CSR Frameworks

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CSR Frameworks SystemsMeasuring CSR

• MBA 292C-1
• Professor McElhaney
• 2.07.07

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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

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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.

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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. Masters degree a plus

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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?typebi
  llsid366
• The Solution
• What would you do if you were the student
  leadership team?
• Come back with your solutions

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CSR Frameworks
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Changing the Game
The Landscape of the Business Case for CSR
Competitive Advantage Market Positioning
Employee Relations
Investor Relations
Improved Business Performance
Value Creation
Risk Mitigation
Reputation Insurance
Mitigate long term business risks
Build Stakeholder Trust
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Changing the Game
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• Shifting From Defensive to Offensive CSR

BP Beyond Petroleum Citigroup
Commits 100m to microfinance Gap
PRODUCT (RED)Interface
Mission ZeroStonyfield Farm Bid With Your
Lid Timberland Partnership with City
Year
Offensive CSR can distinguish a companys
reputation but cannot protect it defensive CSR
can protect a reputation but cannot distinguish
it. Both are necessary to succeed in todays
business climate.1- Mark Kramer John Kania,
Changing the Game
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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

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Stages of CSR
Sweet Spot
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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

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Designing a CSR Structure Big
Picture

• Build Senior Vision Support
• Examine Current CSR Systems Activities
• Design a CSR Structure
• Implement CSR Management Systems

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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

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A CSR Continuum
Philanthropic
Transactional
Integrative
Growth stage
Adapted from The Collaboration Challenge, James
E. Austin
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CSR Landscape Plot Goal
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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
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Prioritizing CSR Actions Corporate Expectations
as Industry Reputation Drivers
2005
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Measuring CSR
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What Metrics Could Whirlpool Use?
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What Metrics Could Whirlpool Use?
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• 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.
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• 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"

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CSR Metrics Must Link to Corporate Strategy
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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 HPs global supply chain and
  ensuring responsible manufacturing for all
  products.
• Education

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CSR Metrics Must Link to CSR Focus Needs
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Types of Evaluation
INTUITION
STORIES
SYSTEMS
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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

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Ease of Measuring
EASY
HARD
TYPE I
TYPE II
TYPE III
TYPE IV

• 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.

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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)

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Value Chain of Metrics
Inputs
Activities
Outputs
Outcomes
Goal Alignment
Changes to social systems
Activity and goal adjustment
What is put into the venture
Ventures primary activities
Results that can be measured
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Impact Metrics differential change
Inputs
Activities
Outputs
Outcomes
Goal Alignment
Changes to social systems
Activity and goal adjustment
What is put into the venture
Ventures primary activities
Results that can be measured
What would have happened anyway
-
Essential
IMPACT
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Evaluation Roles
Outputs
Outcomes
Changes to social systems
Results that can be measured in operations

• Periodic
• Need data from
• researchers and
• other stakeholders

• Tracked regularly
• NGO, Investor,
• Funder

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CR Metrics
Environment
Community
Workplace
Marketplace
Broad metric 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

Metric sub-categories
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Standard and most frequent metrics in each
category area
Environment
Community
Workplace
Marketplace

• 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

• 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

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What Types of Things Can Be Measured?
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Sample Indicators of Financial Performance of
Investment
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Sample Indicators of Financial Performance of
Investee
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Sample Indicators of Socio-Economic Returns to
Individuals or Investees
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National or Regional Socio-economic Returns
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Blending Types of Indicators
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Summary of Social Impact Value Chain
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Example Ciudad Saludable

• 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

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Whats 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

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Ex Ciudad Saludable SROI Analysis
Outputs
Outcomes
Monetization
- Base case
CS already counted the number of jobs created,
the revenues from customer fees, and the amount
of garbage collected.
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Ex Ciudad Saludable SROI Analysis
Outputs
Outcomes
Monetization
- Base case

• 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.

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Ex Cuidad 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

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Ex Ciudad Saludable SROI Analysis
Outputs
Outcomes
Monetization
- Base case

• SVT monetized a subset of CSs 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.

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Results Value Captured with theFull Range of
Types of Information
monetized value
financial value
narrative value
quantified value
qualitative value
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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