1. Strategic CSR Professor McElhaney February 4, 2009

2. CSR in the News (according to Omar) The non-profit sector’s problems have not gone unnoticed: a majority of Americans has serious reservations about the performance of charitable organizations. Americans’ Perceptions of Charitable Organizations ▫ think charitable organizations waste a great deal or fair amount of money. ▫have little to no overall confidence in charitable organizations. ▫think charitable organizations do a very good job running ▫their programs and services. ▫think charitable organizations do a very good job ▫spending money wisely. ▫think charitable organizations do a very good job being ▫fair in their decisions. Source: NYU Wagner Organizational Performance Initiative Research Brief #1, August 2006; internal estimates

3. Edelman Trust Barometer 2009 Trust at all-time low (lower than post-Enron)

4. Edelman Trust Barometer 2009 Want government regulations

5. Edelman Trust Barometer 2009 Will (want to) act personally

6. Edelman Trust Barometer 2009 Need to hear CSR messages repeated.

7. CSR in the News Fit? ▫http://online.wsj.com/article/SB12329198029891 3525.html#articleTabs%3Dvideohttp://online.wsj.com/article/SB12329198029891 3525.html#articleTabs%3Dvideo

8. CSR in the News- YOU?

9. Assignment For Next Monday Half of you (last names A-M) read Sun’s CSR Report Half of you (last names N-Z) read Chevron’s CSR Report Conduct report analysis for in-class discussion on Monday, February 9, 2009

10. CSR Report Analyses What are the report's strengths & weaknesses? What are your specific recommendations for improvement? Did the report change your opinion of this company? Would the report change your likeliness to work for this company, or purchase their goods/ services as a consumer? Based on the report, what do you think are the key issues for this industry and how well is this company addressing these issues? Also consider the following issues: ▫Does/ how does the company define CSR? How evolved is the company’s view of CSR? ▫How integrated is their CSR strategy? Is it aligned with core business objectives, core competencies? ▫How sustainable is their CSR strategy? ▫What are the metrics for success? How do they measure their CSR impact? ▫Who seems to be the targeted audience(s)? Is this clear from the report? ▫What are the opportunities associated with their CSR strategy? Risks? Strengths? Weaknesses?? ▫From a pure document aspect, assess the strengths and weaknesses of the report?

11. Strategic CSR Frameworks & Tools (continued)

12. Whirlpool +

13. ECONOMIC SOCIAL “PEOPLE, PLANET, PROFIT” Framework #1: Triple Bottom Line ENVIRONMENTAL

14. Framework #2: Internal & External CSR Supply Chain Environment Transparency Human Rights Stakeholder Engagement Privacy Marketplace Community Involvement/ Investment Governance Mission, Vision, Values Ethics Diversity Health & Wellness Dependent Care Downsizing & Layoffs Privacy (employee) Work Life Balance Job Satisfaction Compensation/ Benefits Philanthropy Socio-political Issues Reporting Accountability

15. Framework #3: Modified BITC Employees Retirees/ alumni Recruits Workplace Marketplace Environment Community Clients/customers Regulators/ legislators Investors Academics Suppliers Communities in which we live and work Not-for-profit and non- governmental organizations that support communities Physical environment Not-for-profit and non- governmental organizations that support the environment

16. Framework #4: Legal and Moral Liability SustainAbility, Executive Summary: The Changing Landscape of Liability, January 21, 2005

17. Nestle & Maslow

18. Framework #5: Risk-Opportunity Continuum Use core assets in a positive way, to improve underlying business context Take a big-picture view Go beyond compliance Lift or stabilize reputation Prevent damage to reputation Forestall the negative use of core assets Focus on compliance and managing legal liability MINIMIZE RISK MAXIMIZE OPPORTUNITY

19. Framework #6: Shared Value “The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business.” Source: Porter, Michael E. and Mark R. Kramer, “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, 2006 Generic Social Issues Social issues that are not significantly affected by a company’s operations nor materially affect its long-term competitiveness. Value Chain Social Impacts Social issues that are significantly affected by a company’s activities in the ordinary course of business. Social Dimensions of Competitive Context Social issues in the external environment that significantly affect the underlying drivers of a company’s competitiveness in the locations where it operates

20. Framework #6.5: Changing the Game “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.” - Kramer & Kania, Changing the Game

21. Designing a CSR Structure: Nine Steps (BSR) 1.Understand drivers (internal & external) 2.Identify key CSR issues 3.Identify & evaluate stakeholders 4.Identify current functions supporting CSR 5.Analyze current CSR systems, culture 6.Design CSR structure 7.Develop effective staffing plan 8.Create cross-functional system 9.Match budget to best framework

22. Stages of corporate citizenship: BC CCC

23. Stages of CSR—Zadek Defensive ▫“It’s not our job to fix that” ▫Company faced with pain, criticism, reacts defensively Compliance ▫“We’ll do just as much as we have to” ▫Cost of doing business, do just as much as need to Managerial ▫“It is the business” ▫Moves CSR to core business managers & functions Strategic ▫“It gives us a competitive edge” ▫Realigns strategy to use CSR as competitive advantage Civil ▫“We need to make sure everyone does it” ▫Need to involve all in sector, collective action

24. A CSR Continuum Level of engagementLowHigh Importance to missionPeripheralStrategic Magnitude of resourcesSmallBig Scope of activitiesNarrowBroad Interaction levelSimpleIntensive Managerial complexityInfrequentComplex Strategic valueModestMajor EXAMPLES ACTIONS: Donation Grants Event sponsorship Cause-related marketing Employee volunteerism Joint-advocacy Joint-action Deep partnerships Financing principles Philanthropic Transactional Integrative Growth stage: Adapted from The Collaboration Challenge, James E. Austin