Strategic Corporate Social Responsibility

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Strategic Corporate Social Responsibility

• Professor Kellie A. McElhaney
• 2.11.07

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• Every single pressing social and global issue of
  our time is a business opportunity.
• Management is a matter of world affairs.

- Peter Drucker
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Whirlpool Habitat for Humanity
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Whirlpool
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The State of 2007 How Many Business
Opportunities Do You See?
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Wal-Mart Has EnteredWSJ

• 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

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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
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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

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GEs Ecomagination
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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

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Has CSR Gone Mainstream?
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What Is Corporate Social Responsibility?
Environmental impact?
Solving social problems?
Sustainable development?
Employee treatment?
Citizenship responsibilities?
Safe products?
Human rights?
PR?
Business ethics?
Free give aways?
Philanthropy?
Corporate governance?
Transparent reporting?
Sponsorships?
Workplace diversity?
Employee volunteerism?
PROFITABLE?
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What Is Corporate Social Responsibility?
Pre-texting?
Birthday party for wife in Italy?
Insider trading?
Cooking the books?
Non-independent board?
SEC violations?
Dumping toxins in rivers?
Auditors serving as consultants?
Setting up offshore accounts?
Using I was not aware as CEOs defense?
Domiciling in the Bahamas?
Hiding income?
Squandering employees retirement funds?
Hiding debt?
SUSTAINABLE?
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Crowded Terminology Space

• Global Citizenship
• Corporate Citizenship
• Values-driven Business
• Natural Capitalism
• Spiritual Capitalism
• Compassionate Capitalism
• People, Planet, Profits

• Corporate Social Responsibility
• Corporate Responsibility
• CSR
• Sustainable Development
• Sustainability
• ESG
• CSER
• Social enterprise

OrGood Management/ Good Business?
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Global Citizenship/ CSR/Sustainability
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

• Employee engagement
• Community engagement
• Corporate philanthropy
• Government and public relations
• Governance and ethics
• Corporate environmental footprint
• Socially and environmentally sound product design
  and production

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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.

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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.

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WBCSD Simplified

• CSR is about helping to meet peoples needs.

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The Triple Bottom Line
Triple Bottom Line
J. Elkington, SustainAbility
Social
Economic
Environmental
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Sustainability/Corporate Responsibility/ Global
Citizenship
ENVIRONMENTAL
SOCIAL
ECONOMIC
TRIPLE BOTTOM LINE
SINGLE BOTTOM LINE SUSTAINABILITY
INCORPORATING INTO STRATEGY AND
OPERATIONS ENSURING AND ENHANCING VALUE CREATION
DOING WELL BY DOING GOOD
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Internal External CSR
Governance
Transparency
Mission, Vision, Values
Supply Chain
Reporting
Compensation/ Benefits
Stakeholder Engagement
Ethics
Environment
Diversity
Privacy (employee)
Human Rights
Socio-political Issues
Health Wellness
Philanthropy
Accountability
Dependent Care
Privacy
Downsizing Layoffs
Community Involvement/ Investment
Work Life Balance
Marketplace
Job Satisfaction
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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
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It is About Fit

• CSR Strategy must fit two things
• Core business objectives
• Increase sales, penetrate new markets, engage
  employees, reduce operating expenses, improve
  reputation, protect brand, beat competitors
• Core competencies
• Technology, financial services, market making,
  convenient fun food, automobiles and
  transportation systems

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Drivers of CSR
YOU!
COLLEGE STUDENTS!
MARKET/ GROWTH OPPORTUNITIES
CONSUMERS
RESPONSIBILITY INCREASING IN IMPORTANCE
SOCIAL AND ENVIRONMENTAL NON-GOVERNMENTAL ORGANIZ
ATIONS (NGOs)
COMPETITION
GOVERNMENTS
INVESTORS/ANALYSTS
EMPLOYEES
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Leadership Drivers
E Y, 2002
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Reputation Human Resource Drivers
Brand Who says social responsibility is a big
influence in their impressions of companies?
Product Purchase Who considers corporate
citizenship when buying a companys product?
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Product Boycotts How many people would boycott a
product if they learned about negative
citizenship practices?
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Employee Recruitment Who considers social
commitment when choosing an employer?
77
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CSR is a powerful predictor of reputationif
known
Emotional Appeal
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Social Responsibility
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Feel Good About Admire and Respect Trust
Supports Good Causes Environmental
Responsibility Community Responsibility
ReputationQuotientSM (RQ)
Products Services
Vision Leadership
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Market Opportunities Excellent Leadership Clear
Vision for the Future
High Quality Innovative Value for Money Stands
Behind
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Financial Performance
Workplace Environment
Outperforms Competitors Record of Profitability
Low Risk Investment Growth Prospects
Rewards Employees Fairly Good Place to Work Good
Employees
Source C. Fombrun, Reputation Institute, Harris
Interactive
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Who Cares Most About CSR?

• 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)

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LeapFrog Asthma Education LeapPad

• 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

Interactive LeapPad book for children ages 4-7 to
learn key asthma messages to successfully manage
asthma.
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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.

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• 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.
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• 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"

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• The only thing necessary for the triumph of evil
  is for good men (and women!) to do nothing.
• - Edmund Burke

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Things You Can Do

• Take Fall semester BA 192 Intro to CSR
• Taught by Kevin Sweeney
• Enter CRBs Gap Case Competition in the Spring
• Contact Joanna Trammell joannat_at_haas.berkeley.edu
  
• 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