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CORPORATE RESPONSIBILITY CORPORATE RESPONSIBILITY LEADERSHIP WORKSHOPLEADERSHIP WORKSHOP
Embedding CR in Your Operations & Embedding CR in Your Operations & ManagementManagement
UC BerkeleyCenter for Responsible Business & Business for Social Responsibility
July 8-9, 2008
Program Schedule
• Day One– Overview of CR &
Global Trends– CR Strategy
Development Tool– Case: Tale of Two
Strategic Approaches– CR Metrics, Impact &
Value Chain
• Day Two– Defining Your
Stakeholders– Communicating &
Branding Your CR– Strategy Small Group
Work– Preparing for the
Future
Overview of Corporate Responsibility & Global Trends
Professor Kellie A. McElhaney
Haas School of Business
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
A Short Story in Three Parts
1. The Power of Business
2. The Challenges in the World
3. A Solution in CSR
Part One is Short:It’s About the Power of Business.
There’s Been a Shift of Power & Resources
2006
Company/Country
Revenue (Fortune Magazine)GDP (World Bank)
[millions, USD]
1 United States 13,201,819
2 Japan 4,340,133
3 Germany 2,906,681
4 People's Republic of China 2,668,071
5 United Kingdom… 2,345,015
22 Exxon Mobil 339,938
23 Poland 338,733
24 Austria 322,444
25 Wal-Mart Stores 315,654
26 Norway 310,960
27 Saudi Arabia 309,778
28 Royal Dutch Shell 306,731
29 Denmark 275,237
30 BP 267,600
If you think it’s bad being exploited by global companies…try being ignored by one.
- Jeffrey Sachs
There’s Been a Shift of TrustExpectations of Companies to Operate in Society’s Best
Interests v. Perceived Performance
Globescan, 2005
Private Sector Has Lost Trust
• Trust in global institutions to “operate in society’s best interests”
• NGOs 2, Business ranks 11 (out of 12), only ahead of Parliament/Congress
– Armed Forces– NGOs– UN– Religious Institutions– WTO– Government– Press/ Media– Trade unions/ Labor– World Bank– IMF– GLOBAL COMPANIES– Parliament/ Congress
• NGOs more trusted, high credibilityEnvironics International, 2006
Part Two is Longer:It’s About the Challenges our World Faces
• Water– 1.1 B lack access to clean drinking water– 2.5 B lack access to proper sanitation– 5 M die from water-related disease (10 times killed in wars)
• Climate Change– 2006 hottest year on record– Need 80% decrease by 2050 to prevent global catastrophe– Climate change is the greatest market failure the world has ever seen.
- Sir Nicholas Stern, Former Chief Economist, World Bank.
• Food– Global food prices (grains & oils) have risen 54% in 2008– In rich countries, we spend 10-20% of budget on food; in poor countries, 60-
80%– 15M children die of hunger– For first time, levels of obesity approaching parity with levels of starvation
• Rich/ Poor Gap– Half of the world lives on less than $2/day– Richest 20% of countries account for 75% world’s income– From this, disease, lack of healthcare, lack of education, lack of opportunity
The Third Part is a [piece of a] Solution:
Corporate Social Responsibility (CSR)
CSR Goes Mainstream
CSR is Everywhere
Defining CSR
• Net Impact:– Using the power of business to improve the 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.
• A Corporate Strategy Definition (McElhaney, 1998):– A corporate strategy that is integrated with (1) core business
objectives & (2) core competencies to create financial and social/environmental returns, and is embedded in corporate culture and day-to-day business operations.
Strategic CSR
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 products &services, making markets,
natural food, automobiles and transportation systems, travel & tourism.
Global Citizenship/ CSR/ Sustainability
• Employee Engagement
• Community Investment
• Philanthropy
• Government & Public Relations
• Governance & Ethics
• Environmental Footprint
• Supply Chain/ Sourcing
• Social/ Environmental Impact of Products & Services
A Typical Corporate Strategy
Hewlett Packard, 2006
A Typical CSR Strategy
Philanthropy
Non-Profit partnerships
Social/ environmental reporting
Product give-aways
Sponsorships
Workplace diversity
Human rightsEmployee volunteerism
Cause marketing
Corporate governance
Business ethics
Fair employee treatment
Environmental management
Safe products Community investment
Supply Chain
A Lost Opportunity…
…to utilize CSR as a powerful integrated business strategy, not an add on.
What People Think CSR Is…
Spending (a little bit of) the (whole lot of) money that you make.
What CSR Really Is…
How you make (the whole lot of) money that you spend.
CSR is not about how you spend the money you make.
It’s about how you makethe money you spend.
The Triple Bottom Line
Soci
al
Env
iron
men
tal
Eco
nom
ic
Triple Bottom Line
Economic
Triple
Bottom LineJ. Elkington, SustainAbility
Internal & External CSR
Supply Chain
Environment
Transparency
Human Rights
Stakeholder Engagement
Privacy
Marketplace
Community Engagement & Investment
Governance
Mission, Vision, Values
Ethics
Diversity
Health & Wellness
Downsizing & Layoffs
Work Life Balance
Job Satisfaction
Compensation/ Benefits
Philanthropy
Socio-political Issues
Reporting
Accountability
Stages of CSR
Civil
Strategic
Managerial
Compliance
Defensive
Current Trend
Historical FocusRisk Mitigation
Value Creation
SweetSpot
The Baby Parable & Four Approaches
Save babies, one at a time
-Charity work-Serve desperate needs
Teach babies to swim
-Empowerment work
-Teach skills
-Help people overcome
Run upstream to stop whoever is throwing the
babies in
-Advocacy work-See cause of suffering, work to stop it
Analyze why people throw babies in rivers (the University
Professor!)
-Problem analysis-“Big picture” view
-Educate self, share knowledge
It is Linked with Basic Human Needs
SelfActualization
Esteem
Love/ Belonging
Safety
Food, Air, Water, Shelter
Civil
Strategic
Managerial
Compliance
Defensive
CSR Maturity
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• Changing rules of
industry
Philanthropic Transactional IntegrativeGrowth stage:
WO
RL
D Transform multiple industries.
IND
US
TR
Y
Transform an industry. Take responsibility for our full impact (social, environmental, economic).
Take responsibility for adjacent industries.
Take responsibility for global conditions (climate change, global inter-dependence, etc.).
Be a beacon to others. Develop codes of conduct for the industry.
Build strong coalitions to effect and enforce them.
CO
MM
UN
ITY
Be a good neighbor. Innovate and demon-strate restorative business practices.
Influence the industry indirectly, by example.
Give something back.
Support local communities (philanthro-py, direct programs, employee matching & volunt’ring.)
Reduce waste, consumption and emissions.
CO
MP
AN
Y
Run a good business
Provide access to tools/ product.
Disaster relief.
COMPANY COMMUNITY INDUSTRY WORLD
A CSR Landscape
A Company Who Gets It: Whirlpool
Whirlpool & Habitat for Humanity
• $25M commitment in 1999
• Given $34M, plus 73,000 refrigerators, ranges, household items to 36,000 homes
• Pledged to give appliances to every house built through 2011
• Launched Building Blocks initiative in 2006, sending over 1000 employees & more volunteers to neighborhood for 1 week to build an entire block
• From onset, was philanthropy; in 2004, became brand message– “We make very large, very heavy metal machines, often with big motors.
This puts a human face on what could be a very cold metal category.”
• Sponsored 2006 Reba McEntire Habitat for Humanity Tour
It’s an Integrated Strategy…
DeepNon-Profit
Partnership
Branding/Communic.
Star Power
ProductDonations
CashDonations
MultipleYear
Commitment
EmployeesEngaged/
Volunteering
Problem/ Solution Fit
Whirlpool’s Competencies/
Business Objectives
With Business Implications
Brand
Who says social responsibility is a big influence in their
impressions of companies?
49%
Product Purchase
Who considers corporate citizenship when buying a
company’s product?
Product Boycotts
How 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%
Brand, Employees & ConsumersBrand, Employees & Consumers
CSR & The Million Dollar Employee
Inspires/ attracts employees Enhances/ redefines the brand Enhances value proposition Fosters distinctiveness Tells a story Opens access to new markets Increases license to operate Improves efficiencies Increases trust and loyalty
The Role of CSR in Business
CSR Leaders May No Longer Finish Last
• Economist Intelligence Unit global study, “Doing Good: Business & Sustainability Challenge” 2007
• Sponsored by B of A, Orange, Kearney, SAP
• Companies who rated selves highly on CSR saw 16% increase in profits, price growth of 45%, compared to poorly-rated at 7% / 12%
• May not be causal or proved, but executives believe it is
• Asked to name highest priority over next five years, 61% cited “communicating their practices to all stakeholders”
CSR Frameworks Part 1: Context
What is CSR?What is the role of business?
CEO Aron Cramer, BSR
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
What is CSR?
CSR is…
– Being energy efficient
– Publishing a sustainability report
– Greening the supply chain
– Healthy working conditions
– Producing a human rights policy
– Signature philanthropic program
– Having a social mission statement
– Partnering with nonprofits
– Dialogue with stakeholders
– Enforcing a code of conduct
…but what’s behind all these activities?
CSR is aligning business with the world’s needs
Individual health, security and wellbeing
Societal health, security and wellbeing
Healthy functioning ecosystems, natural
resources and biodiversity
Individual
Society
Ecosystem
A just and sustainable world is indicated by the wellbeing of:
Business has the potential to promote the wellbeing of the world through problem solving and wealth distribution.
Business
Business can contribute to society by:
• Developing solutions
• Innovating
• Creating financial wealth
• Allocating resources
Making sense of complexity &
finding opportunities
The Emerging Business Case
Business
Success
Technology
Climate ChangeCultural Values
Religion
Public Policy
Markets
Natural Resource
sGlobalizati
on
Supply Chain
OperationsCommuniti
es
Population
EnergyWar
The world is increasing in complexity and understanding social and environmental issues is required for making informed business decisions.
CSR can mean meeting essential global challenges through value creation
Market ValueSocia
l &
En
vir
on
men
tal V
alu
e
Philanthropy & Civil Activism
Non-market solutions for
social/environmental needs
Financial OnlyFinancial gains with little or no societal
value
No ValueFailure to
provide any value
CSR(Value Creation)
Market solutions for social/environmental
needs
Corporate leadership is not just about “reducing risk” but using business and markets to deliver social and environmental solutions.
Evolving Definitions of CSR
Value Creation
Integration
Innovation
Reaction 1980’s
1990’s
2000’s
Now
CSR Frameworks Part 2: Strategy Development
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
Approach
Visioning
Assessment: Where are we now?
Visioning: Where do we want to be?
Strategy: How do we get there?
Implementation: Let’s get there.
Testing: Will it work?
AssessmentImplementation
Strategy
1. Assessment: Where are we now?
VisioningAssessment
Assessment Components:
– Business Strategy: where is the business going over the next ten years?
– Internal Assessment: What are our existing policies and practices?
– Current Approach: How do we manage CSR today?
– Value Chain: What are the various touch points of our business? What opportunities and risks do they create?
– Reputation: How do important audiences – internal and external – view our company/industry?
Implementation
Strategy
2. Visioning: Where do we want to be?
VisioningAssessment
Visioning Components:– Leadership Profile: What is our company’s aspiration? – Materiality Analysis: What are our most material issues?– Prioritizing: Where do we want to make a mark? What is secondary?– Internal Support: Will this vision get traction throughout the company?– External Credibility: Will this strategy be credible with key
stakeholders?
Implementation
Strategy
3. Strategy: How do we get there?
VisioningAssessment
Strategy Components:
– Framing Questions: Will this aid our business, foster innovation, and mitigate risk?
– Value Chain: Can we integrate this strategy throughout the supply chain?
– Change Management: What changes will be needed to make the strategy effective?
– Systems Thinking: What levers must be influenced to make the strategy work?
– Relationships: What relationships do we need to execute this strategy?
– Communication: Can we communicate this strategy effectively?
Implementation
Strategy
4. Implementation: Let’s get there.
VisioningAssessment
Implementation Components:
– Communication: Strategy must be conveyed clearly and effectively.
– Policy Development: Develop policies needed to implement strategy.
– Integration: Core business plays a role.
– Targets: Metrics (impacts, not only activities) and accountability introduced.
– Collaboration: Look for opportunities with industry and other partners.
– Reporting: Communicate our impacts to internal & external stakeholders.
Implementation
Strategy
5. Testing: Make it credible and resilient.
VisioningAssessment
Testing Components:– Stakeholder Dialogue: Is the strategy credible to key
opinion formers?– Forecasting: What are the “unknown unknowns?”– Refresh the Strategy: Assume that adjustments to strategy
will be needed.
Implementation
Strategy
CSR Frameworks Part 3: Strategy Exercise
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
Exercise One: Rescue Our Reputation!
• Your consumer products company has been hit by a series of labor and quality scandals that has placed it in the bottom fifth of the annual Consume-A-Lot reputation rankings.
• Your CEO asks you, as the head of Public Affairs, to work with the head of CSR develop a three-step program to raise the company’s rankings to the 50th percentile in two years, and top quartile in three.
• You have not really worked with the head of CSR before, and have always wondered whether his boss, the General Counsel, really embraces corporate responsibility.
• What process will you use, and what will you recommend to the CEO?
Exercise Two: Open New Markets!
• Your food retailing company is taking advantage of market liberalization in India, and aims to be the #1 foreign retailer within five years.
• As head of strategy, you have never really thought about CSR, but know that the India plan can make or break your career.
• You want to make sure that your stores are viewed favorably in a notoriously difficult market.
• You want to develop a five year strategy that establishes your company as a leading corporate citizen in India.
• How will you develop a strategy, and what will it be?
Exercise Three: Innovate!
• Your new CEO has set innovation for society as the #1 objective for the company under her leadership.
• As the Vice President, Sustainability, for your consumer electronics company, you have been tasked with developing new product offerings.
• You have been asked to focus in particular on emerging markets with low to middle incomes, with the goal of increasing sales volume and generating economic opportunity for underserved communities.
• What process will you use, and what will the main points of your strategy be?
Exercise Four: Overcome the Skeptics!
• You are the head of CSR at a pharmaceutical company headed by a CEO who has made numerous cynical comments about “greenies” and “CSR as nothing but the flavor of the month.”
• At the same time, the Board has recently established a committee focusing on CSR, and with the three most powerful independent directors to the Committee.
• You have been asked to report to the Committee, with the CEO not present, on the three greatest risks and opportunities facing the company concerning sustainability.
• How will you develop your report, and make sure that it has real impact on the company’s thinking? How will you manage the CEO’s skepticism?
CSR Frameworks Part 4: Integration
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
CSR Integration FrameworkHow do we integrate CSR into the company?
StakeholderRelations
TransparentCommunication
IndustryCollaboration
PerformanceEvaluation
Core Business &
Material Issues
Business Processes
Implementation Tools
Purpose & Vision
Internal & External AlignmentIf CSR is aligning business with the world’s needs, how do we ensure alignment
throughout the process?
StakeholderRelations
TransparentCommunication
IndustryCollaboration
PerformanceEvaluation
Core Business &
Material Issues
Business Processes
Implementation Tools
Purpose & Vision
Internal & External
Alignment
BSR Services
Visioning & Strategy
Development
Forecasting
Trends R&D
Purpose & Vision
Purpose & VisionWhat impact do we want our business to have on
society?
How do we get there?Where are we today?
What is our vision
for tomorrow
?
Vision establishes a direction that can then enable:– Prioritization of issues and opportunities– Allocation of resources– Communication internally and externally– Development of performance & measurement – Leadership
Avoidance of risk is not a road map; it is neither anticipatory nor is it a destination
BSR Services
CSR Assessment
R&D
Materiality Analysis
Stakeholder Engagement
Strategy Development
Convenings
Core Business & Material IssuesWhat is the business case for CSR at our company
and what issues should we focus on?
Core Business & Material Issues
Issues Impacting
Society
An effective CSR strategy requires integration into the core business and understanding the following:
–Business Model: products, services, core competencies
–Business Context: trends, relationship between business and external factors
–Material Issues: areas with high impact on both business and society
Issues Relevant to
BusinessMaterial Issues
BSR Services
CSR Assessment
Strategy Development
Supply Chain Strategy
Business ProcessesHow do we ensure that our everyday business
processes are aligned with the vision?
Business Processes
Effective execution throughout your business processes can be enabled by integrating CSR into:
–Policies
–Procedures
–Staff
–Performance measures
Strategy
Sourcing
Marketing
Design
Production
HumanResources
Sales
Management
BSR Services
Stakeholder Engagement
Working Groups
Convenings
Internal & External AlignmentHow do we align our actions internally and externally to
achieve our vision?
1. Within the company
2. Along the supply chain
3. Within the industry
4. With external stakeholders
5. With the ecosystem
Internal & External Alignment
Government Civil Society
SuppliersBuyers &
Consumers
Competitors Partners
Employees Investors
Air/Water/Land Species
Aligning efforts internally and externally is critical to effectively executing a CSR strategy.
Implementation ToolsWhat practices will enable us to implement our CSR
strategy?
Stakeholder Engagement
Industry Collaboration
Performance Evaluation
Transparent Communications
Implementation Tools
Implementation of the strategy depends on the following key practices:
BSR Services
Engagement Design &
Facilitation
Stakeholder Engagement
Internal Process
Development
Stakeholder Engagement
Strategy
Stakeholder Engagement:What are external groups’ perspectives on the
issues?
What: Engaging with external groups in a two-way dialogue on key issues
Why: To better understand and align business
actions & stakeholder interests
Business Benefits:
–Gather information for decision-making
–Secure trust and credibility
–Anticipate and manage conflicts & trends
–Assess performance and progress
–Develop collaborative solutions
–Gain access to capital & markets
Stakeholder Engagement
BSR Services
Working Groups
Convenings
Supply Chain Strategy
Industry CollaborationHow can we collaborate with our industry to increase
our impact?
What: Collaborating with other companies in the same industry on key initiatives
Why: To increase impact of efforts, and in some cases share and thereby reduce costs and other barriers to improvement
Business Benefits:
– Shared resources
– Greater influence as a collective
– Exchange of knowledge & best practices
– Consistent message & expectations across the industry
– Level playing field
Industry Collaboratio
n
BSR Services
Metrics Development
Accountability Systems
Information System Strategy
Performance EvaluationHow do we measure progress and ensure accountability?
Performance Evaluation
What: Developing metrics to assess progress in key performance areas and having incentive structures in place to ensure accountability
Why: To understand how well desired objectives are being met
Business Benefits:–Better understanding of ROI–Measure progress–Gather information for reporting–Inform strategic planning
BSR Services
Reporting
Metrics Development
CSR Strategy
Transparent CommunicationsHow do we communicate our actions accurately, for to
benefit of ourselves and our stakeholders?
What: Communicating actions and performance openly to stakeholders
Why: Discussing issues publicly demonstrates a company’s CSR commitment and creates accountability.
Business Benefits:–Clear, consistent communications to the
public–Enhanced credibility with stakeholders &
the public.–Companies can take clear positions on
issues that matter to them–Engage and shape public discourse
Transparent Communications
In Closing… Characteristics of A Successful Sustainability Strategy
• Strengthens business competitiveness• Aligned with basic business strategy• Supported top to bottom• Globally coherent• Credible externally• Resilient in the face of change
Company Case Studies
A Tale of Two Strategic ApproachesGE & HP
Director Stacey Smith, BSRKellie McElhaney
Background and Drivers
1. Increasing investor inquiries2. Investor Relations exploring SRI and DJSI requirements3. Begin to form a new definition of best-in-class company
– Well-managed– Well-governed– Corporate CitizenshipCorporate Citizenship
4. Need to build Corporate Citizenship piece5. Important commercial drivers in development
– Ecoimagination– Emerging markets
6. Decision to create a report to address growing stakeholder inquiries
First Activities
Starting point was a citizenship report
1. Engaged external support to guide them
2. Created SWOT on CR performance – delivered to Board
3. Conducted high level materiality analysis
4. Most data collection was in place (EHS, HR, etc.); other data not available
5. First report developed and published in 2005
6. Engaged stakeholders to receive feedback
Launch of Commercial Actions
Ecomagination – a research priority the cut across all business units signaling a joined up collaborative approach
Company to Country – product development driven by questions: “what are the social infrastructure needs of the country”
Results from First Report
Identified key areas of weakness and began integration into GE system
1. Public Responsibilities Committee redirected focus and inquiry from philanthropy to core citizenship agenda as determined by materiality analysis
2. Developed Human Rights policy followed by worldwide roll out in subsequent years
3. Put in place processes for water and waste data collection – two years to collect baseline and then set targets
4. Began conducting business unit materiality analyses
Structure
Culture is top down and driven by one philosophy
1. “Conductors” of the orchestra –collect and review
business unit goals and deliverables and identify opportunities with support of external advisors; then work with business unit to push performance
2. No central structure established – instead virtual work group across company comes together once a year to work on report; some strategy is developed at that time
3. Business units tasked with strategy and implementation based on materiality analysis
HP’s Strategic Approach
Business Drivers
Working together across HP
GC strategy workshop• Cross-functional company team• defined an integrated GC strategy for FY07• assessed GC relevance and prioritization• determined gaps, opportunities and mapped to company
strategy• identified top three GC priorities• developed strategies and goals• gained commitment from BUs and Functions to integrate
strategies and goals into business plans
Philanthropy
Employees
Brand
Differentiation
Access
Compliance
7%
49%
4%
1%
12%
27%
Philanthropy
Employees
Brand
Differentiation
Access
Compliance
7%
49%
4%
1%
12%
27%
…and to continue work in critical areas such as employees, education privacy and compliance.
It was agreed that HP should drive for more investment in the framework categories: brand and differentiation.
Current GC investments
Recommended GC priorities
• Energy– Improving energy efficiency and innovation in our
operations and products.
• Product take back and recycling– Reducing product environmental impacts through
leading-edge reuse and recycling solutions.
• Responsible supply chain– Raising standards in HP’s global supply chain
and ensuring responsible manufacturing for all products.
Proposed GC Goals
Energy
•Reduce HP operations’ energy consumption and CO2 emissions by 15% by 2010 •Reduce energy used for data center cooling at HP by 50% by 2010
Product Take-Back & Recycling•Recycle 1B pounds of material by 2007•Set industry-leading vendor standards (for reuse and recycling) by early 2007 •Create consistent and convenient access to EOL services for commercial customers for improved customer loyalty and revenue around EOL services (internal goal)
Raising standards in our Supply Chain •Ensure that >75% of spend (>$40B) in product materials and distribution is with suppliers that conform to the EICC by 2008 •Complete China and E. Europe pilot training programs and release business impact results to set benchmark for industry in 2007•Publish Supplier Toolkit for industry use in partnership with EICC members in 2007
Additional Points Discussed
Energy•Halo: Establish tools to set travel reduction and carbon credit goals by 2008 (internal goal of 5% reduction) • Lack of Energy Star related goal for products
Product Take-Back & Recycling•Optimize % of recovery efficiency •Establish next recycling/reuse goals, preferably as % of sales for external reporting
Raising standards in our Supply Chain •Integrate materials and supply chain standards into the sales process for targeted customers by 2007 (internal goal)
Next steps
Gain agreement on GC priorities from cross-company strategy team
• Review proposed goals with internal stakeholders (in progress)– Executive Council Members– Global Marketing Council– Supply Chain Board– Others
• Present recommendations to EC • Integrate GC strategies into business plans• Publicly announce new GC priorities & goals
Global Citizenship at HP
Corporate Responsibility (Sustainability) Metrics, Impact & the Value Chain
Tony KingsburyExecutive-on-Loan
Sustainable Products & Solutions Program
UC Berkeley
Corporate Responsibility Leadership Workshop: Embedding CR in Your Operations & Management
Desired Outcomes
Deeper understanding of CSR / Sustainability Metrics
Understand the Value of measuring CSR / Sustainability Metrics
Understand the need to be transparent and look across your value chain
Learn how to identify and apply the key metrics for your company / organization
Topics
• Measuring Corporate Responsibility / Sustainability – Sustainability…Why is This Important?
• Three P’s Approach Planet People Profit / Prosperity
• What’s Important for Your Organization?– In-class examples– Discussion of your key metrics (break-out?)– Wrap–up discussion from break-outs
• Conclusion
Sustainability – what is it?
• Webster Definition: “method of harvesting or using a resource so that the resource is not depleted or permanently damaged”
• World Commission on Environment and Development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
• “The word ‘sustainability’ has been thrown around a lot. What it means to us is not seeing things piecemeal, not stressing business issues in one place and responsibility in another. To us, sustainability means running our business while being conscious of, and addressing its impacts, and addressing them everywhere.” …Nike
Sustainability – what is it?
However you define sustainability, you need to realize that sustainability is a journey, not an endpoint…
Measuring Sustainability Why is This Important?
• "You only manage what you measure"– How many of you know what mpg your car
gets?...what it costs to fill-up your gas tank?– How many gallons of water is used when you
flush your toilet?... Or take a shower?– How much does your organization pay to
dispose or recycle your waste?– Do your suppliers pay their employees a living
wage?... Do they offer health benefits?When we Measure… we know what & how to improve!
Example
• In 1995 Dow set a goal of improving it’s energy efficiency by 20% in 10 years.– Starts with knowing how much energy was used– Tracked progress– Tracked $ spent on improvements– Tracked $ & energy saved from improvements
• Results:– 22% Improvement (9 trillion btu’s saved)… – $1 Billion spent on improvements– $5 Billion+ saved from improvements.. and counting
2005 goals seek another 25% improvement by 2015!Source: http://www.dow.com/commitments/goals/effortstodate.htm
Example
Improving working conditions in contract garment factories remains a key part of our overall social responsibility strategy.
Our approach, which involves factory monitoring, training, other capacity-building programs and engaging with stakeholders, gives us first-hand insight into factory conditions, and helps us measure progress against our standards. In 2006 we: – Continued to employ a team of more than 90 people around the world
dedicated to improving the lives of garment workers. – Evaluated 425 new garment factories and rejected 18 percent for failing
to comply with our Code of Vendor Conduct. – Conducted 4,316 inspections in 2,053 garment factories around the
world, covering 99.4 percent of garment factories approved for the entire fiscal year.
– Revoked our approval of 23 factories for compliance reasons, approximately 1.1 percent of our base.
Measuring Sustainability...Why is This Important?
• Trend in transparency throughout the value chain…
Measuring Sustainability...Why is This Important?
Trend in transparency throughout the value chain…
• How many of you know your organizations carbon footprint?
Measuring Sustainability...Why is This Important?
• carbon footprint - example of what’s coming
Measuring Sustainability...Why is This Important?
• How many of you have heard of Wal-Mart’s Sustainability Initiative?
“We soon realized (sustainability) …was something we could be proactive about, a business strategy. It's not an easy path, but we now see it as the greatest opportunity we have to create value for our customers, cut costs, increase morale, grow responsibly, and do the right thing for the planet.”
Lee Scott, Wal-Mart CEO
Wal-Mart is beginning to ask it’s suppliers for Carbon Footprint data
• Are you ready to supply carbon data to your customers and stakeholders?
• What is the Opportunity?– Reduction = $ savings
– Carbon/CO2 is a green house gas = climate change reduction
– Ability to differentiate from competitors• Lower cost, employee moral, hiring, reputation gains, ability
to quickly supply data, etc.
Measuring Sustainability
• Planet (Environment)
• People (Social)
• Profit / Prosperity (Financial)
Measuring Sustainability
• Planet (Environment) – – What are common environmental measures?– What’s important for your organization?
Common Planet (Environment) Metrics
• Energy use (direct & indirect)• Emissions (direct & indirect)
– water - air - land– Climate Change potential from your operations
• Recycling & Use of Recycled Materials• Fresh Water Use• Material Intensity… products, packaging, etc.• Hazardous substances in your value chain• Biodiversity… land use and activities that effect.• etc.
Common Planet (Environment) Metrics
Environmental• Materials used by weight or volume.• Percentage of materials used that are recycled input materials.• Direct energy consumption by primary energy source.• Indirect energy consumption by primary source.• Total water withdrawal by source….Water sources significantly affected by withdrawal of water.• Percentage and total volume of water recycled and reused.• Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high
biodiversity value outside protected areas.• Description of significant impacts of activities, products, and services on biodiversity in protected areas
and areas of high biodiversity value outside protected areas.• Total direct and indirect greenhouse gas emissions by weight.• Other relevant indirect greenhouse gas emissions by weight.• Initiatives to reduce greenhouse gas emissions and reductions achieved.• Emissions of ozone-depleting substances by weight.• NOx, SOx, and other significant air emissions by type and weight.• Total water discharge by quality and destination.• Total weight of waste by type and disposal method.• Total number and volume of significant spills• Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.• Percentage of products sold and their packaging materials that are reclaimed by category. • Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with
environmental laws and regulations. • Significant environmental impacts of transporting products and other goods and materials used for the
organization's operations, and transporting members of the workforce. • Total environmental protection expenditures and investments by type.
Extracted from the Global Reporting Initiative
Common Planet (Environment) Metrics
Product Responsibility
• Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures
• Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.
• Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.
• Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.
• Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.
Extracted from the Global Reporting Initiative
Measuring Sustainability
• People / Society – – What are common societal measurements? – What is important for your organization?
Common People (Social) Metrics
• Labor Practices (around the world & throughout your value chain)
• Women & Minorities hiring and treatment– Ratio of salary of men to women by employee category
• Corruption Policies & Practices• Human Rights… Policies, Procurement, Suppliers• Community Engagement & Practices
– Donations, Volunteerism, etc.• Turnover by age group, gender & region• Rates of injury, lost days, absenteeism, etc.• etc.
Measuring Social / People Impact
Social: Society
• Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.
• Percentage and total number of business units analyzed for risks related to corruption.
• Percentage of employees trained in organization's anti-corruption policies and procedures.
• Actions taken in response to incidents of corruption.
• Public policy positions and participation in public policy development and lobbying.
• Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.
• Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.
• Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. 5
Extracted from the Global Reporting Initiative
Measuring Social / People Impact
Social: Human Rights • % and total number of significant investment agreements that include human rights clauses or that have
undergone human rights screening.
• % of significant suppliers and contractors that have undergone screening on human rights and actions taken.
• Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.
• Total number of incidents of discrimination and actions taken.
• Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.
• Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.
• Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.
• Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.
• Total number of incidents of violations involving rights of indigenous people and actions taken.
Extracted from the Global Reporting Initiative
Measuring Social / People Impact
Labor Practices & Decent Work
• Total workforce by employment type, employment contract, and region.• Total number and rate of employee turnover by age group, gender, and region.• Percentage of employees covered by collective bargaining agreements.• Minimum notice period(s) regarding significant operational changes, including whether it is specified
in collective agreements.• Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related
fatalities by region.• Education, training, counseling, prevention, and risk-control programs in place to assist workforce
members, their families, or community members regarding serious diseases.• Average hours of training per year per employee by employee category.• Programs for skills management and lifelong learning that support the continued employability of
employees and assist them in managing career endings.• Composition of governance bodies and breakdown of employees per category according to gender,
age group, minority group membership, and other indicators of diversity.• Ratio of basic salary of men to women by employee category.
Extracted from the Global Reporting Initiative
Measuring Sustainability
• Profit / Prosperity (Financial) – – What are key Financial Measurements– What are the important metrics for your
organization?
Common Profit (Financial) Metrics
• Income & Profitability & Growth
• Investments
• Purchasing Practices
• Joint Venture practices
• Debt to Equity Ratio
• Risks from operations and products
• Financial Assistance from Governments
• Patents, New Products, etc.
Measuring Financial Impact
Financial
• Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
• Financial implications and other risks and opportunities for the organization's activities due to climate change.
• Coverage of the organization's defined benefit plan obligations.
• Significant financial assistance received from government.
• Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.
• Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.
• Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
• Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.
• Understanding and describing significant indirect economic impacts, including the extent of impacts.
Extracted from the Global Reporting Initiative
Measurement to Goals - SC Johnson Example
Source: 2008 SCJ Public Report, Page 10
You Are Only As Green As Your Supply Chain (Herman Miller)
Years ago Herman Miller decided to become an advocate for the environment, both because we believed it was the right thing to do and because we saw the potential for a clear business benefit. Ever since, we've been refining our processes to put our aspirations into practice.
Our Perfect Vision campaign, launched in 2003, includes green goals such as no landfill waste, no hazardous waste, no air or water emissions from manufacturing, and the use of 100% green energy, all by the year 2020. These are stringent targets our company cannot reach without engaging over 200 materials and components suppliers in the ongoing task of greening our global supply chain.
As we've examined every aspect of our worldwide supply chain, we've learned one key lesson: A business, and the products it sells, can only be environmentally sustainable through a holistic approach to design, raw materials, production methods, packaging, shipping, recycling, and even marketing--across the entire value chain. It's far too large and complex a undertaking for any organization to go it alone and be truly effective. You know the saying, "It takes a village to raise a child." Well, it takes an entire supply chain to green a company.
Here are three things we recommend to companies working with their suppliers on the long-term goal of going green.
1. Design your products with sustainability as a core principal. At Herman Miller, we have a problem-solving, design-driven culture, so we spend a lot of time thinking about how to create our products. In 2001, when we were creating our Mirra chair, we had been working with architect Bill McDonough and chemist Michael Braungart, both leading-edge environmentalist thinkers, toward their vision of a "cradle-to-cradle" design that embraces sustainable materials in a closed-loop life cycle. As a result, we eliminated the use of a chemical called polyvinyl chloride in that chair. Now, PVC has advantages, including the fact that it is inexpensive and durable. However, PVC releases toxins during manufacturing and when it is burned. We decided not to use it and implemented that decision with the help of our suppliers. We embedded those cradle-to-cradle principals in our product development process for all new designs, beginning with Mirra.
2. Refine your goals and put them to paper. We aim to be fully sustainable by 2020, but we're holding ourselves accountable to interim goals along the way. For example, by 2010, 50% of our sales will come from products that conform to our own rigorous Design for the Environment standards, and we aim to reduce our environmental footprint by 80%. Achieving these goals requires paying attention not only to materials, including their chemical ingredients, but also to our sources of energy, to our manufacturing processes, and to our packaging. We don't want to reduce our impact in one area while ignoring it in another. Nor do we want to move our environmental impact upstream into our supply chain.
3. Embrace transparency and meaningful metrics. Our company, our customers, and our industry in general are moving inexorably toward more transparent reporting when it comes to the environment. And, like any other management issue, what gets measured gets managed. When it comes to our supply chain, several measures apply. We award points through our Supplier Quantification Process for formal environmental programs and active waste-reduction programs. We rate our suppliers according to how effectively they are working to help us reach our goals--from researching alternative materials to incorporating our measurable targets into their flow charts. And this is the crux of the issue: We're not only looking at our suppliers, but at our suppliers' suppliers.
We have 12 years and a long way to go before reaching our self-imposed deadline for our Perfect Vision mission. By looking--and forcing change--outside our company as well as inside, we believe we can achieve this goal. By following the three steps above, we believe other companies can reach their green goals as well.
Author: Brian Walker, CEO of Herman Miller Source: www.hbrgreen.org/2008/02/you_are_only_as_green_as_your.html
Herman Miller You Are Only As Green As Your Supply Chain
Key Points:• Know your Value-chain• Establish Meaningful Goals (and share them)• Be Prepared for a Transparent World
The right METRICS are the root to all three of these points
Break-out groups
• Discuss the key metrics for your organization as a group
• Come back in 20 minutes prepared to present your: – Key metrics?– Why?– How can you make sure they are implemented?
Break-out groups - Feedback
• Key metrics?
• Why?
• How can you make sure they are implemented?
Conclusion
• Measure your Organizations Sustainability Performance!– Improvement begins with measurement– Take into account the full value chain
• Determine what is important for your organization and set goals!
• Be transparent… you can’t avoid it!– Reputational impact comes from being able to
document your improvements
• Opportunities will flow from these activities!
"Not everything that can be counted counts, and not everything that
counts can be counted." -- Albert Einstein
Final Word.
Participants for Break-out
Group A• Banaynal - Palm • Bell - Driscoll's• Berman - Bio-Rad Laboratories• Consler - Safeway, Inc.• Cortsen – NOEA• Rudd- Altria Group, Inc.
Group B• Cousins - Safeway, Inc. • Degenna - Altria Group, Inc.• DeMerritt- Frog's Leap Winery• Hughes - ConocoPhillips• Kelley - SunPower
Group C• McAlindon - Dow Coating Sol. • McIntosh - Navigant Consulting• Murdy - Fireman's Fund Insurance• Rankin -The Forrester Group• Renda - Safeway, Inc.
Group D• Rubinshteyn - UC Berkeley• Shields - Altria Group, Inc.• So - LG Electronics• Steffen - Transformative Ldr Inst.• van de Raadt -Waggener Edstrom
Worldwide
Corporate Responsibility Leadership Workshop:
Embedding CR in Your Operations & Management
UC Berkeley
July 8-9, 2008
Defining Your Stakeholders
Stacey Smith, BSR
Stakeholder Value
Stakeholders, both traditional and emerging, can play an important role in creating and maintaining business
value.
Stakeholders can supply key information regarding:–emerging trends and impacts–program implementation advise and partnership–critical feedback regarding perceptions, expectations
and performance
Not all stakeholders can provide this value and a company must take a strategic and disciplined approach to its
stakeholder relations to ensure that this business tool delivers value.
Government
Civil Society
Thought Leaders
Remote Communities
Suppliers
Partners
Local Communities
Employees
Investors
Customers
Stakeholder – Evolving Definitions
Traditional stakeholders include –Shareholders–Employees–Customers–business partners
Companies often have reliable and sophisticated methods for relating to these stakeholders and incorporating their perspectives
into business planning and execution.
Government
Civil Society
Thought Leaders
Remote Communities
Suppliers
Partners
Local Communities
Employees
Investors
Customers
Stakeholder – Evolving Definitions
Emerging stakeholders include – governments and multi-lateral institutions – advocacy/special interest groups and non-governmental
organizations– socially responsible and other investors– community representatives– the environment – future generations
As these stakeholders continue to evolve their influence, knowledge and potential value to companies, companies need to evolve methods to leverage the potential of these
relationships for real business value.
Why Do Stakeholders Matter?
Benefits of Engagement
Ris
kO
pp
ort
un
ity
Mitigation of risk, lower legal costs
Informed/improved decision-making
Issues identification and management
Trusting relationships
Strengthened license to operate
Entrance to and expansion of markets
“(We engage) to find solutions to shared challenges, everything from creating awareness about a topic to improving company performance on the environment and human rights, to finding solutions to societal challenges.” --Novo Nordisk
Exercise 1
• Are external stakeholders important to your business success?
• What role(s) can they play?
A Strategic Approach
Iterative Questions
Why
Who What
Why do you want to engage?
What issues are most important?Who is the most relevant?
What Are The Issues?
Financial – ability to impact financial performance of company
Reputation – ability to impact company reputation and image
Litigation – ability to impact current/future litigation
Regulation – ability to impact current/future regulation
RISK
OP
PO
RT
UN
ITY
Government
Civil Society
Thought Leaders
Remote Communities
Suppliers
Partners
Local Communities
Employees
Investors
Customers
Who is a Stakeholder?
Those who are affected by or affect a company’s products or operations.
Mapping Your Stakeholders
Knowledge
InfluenceOrientation
Stakeholder #1
Stakeholder #2
Stakeholder #3
Stakeholder #4
Stakeholder Relations
There is no best way to relate to traditional or emerging stakeholders, instead there exists a range of possible interactions that can serve the company’s business objectives.
Companies can benefit from taking a disciplined approached to stakeholder relations that discriminates the type of interaction best needed based on the situation and the potential stakeholders.
In a given situation, different points along this continuum might be most effective.
IgnoreMonitor
MessageAdvocate
ConsultEngage
Collaborate
Ignore Monitor Message Advocate Consult Engage Collaborate
Not directing communication or messages toward specific stakeholders and not monitoring or responding to their actions.
Tracking the positions and actions of stakeholders through media scans, Internet searches, review of Web sites, review of list-serves, and talking with other parties.
Typically “one-way” messaging toward specific stakeholders, sometimes for the purpose of “education.” These messages can come through direct advertising, media campaigns, letters, blogs, etc.
Activities intended to enlist support for a specific effort or position. Often there may be an imbalance or implication of power/ influence affecting the relationship.
Soliciting explicit feedback or input on a project or plan. No commitment regarding action related to the feedback/ input.
Initiating or participating in two-way dialogue focused on mutual learning and solutions. It requires a commitment to openness.
Explicit development of opportunities to work on shared objectives by the company and its stakeholders. Sometimes formalized in agreements; sometimes informal.
Stakeholder Relations Continuum
IgnoreMonitor
MessageAdvocate
ConsultEngage
Collaborate
Dell – Stakeholder Map
HP – Stakeholder Engagement Grid
“These interactions help us better understand our markets and customers, develop effective approaches to global citizenship issues, and strengthen HP’s reputation.” --HP
When to Engage Stakeholders
Engagement is substantive two-way interaction between a company and their stakeholders, focused on mutual
learning and/or solutions.
Engagement is most effective when:–There is curiosity or concern regarding the impact of
a company action or product–There is a need or desire to learn about issues or
stakeholders–All of the decisions related to a project or issue have
not yet been made–There is sufficient control or influence by the
company regarding an issue
Types of Stakeholder Engagement
Engagement may be used in different situations. It is often useful in following situations. Each situation requires a slightly different approach to ensure that the company can receive value.
• Crisis/Incident• Community• Trends Forecasting• Business Planning
Exercise 2
• Identify, by name or organization, a single stakeholder that is currently important to your company.
• What is your company curious about that the
stakeholder could help shed light on? • Articulate how you would invite this stakeholder
to a conversation to discuss this topic.
Nike
Deep Dive on Issues• Large, multi-stakeholder dialogue• Three issue focus areas• 40 business managers together with 40 external
stakeholders• Two days including polling, presentation by
company and expert, small group work planning, commitments
• Laid groundwork for ongoing initiatives
Gap
Stakeholder Mapping• Determined focus area• Thorough identification and research• Cross-functional exercise to “map” stakeholders• Development of plan for communication and
engagement• Ongoing resource to guide strategy and
reference additional engagement activities
Wal-Mart
System-wide Sustained Engagement• Identification of key systems of impact
(packaging, textiles, GHG, buildings, etc.)• Conduct research and analysis• Assemble representatives from all key aspects
of the system (producers, suppliers, experts, associations, government agencies, etc.)
• Create facilitated, long term forum for dialogue, commitments and innovation
Discussion
Supplemental Slides
Stakeholder Engagement Cycle
Plan
Apply Design engagement Prepare company
participants Engage/Dialogue
Engage Evaluate engagement
process & results Apply engagement learnings Follow-up with stakeholders
Integrate Build internal capability Clarify roles Establish processes &
tools
Identify & prioritize issues Identify & prioritize stakeholders Define engagement objectives and scope
Communicating & Branding CSR
Kellie McElhaney, Haas School of Business
McElhaney’s Seven Principles of CSR & Branding
1. Know Thyself
2. Get a Good Fit
3. Be Consistent
4. Simplify
5. Work from the Inside Out
6. Know Yours Customer
7. Tell Your Story
Stories trump facts ten times out of ten.
CSR is a powerful predictor of brand…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
…and reputation matters….ask Nike.
There are Early Communicators
And Even They Have Enemies
Requires banked goodwill in customers’ minds when these messages emerge.
• Females (employees, consumers, investors)
• Millennials/Gen Yers Ages 8-24 (cause focus)
• LOHAS/ Ethical Consumers
• More educated
• More diverse (gender, sexual orientation, ethnicity)
• More affluent (enter Walmart)
There Are Ready CSR Segments
LOHAS: Lifestyles of Health and Sustainability
• Strong environmental and social values, and base many purchase decisions accordingly
• Don’t just buy organic food or energy efficient appliances, they’re active in all LOHAS-related product categories
• “The largest market segment you’ve never heard of”
“As ‘green’ products make inroads
among Wal-Mart’s budget-conscious masses, they are gathering cachet among an affluent
new consumer category which marketers call
LOHAS.” (7/17/06)
Sources: The Natural Marketing Institute; Adler, Going Green.
They’re Growing2006 Ethical Consumerism Report
Source: Co-Operative Bank, 2006 Ethical Consumerism Report
£20M£28M
They’re Focused on Recycling & Local Shopping
Source: Co-Operative Bank, 2006 Ethical Consumerism Report
They’re Conscious Consumers
• More likely to buy from companies that:
– Manufacture energy efficient products (90%)– Promote health & safety benefits (88%)– Support fair labor & trade practices (88%)– Commit to enviro-friendly practices (87%)
Source: MORI 2008
In Other Words, Consumers Care If It’s…
In me,
On me,
Or around me.
They’re the Millennials (ages 8-24)
• 89% said they are likely to switch brands if linked to cause• 83% will trust company more if socially responsible• 79% want to work for company that case about and
contributes to society• 78% believe that companies have responsibility for making a
difference in the world• 74% more likely to pay attention to a company’s overall
messaging when they see that company has deep commitment to cause they care about
• 69% consider companies’ CSR reputation when deciding where to shop
• 61% feel personally responsible for making a difference in the world
• 56% would refuse to work for an irresponsible corporation
Source: 2006 Cone Millennial Cause Study
Sign in Dreyer’s Ice Cream Scoop Shop, Berkeley, CA
They’re LionessesSource: P. Diddy
The “Lioness Factor”
Enter the Lionesses
CSR Opportunity: The Power of Women
• WOMEN more likely than men to:
– Volunteer in their local communities
– Investigate a company’s environmental reputation before making a purchase
– Invest in companies screened for different criteria including environmental practices, the hiring and promotion of women and minorities, labor practices and tobacco manufacture
– Factor CSR when job-searching
– Purchase a product with a percentage of profit earmarked for charitable donation
– Participate in company sponsored social programs
The Power of Women• More likely than men to:
– Indicate that it is important to ensure that workers inside and outside the U.S. are paid a living wage (68 percent versus 57 percent).
– Give corporations a “poor” rating for current CSR performance (18 percent versus 11 percent of men). Men are far more likely than women to rate companies as “excellent” or “good” (31 percent versus 13 percent, respectively).
– Indicate that it is extremely important for companies to make relevant donations to charities and philanthropies (27 percent versus 19 percent, respectively).
Source: Fleishman Hillard – National Consumers League Study, “Rethinking Corporate Social Responsibility,” 2006
WOMEN: A Desirable Market Segment
• Women make over 80% of purchasing decisions in the United States (and influence most others)
• Women are less likely to act impulsively on brand loyalty, and are more likely to do research and weigh information before making purchases
Source: Faith Popcorn and Lys Marigold, 2000
• March 2008, Goldman Sachs launched new initiative• Will provide 10,000 women in developing countries and
emerging markets with educational opportunities in business & management
• Partnership with American & European universities• Will contribute $100 million over five years, plus time &
effort of employees
HP & Technology
Tesco Green Club Card Points
Tesco Green ClubCard Points Program• Rewards consumers with Clubcard points for re-using bags or recycling mobile
phones & toner.
• Program launched with humorous TV ads featuring celebrities using alternative items for shopping bags (suitcase, golf bag, etc).
– Unclear what percent of Tesco’s annual $80 million media spend will go towards supporting this initiative.
Consumer Connection • Builds confidence that individuals, acting together, can bring about change. Keeps
the environment top of mind.
Results• Since 2006 launch, reduced # of new bags by nearly 300 million (14MM fewer
plastic bags/week).
Tesco Green Club Card Points
20022001
2000
2007
•Campaign for Real Beauty– Campaign began with ''global study,'' commissioned by Dove that posed
questions about beauty across 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 Dove Self-Esteem Fund
– Uses un-retouched images of women rather than models– Commissioned 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
A Brand Story
•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"
& Impact
Developing/ Refining Your CSR Strategies
Small Group Exercise
Questions for You:
• What are your business objectives?
• What are your core competencies?
• What are the main drivers for CSR?
• Why would/ do you do it?
• What do you currently do today?
Start Here
Your CSR strategy must only link to 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 products &services, making
markets, natural food, automobiles and transportation systems, travel & tourism.
Engage An Employee Team
• Dedicate a CSR leader• Develop a multi-functional CSR strategy-development
team• A CSR Council of champions, ambassadors
– Determine who needs to be there– Get a few cynics in early– Play with whomever shows up
• Invite in a few external stakeholders– Clients, consumers, suppliers, NGOs, academics
• Set out to develop your CSR strategy
A Suggested Strategy-Development Process
• Starting with business objectives & competencies….– Determine where you want to play (babies, landscape, etc.)– Assess current CSR (philanthropy) initiatives & plot to see
clusters– Benchmark industry, develop your competitive advantage– Select an issue for which you own [part of] the solution– Develop a CSR strategy linked to your corporate strategy
A Suggested Strategy-Development Process
• Go long & deep: FOCUS, FOCUS, FOCUS– Signature project– Fewer projects, more focus
• Make longer-term commitment – 3-5 years, phases, etc.
• Teach CSR to your employees• Then engage, involve your employees in your CSR• You, as leader, stay involved • Develop partnership(s)• Determine KPIs, metrics• Celebrate small wins• Tell your story
– Stories trump facts ten times out of ten, period.
What Will You Do on Monday Morning?
• What will you tweak?
• What will you toss?
• What will you develop/ do?
• How will you measure it?
• How will you communicate/ brand it?
Anticipating the Future
Aron Cramer, BSR
Anticipating the Future
• Business has a key role to play in meeting global challenges.
• Many of the toughest CSR dilemmas have arisen when companies fail to understand the changing intersection of business and society.
• Business succeeds best when it is able to “get there early.”
The Value of Getting It Right; The Cost of Getting It Wrong
• What are some examples of CSR problems companies faced by not anticipating the social or environmental implications of business change?
• What companies have succeeded on their business and sustainability strategies by anticipating social change?
What’s Next?
• What changes will define the intersection of business and society over the next ten years?
Wisdom from Donald Rumsfeld
• “There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.”
Characteristics of the Emerging World
• Decentralization of information…and power
• Rise of emerging economies
• Transparency as a given
• Resource scarcity and volatile commodity prices
• Return of the state
What sustainability challenges are we
facing now and into the future?
Global Sustainability Challenges
•Business has an essential opportunity to make a unique contribution to meeting critical global challenges. By leveraging innovation, employment, capacity building, and value creation, the world is likelier to achieve the objectives of the Millennium Development Goals:
1. Health2. Human Rights3. Water4. Economic Well-Being5. Climate6. Biodiversity7. Education8. Global Security & Peace
What does the future hold for global sustainability?
More than 500,000 women still die each year of treatable and preventable complications of childbirth.1
2.2 million children die each year because they are not immunized.2
1.1 billion people in developing countries have inadequate access to water, and 2 billion lack basic sanitation.3
28% of all children in developing countries are estimated to be underweight or stunted.4
Prevention measures for HIV/AIDS are failing to keep pace with growth of the epidemic.5
New major health threats have arisen, including bioterrorism, SARS, and toxic chemical waste dumping.1
Challenge #1: Health
New and ongoing health threats further exacerbate need for stronger health systems
Source: BBC
Challenge #2: Human Rights
The rise of anti-terrorism policies has brought increasing claims of discrimination and racism.6
Cases of violence and discrimination based on sexual orientation continue to occur in all regions of the world.6
No developed country has effective policies to protect the rights of migrant workers.6
Corporations are more accountable; shareholder resolutions regarding human rights are increasing annually.7
Women’s global participation in paid employment increased to 39% over the past 15 years, illustrating the potential for business to have an impact on gender disparity.8
Source: The Social Blog
In the absence of effective governance or justice systems, business and international bodies are increasingly needed to advance human rights
Increasing water shortages, scarcities, and stresses throughout the world due to increasing populations and agricultural demands.9
1.8 billion more people could be living without adequate access to water by 2080.4
Glaciers are retreating 10–15m/yr in the Himalayas, creating immense vulnerability for Central Asia.4
>10 countries possess 60% of the world’s available fresh water supply.10
In 60% of European cities, ground-water is being used at a faster rate than it can be replenished; where some water remains, the cost to capture it is exhorbitant.10
Challenge #3: WaterFreshwater resources are becoming scarcer or more polluted,
leading to a global crisis in access to clean water
Challenge #4: Economic Wellbeing
By 2050 the global population is expected to top 9 billion, with 8 billion forecast to live in developing countries.4
The economic gap between rich and poor is further widening; in 2007, the richest 20% of the world’s population accounted for 75% of the world’s income.4
Nearly three billion people, which is half the world’s population, survive on less than US$2 a day.4
30,000 children die daily as a result of extreme poverty.4
Source: BBC
The widening of economic gaps is posing increased opportunities and challenges for business in the developing world
Some 262 million people were affected by climate disasters annually from 2000 to 2004.4
Based on current trends and policies, energy-related CO2 emissions could rise by more than 50 percent over 2005 levels by 2030.4
In the 21st century, average global temperatures could increase by more than 5°C.4
Global temperature increases of 3–4°C could result in 330 million people being permanently or temporarily displaced through flooding.4
To avoid drastic global impacts, it is estimated that rich nations would need to cut emissions by 30% by 2020.4
Challenge #5: ClimateThe threat of dangerous climate change is increasingly becoming a reality, and
prompts the need for drastic cuts in global emissions
20-50% of 9 of the world’s 14 biomes have been transformed to croplands.11
Over the past century, humans have increased the species extinction rate by as much as three orders of magnitude.11
Despite increased conservation efforts, deforestation continues at an alarming rate.5
Biodiversity loss is increasing the likelihood of ecological surprises and catastrophes.11
Unprecedented efforts in conservation and ecosystem management will be required if the rate of species loss is to be reduced.5
Challenge #6: BiodiversityDespite greater conservation efforts, biodiversity loss is continuing at an
alarming rate and increasing the risk of ecological catastrophe
Enrollment in primary education in the developing world rose from 80% to 88% between 1990-2205.5
115 million children, 60% of whom are girls, have no access to formal schooling.12
In many poor countries, people earn 10% higher wages with each additional year of schooling.12
Members of society will increasingly create innovative and contextually-relevant applications for new knowledge.13
Challenge #7: EducationIn a future driven by globalization and information exchange, education is becoming
even more critical to the success of business and economic development
There are over 25,000 nuclear weapons in the world today.14
The following countries are known to have nuclear weapons: China, France, India, Israel, Pakistan, United Kingdom, and the US.15
New environmental challenges, such as climate change and access to water, are potential topics for conflict and are inextricably linked with global security issues.
Challenge #8: Global Security & Peace
Ongoing nuclear proliferation and new global challenges continue to pose a threat to global security and peace.
Insight: Sustainability Outlook
•A project supported by 10 sponsoring companies
•Assessing broad trends through the lens of markets, commons, technology, and policy based solutions
•Based on two company/BSR/IFTF workshops and inputs from diverse range of experts
Insight: Sustainability Outlook
• Discussion: What lessons do you draw from the map?– How do these affect your business/CR strategies?– How do you forecast trends affecting your company?– How would you use a map like this?– Do these present risks, opportunities, or both?– What’s missing?
• Exercise/Discussion: What three things will you take back to your company next week?
We Are It, Friends.
Never forget that a small group of committed individuals can change the world. Indeed, it is the only thing that ever has.
- Margaret Mead
Contact Information
• Kellie A. McElhaney
• Tony Kingsbury
• Aron Cramer
• Stacey Smith