CSR

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CSR BrandingCSR HR

• MBA 292C-1
• 7 March 2007
• Professor Kellie A. McElhaney

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Tonight

• Team Meetings Sign Up
• Strategic CSR Issues Analysis
• Who is doing what?
• Who needs a team or a topic?
• Projects Updates
• CSR in the News
• CSR Branding
• CSR HR

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Current News

• Technology Firms Launch Group to Cut Industry's
  Electricity Usage
• A group of 11 technology firms representing 90
  percent of computer system manufacturers in the
  world have joined forces in a bid to cut the
  industrys electricity usage.
• The group called The Green Grid aims to tackle
  ways to make the data center ecosystem more
  energy efficient and has published three white
  papers on electricity use in data centers.
• The firms involved include Advanced Micro
  Devices, Inc., Dell Inc., Hewlett-Packard Co.
  (HP), IBM Corp., Intel Corp., Microsoft Corp. and
  Sun Microsystems, Inc.

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Current News

• TXU Is Bought Out by Environmentally Minded
  Equity Firms
• In a deal negotiated with U.S. environmental
  groups beforehand, Texas energy company TXU Corp.
  was acquired by two private equity firms,
  Kohlberg Kravis Roberts Co. and Texas Pacific
  Group, in the largest private buyout ever of 45
  billion.
• The deal ensures that TXU Corp. will cancel
  plans for eight of the 11 coal plants it had
  planned TXU Corp. will back U.S. federal
  regulation of carbon emissions TXU Corp. will
  create a sustainable energy advisory board with
  representatives of Environmental Defense (ED) and
  the Natural Resources Defense Council (NRDC) and
  TXU Corp. will adopt corporate governance and
  executive compensation programs that tie the
  operations and goals of the company to climate
  stewardship.
• ED executive director Fred Krupp says, Ive been
  at Environmental Defense for 22 years, and Ive
  never seen environmental issues play such a big
  role in a major transaction.
• NRDC Texas head Jim Marston, who was also part of
  the negotiations, says, I didnt want to kiss
  them on the lips in public, but this is exactly
  what weve been asking corporate America to do.

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Current News

• Sanofi-Aventis to Make Malaria Pill Available
  At-Cost In partnership with Médecins Sans
  Frontières, French pharmaceutical firm
  Sanofi-Aventis has developed a simple malaria
  drug called ASAQ that will be available at-cost
  in several African countries. The treatment
  consists of two pills per day for three days for
  adults and costs less than U.S. 1. For children,
  the treatment consists of one pill per day for
  three days and will cost less than 50 cents.
• Vodafone Wins U.K. ACCA Award for Best CSR Report
  U.K. telecommunications firm Vodafone Group plc
  has won the best U.K. CSR report award from the
  Association of Chartered Certified Accountants
  (ACCA). Vodafones report was noted for its
  clarity and readability and for disclosure on
  impacts of mobile phones on health, the economic
  value of technology and responsible use of
  content.
• IKEA to Charge U.S. Customers for Plastic
  BagsSwedish retailer IKEA International A/S has
  announced it will charge 5 cents for disposable
  plastic bags in a bid to reduce the estimated 100
  billion plastic bags thrown away by U.S.
  consumers per year. The price of IKEAs 99-cent
  sturdier, reusable bags will be reduced to 59
  cents to encourage their use.
• Coca-Cola, Pepsi to Label Caffeine
  AmountU.S.-based soda makers The Coca-Cola Co.
  and PepsiCo, Inc. have announced they will
  include the amount of caffeine on their beverage
  labels in the United States.

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Current News

• Costly Red Campaign Reaps Meager 18 Million
• Bono Co. Spend up to 100 Million on Marketing
• Julie Cordua, VP-marketing at Red and a former
  Motorola marketing exec and director-buzz
  marketing at Helio, said the outlay by the
  program's partners must be understood within the
  context of the campaign's goal sustainability.
  "It's not a charity program of them writing a
  one-time check. It has to make good business
  sense for the company so the money will continue
  to flow to the Global Fund over time." She added
  that since many of Red's partners haven't closed
  their books yet on 2006, more funds likely will
  be added to the 18 million
• There is a broadening concern that business is
  taking on the patina of philanthropy and crowding
  out philanthropic activity and even substituting
  for it," he said. "It benefits the for-profit
  partners much more than the charitable causes."

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Using CSR as Branding Tool
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Channel Selection MattersInternet growing
strongly at expense of TV, Newspapers
Source Edelman Annual Trust Barometer, Jan 06
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Using Non Traditional Channels
Where do you go to learn about CSR for companies?
Source Fleishman-Hillard White Paper 2006
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Employees As CSR Brand Ambassadors
Source Fleishman-Hillard White Paper 2006
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Integration is Critical
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There are risks

• Dows new Human Element Campaign
• http//youtube.com/watch?vi3byt7xMSCA
• A redux on Bhopal
• http//youtube.com/watch?vlbpuSPL-FNU

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Part of an overall strategy
Corporate Responsibility Marketing Toolbox
Source Adapted from Kotler and Lee 2005
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Cause Marketing can stand apart from other efforts
Demand on Resources
Cause Marketing can have a high Social ROI
relative to other efforts.
Corporate Marketing
Cause Marketing
CSR
Corporate Philanthropy
Degree of Social Impact
An action through which a company markets an
image, message, product, or service for mutual
benefit.
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A Cause-Marketing Framework
Global scale
ad hoc
Long term/Permanent
Short term
First world
Third world
Broad issue
Business focused
Public benefit
Consumer benefit
Engaging consumers
Engaging employees
High level action
Product based action
Partnership
Lone Ranger
Serious/Weighty issue
Lighthearted/ Everyday
Conservative
Risky
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Applying the Framework
Global scale
ad hoc
Long term/Permanent
Short term
First world
Third world
Broad issue
Business focused
Public benefit
Consumer benefit
Engaging consumers
Engaging employees
High level action
Product based action
Partnership
Lone Ranger
Serious/ Weighty issue
Lighthearted/ Everyday Issue
Conservative
Risky
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Trust in global companies in decline (Consumer)
Net Trust, Decreases over Past Year, 20012005
Source The 2002 data come from the Voice of the
People survey, a collaboration between GlobeScan
and Gallup International.
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A Trust Discount for U.S. Brands Tell me how much
you TRUST each company or organization to do what
is right ?
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Source Edelman Annual Trust Barometer, 2006
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Opportunity to Link CSR to Drivers of Trust in
Brand


Source Edelman Annual Trust Barometer, Jan 06
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CSR is a powerful predictor of reputationif known
Emotional Appeal
1
Social Responsibility
3
Feel Good About Admire and Respect Trust
Supports Good Causes Environmental
Responsibility Community Responsibility
ReputationQuotientSM (RQ)
Products Services
Vision Leadership
6
2
Market Opportunities Excellent Leadership Clear
Vision for the Future
High Quality Innovative Value for Money Stands
Behind
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5
Financial Performance
Workplace Environment
Outperforms Competitors Record of Profitability
Low Risk Investment Growth Prospects
Rewards Employees Fairly Good Place to Work Good
Employees
Source C. Fombrun, Reputation Institute, Harris
Interactive
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CSR can lead to brand loyalty
2 tie
2 tie
3
1
Source Rethinking Corporate Responsibility,
Fleishman-Hillard /National Consumers League, 2006
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Importance of CSR in forming consumerimpressions
is increasing
Unprompted, First Mention, Trends 19992005
Most Important Factors in Forming Impressions of
Companies Social Responsibilities
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Consumers on CSR Issues
Source Fleishman-Hillard White Paper 2006
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Consumers on Purchasing
Source Fleishman-Hillard White Paper 2006
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Who Cares Most About CSR?

• Females (employees, consumers, investors)
• Gen Yers Ages 8-24 (cause focus)
• Boomers (say v. do)
• More educated
• More diverse (gender, sexual orientation,
  ethnicity)
• More affluent..enter, Walmart!

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The LOHAS Typology is the CR Industry Standard

• Lifestyles Of Health And Sustainability
• LOHAS Consumer Segment Overview
• Strong environmental and social values, and base
  many purchase decisions accordingly
• Dont just buy organic food or energy efficient
  appliances, theyre active in all LOHAS-related
  product categories
• Demanding green products are not enough they
  need to feel, taste, and perform as well (or
  better) than conventional counterparts

As green products make inroads among
Wal-Marts budget-conscious masses, they are
gathering cachet among an affluent new consumer
category which marketers call LOHAS. (7/17/06)
Sources The Natural Marketing Institute Adler,
Going Green.
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The segmentation model
LOHAS Profound sense of environmental and
social responsibility, the most likely segment to
buy a range of environmentally and socially
responsible products.
LOHAS 60 Million U.S. Adult Consumers
NOMADICS The largest segment (nearly four in ten
adults), less resolute in their LOHAS attitudes,
still show moderate levels of related concern and
select low-impact LOHAS behaviors.
Indifferents 12
Indifferents 12
LOHAS 23
LOHAS 23
Centrists 27
Centrists 27
Total U.S. Population
CENTRISTS A lack of relevance in LOHAS attitudes
becomes more evident.
Nomadics 38
Nomadics 38
INDIFFERENTS So disinterested that they do not
even consider the environment or related
platforms.
Source The Natural Marketing Institute
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LOHAS ? Tree Hugger

• Demographics skew wealthy and educated
• Value premium products and brands
• Top 3 Activities to Protect Environment are
  basic
• Control thermostat (95)
• Recycle cans, bottles (85)
• Recycle Paper (84)

• LOHAS are premium consumers
• Great Upside Potential for cool products

• Success hinges on compelling non-environmental
  benefits, such as function or status

Sources The Natural Marketing Institute Ottman,
Avoiding Green Marketing Myopia.
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Case Study Philips Lightbulbs

• Philips called its original compact
  energy-efficient fluorescent (CFL) light
  "EarthLight" to communicate the bulbs'
  environmental advantage.
• Benefit appealed to only a small green niche of
  consumers.
• Reintroduced product in 2000 under the name
  "Marathon," to emphasize the bulb's five-year
  life and more than 20 in energy savings over the
  product's life span.
• Repositioning the features into advantages that
  resonated with consumer values--convenience,
  ease-of-use, and credible cost savings--ultimately
  sparked an annual sales growth of 12 in a
  mature product market.

Source Ottman, Avoiding Green Marketing Myopia.
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Another Ready Market Segment

• Women are more likely than men to
• Volunteer in their local communities
• (VolunteerMatch Corp. for National and
  Community Service)
• Investigate a companys environmental reputation
  before making a purchase
• (National Association of Women Business Owners)
• Invest in companies screened for different
  criteria including environmental practices, the
  hiring and promotion of women and minorities,
  labor practices and tobacco manufacture
• (Yankelovich Partners)
• Purchase a product with a percentage of profit
  earmarked for charitable donation
• (Cone Research)
• Participate in company sponsored social programs
• (Pfizer)
• Be a member of Net Impact
• (Net Impact Membership data)

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A Ready Market Segment

• Women are more likely than men to
• Indicate that it is important to ensure that
  workers inside and outside the U.S. are paid a
  living wage (68 percent versus 57 percent).
• Give corporations a poor rating for current CSR
  performance (18 percent versus 11 percent of
  men). Men are far more likely than women to rate
  companies as excellent or good (31 percent
  versus 13 percent, respectively).
• Indicate that it is extremely important for
  companies to make relevant donations to charities
  and philanthropies (27 percent versus 19 percent,
  respectively).
• Indicate that it is important to use workers in
  the U.S. to the fullest extent possible before
  hiring labor overseas (68 percent versus 54
  percent).
• Source Fleishman Hillard National Consumers
  League Study, Rethinking Corporate Social
  Responsibility, 2006

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Womens power of the purse

• Women make more than 80 of purchasing decisions
  in the United States
• Women are less likely to act impulsively, and are
  more likely to do research and weigh information
  before making purchases

Source Faith Popcorn and Lys Marigold, 2000
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CSR Branding Trends

• Select consumer segments ready (LOHAS, women, Gen
  Y, LGBT)
• Reporting does not equal communication
• POS communication is critical
• Blogs increasing in effectiveness
• Simple messages, language
• Use employees as ambassadors
• Link to/ integrate with brand, all company
  messaging
• Numbers increase credibility, but stories stick

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Using CSR as an HR Tool
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Employees Very Interested- Participating in
Company Community-Improvement Initiatives
Source Globescan 2005
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Employees Care About CSRVery Interested in
Participating in Company Community-Improvement
Initiatives
Source Globescan 2006
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Employees are motivated by CSR activities
Source HP employee survey, June 2005
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Employee Attraction, Retention, Satisfaction
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Skill Set of a CSR Expert

• Confidence to take risks, learn from experiences
• Flexible
• Ability to deal with ambiguity, lack of facts
• Brings together disparate views, voices
• Persists in face of obstacles, challenges
• Short-term and long-term balanced
• Innovation
• Stakeholder engagement/ listening

• Strategic thinker
• Integrity-based actions
• Ability to operate in 2 worlds simultaneously
• Sees possibilities where others see problems
• Works well across functions, collaboratively
• Proactively senses problems, acts
• Proactively senses opportunities, acts
• Ability to deal with complexity

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Leadership Skill Set Desired at J J
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What companies hire for
--2005 survey by Economist Intelligence Unit of
characteristics sought by 225 senior executives
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What BSR hears from their member companies

• Our company doesnt have anyone in-house with
  really good stakeholder engagement facilitation
  skills

• We increasingly need managers with a
  sophisticated understanding of public policy and
  international affairs

• Our management team needs assistance in taking a
  systems-thinking approach to new product design

• How should we define what environmental and
  social issues are material to our company?

• Who can help us work with other companies in our
  industry to reduce the costs of auditing our
  supply chain?

• What would ethical decision-making criteria look
  like in this situation?

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CSR HR PR

• Build CSR in to internal company messaging
• Make CSR part of employee value proposition
• Educate employees about CSR (integrate into
  in-house training)
• Work CSR out across business units
• Build CSR metrics in to performance appraisals
• Engage employees with CSR strategy, councils,
  programs
• Let employees communicate CSR they are more
  believable