CSR

1. Unit II:
CSR & Triple bottom line

2. Traditional View

3. 3
Global Executives On Role Of Business
84%
16%
Which of the following statements best describes the role
that large corporations should play in society
Generate high returns to investors
but balance with contributing to the
broader public good
Focus solely on providing highest
possible returns to investors while
obeying all laws & regulations
Source Dec 2005 McKinsey Quarterly survey of 4,238 global business executives

4. 4

5. 5
What is the meaning of CSR?
Source: Fleishman Hillard/National Consumers League study,
“Rethinking Corporate Social Responsibility”

6. 6
Societal Views of Large Corporations
Around the world...
10-20%
60-70%
Sources: GlobeScan, Wirthlin, Edelman

7. 7
Expectations are high for Business
Companies “Held Completely Responsible for,” Average of 25 Countries

8. 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…?

9. •Defensive. When first criticized over some problem, companies take a
defensive stance. They reject allegations of wrongdoing & refuse to
take responsibility.
•Compliant. During this stage, companies do only what they have to do
to satisfy their critics, protect brands or reputations, & reduce the risk
of litigation.
•Managerial. When it’s clear that the problem won’t go away,
companies take responsibility & look for long-term solutions.
•Strategic. At this point, they may start to reap the benefits of acting
responsibly. Responding to public needs gives them a competitive edge
& enhances long-term success.
•Civil. Ultimately, companies recognize the importance of getting other
companies to follow their lead. They enlist the cooperation of other
companies in supporting the issue of concern to the public.
Stages Of Corporate Responsibility

10. 10
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

11. Brands feel the
impact as activists
target customers
Financial Times
Brands feel the
impact as activists
target customers
Financial Times
CSR from OUTSIDE IN

12. To be more responsible….

13. Success in tomorrow’s markets means
working with stakeholders to
understand, predict, & shape our
future environment & ways of living.
Tackling important problems together
will require teamwork & respect.”
Jeff Immelt
Current CEO,
General Electric

14. Socially Responsible
Business Models

16. Base of the Pyramid,
Micro-Finance,
Eco-Effectiveness
CSR Partnerships
Cheap Labor/Sourcing,
Obesity/Consumerism,
Environmental Damage,
Bribery
Nationalization
Access to Medicine
Access to Credit
Piracy
Climate Change
Digital Divide,
Youth Unemployment,
Corruption
SOCIETY
B
U
S
I
N
E
S
S
S
Opportunity
Risk
Source: Beyond Good Company
Risk Opportunity
Business & Society:
Risk & Opportunities

17. Revolutionary Renewal
Strategic activities contribute both
to repairing & also to building
society & environment
Sustainable Enterprise
All functions & actions are sustainable in
economic, social & environmental terms
Social Responsibility
Society & environmental initiatives are
integral to strategy – “do good”
Compliance & Disclosure
“Do no harm”
Act within legal & ethical
codes of conduct
Benefit to Business
Benefit to
Society

19. 19

20. Leadership development
Adaptability
Long-term strategic view
License to operate
Supply chain/security of supply
Regulatory risk
Reputational risk
Workforce efficiency
Operational efficiency
Reputation/price premium
New markets
Reputation / differentiation
Innovation
New customers/ market share
New products
Management
quality
Risk
management
Return
on capital
Growth
CSR creates financial value along 4 dimensions
▪ Novo Nordisk: Earned market leadership in
China with market share above 70%
▪ Verizon: Increased sales by $6 million, with
potential growth of a new market of over
$600 million
▪ Dow: Invested $1 billion over 10 years to
reduce its energy consumption & improve
its efficiency & has saved $7 billion in last 5
years
▪ IBM: Improved global leadership skills,
employee retention & commitment to IBM,
new knowledge & skill contribution to IBM
▪ Nestlé: Earned $4.5 billion in 2007 through
the sales of PPP (Popularly Positioned
Products)
Source: Mirvis/McKinsey Study

21. 21
Although many companies create value from ESG(Envi,Social,Gov), very few assess the
financial value creation & even fewer communicate that to the markets
Percent of companies interviewed = 100%
-40%
-5%
-40%
-10%
ESG program
Maximizing value
from ESG
Established metrics
to monitor program
Converting ESG
metrics to
financial value
Communicate ESG
value to CFOs,
investors
Creating value Assessing value Communicating value
Source: BCCCC/McKinsey Study

22. 22

23. The Role of Citizenship on Corporate Reputation 11 March
2008

24. 24
• Triple bottom line means expanding the traditional framework to take into
account ecological & social performance in addition to financial performance.
• In 1981 Freer Spreckley first articulated the term in a publication called 'Social
Audit - A Management Tool for Co-operativeWorking'.
• Sustainability, itself, was first defined by the Brundtland Commission of the United
Nations in 1987.
• The phrase was coined by John Elkington in his book ’Cannibals with Forks: the
Triple Bottom Line of 21st Century Business’in the year 1998.
• The concept of TBL demands that a company's responsibility lies
with stakeholders rather than shareholders.
• In this case, "stakeholders" refers to anyone who is influenced, either directly or
indirectly, by the actions of the firm.
The Concept

25. 25
PEOPLE
PLANET PROFIT
Three pillars of TBL

26. 26
PEOPLE
"People" (human capital) pertains to fair &
beneficial business practices toward labour & the
community & region in which a corporation
conducts its business.
A TBL company conceives a reciprocal social
structure in which the well-being of corporate,
labour & other stakeholder interests are
interdependent.

27. 27
PLANET
(natural capital) refers to sustainable environmental practices.
A TBL company endeavors to benefit the natural order as much as
possible or at the least do no harm & curtail environmental impact.
A TBL endeavor reduces its ecological footprint by, among other
things, carefully managing its consumption of energy & nonrenewable
& reducing manufacturing waste as well as rendering waste less toxic
before disposing of it in a safe & legal manner.
TBL manufacturing businesses which typically conduct a life cycle
assessment of products to determine what the true environmental cost
is from the growth & harvesting of raw materials to manufacture to
distribution to eventual disposal by the end user.
A tbl co does not produce harmful or destructive products such as
weapons, toxic chemicals or batteries containing dangerous heavy
metals.

28. 28
PROFIT
"Profit" is the economic value created by the organization after
deducting the cost of all inputs, including the cost of the capital tied up.
It therefore differs from traditional accounting definitions of profit.
In the original concept, within a sustainability framework, the "profit"
aspect needs to be seen as the real economic benefit enjoyed by the host
society.
It is the real economic impact the organization has on its economic
environment.
This is often confused to be limited to the internal profit made by a
co or organization (which nevertheless remains an essential starting point
for the computation).
Therefore, an original TBL approach cannot be interpreted as simply
traditional corporate accounting profit plus social & environmental
impacts unless the "profits" of other entities are included as a social
benefits.