Examination of Witnesses (Questions 180-190)
THURSDAY 20 MARCH 2003
MS SARAH
HUNT AND
MS CATHERINE
MCALINDEN
180. You talked earlier about the Global Action
Plan's Action at Work programme which you apply selectively in
order to get maximum benefit out of it. Do you think from your
experience of that that this is not a programme which is much
suited to smaller businesses?
(Ms Hunt) To be honest, what we feel we have got out
of the Global Action Plan is that we have embedded some skills
in our workforce. We have seen the successes and failings of that
kind of programme and we can now customise that to roll it out
in our own organisation. Small businesses are an interesting case.
For the Global Action Plan, an SME might have one or two or three
sites but Global Action Plan is one that works well for a multi-site
activity. In a small business, yes, advice is needed and the Global
Action Plan would probably be useful, but there is no reason why
the same function could not be provided by a series of other providers.
Small businesses tend to have simpler business models and so can
often, with a very small amount of advice and encouragement in
the right direction to realise it will help their business, do
it for themselves much faster than a big organisation like ourselves
in implementing change.
181. Of course they have less resources to put
towards these type of projects which can be a barrier.
(Ms Hunt) What I tend to find with an SME, though,
is as the business gets larger and gets involved in more issues
it becomes exponentially more difficult to implement change across
the business. Certainly working with SMEs in our supply chain,
a customer saying, "We want to buy this and we want to buy
the right thing", has done the job. You might need a little
bit of guidance from the customer as to what the customer thinks
the social, ethical and environmental right thing is, but it is
very easy for them to achieve it. Buying their feedstock from
here, not there, a simple change in their process, that kind of
thing. It is very easy to get that customer power with the SMEs
operating effectively, which goes to my other point in the document,
the role of the consumer in all this and individuals not being
able to understand the science behind all this and why it is important.
The example that the government as a consumer of goods must give
and must communicate to people, if they know the issue but cannot
work out the right thing to do, that the government is intervening
to bridge that gap until the learning gap is addressed, saying,
"This is what to buy, this is what to do and, look, it is
what we are doing and it is working". That is really essential.
Chairman
182. Just on the science skills gap that you
talk about, what kind of qualifications do your workforce have
when they come to apply for a job with you?
(Ms Hunt) It varies massively. We have
got 22 fully qualified RICS building surveyors. We have got God
knows how many financial analysts, we have huge amounts of call
centre staff. The CIS is a bit of a reflection of the community
in a lot of ways because it is such a large company. We have got
10,000 people working in 160 offices around the country, we own
shopping centres, business parks, that kind of thing in our investment
property area, so we employ shopping centre managers. There is
a really broad range of skills employed and types of employment
within the organisation so it would be very difficult to pin down
a specific type of person that we tend to employ, although historically
we have had an awful lot of school leavers and then developed
them within the organisation.
183. When you have hired school leavers how
have you been struck by the understanding that they have of basic
science that will equip them to understand the environmental agenda?
(Ms Hunt) To be honest, it is almost non-existent.
It seems to be that they have been taught an awful lot of facts
in order to produce an essay or sit an exam, and then the facts
are gone because they are taught facts instead of the learning
tools to be able to develop and understand frameworks for them.
There is a slight personal emphasis in that as well. My partner
has been a secondary school science teacher for six years and
has left because he is so sick of teaching a broad range of facts
that go in and out instead of giving them the skills that are
given in things like the CASE Community Acceleration Through Science
Education Programme, or what I have experienced in my previous
role working in other countries with workforces. It is just that
simple, for example, what is an eco-system? They do not know.
How to work out what it is, how to draw a flow chart, the tools
that you use to systematically understand the environment around
you and to put information into context seem to be lacking.
184. The tools that you use, the way you put
information into context, the video you provided us with a copy
of, in terms of the community joint partnership work that you
do, do you see part of your role as linking in with the DfES or
OFSTED or education bodies to try and share your best practice
with them to get that into a school context?
(Ms Hunt) We already do that to a certain extent.
We publish a citizenship[2]pack
addressing different issues in this, and we can provide a copy
of that for you, where we have looked at some of the skills and
some of the information and some of the values which is the key
thing, people not linking actions with consequences is a fundamental
difficulty that we are seeing so we do use the citizenship pack
to try and do that and that has been developed with education
authorities.
185. It is not just the science gap, it is in
citizenship and science as well?
(Ms Hunt) Science and numbers are the
real important ones and the teaching of processes not facts, actions
and consequence, that is particularly evident when you come to
the field of science and sustainability because that is where
it is so important.
186. Thank you. Just moving on a little bit
towards the interface you have between the customer and contractors,
you say in your evidence to us that you like to direct customers
towards more sustainable services. Do they have to go down that
route? Do you penalise them if they do not? If they go down that
route how do you use that as an opportunity to increase their
awareness and promote education at the same time?
(Ms Hunt) In the field of customers there is a series
of initiatives that we have undertaken. The first I think was
to do some research in our products. We used Professor James from
Bradford University to do that, to look at what influence our
products can have on social, ethical and environmental performance.
We do not ask for the mileage of people when they are buying motor
insurance, but the amount of time they spend on the road influences
the emissions, it can influence pollution and it can affect our
life assurance, with an increased incidence of respiratory disorders,
that type of thing. The first step is, we identify where the problems
are. We are currently at the stage of looking at how to change
our products to do that. It is very difficult in this area because
from a purely insurance perspective there is no evidence of direct
risk reduction in terms of the likely premium pay out in introducing
some of these measures, so basically what we are doing is looking
at the back end of it in motor claims and how sustainable the
motor claims process is, or if the vehicle is damaged and needs
to be repaired or needs to be disposed of, basically unless we
do it ourselves and get the back-end sorted out, it is very difficult
to go and advise a customer and say this is the product you want.
In the meantime what we are trying to do is to encourage good,
sustainable behaviour. For example, we send out a customer magazine[3]talking
about initiatives. In this one (displayed) we have got "What
a Load of Rubbish" about recycling and if goods are damaged
in the home and disposed of, looking for recycling opportunities.
Also vehicle selection, what kind of vehicle. People are not aware
of all the grants and subsidies and excellent things that are
out there at the moment to help them drive more sustainably and
save money. Basically giving them a direct link to that and making
sure if they do decide they are going to have an LPG vehicle or
a hybrid that we are not going to hit them with a great big fat
extra premium in order to do that. Those are the steps we are
taking at the moment. It is general education presented in an
interesting way. For example, that article about recycling is
right next to winning a trip to Italy to try to draw them into
reading that bit. It is giving them the basic information to start
to understand so when we begin to then look at changing our products
and the way that our products work, why instead of phoning for
Direct Line and asking for 56 different quotes and picking the
cheapest one, explaining there are values and impacts associated
with insurance products. We are an organisation that is very closely
linked with joint leadership to the Co-operative Bank as Co-operative
Financial Services. They are publishing an ethical purchasing
index looking at how customer behaviour is influenced by these
issues and also they are now starting to develop specific products—eco
mortgages and that kind of thing—to appeal to people, to
try and inform them about making consumer choices and decisions
based on a broader issue than the price when you first buy it.
187. To what extent is that registering with
your customers? Is that something which increases the value of
the kind of service you provide?
(Ms Hunt) The insurance side is very
interesting, it is changing at the moment, but our business has
been almost entirely sold through agents going into customers'
homes and selling financial and insurance products, so it has
very much been an advisor coming into the house actually starting
to raise these issues. One of the key areas in that is in making
investment decisions. We found that people did not make social,
ethical or environmental inclusions in their decision making but
when we said to them, "Do you want us to invest in defence?"
immediately they did then have an opinion. We had some research
conducted with Forum for the Future, who incidentally are, particularly
at the senior management and leadership end, very useful for business
in creating education programmes, research and deciding action.
It was basically called "Sustainability Pays"[4]where
we looked at investors and what issues they thought might be important
and how to influence their behaviour. Introducing some of the
knowledge and experience and engaging in research to be able to
understand what the factors are, that are influencing the decisions
in itself seems to be a good educational tool because when we
started to ask them about it, they suddenly realised and became
interested and realised it is a factor. The Bank's ethical policy
and ethical customer survey has been another powerful tool in
that. Every year they are seeing increasing amounts of customers
responding to the survey, giving a very strong customer mandate
for changing the products and how they behave.
Mr Chaytor
188. In terms of influencing customer behaviour,
how can you bring in a sustainable dimension to selling insurance,
particularly now with the growth of the Internet and the ease
of going onto the Internet and choosing house or car insurance
from 25 quotes off the Internet? I can understand the concept
of eco mortgages and I can understand the concept of ethical investment
and I can understand the concept of choosing your power supplier
from renewable sources, but if I am going to buy my car insurance
from CIS or someone else what ecological or sustainable advantage
can you persuade me that you have?
(Ms Hunt) There is a series of different
things. People do not seem to realise that when they take out
an insurance product, the money they have taken that out with
is then invested, so informing consumers of that link. We take
this money, we then invest it, and it is important where that
goes. That is the key thing. Also in charging premiums and in
marketing the product. You see scrap cars all over the place.
There is a code of conduct for motor vehicle salvage which insurance
companies can sign up to and it basically makes sure that your
car is disposed of effectively. We have the largest approved repair
network of any insurer, communicating the fact that when your
car goes in to the garage to be repaired, we inspect, assess and
approve those places, not just to check your repair is done well
but to make sure they are disposing of any replacement parts correctly,
that they put a focus on repair rather than replacement to mitigate
resource use, and that activity happens properly and effectively.
With the home side of things as well there is a very good example
in Sweden, Folksaam Insurance, where they offered a product where
you did not just get a big fat cheque, you got replacements goods
and you had the option to be able to choose refurbished goods
or energy saving goods on your insurance product to help reduce
the impact on the environment. It is that role when you are buying
things of realising the total package that you are buying, not
just the direct debit going out of the bank, that is the key role
that we have got to play there.
189. But in terms of consumer understanding
it is fairly low level. When people are going out to make a small
investment they understand the concept of ethical investment and
going to the financial pages and getting indicators of different
ethical investment. In terms of insurance policies, have you established
a series of indicators or benchmarks whereby for different insurance
policies the consumers can judge different insurance policies
not just by the premium but by the various criteria you have just
described?
(Ms Hunt) No, I have to say the research and development
in the back end of the mechanics of what the impacts are is on-going
but is not sufficient yet to be able to actively use that. The
thing is that we are talking about here is sustainability and,
yes, market advantage in terms of attracting consumers is the
issue but, as is the case with a lot of these things, what we
are trying to do here is lead by example because we want more
of it. If every single insurance company managed to create a situation
with reduced climate change impact, reduced energy consumption
for replacement products we believe we might be able to influence
climate change, for example, and not have as many claims. This
is the thing. We are a business that deals with risks and these
are the risks and what we are trying to explore is how those risks
can be dealt with in a wider context, not how to use sustainability
to attract an additional number of customers. That is fundamentally
what it is about.
Chairman
190. We are coming to the end but I wanted to
ask you very quickly could you give us an example of other businesses
that you feel you have influenced or other companies, particularly
small and medium-sized enterprises as well, where because of the
way in which your people are taking part in working groups and
working parties and policy documents you have had an influence?
(Ms Hunt) I can, right down to names
and facts on a very specific example of which I am quite proud.
Pringle Brandon are a firm of architects and designers operating
in office refurbishment. We are undertaking significant refurbishment
to a very high specification of part of our headquarters building
in Manchester. We want to do that in a sustainable way so we have
been working directly with all the different companies and particularly
the architect and designer in material selection. What we have
done is see what is the best material we can use, for seats with
a high recycled content, different things like that, working with
them to go out and find that material. They have a customer who
wants sustainable goods and they do not know what the facts are.
By educating them, for example, in what chemicals we do not want
to be in there and that recycling is important, this company has
gone away, done loads of research, done it with us, and identified
new suppliers to supply these kind of materials that they just
had not realised were out there. They have now appointed some
members of staff in there to specifically look at these issues
and they have also had an approach from a different customer saying,
"We have heard you can do sustainable refurbishment. We are
quite interested in that. What are the issues? What is going on?"
We are continuing to help them formalise the approach they have
taken with us into a framework they can then use with other customers
so the extra effort they have had to put into the contract to
satisfy our requirements is paying dividends in the fact that
they have developed a new marketable service that they can offer
to other people. It also means the effort we invested in that
in getting what we wanted in that company looking at ethical product
selection, fairly-traded goods, Forestry Stewardship Council certified
goods, has given them a broad education and has a much wider influence.
Another example of that is we have a Planning Committee decision
in Manchester today to refurbish our chief office buildings' exterior
walls where we would prefer to use photovoltaic panels to stainless
steel or other things because it is about sustainable material
selection, not energy generation, what is the most sustainable
material that you can use on that building. In the process of
doing that, working with the North West Development Agency and
Renewables North West, we are actively managing to attract renewable
industry businesses in the North West of England which helps to
regenerate the area where the main activity of our business is
centred and it helps to create a more wealthy society around us
in a sustainable way. Already the chief photovoltaics advisor
has recruited a North West representative to satisfy customer
demand, and different things like that where we are currently
helping to negotiate maybe by using the customer pull. Again it
is back to that ethical consumer pull which is important in looking
at manufacturing as well.
(Ms McAlinden) I would just like to add another example
of where we have used our expertise to influence another organisation.
We actually have a partnership with a local high school in Whalley
Range. We work with the school on a number of different issues.
We are in the process of helping them set up a recycling project
at the school using our expertise and hopefully bringing selected
materials back to ourselves for recycling. We are particularly
interested in doing that because we will be able to work with
pupils aged 11 upwards rather just being able to reach out to
our staff and we are able to extend our recycling streams into
the houses of other people and influence younger members of our
society.
Chairman: Thank you for that. I am afraid we
are going to have to bring it to a close. I hope just by giving
evidence to this Committee that you will be expanding the work
that you are doing. Thank you very much indeed.
2 Not printed here. Available from CIS. Back
3
Not printed here. Available from CIS. Back
4
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