Strategic CSRProfessor McElhaneyFebruary 4, 2009

CSR in the News (according to Omar)

The non-profit sector’s problems have not gone unnoticed: a majority of Americans has serious reservations about the performance of charitable organizations.

• Americans’ Perceptions of Charitable Organizations▫  think charitable organizations waste a great deal or fair amount of money.▫ have little to no overall confidence in charitable organizations.▫ think charitable organizations do a very good job running▫ their programs and services.▫ think charitable organizations do a very good job▫ spending money wisely.▫ think charitable organizations do a very good job being▫ fair in their decisions.

Source: NYU Wagner Organizational Performance Initiative Research Brief #1, August 2006; internal estimates

Edelman Trust Barometer 2009

Trust at all-time low(lower than post-Enron)

Edelman Trust Barometer 2009

Want government regulations

Edelman Trust Barometer 2009

Will (want to) act personally

Edelman Trust Barometer 2009

Need to hear CSR messages repeated.

CSR in the News

•Fit?▫http://online.wsj.com/article/SB123291980

298913525.html#articleTabs%3Dvideo

CSR in the News- YOU?

Assignment For Next Monday

• Half of you (last names A-M) read Sun’s CSR Report

• Half of you (last names N-Z) read Chevron’s CSR Report

• Conduct report analysis for in-class discussion on Monday, February 9, 2009

CSR Report Analyses

• What are the report's strengths & weaknesses? What are your specific recommendations for improvement?

• Did the report change your opinion of this company? • Would the report change your likeliness to work for this company, or

purchase their goods/ services as a consumer?• Based on the report, what do you think are the key issues for this industry

and how well is this company addressing these issues? 

Also consider the following issues: 

▫ Does/ how does the company define CSR?  How evolved is the company’s view of CSR? ▫ How integrated is their CSR strategy?  Is it aligned with core business objectives, core

competencies?▫ How sustainable is their CSR strategy?▫ What are the metrics for success?  How do they measure their CSR impact?▫ Who seems to be the targeted audience(s)?  Is this clear from the report?▫ What are the opportunities associated with their CSR strategy?  Risks?  Strengths?  Weaknesses??▫ From a pure document aspect, assess the strengths and weaknesses of the report?

Strategic CSR Frameworks & Tools (continued)

Whirlpool

+

ECONOMICECONOMICSOCIALSOCIAL

“PEOPLE, PLANET, PROFIT”

Framework #1: Triple Bottom Line

ENVIRONMENTALENVIRONMENTAL

Framework #2: 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

PhilanthropySocio-political Issues

Reporting

Accountability

Framework #3: Modified BITC

• Employees• Retirees/ alumni• Recruits

Workplace

Marketplace

Environment

Community

• Clients/customers• Regulators/

legislators• Investors• Academics• Suppliers

• Communities in which we live and work

• Not-for-profit and non-governmental organizations that support communities• Physical environment

• Not-for-profit and non-governmental organizations that support the environment

Framework #4: Legal and Moral Liability

SustainAbility, Executive Summary: The Changing Landscape of Liability, January 21, 2005

Nestle & Maslow

Framework #5: Risk-Opportunity Continuum

• Use core assets in a positive way, to improve underlying business context

• Take a big-picture view• Go beyond compliance• Lift or stabilize

reputation

• Prevent damage to reputation

• Forestall the negative use of core assets

• Focus on compliance and managing legal liability

MINIMIZE RISK

MAXIMIZEOPPORTUNITY

Framework #6: Shared Value“The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business.”

Source: Porter, Michael E. and Mark R. Kramer, “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, 2006

Generic SocialIssues

Social issues that are not significantly affected by a company’s operationsnor materially affect its long-term competitiveness.

Value Chain SocialImpacts

Social issues that are significantly affected by a company’s activities in the ordinary course of business.

Social Dimensions of Competitive Context

Social issues in the external environment that significantly affect the underlying drivers of a company’s competitiveness in the locations where it operates

Framework #6.5: Changing the Game

“Offensive CSR can distinguish a company’s reputation but cannot protect it; defensive CSR can protect a reputation but cannot distinguish it. Both are necessary to succeed in today’s business climate.”

- Kramer & Kania, Changing the Game

Designing a CSR Structure: Nine Steps (BSR)

1. Understand drivers (internal & external)2. Identify key CSR issues3. Identify & evaluate stakeholders4. Identify current functions supporting CSR5. Analyze current CSR systems, culture6. Design CSR structure7. Develop effective staffing plan8. Create cross-functional system9. Match budget to best framework

Stages of corporate citizenship: BC CCC

Stages of CSR—Zadek

• Defensive▫ “It’s not our job to fix that”▫ Company faced with pain, criticism, reacts defensively

• Compliance▫ “We’ll do just as much as we have to”▫ Cost of doing business, do just as much as need to

• Managerial▫ “It is the business”▫ Moves CSR to core business managers & functions

• Strategic▫ “It gives us a competitive edge” ▫ Realigns strategy to use CSR as competitive advantage

• Civil ▫ “We need to make sure everyone does it”▫ Need to involve all in sector, collective action

A CSR Continuum

Level of engagement Low High

Importance to mission Peripheral Strategic

Magnitude of resources Small Big

Scope of activities Narrow Broad

Interaction level Simple Intensive

Managerial complexity Infrequent Complex

Strategic value Modest Major

EXAMPLES ACTIONS: • Donation• Grants

• Event sponsorship• Cause-related marketing• Employee volunteerism

• Joint-advocacy• Joint-action• Deep partnerships• Financing principles

Philanthropic Transactional IntegrativeGrowth stage:

Adapted from The Collaboration Challenge, James E. Austin