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Measuring CSR Tools for CSR. BA 292C-1 Professor Kellie A. McElhaney 2.14.07. Happy Valentine’s Evening. The Dow Case: Dow Response. - PowerPoint PPT Presentation
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Measuring CSR Tools for CSR BA 292C-1 Professor Kellie A. McElhaney 2.14.07
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Page 1: Measuring CSR Tools for CSR

Measuring CSRTools for CSR

BA 292C-1

Professor Kellie A. McElhaney

2.14.07

Page 2: Measuring CSR Tools for CSR

Happy Valentine’s Evening

Page 3: Measuring CSR Tools for CSR

The Dow Case: Dow Response• There is no question that Bhopal was a tragedy of tremendous gravity and

human cost. It was a terrible tragedy and it continues to evoke strong emotions nearly a quarter of a century later. Dow, like the rest of industry, has an obligation to always remember the tragedy and to prevent such an event from ever happening again.

• However, the accusation by some NGOs and activists that we are failing to behave properly because we will not accept responsibility for an event and a site in which we did not have any involvement is entirely without foundation and ignores or misstates certain basic facts.

– * Neither at the time of this tragic disaster not subsequent to it has Dow had any connection with the Bhopal facility or its operation. Dow never owned or operated the plant, which today is under control of the state government

– * Dow acquired Union Carbide more than 16 years after the tragedy, and 10 years after the $470 million settlement - paid by Union Carbide Corporation and Union Carbide India, Limited - was upheld by the Indian Supreme Court.

– * Union Carbide remains a separate company and entity with separate financial reporting and nearly 4,000 employees. UCC manages its own liabilities.

Page 4: Measuring CSR Tools for CSR

The Dow Case: Dow Response• It is clear that the responsibility for any further action in Bhopal lies with the Indian government

and the state government of Madhya Pradesh. The Indian government agreed to ensure the healthcare of the victims of the tragedy. The state government took control of the plant site in 1998 and has the responsibility to manage the site clean up.

• We were heartened by Indian media reports stating that the Indian government is providing clean drinking water to the citizens of Bhopal and that they are interested in designing and placing a commemoration to the victims of the tragedy at the Bhopal site. We were also pleased when we heard of the state government's development of a three-phase remediation plan to complete clean up of the Bhopal plant site. We hope that this effort by the State Government to remediate the site will be allowed to go forward.

• As I mentioned on the call, I hope this note provides context to Dow's position on this issue. I

have also provided you with further information by attaching web links to Dow's 2015 goals and Dow's position statement on the Bhopal tragedy. In addition, for further information regarding Union Carbide and the Bhopal tragedy, please see the attached web link.

– http://www.dow.com/commitments/goals/index.htm

– http://www.dow.com/commitments/debates/bhopal/

– http://www.unioncarbide.com/bhopal

• We do look forward to being a partner with you on the Energy Symposium and believe that together we can make a positive contribution. Thank you again for the conversation today.

Page 5: Measuring CSR Tools for CSR

The Dow Case: BERC’s Decision

• After significant discussions with faculty, students, and Dow, the BERC leadership and the symposium organizing committee met yesterday to discuss the issue.

• As a group, BERC has decided to follow the guidelines of the ASUC Resolution and not use Dow funding for the Energy Symposium. 

• In our discussion with the BERC leadership the group consistently voiced two ideals:

– BERC’s mission is to serve and connect students from every background, who are interested in energy and resources.  To maintain our image and efficacy as a cross-disciplinary student group, it is important to operate with the utmost transparency and respect for our unique position within the University.

– While we are not taking the Dow funding, we feel strongly that part of BERC’s mission is to act as a bridge between the University and corporate commercial interests in the energy space. Some of these companies will have histories like Dow that many find unfavorable.  Our role is not to debate these histories.  BERC’s goal is to help the University engage these companies in a manner that is sensitive to history, but focused on the future and the challenge of solving our global energy problems.

Page 6: Measuring CSR Tools for CSR

Current Events

Page 7: Measuring CSR Tools for CSR

Measuring CSR

Page 8: Measuring CSR Tools for CSR

What Metrics Could Whirlpool Use?

Page 9: Measuring CSR Tools for CSR

What Metrics Could Whirlpool Use?

Page 10: Measuring CSR Tools for CSR

• Campaign for Real Beauty– 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

– Uses un-retouched images of women rather than models on Dove.com

• The Uniquely Me! Girl Scouts of America self-esteem program

– Donate money, 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.

Page 11: Measuring CSR Tools for CSR

• 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"

Page 12: Measuring CSR Tools for CSR

CR Metrics

Environment Community Workplace MarketplaceBroad metric categories

Metric sub-categories

• Charitable Giving

• Community Education

• Community Lending & Investment

• Employee Volunteerism

• Business Travel

• Byproducts

• Emissions to Air

• Emissions to Water

• Energy Consumption - Electricity

• Energy Consumption - Fuel

• Environmental Projects

• Large-Scale Environmental Impact

• Waste

• Waste - Paper

• Waste - Water

• Employee Diversity

• Employee Engagement

• Employee Satisfaction & Retention

• Health & Safety

• Health & Safety - Illness

• Health & Safety - Injury

• CSR Spending

• Customer Satisfaction & Retention

• Operation control

• Supply Chain

Page 13: Measuring CSR Tools for CSR

Standard and most frequent metrics in each category area:

Environment Community Workplace

• Byproducts produced through the manufacturing process

• Emissions to air and water through manufacturing, operations, or logistics

• Energy consumption by type or total energy used

• Waste produced – paper, water, hazardous, non-hazardous, other

• Expenses or personnel involved

• Charitable corporate giving – direct, through foundation, through employee match

• Community investment – project spend, local taxes paid

• Employee activities – volunteer hours

• Customer diversity and inclusion

• Unique projects and engagements

• Employee diversity – race, age, gender

• Health and safety – injury and accident rates, works day loss rates, absenteeism, workers comp claims

• Turnover rate

• Employee satisfaction (typically from surveys)

• Training for

employees – spend, time, or number or trainings

Marketplace

• Customer satisfaction measures – surveys, complaint tracking, customers served, external rankings

• Supply chain measures – supplier satisfaction, trainings, audits, total spend on targeted supplier groups, certifications

• Customer reach in socially disadvantaged groups or areas

Page 14: Measuring CSR Tools for CSR

CSR Metrics Must Link to Corporate Strategy

Page 15: Measuring CSR Tools for CSR

CSR Metrics Must Link to CSR 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.

• Education

Page 16: Measuring CSR Tools for CSR

Types of Evaluation

INTUITION

SYSTEMS

STORIES

Page 17: Measuring CSR Tools for CSR

Goals of Measurement

• Align investment with value

• Assess actual value created

• Inform management decisions

• Help you maintain the integrity of your work

• Contribute to reporting, communication, and branding

Page 18: Measuring CSR Tools for CSR

EASY HARD

• Sales revenue• Capital assets• Investment returns• Dividends • Etc.

• Life• Freedom• Dignity• Happiness• Etc.

• Goodwill • Insurance• Depreciation• Liability• Projected revenues• Emission credits • Income changes • Education access• Earnings potential• Technology benefits• Etc.

• Health• Safety• Biodiversity• Clean air• Safe water• Education results• Political stability•Cultural Advancement• Etc.

TYPE I TYPE II TYPE III TYPE IV

Ease of Measuring

Page 19: Measuring CSR Tools for CSR

Types of Information about Value

Five basic ways of articulating value:

• Financial (accounting: cash in, cash/work out)

• Monetizable (translating non-financial value into

monetary equivalent)

• Quantitative (numbers: size, magnitude or degree)

• Qualitative (description: kind, type, or direction)

• Narrative (storytelling)

Page 20: Measuring CSR Tools for CSR

Value Chain of Metrics

Inputs Activities Outputs Outcomes

What is put into the venture

Venture’s primary activities

Results that can be measured

Changes to social systems

Goal Alignment

Activity and goal adjustment

Page 21: Measuring CSR Tools for CSR

Impact Metrics= differential change

Inputs Activities Outputs Outcomes

What is put into the venture

Venture’s primary activities

Results that can be measured

Changes to social systems

Goal Alignment

Activity and goal adjustment

What would have

happened anywayEssential

= IMPACT

-

Page 22: Measuring CSR Tools for CSR

Evaluation Roles

Outputs Outcomes

Results that can be measured in operations

Changes to social systems

• Tracked regularly• NGO, Investor, Funder

• Periodic • Need data from researchers and other stakeholders

Page 23: Measuring CSR Tools for CSR

What Types of Things Can Be Measured?

Page 24: Measuring CSR Tools for CSR

Sample Indicators of Financial Performance of Investment

Page 25: Measuring CSR Tools for CSR

Sample Indicators of Financial Performance of Investee

Page 26: Measuring CSR Tools for CSR

Sample Indicators of Socio-Economic Returns to Individuals or Investees

Page 27: Measuring CSR Tools for CSR

National or Regional Socio-economic Returns

Page 28: Measuring CSR Tools for CSR

Blending Types of Indicators

Page 29: Measuring CSR Tools for CSR

Summary of Social Impact Value Chain

Page 30: Measuring CSR Tools for CSR

• Description: social enterprise that develops community-based, integrated waste management microenterprises in Peru

• Goals: in business to create more than financial value-- wants to restore the environment, improve peoples’ health and cultivate community-based economic development

Example: Ciudad Saludable

Page 31: Measuring CSR Tools for CSR

What’s the value proposition?

• Financial value proposition is easy to count

– $$$$ revenue

– $$ Costs

• Non-financial value…?

– Outputs/measurable indicators:

• #s of customers served with waste collection

• tons of garbage recycled

• # jobs created

• # people trained, etc….

– Outcomes/results:

• Less disease, fewer deaths, healthier people, less domestic violence, sense of pride and dignity

• Cleaner water, restored fish populations & biodiversity

• Fewer lost work days due to illness, lower health expenses, greater incomes and economic security

Page 32: Measuring CSR Tools for CSR

Outputs

CS already counted the number of jobs created, the revenues from customer fees, and the amount of garbage collected.

Outcomes Monetization- Base case

Ex: Ciudad Saludable SROI Analysis

Page 33: Measuring CSR Tools for CSR

Outputs Outcomes

Ciudad Saludable collected information from: • staff• microentrepreneurs• local health authorities

SVT analyst researched “proxy studies” on: • disease and death caused by exposure to

garbage in similar regions• costs of waste management if provided by the

government in similar regions.

Monetization- Base case

Ex: Ciudad Saludable SROI Analysis

Page 34: Measuring CSR Tools for CSR

Outputs Outcomes Monetization- Base case

CS assumed “what would have happened otherwise”- if it did not exist

• what microentrepreneurs & CS staff would have earned

• what the incidence of childrens’ deaths from diarrhea in the region would be

• what it would cost for the government to collect the garbage instead of CS

• where the garbage would be if not collected by CS

Ex: Cuidad Saludable SROI Analysis

Page 35: Measuring CSR Tools for CSR

Outputs Outcomes

SVT monetized a subset of CS’s impacts using the dollar value of:

• The increase in microentrepreneurs’ earnings• The relative savings to taxpayers of having CS

do the waste management rather than the municipal government

These values were calculated relative to the investment that was required to create them.

Monetization- Base case

Ex: Ciudad Saludable SROI Analysis

Page 36: Measuring CSR Tools for CSR

Results: Value Captured with theFull Range of Types of Information

monetizedvalue

Act

ivit

y

Fram

ewor

k

Cos

t ef

fect

iven

ess

a

prim

er

RE

DF

SR

OI

Met

hod

olog

y

GS

VC

Gui

deli

nes

for

Soc

ial

Ret

urn

on

In

ves

tmen

t

Soc

ial

mea

sure

me

nt a

nd

perf

orm

ance

met

rics

DB

LP S

IA T

ool

kit

new

ec

onom

ics

fou

dati

on

SR

OI

app

roa

ch

1Understanding organisation Analytical framework Define goals

Mission and venture coherence

2 Stakeholder analysis Stakeholder analysis

3 Scope of Analysis Scope of Analysis

4Income and cost analysis Measure costs

Brainstorm non financial impacts

Cost evaluation of inputs

Quantify non financial impact

Analyse costs

5 Impact value chain

Articulate theory of change and 3 key, practical indicators

Theories of change and impact value chain Impact value chain

6Identify and collect data

Translate impacts into financial terms Tracking Monetisation

Identify and collect data

7 Projections Projections Projections

8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value

Discount the cashflows

Calculate enterprise returns Calculate SROI

9 SROI reportingGenerate SROI report Reporting SROI reporting

10Evaluation and monitoring

Effectiveness measures Evaluating

Implementation and integratio

qualitative value

Act

ivit

y

Fram

ewor

k

Cos

t ef

fec

tiv

ene

ss

a pr

imer

RE

DF

SR

OI

Met

hod

olog

y

GS

VC

Gui

deli

nes

for

Soc

ial

Ret

urn

on

In

ves

tmen

t

Soc

ial

me

asu

rem

ent

and

pe

rfor

man

ce m

etri

cs

DB

LP S

IA T

ool

kit

new

ec

ono

mic

s fo

udat

ion

S

RO

I a

ppro

ach

1Understanding organisation Analytical framework Define goals

Mission and venture coherence

2 Stakeholder analysis Stakeholder analysis

3 Scope of Analysis Scope of Analysis

4Income and cost analysis Measure costs

Brainstorm non financial impacts

Cost evaluation of inputs

Quantify non financial impact

Analyse costs

5 Impact value chain

Articulate theory of change and 3 key, practical indicators

Theories of change and impact value chain Impact value chain

6Identify and collect data

Translate impacts into financial terms Tracking Monetisation

Identify and collect data

7 Projections Projections Projections

8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value

Discount the cashflows

Calculate enterprise returns Calculate SROI

9 SROI reportingGenerate SROI report Reporting SROI reporting

10Evaluation and monitoring

Effectiveness measures Evaluating

Implementation and integratio

Act

ivit

y

Fram

ewor

k

Cos

t ef

fec

tiv

ene

ss

a pr

imer

RE

DF

SR

OI

Met

hod

olog

y

GS

VC

Gui

deli

nes

for

Soc

ial

Ret

urn

on

In

ves

tmen

t

Soc

ial

me

asu

rem

ent

and

pe

rfor

man

ce m

etri

cs

DB

LP S

IA T

ool

kit

new

ec

ono

mic

s fo

uda

tion

S

RO

I a

ppro

ach

1Understanding organisation Analytical framework Define goals

Mission and venture coherence

2 Stakeholder analysis Stakeholder analysis

3 Scope of Analysis Scope of Analysis

4Income and cost analysis Measure costs

Brainstorm non financial impacts

Cost evaluation of inputs

Quantify non financial impact

Analyse costs

5 Impact value chain

Articulate theory of change and 3 key, practical indicators

Theories of change and impact value chain Impact value chain

6Identify and collect data

Translate impacts into financial terms Tracking Monetisation

Identify and collect data

7 Projections Projections Projections

8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value

Discount the cashflows

Calculate enterprise returns Calculate SROI

9 SROI reportingGenerate SROI report Reporting SROI reporting

10Evaluation and monitoring

Effectiveness measures Evaluating

Implementation and integratio

quantifiedvalue

financial value

narrative value

Page 37: Measuring CSR Tools for CSR

Metrics & Evaluation Take-Aways

• Simplify

• Set clear goals & establish baseline at the outset (start where you are)

• Measure a few things well as opposed to everything poorly

• Concentrate on measuring a few signature programs, with a few signature measurements

• Stories trump facts 10 times out of 10

• Move towards impact metrics, but blend in some evaluative metrics

Page 38: Measuring CSR Tools for CSR

CSR Tools

Page 39: Measuring CSR Tools for CSR

Plotting on a CSR Continuum

Level of engagement Low High

Importance to mission Peripheral Strategic

Magnitude of resources Small Big

Scope of activities Narrow Broad

Interaction level Simple Intensive

Managerial complexity Infrequent Complex

Strategic value Modest Major

EXAMPLES ACTIONS: • Donation• Grants

• Event sponsorship• Cause-related

marketing• Employee

volunteerism

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

Philanthropic Transactional IntegrativeGrowth stage:

Adapted from The Collaboration Challenge, James E. Austin

Page 40: Measuring CSR Tools for CSR

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 demonstrate restorative business practices.

Influence the industry indirectly, by example.

Give something back.

Support local communities (corporate philan., 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

Plotting on a CSR Landscape

Page 41: Measuring CSR Tools for CSR

Prioritizing CSR Actions

2005

Page 42: Measuring CSR Tools for CSR

Benchmarking Analysis

Page 43: Measuring CSR Tools for CSR

Benchmarking Analysis

Company Child LaborHarsh Treatment

Sexual Harrasment

Minimum Wages

Living Wages

Working Hours

Clif BarChiquitaStarbucksLevi StraussGap TimberlandPeet's Standards

ILOSA8000FLA

Detailed information included in Code Mentioned briefly Not included

Page 44: Measuring CSR Tools for CSR

Benchmarking Analysis

Company Code of Conduct Standards Used Auditing Auditing Method

7th Generation Yes Yes (limited) Use Verite

Chiquita Yes

SA8000 (Labor/Human Rights), Rainforest Alliance (Environment)

Yes

Internal assessment + verification from 3rd parties in different countires

Gap Yes Own Standards Yes

Internal assessment + Use SAI to review their compliance system

Levi's Yes Own Standards Yes Internal assessments

Peet's Yes Own Standards NoWorking with BSR to develop an auditing process

Starbucks Yes Own Standards Yes Self reporting

Stonyfield No NA No

Timberland Yes

UN Declaration of Human Rights & ILO Core Conventions Yes

12-15 Timberland Employees conduct 73% of audits. Remaining 27% done by 3rd parties (Verite)

Page 45: Measuring CSR Tools for CSR

1. The Company - Nokia

What are the benefits of community involvement programs for Nokia’s key constituent groups?

Stakeholder Analysis

Communities Government Employees •General social welfare

•Increased technology and educational resources

•Improved product in the region

•General social welfare •Achieve UN Millenium

goals • Assist with country-

specific initiatives

•Increased job satisfaction •CI partnerships with key operator customers could

strengthen business relationships

Takeaway: All stakeholders can benefit from properly crafted community involvement programs.

Page 46: Measuring CSR Tools for CSR

CompanyIssue/Geogr.

FocusBest Practices Takeaways

Motorola

Varied, but officially: Education, Communities and Environment

•Vendor for GSM Emerging Markets Handset Program•Provides equipment to CARE

•Primarily grant-making•Similar scale of LA business operations•Received the 2004 Award for Corporate Excellence from the US State Dept. for its citizenship activities in Brazil, but none really described well in PR materials•Some youth education/skills programs in Brazil & Venezuela that appear similar to Nokia’s•"Bridging the Digital Divide" was the theme of its 2004 CSR report, but not a particular focus of the company’s CSR activities.

Ericcson Disaster response•Partnerships w/ international NGOs: UNDP, OCHA, IFR•Newsletter about activities

•High visibility issue; only manufacturer differentiating itself on this issue

SamsungSports; some generalized support of children’s causes

•Annual webcast for charity•Very linked to core business goals •Not a traditional CI cause and not addressing great societal needs

SiemensMath and science scholarships

•Sponsors innovation competitions•Mostly philanthropic – Siemens Foundation•Math/science a good fit, but other programs miscellaneous and varied

Benchmarking CI Programs: Handset Competitors

Sources: Company websites and documents

Page 47: Measuring CSR Tools for CSR

Gap Analysis

Page 48: Measuring CSR Tools for CSR

Phased Recommendations

Short Term(Q2/Q3 2006)

• Include environmental standards in code of conduct • Implement supplier self-evaluations• Consider global standards to adopt (ex: SA8000 or ILO)

Medium Term(Q4 2006,Q1 2007)

• Evaluate suppliers based on country risk assessment tool • Develop standards for working with suppliers that are out of

compliance • Consider using a 3rd party auditor (ex: Verité)

Long Term (Q2 2007 and beyond)

• Implement a preferred vendor program based on audit performance

• Work on building long term relationships with supplier• Consider developing an industry collaborative to share

auditing costs and to increase leverage with suppliers

Page 49: Measuring CSR Tools for CSR

Plotting Partners in CSR

Synergy between Cause and Brand

Eff

ecti

ven

ess

of

Par

tner

ship Ben & Jerry's

Nickelodeon's Day of Play

Dove's Campaign for Real Beauty

Whirlpool & Habitat for Humanity

Nike and LiveStrong

Clif Bar, Inc

Care Bears

LifeTime TV

Page 50: Measuring CSR Tools for CSR

Timeline of Recommendations

Summer Fall Winter2006 2007

Spring

Finalize brochures and hangtags, including focus on “Good for Me” and “Wine as a Meal”

Develop “Sustainable Sale” Program in concert with sales mgr. sponsors and selected retail wine managers

Identify key sales managers to sponsor and advocate “Sustainable Sale” Program

Train sales force on “Sustainable Sale” program

Roll out “Sustainable Sale” program

Messaging

Distribution

CommunicationHold Regional Tasting Event #1 for Wine Managers

Attend/sponsor Farmers’ Markets

Identify and select “Sustainable Meal” partners; agree to terms

Hold 1st public tasting, highlighting “Sustainable Meal” in association with partners

Hold Regional Tasting Event #2 for Wine Managers

Begin advertising for 1st public tasting (in 2007)

Page 51: Measuring CSR Tools for CSR

Issues Analysis Telecommunications Industry

Risks OpportunitiesEnvironment

Impact of production process and disposal of old

equipment

Digital Divide Ensuring everyone has access to technology

Labor StandardsUnfair practices in the supply chain (wages, working conditions)

Youth DevelopmentDeveloping the potential of

youth to be the next leaders

Health Potential long-term side

effects of cell phone use and base stations

Disabled Providing telecom

services that cater to the blind and deaf

Versus

Page 52: Measuring CSR Tools for CSR

“Slide of Shame”Annual Grants (2005, in millions)

* Includes Foundation and Corporate giving, both cash and in-kind

0 50 100 150 200 250


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