Firm business strategy: when doing good is good for business

CSR SummitState Library of NSW, Sydney, 2007

Wayne BurnsDirector Centre for Corporate Public Affairs

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What has involvement/engagement with the community got to do with business?

“… scratch the surface (of CSR) and one finds a high degree of cynicism about corporate responsibility, and a widespread belief that it is a costly, public relations-focused activity that adds little to the business.”

Peter Davis, Ethical Corporation,2005

“… a corporate citizenship program is most effective when it is aligned with the firm’s basic business objectives and can therefore be justified on business grounds.”

US Conference Board, NY, 2003

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Corporate trust in Australia is at its lowest ebb

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What Australians think of corporations

GlobeScan (2005) reports 62 per cent of Australians have ‘little’ or ‘no’ trust in Australian companies. More than 60 per cent have ‘a lot’ or ‘some’ trust in NGOs

Internationally, citizens are increasingly mistrusting corporations

But the new trend is that more people are prepared to do something about their mistrust

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Consumers who have ‘punished’ companies in the last year

Source: GlobeScan, annual Australian CSR Monitor, 2005

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Companies are in a battle for our hearts and minds

Fombrun, 2005

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Gen Y is here

Vocal Tribal – join together to support

cohorts in groups Concerned greatly about

work/life balance Suspicious of institutions such

as corporations and governments

Environmentally, and issues, sensitive

Communication channel savvy and demanding

Cannot be reached effectively by traditional communication channels

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Business conundrum: What is Corporate Social Responsibility?

CSR?

Sustainability?

Triple bottom line?

Corporate citizenship?

Corporate social performance?

Community investment?

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A big shift is on, driven by the business of business

1970s - philanthropy

1980s - philanthropy and sponsorships

1990s - strategic philanthropy and community involvement

2000s - corporate community involvement (with an emphasis on partnerships and ‘win, win’ ROI for companies and communities)

1970s 2007

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What is driving corporate community investment - external

Community expectations

“Stakeholder” pressures

Regulatory risk

Community license to operate

Corporate reputation

Employer of choice and employer engagement

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What is driving corporate community investment - internal dynamics

Philosophical issues, including the role of the corporation

Significance of leadership

The values organisation and alignment of incentives

Competitive pressures

Employee recruitment and retention

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Business sees Corporate Community Investment as central to business strategyIs it peripheral?

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Factors important to business strategy and affected strongly by corporate values

Source: Booz Allen Hamilton/Aspen study

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Business case for Corporate Community Investment decisions

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Rationale for companies expending community investment resources

Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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How companies see community investment

Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Examples of business strategy linked to Corporate Community Investment

Insurance Australia Group - climate change and insurable events; crime awareness and cost of insurance

ANZ - financial literacy and new customers

Unilever - female body image and its personal care products; hygiene and soap products

IBM - education (teachers) support program and its information products

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Examples of business strategy linked to Corporate Community Investment

Shell - Questacon Science Circus and its demand for more science graduates

Diageo - responsible drinking education and sale of its alcohol products

Australia Post - Australian Opera regional touring and regional Arts, and Post’s Universal Service Obligation

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Drivers of companies’ overall Corporate Community Investment programs/activities

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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How important is it that these stakeholders recognise your Corporate Community Investment initiatives?

Note — other responses included ‘Not important’, ‘Slightly important’ and ‘Somewhat important’

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Community investment is now strategic and proactiveResponses to requests for support in cash/kind

• 7% of companies do not provide any resources to requests for support;

• 58% of companies estimate that between 1% and 19% of their community contribution is used to respond to requests;

• 14% of companies allocate 20% to 39% of their budget to requests for support;

• 11% of companies allocate 40-59% of their cash and in-kind contribution to requests;

• 7 % of companies allocate between 60-79%; and

• just 3% of companies allocate between 80% and 100% of their community contribution in response to requests for support.

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Are your significant Community Involvement activities aligned to your business sector or its specific interests?

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Corporate resources devoted to Community Relations

• 3% of companies do not allocate any of their resources to community relations programs;

• 21% of companies estimate that between 1% and 19% of their community contribution resources is allocated to community relations;

• 34% of companies allocate 20% to 39% of their community resources to community relations;

• 17% of companies allocate 40-59%;

• 9% of companies allocate 60-79%; and

• 16% of companies allocate 80-100% of their community investment resources to community relations projects.

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Programs designed to engage employees

• 3% of companies do not allocate any of their resources to these projects;

• 34% of companies estimate that between 1% and 19% of their community contribution resources is allocated to projects to engage employees;

• 36% of companies allocate 20% to 39% of their community resources;

• 13% of companies allocate 40-59%;

• 4% of companies allocate 60-79%; and

• 10% of companies allocate 80-100% of their community investment resources to projects that engage employees.

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Programs designed to engage NGOs and ‘influencers’

• 12% of companies do not allocate any of their resources to these projects;

• 39% of companies estimate that between 1% and 19% of their community contribution resources is allocated to projects to engage NGOs and influencers;

• 28% of companies allocate 20% to 39% of their community resources;

• 12% of companies allocate 40-59%;

• 5% of companies allocate 60-79%; and

• 4% of companies allocate 80-100% of their community investment resources to projects that engage NGOs and influencers.

Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

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Cultural differences internationally

UK and Europe - strategy and activity influenced greatly by UN and EU compacts, regulations and goals. In the UK, competitive advantage an important driver

USA - strategic philanthropy dominates with corporate citizenship. Limited government involvement but encouragement of ‘giving’

Australia - waning corporate philanthropy. Business strategy and outcomes linked strongly to community investment inputs, outputs and outcomes. Looking for the ‘win, win’

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The Corporate Community Investment landscape in Australia

Trends and best practice

From ‘Chairman’s wife syndrome’ to embedded strategy

Ad hoc response to strategic initiative

Fewer, more strategic relationships, deeper and better leveraged

Sustainable partnerships and mutual obligation the norm

Alignment with business issues and competencies dominate

Employees are a key driver of strategy, activity and outcomes

Linked to stakeholder/community dialogue

Business case driven - search for Return on Investment