Firm business strategy: when doing good is good for business CSR Summit State Library of NSW, Sydney, 2007 Wayne Burns Director Centre for Corporate Public Affairs

2 What has involvement/engagement with the community got to do with business? “… scratch the surface (of CSR) and one finds a high degree of cynicism about corporate responsibility, and a widespread belief that it is a costly, public relations- focused activity that adds little to the business.” Peter Davis, Ethical Corporation, 2005 “… a corporate citizenship program is most effective when it is aligned with the firm’s basic business objectives and can therefore be justified on business grounds.” US Conference Board, NY, 2003

3 Corporate trust in Australia is at its lowest ebb

4 What Australians think of corporations n GlobeScan (2005) reports 62 per cent of Australians have ‘little’ or ‘no’ trust in Australian companies. More than 60 per cent have ‘a lot’ or ‘some’ trust in NGOs n Internationally, citizens are increasingly mistrusting corporations n But the new trend is that more people are prepared to do something about their mistrust

5 Consumers who have ‘punished’ companies in the last year Source: GlobeScan, annual Australian CSR Monitor, 2005

6 Companies are in a battle for our hearts and minds Fombrun, 2005

7 Gen Y is here n Vocal n Tribal – join together to support cohorts in groups n Concerned greatly about work/life balance n Suspicious of institutions such as corporations and governments n Environmentally, and issues, sensitive n Communication channel savvy and demanding n Cannot be reached effectively by traditional communication channels

8 Business conundrum: What is Corporate Social Responsibility? n CSR? n Sustainability? n Triple bottom line? n Corporate citizenship? n Corporate social performance? n Community investment?

9 A big shift is on, driven by the business of business n 1970s - philanthropy n 1980s - philanthropy and sponsorships n 1990s - strategic philanthropy and community involvement n 2000s - corporate community involvement (with an emphasis on partnerships and ‘win, win’ ROI for companies and communities) 1970s 2007

10 What is driving corporate community investment - external n Community expectations n “Stakeholder” pressures n Regulatory risk n Community license to operate n Corporate reputation n Employer of choice and employer engagement

11 What is driving corporate community investment - internal dynamics n Philosophical issues, including the role of the corporation n Significance of leadership n The values organisation and alignment of incentives n Competitive pressures n Employee recruitment and retention

12 Business sees Corporate Community Investment as central to business strategy Is it peripheral? Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

13 Factors important to business strategy and affected strongly by corporate values Source: Booz Allen Hamilton/Aspen study

14 Business case for Corporate Community Investment decisions Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

15 Rationale for companies expending community investment resources Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

16 How companies see community investment Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

17 Examples of business strategy linked to Corporate Community Investment n Insurance Australia Group - climate change and insurable events; crime awareness and cost of insurance n ANZ - financial literacy and new customers n Unilever - female body image and its personal care products; hygiene and soap products n IBM - education (teachers) support program and its information products

18 Examples of business strategy linked to Corporate Community Investment n Shell - Questacon Science Circus and its demand for more science graduates n Diageo - responsible drinking education and sale of its alcohol products n Australia Post - Australian Opera regional touring and regional Arts, and Post’s Universal Service Obligation

19 Drivers of companies’ overall Corporate Community Investment programs/activities Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

20 How important is it that these stakeholders recognise your Corporate Community Investment initiatives? Note — other responses included ‘Not important’, ‘Slightly important’ and ‘Somewhat important’ Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

21 Community investment is now strategic and proactive Responses to requests for support in cash/kind 7% of companies do not provide any resources to requests for support; 58% of companies estimate that between 1% and 19% of their community contribution is used to respond to requests; 14% of companies allocate 20% to 39% of their budget to requests for support; 11% of companies allocate 40-59% of their cash and in-kind contribution to requests; 7 % of companies allocate between %; and just 3% of companies allocate between 80% and 100% of their community contribution in response to requests for support. Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

22 Are your significant Community Involvement activities aligned to your business sector or its specific interests? Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

23 Corporate resources devoted to Community Relations 3% of companies do not allocate any of their resources to community relations programs; 21% of companies estimate that between 1% and 19% of their community contribution resources is allocated to community relations; 34% of companies allocate 20% to 39% of their community resources to community relations; 17% of companies allocate 40-59%; 9% of companies allocate 60-79%; and 16% of companies allocate % of their community investment resources to community relations projects. Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

24 Programs designed to engage employees 3% of companies do not allocate any of their resources to these projects; 34% of companies estimate that between 1% and 19% of their community contribution resources is allocated to projects to engage employees; 36% of companies allocate 20% to 39% of their community resources; 13% of companies allocate 40-59%; 4% of companies allocate 60-79%; and 10% of companies allocate % of their community investment resources to projects that engage employees. Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

25 Programs designed to engage NGOs and ‘influencers’ 12% of companies do not allocate any of their resources to these projects; 39% of companies estimate that between 1% and 19% of their community contribution resources is allocated to projects to engage NGOs and influencers; 28% of companies allocate 20% to 39% of their community resources; 12% of companies allocate 40-59%; 5% of companies allocate 60-79%; and 4% of companies allocate % of their community investment resources to projects that engage NGOs and influencers. Source: Centre for Corporate Public Affairs, Corporate Community Involvement survey, September 2006

26 Cultural differences internationally n UK and Europe - strategy and activity influenced greatly by UN and EU compacts, regulations and goals. In the UK, competitive advantage an important driver n USA - strategic philanthropy dominates with corporate citizenship. Limited government involvement but encouragement of ‘giving’ n Australia - waning corporate philanthropy. Business strategy and outcomes linked strongly to community investment inputs, outputs and outcomes. Looking for the ‘win, win’

27 The Corporate Community Investment landscape in Australia n Trends and best practice u From ‘Chairman’s wife syndrome’ to embedded strategy u Ad hoc response to strategic initiative u Fewer, more strategic relationships, deeper and better leveraged u Sustainable partnerships and mutual obligation the norm u Alignment with business issues and competencies dominate u Employees are a key driver of strategy, activity and outcomes u Linked to stakeholder/community dialogue u Business case driven - search for Return on Investment