Corporate Social ResponsibilityTHE RENEWED ERA

Sondra Lintelmann-DellaripaDirector Corporate and Foundation RelationsConnecticut Children's Medical Center

Robert NolanCorporate Relations OfficerConnecticut Children’s Medical Center

April 3rd, 2005AFP Conference

Corporate Social ResponsibilityThe Renewed Era Old Model/New Model Corporate Social Responsibility defined Corporations renewed interest and the outcomes

they are looking to achieve Indicators of CSR Who is actively engaged in CSR relationships What do we as non profits have to offer What will make us attractive as a partner Risks What will we need to be prepared Discussion

“The business of business is to make money for its

shareholders”

Milton Friedman, EconomistDo corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not.

Interview of Milton Friedman with John McClaughry, contributing editor of Business and Society Review, on the topic of corporate social responsibility.

Old Corporate Philanthropy Model Focus on the nonprofit needs and its

mission Focus on tax benefit to company Little relation to the business of

business: Making money for shareholders

Competing for executives, and by default, company’s attention

New Corporate Philanthropy Model More along lines of a ‘business transaction’

NPO’s provide value added transaction Corp pays price above actual cost of doing

business NPO’s must be able to perform more effectively

and efficiently than company can Company is looking for ways NPO can

support the company’s bottom line. It’s about the company; It’s about making

money for the shareholders

Triple Bottom Line

Companies measuring their success by traditional method: the good old fashioned FINANCIAL bottom line

SOCIAL bottom line ENVIRONMENTAL bottom line Annual report includes or has

addendum: Social Report

"‘……there is no shortage of differing opinions about what businesses should do in various situations and about what constitutes ethical behavior “

A. Coskun Samli - Author ‘Social Responsibility in Marketing: A Proactive and Profitable Marketing Management Strategy.’

Corporate Social Responsibility – What is it?

Corporate Social Responsibility – What is it?

At its heart, CSR sounds a lot like the definition of strategic corporate philanthropy that we've been using for many years

Corporate Social Responsibility embraces two main concepts not found in traditional strategic philanthropy: Accountability & Transparency.

Corporate Social Responsibility is the alignment of business operations with social values

More than just ‘supporting’ a cause Many of the changes a corporation

implements in conducting its social responsibility strategy are internal changes in operations, products and materials.

Corporate Social Responsibility – What is it?

Corporate Social Responsibility consists of integrating the interests of stakeholders-all those affected by the company’s conduct-into the company’s business policies and actions

Goal is to positively impact society while achieving business success

Corporate Social Responsibility - What is it?

Corporate Social Responsibility - What is it?

Corporate Social responsibility most often encompasses a comprehensive set of: Policies Practices Programs

That are integrated throughout the company into: Business Operations Decision making processes Supply chain relationships

And includes responsibility for: Present activities Past actions Future impact

In a study done by Boston College and the US Chamber of Commerce, leading-edge corporations indicate CSR has several features:

 Very

ImportantImporta

nt

Operating with ethical business practices 87% 11%

Treating employees well 85% 14%

Making a profit, paying taxes, and providing jobs

82% 13%

Providing safe and reliable products/services

81% 17%

Having a good environmental record 57% 33%

Working to improve conditions in the community 50% 34%

The Renewed Interest in Corporate Social Responsibility Consumers, and more importantly

investors, increasingly want to know what's inside a company

Differentiators in the marketplace - price, quality, service, brand – AND reputation.

Reputation- the guardian of brand CSR- the guardian of reputation

CSR is no longer a collateral concern but central to business success.

Some of the drivers:• The shrinking role of government• Demands for greater disclosure• Increased customer interest• Growing investor pressure• Competitive labor markets• Supplier relations

The Renewed Interest in Corporate Social Responsibility

Outcomes through Corporate Social ResponsibilityINTERNAL Reduced Operating

Costs Increased Ability to

Attract and Retain Employees

Decision Making Based on Corporate Code of Ethics

Increased Productivity and Quality

EXTERNAL Improved Financial

Performance Enhanced Brand

Image and Reputation Increased Sales and

Customer Loyalty Reduced Regulatory

Oversight Access to Capital

How can we be sure….. Investment by companies in CSR has

remained constant or increased in recent year The scope and scale of corporate social

responsibility is bigger than expected. Small and medium sized businesses are quite active in the corporate social responsibility arena.

More companies are creating departments and hiring directors of Corporate Social Responsibility

Dow Jones has an index of socially responsible companies

Corporate responsibility is simply living our values — everyday, everywhere we operate.- Jeffrey M. Zalla, Corporate Responsibility Officer, Chiquita Brands International

Procter & Gamble has been heralded as the most consistent performer in the 100 Best Corporate Citizens

Fannie Mae Intel Avon Products

Herman Miller Timberland Cisco Systems Southwest Airlines ATT Starbucks Merck

Who are the top dogs in CSR today?

What about SME’s? SMEs make up around 98% of the number of

businesses in the US today A thriving SME sector is one of the strongest

features of a healthy economy. Socially Responsible SME’s are simply good

business for big business: a matter of controlling their supply chain risks

Small companies can reduce their costs by managing their environmental impact.

They can retain their best staff They can sell more

CSR and the Non-Profit SectorWhat do we have to offer? Pressure is on the corporate sector to

have corporate accountability and transparency, good CSR

Corporations main experience is to create shareholder value and stay in business

Have neither the experience nor the expertise to confront world problems

CSR and the Non-Profit Sector

Non-profit organizations can capture the momentum of this new perspective on Corporate Social Responsibility by becoming a resource for companies

“The value of creating practical partnerships and dialogue between business, government, and organizations cannot be underestimated” - WBCSD, 2002

Positioning ourselves as a resource, integrates our services and brand into the evolving CSR arena which translates into an increase in corporate partnerships, corporate donor loyalty and community support.

CSR and the Non-Profit Sector

Non Profit Assets for CSR Alliances Powerful missions Strong public

presence Access to customers

and markets Access to other

businesses Relationships with

community and other influential leaders

Organizational expertise

Volunteer opportunities

Access to potential employees

Established programs and projects

Facilities Products

Corporate/NPO Alliance Continuum

Alliances can be classified from least to most intensive.

Corporate support for employee participation in NPO activities

Corporate contributions and gifts to NPO programs and activities

Corporate support for targeted NPO projects NPO-corporate marketing affiliations NPO certification of corporate business practices Cause awareness and education alliances NPO-corporate cause management alliances

Each level provides more direct and concrete benefit to the corporation’s CSR strategy and to the non profit’s mission.

Chart created by Bradley K. Googins, Ph.D. Executive DirectorThe Center for Corporate Citizenship at Boston College

Corporate/NPO Alliance Continuum

Alliance Examples

“Corporate citizenship is not a luxury – but it is up to individual companies to decide how to be socially engaged.”

P.B. Watts Chairman - Royal Dutch/Shell Group

Alliance Examples

Engage core business operating resources and competencies

Are part of a company’s ongoing strategy

Are seen as contributing economic benefit to the company

Have a positive impact on NPO core constituent and mission advancement

Philanthropy: Travelers The Hartford

Strategic philanthropy Dunkin Donuts LEGO

Integration AETNA “Easy Breathing” program

Alliance Examples

Components for Integration Having a specific project or objective for

collaboration Strong commitment of high level executives Cross sectional involvement within both partner

organizations Assignment to committed managers Development and use of scorecards/metrics Willingness to make core cause performance

improvements part of managerial review Ability to get supply chain/constituents involvement

Companies look for: Credibility as serious, knowledgeable, responsible

organization Experience in dealing with private companies and

knowing how private enterprises operate Ability to provide experience that will improve

corporate outcomes Capacity to maintain balance Straight talk from the NPO on what they can and

cannot bring to the alliance Ability of NPO to provide real value to the company

through sound recommendations

Potential Risks

Over reliance on corporate sector may distract NPO from core mission toward popular concerns

Business influence/commercial pressure may lead NPO to undermine central mission

Crowd out of smaller NPO’s

What will we need to participate

Information and education on CSR

Experienced leaders and staff Dialogue Strategy and mechanisms Common Guidelines

Business and society are interdependent and we must ensure, through mutual understanding and responsible behavior, that the role of business in building a better future is recognized and encouraged.

- WBCSD, 2002