MBA 292Strategic Corporate Social

Responsibility

Professor Kellie A. McElhaney

4.04.07

Tonight

• Current News

• Project Updates

• Limitations of CSR

• Issues Analyses

• Great Debate Assignments for April 18th Class

Current News

• The Supreme Court ordered the EPA to explain why it has refused to regulate greenhouse gas pollution from cars- says it is their job and within their jurisdiction (5:4 vote).– http://video.msn.com

Current News

• A unanimous Supreme Court overturned a lower court's ruling that would have allowed utility Duke Energy Corp. to modernize aging coal-fired power plants without reducing air pollutants.

• Automotive engineers at the Union of Concerned Scientists (UCS) unveiled a minivan design that shows automakers can build affordable vehicles with existing technology that would meet or exceed global warming pollution standards for cars and trucks adopted by California and 10 other states. – UCS Vanguard

Current News

• More than two-thirds (68%) of the world is concerned about climate change with the South Africans (82%) and Brazilians (87%) most concerned, findings from a BBC study said.

At the low end of anxiety were Americans at 57% and Indians at 59%.

Current News• Food Is Top Advertised Product to Children on U.S. Television

In what The Washington Post calls the "largest [study] ever conducted of television food marketing to children and teens," a study by the Kaiser Family Foundation and Indiana University finds that of all television advertisements during children's shows, 34% are for candy and snacks, 28% for cereal and 10% for fast foods.

• Harry Potter Heralds Publishing First with FSC-Certified PaperU.S. publisher Scholastic Corp. has announced that 65% of the 16,700 tons of paper used to publish the seventh and last Harry Potter book, "Harry Potter and the Deathly Hallows," will be certified by the Forest Stewardship Council (FSC) as coming from sustainability managed forests.

• San Francisco is First U.S. City to Ban Plastic BagsSan Francisco's City Council has voted to ban plastic bags at the checkout of large supermarkets and chain pharmacies within the coming year. In the first law of its kind in the United States, only compostable or paper bags will be allowed.

Individual Giving by State

Source: James Irvine Foundation

Individual Giving by Region

Source: James Irvine Foundation

Foundation Giving

Source: James Irvine Foundation

Project Updates

• Next Milestone: Preliminary Recommendations– Due April 18th – Bring hard-copy draft of preliminary recommendations

presentation to Colleen and me in class (2/page)– Email to liaisons for feedback– There can still be placeholder slides awaiting final data/

analysis; we want to review general direction, comprehensiveness, focus

– Use consistent template to lay out each recommendation

Limitations of CSR

“Few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much

money for their stockholders as possible.” - Milton Friedman

“A large corporation these days not only may engage in social responsibility, it had damn well better try to

do so.” - Paul A. Samuelson

Economists’ Viewpoints

Friedman’s Argument

Individual responsibility vs.

Corporate responsibility

Taxes vs. regulations

Voluntary v. mandated

Two Perspectives

• “The business of business is business”– The sole legitimate purpose of business is to create

shareholder value– Challenges to this perspective?

• CSagghhhh– CSR in its most fuzzy, ill-defined format– Companies must also create positive social impact– Challenges to this perspective?

The Economist’s Argument

“CSR initiatives could diminish shareholder returns, distract business leaders from

their focus, and allow companies to continue bad behaviors in the shadows”

The Economist’s Argument

• It is philanthropy at other people’s expense

• Profit-maximizing CSR does not silence the critics

• Non-profit-maximizing CSR silences the critics, but is unethical

• Companies can pay lip service to CSR, but continue to make things worse for communities

The Economist’s Argument

• Disenchanted NGOs are now calling for more government, when poor government was the reason for CSR in the first place

• Seeking profit has made our system as great and powerful as it is

• Companies funding CSR just to get negative press and NGOs off their backs, not in best interest of company or community

• Using company money for CSR is like CEO deciding to buy a corporate jet, or expensive shower curtain

A New CSR Framework?

Good Management

(Strategic CSR)

Pernicious CSR

(Shareholder Maximization)

Borrowed Virtue

(Traditional Philanthropy)

Delusional CSR

(?)

RaisesProfits

ReducesProfits

Raises Social Welfare

Reduces Social Welfare

Myths & Reality

Measure Value in Buckets

• Workplace– Absenteeism, turnover, grievances, diversity profile,

pay conditions, etc.• Marketplace

– Customer complaints, customer satisfaction, supplier satisfaction, supplier codes

• Environment– Energy consumption, water usage, solid waste, CO2

emissions• Community

– Pre-tax cash giving, in-kind giving, reputation

Solutions

• Develop processes to build CSR into highest levels of strategy setting (Board seat, map relevant issues)

• Actively manage “contracts”• Shape societal debates• Government regulations• Social labeling• Changing Corporations’ legal status/ structure• Building CSR principles into founding stage of

companies

A Reality?

The Great CSR Debate

• For April 18th (no class next week) you will prepare and argue either PRO or CON of CSR as an effective/ ineffective business strategy

• PRO Team Leader: Mike Abbott• CON Team Leader: Lorin May

– First PRO Team (5-7 minutes to lay out statement and position): Pedro, Mike A., Hans, Mike P., Melissa, Matt E.

– First CON Team (5-7 minutes to lay out statement and position): Jeff D., Iris, Elizabeth L., Steven O., Lorin, Margot

Next Class: The Great Debate

– Second PRO Team (rebuts first CON, extends position, 5-7 minutes): Maria, Sarah, Mike T., Annabelle, Joe, Akif

– Second CON Team (rebuts first PRO, extends position, 5-7 minutes): Shirin, Cristin, Adrian, Yang-Yang, Wiam, Nick

– PRO Closing Argument: (restates position, 3-5 minutes): Alec, Steven A., Elizabeth S., Theresa

– CON Closing Argument: (restates position, 3-5 minutes): Amy, Gabi, David, Emily

Next Class: The Great Debate

– Judges: Q & A (10 minutes)• 3-5 questions per side• Determine winner• Give specific feedback/ reasoning for vote, discuss

what worked, what did not work• Roni, Daniel, Jennifer, Brooke, Jason

– Time Keeper: Jason

– What will your strategy be?

Good Debating

• Examples• Data• Persuasiveness

– Blend of ethos, pathos, logos

• Strong Communication Skills– Verbal & nonverbal

• Use of physical presence and space

• Conviction• Think like opponent• Cite experts• Well-prepared

presentation• Use of visuals and

words• Well-researched