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