CSR Frameworks

CSR Frameworks & Systems

Measuring CSR

MBA 292C-1Professor McElhaney

2.07.07

Class Agenda Lloyd Kurtz next week (?)

Key Learnings on CSR Reporting

Current Events

Project Learnings from your GSI

CSR Challenge & Solution

CSR Frameworks

CSR Metrics

Current Events The Oprah Winfrey Show is looking for

families that are changing their lifestyles to reduce their global warming impact. That can mean saving energy in various ways, recycling, using public transportation, or xeriscape landscaping. They're looking for families to share their stories and creative ideas on television.

http://sustainablebusinessupdate.c.topica.com/maafKGfabwpXEa4RQFIcaeQyu9/

Cool Job Energy & Climate Change Position Job Responsibilities 2/6/07 Position Summary: This position will drive Yahoo!’s overall environmental strategy for our global facility operations with a specific focus on

decreasing impacts on climate change. Will specialize in decreasing energy use and climate impacts of the offices and datacenters worldwide. Responsibilities will include analysis of energy choices and technologies, green power selection, carbon offsets, and utilization of clean technologies.

Reports To: This position will report into corporate development but will work closely with the Yahoo! for Good team (Yahoo!’s social

responsibility department). Duties and Responsibilities: Oversee the climate change strategy to ensure Yahoo! is making the best choices given our environmental and business

objectives Evaluate options for decreasing climate impacts, make recommendations, and implement programs Manage Yahoo!’s carbon offset portfolio, interfacing with vendors, consultants, and offset project developers Work closely with the facilities, real estate, and operations staff in our datacenters and offices Update our greenhouse gas inventory on a quarterly basis Set energy efficiency goals that position Yahoo! as a leader and oversee tactics to reach those goals Gain recognition for leadership practices Evaluate and respond to suggestions made by employees on how to improve office and datacenter environmental

performance Represent Yahoo! at industry-wide consortiums focused on energy and climate change Skills, Characteristics, and Experience Preferred: Requires BS in Engineering, science, or other technical field. Master’s degree a plus 7-10 years experience in energy efficiency and clean technology as it relates to facilities Technical experience in power generation, renewable power, and energy sources Experience with private corporate investment in voluntary offsets. Extensive knowledge of carbon offsets and other

mechanisms for reducing greenhouse gas emissions Thorough understanding of programs such as Energy Star, LEED certification, and other standards for leadership Experience managing datacenters a plus Strategic thinker as well as detail oriented, organized, and able to manage multiple tasks simultaneously Self-motivated. Makes decisions independently and involves higher management when appropriate Thrives in a fast-paced and unstructured environment Innovative, entrepreneurial, and thinks creatively Resourceful, excellent written and verbal communication, and strong interpersonal skills

The CSR Dilemma The Student Club

The Company

The Conference http://berc.berkeley.edu/index.html

The Bill (Fall 2004) The ASUC calls upon the Chancellor, the University, and

the Deans of Schools and Colleges who receive funding from Dow Chemical, urging the University to reject all donations from Dow or its directly associated foundations in excess of that which the corporation spends to clean up the Bhopal site on an annual basis, until such time as the site has been cleaned to United States Superfund standards.

http://www.asuc.org/documentation/view.php?type=bills&id=366

The Solution What would you do if you were the student leadership team? Come back with your solutions

http://berc.berkeley.edu/index.html

http://berc.berkeley.edu/index.html






CSR Frameworks

Changing the Game

Risk Mitigation

Value Creation

Mitigate long term business risks

Improved Business Performance

Employee Relations

Competitive Advantage & Market Positioning

Build Stakeholder Trust

Reputation “Insurance”

Investor Relations

The Landscape of the Business Case for CSR

Changing the Game

Shifting From Defensive to Offensive CSR

“Offensive CSR can distinguish a company’s reputation but cannot protect it; defensive CSR can protect a reputation but cannot distinguish it. Both are necessary to succeed in today’s business climate.”1

- Mark Kramer & John Kania, Changing the Game

BP: “Beyond Petroleum”Citigroup: Commits $100m to microfinanceGap: PRODUCT (RED)Interface: “Mission Zero”Stonyfield Farm: “Bid With Your Lid” Timberland: Partnership with City Year

Stages of CSR Defensive

Company faced with pain, criticism, reacts defensively

Compliance Cost of doing business, do just as much as need to

Managerial Moves CSR to core business managers & functions

Strategic Realigns strategy to use CSR as competitive

advantage Civil

Need to involve all in sector, collective action

Stages of CSRCivil

Strategic

Managerial

Compliance

Defensive

Current Trend

Historical FocusRisk Mitigation

Value Creation

SweetSpot

Implementing CSR Make business case (relevance) Engage stakeholders (internal & external) Map potential vulnerabilities/ risks Develop CSR strategy Align with organizational culture/ change Monitor, measure, report Communicate to ALL stakeholder groups

Designing a CSR Structure: Big Picture

Build Senior Vision & Support Examine Current CSR Systems

& Activities Design a CSR Structure Implement CSR Management

Systems

Designing a CSR Structure: Nine Steps

Understand Drivers (internal & external) Identify Key CSR Issues Identify & Evaluate Stakeholders Identify Current Functions Supporting CSR Analyze Current CSR Systems, Culture Design CSR Structure Develop Effective Staffing Plan Create Cross-Functional System Match Budget to Best Framework

A CSR Continuum

Level of engagement Low High

Importance to mission Peripheral Strategic

Magnitude of resources Small Big

Scope of activities Narrow Broad

Interaction level Simple Intensive

Managerial complexity Infrequent Complex

Strategic value Modest Major

EXAMPLES ACTIONS: • Donation• Grants

• Event sponsorship• Cause-related

marketing• Employee

volunteerism

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

Philanthropic Transactional IntegrativeGrowth stage:

Adapted from The Collaboration Challenge, James E. Austin

WO

RLD

Transform multiple industries.

IND

USTR

Y

Transform an industry. Take responsibility for our full impact (social, environmental, economic).Take responsibility for adjacent industries.Take responsibility for global conditions (climate change, global inter-dependence, etc.).

Be a beacon to others. Develop codes of conduct for the industry.Build strong coalitions to effect and enforce them.

CO

MM

UN

ITY

Be a good neighbor. Innovate and demonstrate restorative business practices.Influence the industry indirectly, by example.

Give something back.

Support local communities (corporate philan., direct programs, employee matching & volunt’ring.)Reduce waste, consumption and emissions.

CO

MPA

NY

Run a good business.

Provide access to tools/ product.Disaster relief.

COMPANY COMMUNITY INDUSTRY WORLD

CSR Landscape: Plot Goal

Build Stakeholder Trust

“an early awareness of the concerns of NGOs and stakeholders enables companies to join and shape the debate before it turns against them – or at least to prepare themselves for turbulence ahead.”

– McKinsey Quarterly1

Prioritizing CSR Actions: Corporate Expectations as Industry Reputation Drivers

2005

Measuring CSR

What Metrics Could Whirlpool Use?

What Metrics Could Whirlpool Use?

Campaign for Real Beauty Repositioned its brand around self-esteem issues Created CampaignForRealBeauty.com to allow women to

Vote on provocative images Join discussion groups on various beauty stereotypes Participate in the Dove Self-Esteem Fund

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

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

Donate money, Unilever employees donate time to mentor girls as part of the program.

Program uses activity books and simple exercises to help build self-confidence in girls

Supports BodyTalk, an educational program for schools created by the Eating Disorders Association.

"This campaign is addressing key issues and connecting with women in ways that people have not connected in a long time." - Retail analyst Marshall Cohen of the NPD Group.

http://www.campaignforrealbeauty.com/

http://www.girlscouts.org/program/program_opportunities/leadership/uniquelyme.asp

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"

CSR Metrics Must Link to Corporate Strategy

CSR Metrics Must Link to Global Citizenship Priorities

Energy Improving energy efficiency and innovation in our

operations and products. Product take back and recycling

Reducing product environmental impacts through leading-edge reuse and recycling solutions.

Responsible supply chain Raising standards in HP’s global supply chain and

ensuring responsible manufacturing for all products. Education

Philanthropy

Employees

Brand

Differentiation

Access

Compliance

7%

49%

4%

1%

12%

27%

Philanthropy

Employees

Brand

Differentiation

Access

Compliance

7%

49%

4%

1%

12%

27%

CSR Metrics Must Link to CSR Focus Needs

Types of Evaluation

INTUITION

SYSTEMS

STORIES

Goals of Measurement Align investment with value Assess actual value created Inform management decisions Help you maintain the integrity of

your work Contribute to reporting,

communication, and branding

EASY HARD

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

• Life• Freedom• Dignity• Happiness• Etc.

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

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

TYPE I TYPE II TYPE III TYPE IV

Ease of Measuring

Types of Information about Value

Five basic ways of articulating value: Financial (accounting: cash in, cash/work out) Monetizable (translating non-financial value into

monetary equivalent) Quantitative (numbers: size, magnitude or

degree) Qualitative (description: kind, type, or direction) Narrative (storytelling)

Value Chain of MetricsInputs Activities Outputs Outcomes

What is put into the venture

Venture’s primary activities

Results that can be measured

Changes to social systems

Goal Alignment

Activity and goal adjustment

Impact Metrics= differential changeInputs Activities Outputs Outcomes

What is put into the venture

Venture’s primary activities

Results that can be measured


Goal Alignment

Activity and goal adjustment

What would have

happened anywayEssential

= IMPACT

-

Evaluation Roles

Outputs Outcomes

Results that can be measured in operations


• Tracked regularly• NGO, Investor, Funder

• Periodic • Need data from researchers and other stakeholders

CR MetricsEnvironment Community Workplace MarketplaceBroad metric

categories

Metric sub-categories

• Charitable Giving• Community

Education• Community

Lending & Investment

• Employee Volunteerism

• Business Travel• Byproducts• Emissions to Air• Emissions to

Water• Energy

Consumption - Electricity

• Energy Consumption - Fuel

• Environmental Projects

• Large-Scale Environmental Impact

• Waste • Waste - Paper• Waste - Water

• Employee Diversity

• Employee Engagement

• Employee Satisfaction & Retention

• Health & Safety• Health & Safety -

Illness• Health & Safety -

Injury

• CSR Spending • Customer

Satisfaction & Retention

• Operation control• Supply Chain

Standard and most frequent metrics in each category area:

Environment Community Workplace

Byproducts produced through the manufacturing process

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

Energy consumption by type or total energy used

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

Expenses or personnel involved

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

Community investment – project spend, local taxes paid

Employee activities – volunteer hours

Customer diversity and inclusion

Unique projects and engagements

Employee diversity – race, age, gender

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

Turnover rate Employee

satisfaction (typically from surveys)

Training for employees – spend, time, or number or trainings

Marketplace

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

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

Customer reach in socially disadvantaged groups or areas

What Types of Things Can Be Measured?

Sample Indicators of Financial Performance of Investment

Sample Indicators of Financial Performance of Investee

Sample Indicators of Socio-Economic Returns to Individuals or Investees

National or Regional Socio-economic Returns

Blending Types of Indicators

Summary of Social Impact Value Chain

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

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

Example: Ciudad Saludable

What’s the value proposition? Financial value proposition is easy to count

$$$$ revenue $$ Costs

Non-financial value…? Outputs/measurable indicators:

#s of customers served with waste collection tons of garbage recycled # jobs created # people trained, etc….

Outcomes/results: Less disease, fewer deaths, healthier people, less domestic violence, sense of pride and

dignity Cleaner water, restored fish populations & biodiversity Fewer lost work days due to illness, lower health expenses, greater incomes and

economic security

Outputs

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

Outcomes Monetization- Base case

Ex: Ciudad Saludable SROI Analysis

Outputs Outcomes

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

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

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

government in similar regions.

Monetization- Base case


Outputs Outcomes Monetization- Base case

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

• what microentrepreneurs & CS staff would have earned

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

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

• where the garbage would be if not collected by CS

Ex: Cuidad Saludable SROI Analysis

Outputs Outcomes

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

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

do the waste management rather than the municipal government

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

Monetization- Base case


Results: Value Captured with theFull Range of Types of Information

monetizedvalue

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1Understanding organisation Analytical framework Define goals

Mission and venture coherence

2 Stakeholder analysis Stakeholder analysis3 Scope of Analysis Scope of Analys is

4Income and cost analysis Measure costs

Brainstorm non financial impacts

Cost evaluation of inputs

Quant ify non financial impact

Analyse costs

5 Impact value chain

Articulate theory of change and 3 key, pract ical indicators

Theories of change and impact value chain Impact value chain

6Ident ify and collect data

Translate impacts into f inancial terms Tracking Monet isation

Identify and collect data

7 Project ions Projections Project ions

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

Discount the cashflows

Calculate enterprise returns Calculate SROI

9 SROI report ingGenerate SROI report Report ing SROI reporting

10Evaluation and monitoring

Effectiveness measures Evaluating

Implementation and integratio

qualitative value

Activ

ity

Fram

ewor

k

Cost

effe

ctiv

enes

s a

pr

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REDF

SRO

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hodo

logy

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n SR

OI a

ppro

ach

1Understanding organisation Analytical f ramework Define goals


2 Stakeholder analysis Stakeholder analysis3 Scope of Analysis Scope of Analysis



Cost evaluat ion of inputs

Quant ify non financ ial impact

Analyse costs


Articulate theory of change and 3 key, practical indicators

Theories of change and impact value chain Impact value chain

6Ident ify and collect data

Translate impacts into financial terms Tracking Monetisation

Ident ify and collect data

7 Project ions Projections Project ions

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

Discount the cashf lows


9 SROI reportingGenerate SROI report Reporting SROI reporting




Activ

ity

Fram

ewor

k

Cost

effe

ctiv

enes

s a

pr

imer

REDF

SRO

I Met

hodo

logy

GSV

C G

uide

lines

for

Soci

al R

etur

n on

In

vest

men

t

Soci

al m

easu

rem

ent a

nd

perf

orm

ance

met

rics

DBLP

SIA

Too

lkit

new

eco

nom

ics

foud

atio

n SR

OI a

ppro

ach

1Understanding organisat ion Analytical f ramework Define goals


2 Stakeholder analysis Stakeholder analysis3 Scope of Analysis Scope of Analysis



Cost evaluat ion of inputs

Quant ify non financial impact

Analyse costs


Art iculate theory of change and 3 key, pract ical indicators

Theories of change and impact value chain Impac t value chain

6Identify and collect data

Translate impacts into f inancial terms Tracking Monet isation

Identify and collect data

7 Projections Projections Project ions

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

Discount the cashflows


9 SROI reportingGenerate SROI report Report ing SROI reporting




quantifiedvalue

financial value

narrative value

Metrics & Evaluation Take-Aways Simplify

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

Measure a few things well as opposed to everything poorly

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

Stories trump facts 10 times out of 10

Move towards impact metrics, but blend in some evaluative metrics

Documents

CSR Frameworks