What is it, and why should you care? UGBA 178 Erik Kiewiet de Jonge.
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Transcript of What is it, and why should you care? UGBA 178 Erik Kiewiet de Jonge.
What is it, and why should you care?
UGBA 178Erik Kiewiet de Jonge
Roadmap for Today
What is CSR?What are the trends driving CSR?What are the big challenges on the CSR front?
What and where are the opportunities?
How would you define CSR?
Philanthropy?
Employee volunteerism?
PR?
Transparent reporting?
Sponsorships?
Workplace diversity?
Human rights?
Risk management?
Sustainable development?
Corporate governance?
Business ethics?
Employee treatment?
Environmental impact?
Safe products? Solving socialproblems?
Borrowed from presentation by Dr. Kellie McElhaney, Haas School of Business
The many definitions of CSR
A business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.
Dow Jones Sustainability Index
A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
European Commission
Using the power of business to create a better world.
Net Impact
Borrowed from presentation by Dr. Kellie McElhaney, Haas School of Business
Think Strategically – A Better CSR Definition
Dr. Kellie McElhaney, Founder of the Center for Responsible Business at Haas, defines strategic CSR as :
“Strategic corporate social responsibility is a business strategy that is embedded in day to day business operations, supports core business objectives, and leverages core competencies to create business value and positive social change.”
CSR Internationally
CSR varies across countries due to societal norms, legislative requirements, relations between business and government and customer demands
Generally speaking, CSR – as we know it – is strongest and most present within the US and Europe
More prevalent within companies based in developed countries, though it is likely practiced across borders
Trends Driving CSR
Societal Drivers of CSR
Source: The McKinsey Quarterly , 2006
Trust and Credibility Down, CSR Up
Source: 2009 Edelman Trust Barometer
Us, the Millennial Generation, Care
77% of recruits consider social commitment when choosing an employer
97% of “generation Yers” seek a job that “allows me to have an impact on the world”
How many of you seek to make an impact?
Source: 2006 Golin/Harris International survey
Source: Harris Interactive Poll
Ideas borrowed from presentation by Dr. Kellie McElhaney, Haas School of Business
Consumers Care
Rise in consumer awareness and preference
Successful product lines and brands showing returns:Clorox GreenworksMethodPatagoniaFair trade coffee
Natural Marketing Institute, LOHAS Trends Database 2008, Pre-Conference Presentation
Socially Responsible Investing (SRI)SRI considers the financial and societal performance of investments
Currently $2.7 trillion of the $25.1 trillion under management in the US (324% growth since 1995)
Demonstrated competitive performance versus the S&P 500 over the last two decades
Though empirical evidence demonstrates a correlation between CSR and financial performance, causation has been difficult to prove
Source data from the Social Investment Forum’s 2007 Report on Socially Responsible Investing Trends
Non-Governmental Organizations (NGOs) and OthersPower and reach of NGOs increasingEnvironmental and social activism growing through household name NGOs and emerging NGOsGreenpeaceEnvironmental Defense FundFair Labor Association (FLA)World Wildlife Fund (WWF)
Web 1.0 and Web 2.0
Challenges
Regulatory Restrictions
Patchwork of international environmental and social laws, protocals and treatiesKyoto Protocol, Copenhagen Climate Conference, European Emissions Trading Scheme, RGGI, US Clean Air and Clean Water Acts
International Labor Organization, diverse working standards
Government incentives for green jobs, investments, cleantech
Consumer Indifference (?)
Bridging the gap between consumer statements and actions – is price the only bottom line?
Educating the consumer – why do your company’s CSR efforts make your product better?
Effectiveness versus goodnessChanging behavior remains the largest consumer challenge
(Perceived) Cost ChallengesOvercoming the no-sum mindset: economic performance versus environmental/social performance
Are CSR efforts a cost center or revenue driver?Operational ImprovementsRegulatory complianceStakeholder managementOpportunity Costs
Just Good BusinessAlignment with corporate strategyResponsible investment with positive NPVs
Critics and their arguments
The Friedman Doctrine: the social responsibility of business is to increase profits
CSR is spending other peoples’ moneyCSR dilutes government actions to address large-scale social and environmental challenges
CSR is a sideshow to the core operations of a company
Opportunities
New Products, New Markets
Brand Equity
Establish, rebuild and protect corporate brand
Professional Services
Carbon AccountingCSR Strategy ConsultingCarbon FinanceSustainability MarketingManagement Consulting
Risk Mitigation Continuous InnovationAddress corporate “black eyes”
Engage stakeholders and vocal critics; minimize brand damage and customer loss
Stay ahead of the curve – regulations, societal expectations, activists
Reduce litigation (and the threat of)
Use CSR as a driver for operational efficiency
Anticipate consumer demands
Attract top talent
Opportunities Continued…
Questions and Comments
If interested, take the UGBA 192 Strategic CSR class in the fall and explore sustainability classes across Berkeley