Strategic Corporate Social Responsibility
Professor Kellie A. McElhaney2.11.07
Every single pressing social and global issue of our time is a business opportunity.
Management is a matter of world affairs.
- Peter Drucker
Whirlpool & Habitat for Humanity
Whirlpool
The State of 2007: How Many Business Opportunities Do You See?
Wal-Mart Has Entered…WSJ
Wal-Mart, infamous for its truculence on CSR, astounds observers with its $500M announcement of broad commitments to environmental and social responsibility. These include: 100% renewable energy Zero waste Reducing greenhouse gas emissions by 20% (by
2012) Increasing minimum wage Increasing the percentages of women and minority
managers…
“As one of the largest companies in the world, with an expanding global presence, environmental problems are OUR problems. The supply of natural products (fish, food, water) can only be sustained if the ecosystems that provide them are sustained and protected. There are not two worlds out there, a Wal-Mart world and some other world.” – Lee Scott, CEO
GE Said Green is Green… NYT
In May, GE launched their $1.5B “Ecomagination" environmental responsibility initiative, a move that reverberated widely.
When a corporate giant such as GE places its stamp of approval on CSR as a legitimate mainstream business strategy, it suddenly becomes much harder to invalidate CSR…
GE’s EcomaginationGE’s Ecomagination
I Banks are Slowly Arriving….
Goldman Sachs became the first major investment bank to adopt a comprehensive environmental policy--and the fourth major US financial institution to do so, after JPMorgan Chase (JPM) earlier and Bank of America (BAC) and Citigroup in previous years…
Has CSR Gone Mainstream?
What Is Corporate Social Responsibility?
Philanthropy?
Employee volunteerism?
PR?
Transparent reporting?
Free give aways?
Sponsorships?
Workplace diversity?
PROFITABLE?
Human rights?
Citizenship responsibilities?
Sustainable development?
Corporate governance?
Business ethics?
Employee treatment?
Environmental impact?
Safe products?
Solving socialproblems?
What Is Corporate Social Responsibility?
Setting up offshoreaccounts?
Squandering employees’retirement funds?
Hiding income?
Using ‘I was notaware’ as CEO’s defense?
Hiding debt?
SUSTAINABLE?
Pre-texting?
Non-independentboard?
Cooking the books?
Domiciling in the Bahamas?
Insider trading?
Auditors serving as consultants?
Birthday party for wife in Italy?
SEC violations?
Dumping toxins in rivers?
Crowded Terminology Space
Corporate Social Responsibility
Corporate Responsibility
CSR Sustainable
Development Sustainability ESG CSER Social enterprise
Global Citizenship Corporate Citizenship Values-driven
Business Natural Capitalism Spiritual Capitalism Compassionate
Capitalism People, Planet, Profits
Or…Good Management/ Good Business?
Global Citizenship/ CSR/Sustainability
• Employee engagement
• Community engagement
• Corporate philanthropy
• Government and public relations
• Governance and ethics
• Corporate environmental footprint
• Socially and environmentally sound product design and production
“Deeper business purpose, great products, customer satisfaction, employee happiness, social and environmental responsibility— these are the keys to maximizing long-term profits.” -John Mackey, CEO Whole Foods
“People want to know your values and ethics demonstrated by how you treat employees, the community in which you operate, and many other things that are important to them.”-Howard Schultz, Chairman, Starbucks
“I believe that businesses today need to ensure that corporate social responsibility is a strategic component of their own planning and reporting.” -John Chambers, CEO Cisco
Defining Corporate Responsibility
Net Impact: Using the power of business to create a better world.
Business for Social Responsibility (BSR): Companies being able to be commercially successful in ways that demonstrate respect for ethical values, people, community, and the environment.
Defining Corporate Responsibility
World Business Council for Sustainable Development: Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.
WBCSD Simplified
“CSR is about helping to meet people’s needs.”
The Triple Bottom Line
Soci
al
Env
iron
men
tal
Eco
nom
ic
Triple Bottom Line
Economic
Triple
Bottom LineJ. Elkington, SustainAbility
ECONOMICECONOMICENVIRONMENTALENVIRONMENTAL SOCIALSOCIAL
“TRIPLEBOTTOM
LINE”
SINGLE BOTTOM LINE SUSTAINABILITY =
INCORPORATING INTO STRATEGY AND OPERATIONSENSURING AND ENHANCING VALUE CREATION
“DOING WELLBY
DOING GOOD”
Sustainability/Corporate Responsibility/Sustainability/Corporate Responsibility/
Global CitizenshipGlobal Citizenship
Internal & External CSR
Supply Chain
Environment
Transparency
Human Rights
Stakeholder Engagement
Privacy
Marketplace
Community Involvement/ Investment
GovernanceMission, Vision, Values
Ethics
Diversity
Health & Wellness
Dependent Care
Downsizing & Layoffs
Privacy (employee)
Work Life Balance
Job Satisfaction
Compensation/ Benefits
Philanthropy
Socio-political Issues
Reporting
Accountability
Strategic CSR
Strategic corporate responsibility is a business strategy that is integrated with core business objectives & core competencies to create business value and positive social change, and is embedded in day to day business operations.
McElhaney, 1998
It is About Fit
CSR Strategy must fit two things:
1. Core business objectives: Increase sales, penetrate new markets, engage
employees, reduce operating expenses, improve reputation, protect brand, beat competitors
2. Core competencies Technology, financial services, market making,
convenient fun food, automobiles and transportation systems
RESPONSIBILITYINCREASING
IN IMPORTANCE
RESPONSIBILITYINCREASING
IN IMPORTANCE
GOVERNMENTS
GOVERNMENTS
MARKET/ GROWTH OPPORTUNITIES
MARKET/ GROWTH OPPORTUNITIES
CONSUMERS CONSUMERS
COMPETITIONCOMPETITION
INVESTORS/ANALYSTSINVESTORS/ANALYSTS EMPLOYEESEMPLOYEES
Drivers of CSR
SOCIAL AND ENVIRONMENTAL
NON-GOVERNMENTAL
ORGANIZATIONS (NGOs)
SOCIAL AND ENVIRONMENTAL
NON-GOVERNMENTAL
ORGANIZATIONS (NGOs)
COLLEGE STUDENTS! COLLEGE STUDENTS!
YOU!
Leadership Drivers
E & Y, 2002
Reputation & Human Resource Drivers
BrandWho says social responsibility
is a big influence in their impressions of companies?
49%
Product PurchaseWho considers corporate citizenship when buying a
company’s product?
Product BoycottsHow many people would boycott a
product if they learned about negative citizenship practices?
79%
76%Employee Recruitment
Who considers social commitment when
choosing an employer?
77%
CSR is a powerful predictor of reputation…if known
EmotionalAppeal
FinancialPerformance
WorkplaceEnvironment
Products &Services
Vision &Leadership
SocialResponsibility
ReputationReputationQuotientQuotientSMSM
(RQ)(RQ)
Feel Good AboutAdmire and RespectTrust
Market OpportunitiesExcellent LeadershipClear Vision for the Future
Rewards Employees FairlyGood Place to WorkGood Employees
Outperforms CompetitorsRecord of Profitability Low Risk InvestmentGrowth Prospects
Supports Good CausesEnvironmental ResponsibilityCommunity Responsibility
High Quality Innovative Value for MoneyStands Behind
Source: C. Fombrun, Reputation Institute, Harris Interactive
1
2
3
45
6
Females (employees, consumers, investors)
Gen Yers Ages 8-24 (cause focus)
Boomers (say v. do)
More educated
More diverse (gender, sexual orientation, ethnicity)
More affluent (enter Walmart)
Who Cares Most About CSR?
LeapFrog: Asthma Education LeapPad
Interactive LeapPad book for children ages 4-7 to learn key asthma messages to successfully
manage asthma.
•Most common chronic disease of childhood in the developed world.
•Affecting ~9 million children in the U.S. under 16.
•Americans with asthma: 26.3 million
•Emergency room visits for asthma: 1.9 million in 1995
Levi Strauss & Co
The Red Tab Foundation is a public, non-profit foundation which assists Levi Strauss & Co. employees, retirees, and their families who face problems caused by unexpected emergencies. The Red Tab Foundation (RTF) will provide financial assistance, education, and preventative programs to help these individuals in their own efforts to maintain their financial, physical and emotional health.
Among the first of "employer relief funds" set up to help employees in crisis
Based on employee-to-employee support, not coming from founders or the corporation
Includes retirees in its scope Programs include proactive education and support that
is designed for longer-term solutions: helping employees help themselves.
Campaign for Real Beauty Campaign began with a ''global study,'' commissioned by Dove
that posed questions about beauty to thousands of women in many countries.
Repositioned its brand around self-esteem issues Created CampaignForRealBeauty.com to allow women to
Vote on provocative images Join discussion groups on various beauty stereotypes Participate in the Dove Self-Esteem Fund
Established a “real beauty” section on Dove.com Uses un-retouched images of women rather than models on
Dove.com Commissioned and published a study called
The Dove Report: Challenging Beauty The uniquely Me! Girl Scouts of America self-esteem
program Works through the Unilever Foundation to donate money. In
addition, Unilever employees donate time to mentor girls as part of the program.
Program uses activity books and simple exercises to help build self-confidence in girls
Supports BodyTalk, an educational program for schools created by the Eating Disorders Association.
"This campaign is addressing key issues and connecting with women in ways that people have not connected in a long time."
- Retail analyst Marshall Cohen of the NPD Group.
Impact
Increased sales. U.S. sales rose 6% in one year to $500 million. Dollar sales jumped 2% in the month the campaign started.
Heightened brand awareness. Ads received considerable press, more than 1 million women have visited dove.com and voted on images.
Created buzz with the "water cooler effect"
The only thing necessary for the The only thing necessary for the triumph of evil is for good men triumph of evil is for good men (and women!)(and women!) to do nothing. to do nothing.
- Edmund Burke
Things You Can Do: Take Fall semester BA 192 “Intro to CSR”
Taught by Kevin Sweeney
Enter CRB’s Gap Case Competition in the Spring Contact Joanna Trammell [email protected]
Ask about CSR in your job interviews
Ask companies from whom you buy about their CSR
Be the internal company change agents once you get inside of companies
Start a CSR conversation- help tip CSR