Corporate Social Responsibility Class 3: CSR Management System Syllabus developed by Jens Trummer

For those interested in more detailed information: Agenda CSR Management System Reading: 1. “Daimler 360, Facts on Sustainability”, 2010 For those interested in more detailed information: - “Designing a CSR Structure”, Business for Social Responsibility, 2002 - “CSR – An Implementation Guide for Business”, IISD Course Note: Bear with me!!! This is the second time I’ve taught the class, now 3 credits, opened up to the Msc in E&P . . . It’s a bit eclectic Expect to have a number of guest lectures . . AC and EB almost for sure . . . Deloitte, Vertis, Denso- in discussions

Class 3: CSR Management System CSR LAB

What is difference ? and

2 Types of Business Models: 1. “Sustainable” Business Model = CSR??? 2. Business Model with CSR Programs: CSR Management System

? CSR Management System Evolution of CSR: Stage 3: Strategic CSR: Strategy complimenting business activity CSR Management System Stage 1: CSR non-existent Stage 4: Sustainability Intrinsic business strategy/ Activity: Still CSR ?? Stage 2: CSR non-strategic: - Philanthropy - Donations - Volunteering, etc. ?

CSR Management System needs “ Framework for ‘Strategic’ ‘Integration’ ” TOOL to compliment core business activities

“Framework for Strategic Integration” - ‘Theory of Practice’ - No ‘one size fits all’ - Not necessarily chronological - Must be adaptive – Why?

CSR implementation on-going Continuous adaptation to changing ‘Driving Forces’ Class 1 Class 1

3 Steps + 1 Continuous Action Step 1 ??? Framework for Strategic Integration: 3 + 1 = 3 Steps + 1 Continuous Action Step 1 ???

Step 1: Analysis Step 1: Analysis 1. CSR Audit → Gap Analysis 2. Stakeholder Process (See Class 2) - Stakeholder Analysis - Stakeholder Dialogue 3. CSR-SWOT

Goal: Assess the whole picture Basis for “Gap Analysis” Step 1: Analysis 1. CSR Audit “As-is Analysis” Goal: Assess the whole picture Basis for “Gap Analysis”

1. CSR Audit Step 1: Analysis - CSR definition - 4 key criteria ??? - Existing CSR policies, standards, values, Corporate Motivation Nalco - Understand current CSR commitments, external standards used - Structures: Current departments, functional areas, cross-functionality - CSR issues currently being addressed - Stakeholder Overview of current stakeholder ‘dialogue’ - Current CSR programs and activities

Re-active vs. Pro-active External Divers/Motivation Re-active vs. Pro-active Nike, Gap, BP, Starbucks ?? What about Nestle??? LINK

1. CSR Audit Internal Drivers/Motivation Step 1: Analysis - Honest (‘self’-) analysis - Philanthropic and /or(??) business incentives

1. CSR Audit Step 1: Analysis - CSR definition - Existing CSR policies, standards, values, Motivation - Understand current CSR commitments, external standards used - Structures: Current departments, functional areas, cross-functionality - CSR issues currently being addressed - Stakeholder Overview of current stakeholder ‘dialogue’ - Current CSR programs and activities

… are not necessarily referred to as “CSR” ? Step 1: Analysis 1. CSR Audit Which CSR programs … … are not necessarily referred to as “CSR” ?

- Health and Safety (SA 8000) Step 1: Analysis 1. CSR Audit - ISO 14001/EMAS - Health and Safety (SA 8000) ISO for CSR ???

1. CSR Audit ISO for CSR ISO 26000: Launched November 1st, 2010 ! Step 1: Analysis 1. CSR Audit ISO for CSR ISO 26000: Launched November 1st, 2010 ! Guidance standard on social responsibility

1. CSR Audit Step 1: Analysis - CSR definition - Existing CSR policies, standards, values, Motivation - Understand current CSR commitments, external standards used (e.g. ISO 14001, SA 8000) - Structures: Current departments, functional areas, cross-functionality - CSR issues currently being addressed - Stakeholder Overview of current stakeholder ‘dialogue’ - Current CSR programs and activities

Which departments responsible for CSR issues ? Step 1: Analysis 1. CSR Audit: ‘I I I’ Internal ‘Intelligence’ Investigation: Which departments responsible for CSR issues ?

Which department typically most reactive Step 1: Analysis 1. CSR Audit ‘CSR Departments’ - Communications/PR - Marketing - Human Resources - (Senior) Management Which department typically most reactive … or ‘slow’ on take-up ?

1. CSR Audit Step 1: Analysis - CSR definition - Existing CSR policies, standards, values, Motivation - Understand current CSR commitments, external standards used (e.g. ISO 14001, SA 8000, ISO for CSR ???) - Structures: Current departments, functional areas, cross-functionality - CSR issues currently being addressed - Stakeholder Overview of current stakeholder ‘dialogue’ - Current CSR programs and activities Which stakeholders almost all companies irrespective of existing CSR strategy???

How would you do an Audit ??? Step 1: Analysis 1. CSR Audit How would you do an Audit ???

How? 1. CSR Audit Step 1: Analysis Method: Internal: 1. Desk-top study: Document Analysis 2. Executive, Management & Staff Interviews External: 3. Reputation surveys, benchmarking, CSR Reports (GRI, AccountAbility Rating)

Step 1: Analysis Step 1: Analysis 1. CSR Audit → Gap Analysis 2. Stakeholder Process - Stakeholder Analysis … Components ??? - Stakeholder Dialogue 3. CSR-SWOT

Step 1: Analysis See Class 2! Step 1: Analysis 1. CSR Audit → Gap Analysis 2. Stakeholder Process - Identification of Issues - Selection of Stakeholder - Prioritization of Stakeholders - Stakeholder Dialogue 3. CSR-SWOT See Class 2! Stakeholder Analysis

- Identification of Issues - Selection of Stakeholder Step 1: Analysis 2. Stakeholder Process - Identification of Issues - Selection of Stakeholder - Prioritization of Stakeholders - Stakeholder Dialogue Stakeholder Analysis Significance: More adaptive to External Drivers (Social Expectations & Globalization) Class 2

However: ‘Outsourcing’ CSR: Step 1: Analysis ‘Outsourcing’ CSR: Risking ‘hodgepodge’ of un-coordinated CSR activities and philanthropic activities? What do you think? However: Class 2

Does Kramer & Porter Inside-Out/Outside-In Model work better ?? Step 1: Analysis Does Kramer & Porter Inside-Out/Outside-In Model work better ?? Class 1 Inside-Out: Impact on Society Outside-In: Impact on “Competitive Positioning” Source: “Strategy and Society”, Porter & Kramer

How does this compares with Stakeholder Model ? Step 1: Analysis CSR Impact of Society on Company Impact of Company on Society How does this compares with Stakeholder Model ?

Step 1: Analysis Class 2 Both ways?

Step 1: Analysis Step 1: Analysis 1. CSR Audit → Gap Analysis 2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue 3. CSR-SWOT And/or Kramer & Porter: Inside-Out/Outside-In Model

Step 1: Analysis Step 1: Analysis 1. CSR Audit → Gap Analysis 2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue 3. CSR-SWOT And/or Kramer & Porter: Inside-Out/Outside-In Model

- Putting it all together Step 1: Analysis 3. SWOT CSR-SWOT Analysis: - Putting it all together - Linkage to next part

Framework for Strategic Integration: Step 1: Analysis … Step 2 ???

2. CSR Strategy 1st Step?? Strategy to compliment business activity Step 2: CSR Strategy 2. CSR Strategy Strategy to compliment business activity … CSR is Business Strategy (see EU Definition !) 1st Step??

Step 2: CSR Strategy Step 2: CSR Strategy 1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget

- Formulation of Policy Statement Step 2: CSR Strategy 1. Policy Formulation - Priorities - Core Values - Formulation of Policy Statement

- Formulation of Strategy Step 2: CSR Strategy 1. Policy Formulation - Formulation of Strategy How long before public starts identifying CSR strategy with company ?

Step 2: CSR Strategy Step 2: CSR Strategy 1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget

2. CSR Structure Step 2: CSR Strategy Choose structural framework - Size - Corporate structure - Sectors involved ... geographic locations, risk areas, commitment - New or improved structure?

What is important for an effective Step 2: CSR Strategy What is important for an effective Structure ?

Step 2: CSR Strategy ‘Cross-Functional’ Why so important in CSR ?

CSR is cross-functional: Step 2: CSR Strategy 2. CSR Structure: CSR is cross-functional: - Environment - Government - Communities - Employees - Supply Chain - Customers - Shareholders 7 Stakeholder Groups

Step 2: CSR Strategy 2003: ‘Embedding’

Framework for Strategic Integration Step 2: CSR Strategy Framework for Strategic Integration Integrating sustainability into company’s: … at all levels of the organization - Values - Culture - Operations - Business decisions = ‘Embedding’

2. CSR Structure: Step 2: CSR Strategy Mechanisms for involving functional areas, departments, etc. Roles and responsibilities of each employee and/or group (committee) involved with CSR efforts (Board committee, executive committee, specific CSR committee, etc.)

Increasing level of CSR commitment Source: Designing a CSR Structure, BSR

Step 2: CSR Strategy Step 2: CSR Strategy 1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget

3. Staffing Plan Step 2: CSR Strategy Identify CSR-specific staff roles and responsibilities at the different levels.

How would you design Daimler’s CSR Structure? Step 2: CSR Strategy Daimler’s Corporate Governance Structure How would you design Daimler’s CSR Structure?

Daimler’s Sustainability Governance Structure Step 2: CSR Strategy Daimler’s Sustainability Governance Structure (P. 16) 1. Key Stakeholder Groups ??? 2. Cross- Functionality

Daimler’s Sustainability Governance Structure Step 2: CSR Strategy Daimler’s Sustainability Governance Structure (P. 16) Core Business Activity Which ones?? 1. Key Stakeholder Groups 2. Cross- Functionality Notice: ‘Integration’

Centralized, de-centralized ? Step 2: CSR Strategy Centralized, de-centralized ? Top-down, bottom-up ?

Daimler’s Environmental Structure p.19 Step 2: CSR Strategy Daimler’s Environmental Structure p.19 Bottom-up, Top-down ? Life-cycle Analysis

Daimler’s CSR Structure Step 2: CSR Strategy Daimler’s CSR Structure ‘Hybrid’

Step 2: CSR Strategy Daimler: Committed to CSR ?

Increasing level of CSR commitment Step 2: CSR Strategy Daimler’s CSR Structure Where is Daimler (Page 16)? Increasing level of CSR commitment

Increasing level of CSR commitment Step 2: CSR Strategy Step 6: Daimler’s CSR Structure Where is Daimler (Page 13)? Board of Management Sustainability Board Increasing level of CSR commitment

? Centralized or de-centralized ? Step 2: CSR Strategy Daimler’s CSR Structure Centralized or de-centralized ? ?

Daimler’s CSR Structure Step 2: CSR Strategy Daimler’s CSR Structure Sustainability Office

Mobile’s CSR Structure Step 2: CSR Strategy Mobile’s CSR Structure

- Subsidiary of KBC (Belgium, Flemish) - Required CSR in 2005 Step 2: CSR Strategy - Subsidiary of KBC (Belgium, Flemish) - Required CSR in 2005 - Communications Intern tasked

What evolutionary stage of CSR – strategic, non-strategic? Step 2: CSR Strategy 2006: Allocated budget: New CSR Policy: 1. Professional Business Ethics 2. Employees and their families 3. Attitude to the environment 4. Care for the community (“CSR-led sponsorship”) What evolutionary stage of CSR – strategic, non-strategic?

How to manage CSR?

2007: CSR Expert Task Force (ETF): Step 2: CSR Strategy 2007: CSR Expert Task Force (ETF): 1. Head of External Communications 2. Head of Retail Segment Marketing 3. Head of PSB Retail Segment 4. Head of Human Resources 5. Head of Legal 6. Head of Public Affairs 7. Head of Marketing Communications (with an advisory vote power) 8. CSR Officer 9. CSR Manager Main focus area of ETF ?

2007: CSR Expert Task Force (ETF): Step 2: CSR Strategy 2007: CSR Expert Task Force (ETF): Main focus areas: - Risk Management & Compliance - PR, Communications & Marketing

2007: CSR Expert Task Force (ETF) CSR Manger + Problem ?

2008: Country Team Sustainability Committee (CTSC) CSR Manger +

2008: Country Team Sustainability Committee (CTSC) : Step 2: CSR Strategy 2008: Country Team Sustainability Committee (CTSC) : 1. CEO of ČSOB Pojišťovna 2. PSB and Direct Banking Business Senior executive director 3. Corporate banking Senior executive director 4. Corporate Office Director 5. External Communication Director 6. CSR Manager

Country Team Sustainability Committee (CTSC) Step 2: CSR Strategy Country Team Sustainability Committee (CTSC) 2. Votes on general budget components (Budget: 0.5% net profit) CSR Manager 1. Identifies risks, proposes strategies CSR Expert Task Force 3. Votes on specific programs Implementation by CSR Team

Step 2: CSR Strategy Step 2: CSR Strategy 1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget

Typically, CSR Budget in EE Companies what percentage of net profit? Step 2: CSR Strategy 4. Budget Assess budget structure and size … Typically, CSR Budget in EE Companies what percentage of net profit? More effective if tied with PR Budget!

Framework for Strategic Integration: Step 1: Analysis Step 2: Strategy … Step 3 ???

Step 3: Implementation Goal: Long-Term Integration Embedding CSR management system into processes and programs

Reporting & Monitoring Communication Management Tool See Class 4

3 Steps + 1 Continuous Action ? Framework for Strategic Integration: 3 + 1 = 3 Steps + 1 Continuous Action ?

Building Senior Vision & Support Continuous: Building Senior Vision & Support Building Senior Vision & Support Especially if Re-active … (or not ‘-active’): - Get clear CSR Mandate - Educate Board, CEO and employees - Build Board & CEO level support - Strengthen company-wide support

Building Senior Vision & Support Continuous: Building Senior Vision & Support Building Senior Vision & Support … it’s all about (internal) communication! - Workshops Training - Personal Contact - Etc. Gradual Process, building on success.

Building Senior Vision and Support Framework for Strategic Integration Step 1: Analysis 1. CSR Audit 2. Stakeholder Process - Stakeholder Analysis (Identification, Selection and Prioritization) - Stakeholder Dialogue OR Kramer & Porter Inside-Out/Outside-In Model 3. SWOT Step 2: CSR Strategy 1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget Step 3: Implementation 1. Monitoring & Reporting Building Senior Vision and Support