Creating Value via

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Creating Value via Corporate Social
Responsibility
Bradley Googins, Philip Mirvis, Mary Jo Hatch
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Traditional View
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Global Executives On Role Of Business

• Which of the following statements best describes
  the role
• that large corporations should play in society

Focus solely on providing highest possible
returns to investors while obeying all laws and
regulations
Generate high returns to investors but balance
with contributing to the broader public good
Source Dec 2005 McKinsey Quarterly survey of
4,238 global business executives
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What is the meaning of CSR?
Source Fleishman Hillard/National Consumers
League study, Rethinking Corporate Social
Responsibility
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Societal Views of Large Corporations
Around the world...
Sources GlobeScan, Wirthlin, Edelman
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Expectations are high for Business
Companies Held Completely Responsible for,
Average of 25 Countries
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2t. I am going to read a list of things some
people say should be part of the responsibilities
of large companies. For each one, please tell me
to what extent you think companies should be held
responsible. In answering, please use a scale of
1 to 5, where 1 is Not held responsible, 3 is
Held partially responsible, and 5 is Held
completely responsible. What about?
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Stages Of Corporate Responsibility
Stage 1 Compliant Stage 2 Engaged Stage 3 Innovative Stage 4 Integrated Stage 5 Transforming
Citizenship Concept Jobs, Profits Taxes Philanthropy, Environmental Protection Stakeholder Management Sustainability or Triple Bottom Line Change the Game Business in Society
Strategic Intent Legal Compliance Reputation Business case Value Proposition Market Creation or Social Change
Leadership Lip Service, Out of Touch Supporter, In the Loop Steward, On Top of It Champion, In Front of It Visionary, Ahead of the Pack
Structure Marginal Staff driven Functional Ownership Cross-Functional Coordination Organizational Alignment Mainstream Business Driven
Issues Management Defensive Reactive, Policies Responsive, Programs Pro-Active, Systems Defining
Stakeholder Relationships Unilateral Interactive Mutual Influence Partnership Alliance Multi-Organizations
Transparency Flank Protection Public Relations Public Reporting Assurance Full Exposure
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Brands feel the impact as activists target
customers Financial Times
Brands feel the impact as activists target
customers Financial Times
CSR from OUTSIDE IN
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To be more responsible.
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• Success in tomorrows markets means working with
  stakeholders to understand, predict, and shape
  our future environment and ways of living.
  Tackling important problems together will require
  teamwork and respect.
• Jeff Immelt
• Current CEO,
• General Electric

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Socially Responsible Business Models
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(No Transcript)
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Business And Society Risk And Opportunities
SOCIETY
Risk
Opportunity
BUSINESSS
Risk
Opportunity
Source Beyond Good Company
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Revolutionary Renewal Strategic activities
contribute both to repairing and also to building
society and environment
Sustainable Enterprise All functions and actions
are sustainable in economic, social and
environmental terms
Benefit to Society
Social Responsibility Society and environmental
initiatives are integral to strategy do good
Compliance Disclosure Do no harmAct within
legal and ethical codes of conduct
Zone of Mutual Benefit
Benefit to Business
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(No Transcript)
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CSR creates financial value along 4 dimensions
Growth

• Novo Nordisk Earned market leadership in China
  with market share above 70

New markets
New products
New customers/ market share

• Verizon Increased sales by 6 million, with
  potential growth of a new market of over 600
  million

Innovation
Reputation / differentiation
Return on capital

• Dow Invested 1 billion over 10 years to reduce
  its energy consumption and improve its efficiency
  and has saved 7 billion in last 5 years

Operational efficiency
Workforce efficiency
Reputation/price premium
Risk management
Regulatory risk
License to operate

• Nestlé Earned 4.5 billion in 2007 through the
  sales of PPP (Popularly Positioned Products)

Supply chain/security of supply
Reputational risk

• IBM Improved global leadership skills, employee
  retention and commitment to IBM, new knowledge
  and skill contribution to IBM

Management quality
Leadership development
Adaptability
Long-term strategic view
Source Mirvis/McKinsey Study
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Although many companies create value from ESG,
very few assess the financial value creation and
even fewer communicate that to the markets
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Percent of companies interviewed 100
-40
ESG program
-10
Maximizing value from ESG
Established metrics to monitor program
-40
-5
Converting ESG metrics to financial value
Communicate ESG value to CFOs, investors
Source BCCCC/McKinsey Study
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JJ Partnership with the American Association of
Colleges of Nursing

• Linking Johnson Johnson with
• Caring, Education, and Hospitals
• Key Drivers
• Standing behind products and services
• Vision for the futures
• Supporting good causes
• Meeting needs

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Corporate Branding and CSR

• Brilliant!

• Bullshit!