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

GE’s Strategic Approach

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

The Queen Lioness: Oprah

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

Pedigree: A Cause That Fits

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

kmack@haas.berkeley.edu

• Tony Kingsbury

tkingsbury@haas.berkeley.edu

• Aron Cramer

acramer@bsr.org

• Stacey Smith

ssmith@bsr.org