used LOCOG's Factory Worker Hotline to tip the Organising Committee off about an underage worker. The person in question has now been enrolled in a specialist remediation programme and is back at school.

"Of course, there is still scope for improvement", says Cumming, "and there are valuable lessons to share." LOCOG has commissioned an independent review of its approach, looking at how it has managed labour standards in particular. Recommendations will be made available after the Games in late 2012.

Stretching the sponsors

If procurement and supply are hard work, then sponsorship may by contrast seem an easy ride. Jon Woods, General Manager at Coca-Cola, Great Britain and Ireland, acknowledges that many sponsors have traditionally viewed high-profile events "as a chance to raise the profile and visibility of their brand – and nothing more".

His view is confirmed in a report by the independent think tank Demos, 'Measuring Up', which revealed that the majority of sponsors across the board make no attempt to measure the impact of their activities. One-third of them blamed the lack of a measurement model, and another third said ascertaining social value was simply not a priority.

As Woods sees it, sponsors do lots of good work which isn't captured or measured, and so the benefits can't be assessed. It's something he wants to change: "Once we understand more about the social value we create", he says, "we can learn from our experiences and improve."

Coca-Cola is working with Demos to evaluate its activity using a first-of-its-kind tool, also called Measuring Up, to measure the social value of corporate sponsorship. Max Wind-Cowie and Claudia Wood, who are leading the project at Demos, hope this tool will put an end to excuses, and "help the corporate sector to understand, demonstrate and improve the social value" of highly branded activities. Alongside the standard 'input–output–outcome' matrix, the tool prompts corporates to measure the legacy of their sponsorship, recognising the potential for long-term, and even permanent, benefits. Coca-Cola will pilot the new tool as part of its own evaluation exercise.

It's not just about doing good: there's a strong business case for such assessment. Woods points to a 2012 poll which shows that over 70% of British adults would feel more positive towards a brand if they knew its sponsorship activity was actually bringing benefit to local communities.

Familiar fruit

While totting up the value of social improvements may not yet be seen as top priority by some boards, the same could never be said of resource efficiency. And here, the exclusive rights that come with sponsorship are clearly a bonus. Major events like the Olympics offer corporates a king-size test bed for innovation, while tight budgets, timelines and energy targets provide the impetus to trial new solutions and efficiency measures.

Sometimes it's simply a matter of coordination. For the first time at a summer Games, there'll be one network for all the different communications activities, whether it's scoring and results, mobile phones, internet or media. This network provides seven times the bandwidth of the 2008 Beijing Games, BT claims – but took just 800 on-site engineers to set up, compared with 4,000 in China. It can cope with all the traffic thanks to sophisticated new prioritisation software.

This network will act as a 'golden thread' for Newham

But the real benefit, according to Niall Dunne, Chief Sustainability Officer at BT, is that the local community will get to use it after the event. Dunne believes it will act as a 'golden thread' for Newham, taking a deprived area and making it one of the best places in the UK for communications infrastructure, thanks to its speed and capacity. And this will create further opportunities, he claims, pointing to research which suggests that people with good ICT skills earn up to 10% more than average.

Another sponsor keen to use the podium to try out new approaches is UPS, logistics partner for London 2012. With a global workforce of more than 400,000 and the ability to reach more than 200 countries every day, it has real clout as a potential sustainability leader. It used the Olympics to experiment with everything from transporting freight by river to installing new telematics software in its trucks. "We've been keen to connect what we are doing with the Olympics to our broader European and global sustainability priorities", says Peter Harris, Sustainability Director for UPS EMEA. "Carbon management is one of those priorities, but another is sustainable city logistics. There are increasing challenges with the way our cities operate because of growing numbers of people: air quality, congestion, noise, waste, all of which are separate from greenhouse gas emissions." If the Olympics can prove a test bed to help resolve some of those issues, then it will leave a legacy indeed.

BMW Group is also using the challenge of providing transport for the Games as a "unique, live test bed" to explore how emerging mobility technologies will deliver a more sustainable future. Not only is it supplying a 3,200-strong fleet of hybrids, electric vehicles, clean diesels, motorbikes and bicycles, but – looking beyond the Games – it is busy developing solutions to challenges including congestion and parking. It has founded a venture capital company, BMW i Ventures, to help urban transport networks run more smoothly, using mobile technology. The company has invested in a range of apps, including a car-sharing club and the online marketplace ParkatmyHouse, designed to connect available parking spaces with people looking to park. It's arguably this 'big picture thinking' that has kept BMW at the top of the Dow Jones Sustainability Index for the automotive sector for seven years in a row, making it the only car manufacturer to have appeared in these rankings every year since they were established.

Some changes are yet to come, as businesses take a step back to see how new ways of working and emerging technologies trialled during the Games have paid off. But with the legacies of a new sustainable procurement system and a tool to measure the social value of sponsorship, London 2012 has already blazed a trail for others to follow.

Robin Yapp is a freelance journalist specialising in renewable energy and former Brazil correspondent for The Daily Telegraph.

Photo: BMW Group London 2012 Fleet ActiveE;  BT; StreetGames / The Coca-Cola Company

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