Examination of Witnesses (Questions 159-179)
THURSDAY 20 MARCH 2003
MS SARAH
HUNT AND
MS CATHERINE
MCALINDEN
Chairman
159. We welcome you both to our session this morning.
In think you were here for the previous session. May I also thank
you for providing us with video evidence. We have modernised Parliament
but it is a pity that we have not organised it sufficiently for
you to present your video evidence to the Committee, but I thank
you for that. First, would you like to make some opening remarks?
We have read your evidence. We are very interested in the work
you are doing. Would you briefly like to highlight anything in
particular before we start our questioning?
(Ms Hunt) Firstly, addressing the issue
of sustainability, that is a really fancy word but it boils down
to securing the long-term future of a business from a business
perceptive and also addressing wider risks that have a tangible
bottom-line effect on that business. It is not about being green.
It is fundamentally about business. As an insurance company, we
are seeing significant effects of sustainability issues on our
business performance. The misuse of drugs is causing difficulties
with theft; that has been determined. We have climate change causing
increased incidence of extreme weather events, and not just flooding.
The direct business concerns are difficult to understand and recognise
because of this gap in science and the understanding of science.
That is basically what this is about. The issues are shied away
from, not because they have direct business relevance but because
the entrants to the workforce are not equipped with a clear direction
from many of the organisations for which they work. To be honest,
they are not equipped with a clear direction from Government and,
even when they are, they are not equipped with the basic skills
and the learning to be able to understand what these issues mean
and the practical measures that they need to take to make a difference
there.
160. You have stressed the business force behind
all of this. Do you feel that that is the bottom line or that
with your own ethical heritage, if you like, in your own organisation,
you would be doing as much as you are doing if you had not got
that ethical baggage—and that might be the wrong word—or
the ethical origins that you have?
(Ms Hunt) I see that more as a headstart. We have
been given a slight advantage in this.
161. There is no difference between you and
any other business organisation?
(Ms Hunt) There is absolutely none at all. We compete
in the same markets. We target the same customers. We depend on
income to maintain our business in exactly the same way. The fact
that we are a co-operative organisation makes no difference, other
than we are fortunate to the extent that we have a heritage of
social, ethical and community issues being considered in our business.
Basically our fundamental core principle is concern for the community.
We use that enabling clause for managers and business leaders
in the co-op movement to be able to take these issues on board
without feeling it is a bit woolly or not quite business, but,
other than that, no.
Mr Chaytor
162. Do you think other insurance companies
are doing similar things, such as Norwich Union, Sun Alliance
and the other names we have heard of?
(Ms Hunt) The insurance and investment
industry is starting to take on board these issues. There are
quite a few groups forming, such as investor forums like the Institutional
Investors Group on Climate Change. We think there is a difference
in that many of these businesses are actively trying to influence
the companies in which investors invest or influence from outside
rather than looking at their own business itself and going through
the sustainability learning curve there, and then disseminating
that to the companies that it is investing in or to its customer,
or influencing its product development in the field of motor and
home insurance and those sorts of areas.
163. You have a very intensive programme for
staff, particularly the new recruits. Can you tell us a bit about
how you induct the staff into the organisation?
(Ms Hunt) There is a series of fundamental measures
for staff coming in. The first is the induction where we have
a strong social values section. That outlines first and foremost
that you are supported; it is taking the handcuffs off. Many of
our staff and people coming into the business have an interest
in this area but think it is time-consuming and expensive and
wonder if it is legitimate for them to spend company time on it.
The message we try to put across at induction is that this is
not just something to think about, it is part of their job, and
the organisation will support them in understanding that as part
of their job. The second element is to try to address the learning
gap and talk about some of the principles and ideas behind sustainable
development, the social, ethical and environmental considerations
and some of the basic facts surrounding that. That is the most
difficult bit for us as an organisation. We are not a natural
educator; we are an insurance business. In educating people about
the science element when they come in, it is not enough to give
them some eco facts or climate change facts. You cannot say that
climate change is important without explaining what climate change
is. If you go to Germany, Japan or Sweden, that is not an issue
because they know what climate change is and what eco system balance
is.
164. Have you thought of subcontracting the
responsibility for that if you feel so strongly the lack of basic
scientific understanding?
(Ms Hunt) We do that to a certain extent in our existing
employee framework. We utilise a series of different tools for
education. We tend to target this to the field in which people
are working. For example, our motor claims assessors will go to
Thatcham (motor research) and hear about environmental issues
and learn about the environmental issues that are directly relevant
to the business in which they operate. Staff with inspection or
supervisory responsibilities will train in environmental audit
techniques so that they have the correct skill set to do that.
Global Action Plan is a significant project that works with the
general staff to raise awareness of issues, very much focusing
on equipping them with the necessary groups of skills they need
to deliver social, ethical and environmental results. This is
about before and after. They now say that the "policy"
is relevant. Attention should be paid to whether the actual impacts
on that business area have gone down as a result of the training
being given.
165. In your evidence you have mentioned the
significant costs of the Global Action Plan programme. Is that
in itself sustainable? Will it continue or is this very much a
climate scheme and you want to test the water?
(Ms Hunt) The Global Action Plan has been extremely
successful, and it has saved costs in business. We have a series
of results, basically environmental and others, and we save about
£16,000 in bottom-line business costs through implementing
the Global Action Plan.
(Ms McAlinden) That cost about £33,000 to implement.
We save over £16,000 per annum just on energy costs and nearly
£28,000 on stationery costs.
166. So there is a net gain?
(Ms Hunt) Yes. However, this was a selected area of
the business. We did this at big sites. If you want to roll this
out to our smaller sites, it will cost £150,000 to £200,000.
We would not see the same net gain because of the smaller impact
in that area. The point I was making about the Government funding
here is not that I think you people are not devoting enough funds
to this; the problem is that there are so many not-for-profit
organisations, trade associations and trades union activities
all wanting to offer basic sustainability awareness training to
us. If the funding was targeted towards schemes which demonstrated
success, and fewer schemes, with Government backing, that would
give much better value. Some of these schemes are of very poor
quality. They have received European and Government funding and
that is seen as a stamp of approval being given by you. If a training
provider says, "We are Government funded", it is as
though it is almost Government authorised. It would be a very
good idea if Government paid a lot more attention to what the
results demonstrate before it places its money in these organisations.
167. That is important. In terms of the employee
perception of this programme, with new staff that happens during
the induction. Are your employees happy to go along with this
or do they think it is all a bit bizarre? Secondly, when they
finish their induction programme and start doing a real job, do
they find there is a conflict between the rhetoric and the reality
of the day-to-day routine?
(Ms Hunt) I think that is true in every business,
that you get a degree of that, individuals maybe have not bought
in, their individual manager has not bought in. The key thing
we have done to address that is to make social, ethical and environmental
issues part of the pay framework and part of the performance management
framework.
168. So you get paid more if you are more ethical?
(Ms Hunt) Exactly.
169. How does that work?
(Ms Hunt) Management are given targets and if they
achieve their performance targets, they could receive a performance-related
bonus or pay increase.
170. So each division of the business—
(Ms Hunt) Each manager in their appraisal has to achieve.
171. What kind of sustainability targets, for
example?
(Ms Hunt) They may be required, for example, to run
with their staff a community involvement initiative of their choice.
Again, they are allowed to target their area. For example, our
business property managers might have targets to increase the
proportion of renewable electricity used in the business, direct
targets like that, where if they manage it it has a direct reflection
on their bottom line. It is not just about pay. The fact that
it is in the job description and in the performance framework
means, "I really am allowed to spend time on this. I really
am allowed to spend money on this." From a business perspective
we know that the feeling "we have not got time for this,
we have not got money for this" is a false economy in the
long run because it will increase risks affecting our business.
That is fundamental really. What we need is government to make
it so that it is not more time-consuming and more expensive to
engage in sustainable behaviour, through the legal frameworks
and through example, and for business to enable that through introducing
the same measures.
172. In the Global Action Plan's Action at Work
they have this concept of Environmental Champions; how does that
work? How do you select those or how do they select those people?
Can you describe what happens?
(Ms Hunt) It is basically a nomination process. Catherine
is our representative in the Global Action Plan element of the
wider sustainability education framework and if you would not
mind, she will be able to answer that for you.
(Ms McAlinden) We asked for volunteers to begin with
and if we had a particular office where there were no volunteers,
they were nominated. I must say that happened at a minimal number
of sites. Most people were happy to volunteer and happy to be
a part of it.
173. What is their job once they have volunteered?
For how long does it last? How long do they remain an Environmental
Champion?
(Ms McAlinden) They remain an Environmental Champion
for as long as they wish to. The Global Action Plan project itself
ran for 12 months. In the 12 months their role was merely to facilitate
the message back to staff in their offices. They conducted training
sessions, they conducted the energy audits, the waste audits,
they were responsible for running the project in their own offices.
174. But you have also got a group of people
called Values Facilitators. My final question is how do the Values
Facilitators relate to the Environmental Champions and can one
person be both?
(Ms McAlinden) In quite a lot of the offices the Social
Values Facilitator was also the Environmental Champion.
175. And is it the same kind of role?
(Ms McAlinden) It is the same kind of role. The Environmental
Champion deals solely with environmental issues and the Values
Facilitator is looking at the wider picture. We did not specifically
ask for the Values Facilitators to be Environmental Champions
because we are aware that everybody has the same workload and
they are taking this on board on top of their own work. At a lot
of the offices they were working under a lot of pressure to begin
with anyway.
176. Is there an incentive for them in any way
or is it entirely something that they choose to do? Do they see
it as part of the career structure or promotion opportunities
or to get this as something on their CV?
(Ms McAlinden) Most of them are happy to do it because
they have an interest in that area. The ideal candidate is somebody
in the office who is quite well respected and a particularly good
communicator. There is not an incentive as such, other than the
satisfaction of being involved in a project of this kind.
Mr Ainsworth
177. I notice you highlight the fact that some
of your senior management have external positions and your Chief
Executive, for example, was on the board of Business in the Community.
To what extent does that filter down through the culture of the
organisation? Does it have a positive impact on the way that employees
and managers behave?
(Ms Hunt) It gives us a leading edge
basically because senior management being involved in these things
means they are very well informed about the latest initiatives
and they have very good access to information on sustainability
issues, and it sends such a strong message to our staff that it
is alright. When they phone up to speak to the chief operating
officer and find he is attending a meeting looking at for example,
regeneration issues in Salford, they realise, "I am allowed
to do this, it is really alright." It is not just the top
management. If you go into the different business areas, the areas
where we are finding strong success is where the manager in that
area has been encouraged to take on external responsibilities
in the field of sustainability that are appropriate to them. For
example, Gary Thomas, our Property and Facilities Manager, sits
on the steering group of Managing Buildings Sustainably, a DTI
"Partners in Innovation" project. He also chairs the
Property Group of the Institutional Investors Group on climate
change. They come back really enthusiastic and get to implement
leading edge initiatives in the business. The fact it is leading
edge initiatives we are testing out and implementing tends to
attract that little bit more enthusiasm.
178. You are talking about people with quite
grand job titles quite high up the chain. Do you apply the same
standards to more humble employees who may be involved in projects
in their own community, and do you let people go if they have
got external commitments?
(Ms Hunt) We operate a matched time policy. Obviously
there are upper limits—
179. You cannot have everybody out in the countryside.
(Ms Hunt) The personal time that they spend is matched
by company time. In addition to that we do active team events
with the staff. We take them out to do some tree-planting, to
decorate an old people's home but also as well to use the skills
they are learning in business to help the community. For example,
consumer credit and credit advisory skills—encouraging our
agents who are financially skilled to give some of their time
in holding free financial advice centres for local credit unions
and different things like that. It is a very important part of
it. Giving them time and giving them budget means that they realise
it is okay.
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