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.
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
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.
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
Changes to social systems
Goal Alignment
Activity and goal adjustment
What would have
happened anywayEssential
= IMPACT
-
Evaluation Roles
Outputs Outcomes
Results that can be measured in operations
Changes to social systems
• 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
Ex: Ciudad Saludable SROI Analysis
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
Ex: Ciudad Saludable SROI Analysis
Results: Value Captured with theFull Range of Types of Information
monetizedvalue
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 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
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 organisation Analytical f ramework Define goals
Mission and venture coherence
2 Stakeholder analysis Stakeholder analysis3 Scope of Analysis Scope of Analysis
4Income and cost analysis Measure costs
Brainstorm non financial impacts
Cost evaluat ion of inputs
Quant ify non financ ial impact
Analyse costs
5 Impact value chain
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
Calculate enterprise returns Calculate SROI
9 SROI reportingGenerate SROI report Reporting SROI reporting
10Evaluation and monitoring
Effectiveness measures Evaluating
Implementation and integratio
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
Mission and venture coherence
2 Stakeholder analysis Stakeholder analysis3 Scope of Analysis Scope of Analysis
4Income and cost analysis Measure costs
Brainstorm non financial impacts
Cost evaluat ion of inputs
Quant ify non financial impact
Analyse costs
5 Impact value chain
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
Calculate enterprise returns Calculate SROI
9 SROI reportingGenerate SROI report Report ing SROI reporting
10Evaluation and monitoring
Effectiveness measures Evaluating
Implementation and integratio
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