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C H A P T E R 1

The Case for Doing at Least Some Good

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For many years, community development goals were philanthropicactivities that were seen as separate from business objectives, notfundamental to them; doing well and doing good were seen asseparate pursuits. But I think that is changing. What many of theorganiations that are represented here today are learning is thatcutting!edge innovation and competitive advantage can result fromweaving social and environmental considerations into businessstrategy from the beginning. "nd in that process, we can helpdevelop the ne#t generation of ideas and markets and employees.

Carly Fiorina, Hewlett-Packard, at the !siness for Social"es#onsi$ility %nn!al Conference, &o'em$er (), )**+

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WHAT IS GOOD?

$orporate social responsibility is a commitment toimprove community well!being through discretionary

business practices and contributions of corporateresources.

%oluntary commitment

The term community well!being in this definitionincludes human conditions as ell as en!ironmental

issues"

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World #usiness Council for Sustaina$le De!elo%mentdefines CSR as&

'#usiness( commitment to contri$ute to sustaina$leeconomic de!elo%ment) or*in+ ith em%lo,ees) their

families) the local communit,) and societ, at lar+e toim%ro!e their -ualit, of life".

#usiness for Social Res%onsi$ilit, defines CSR as&

'O%eratin+ a $usiness in a manner that meets ore/ceeds the ethical) le+al) commercial) and %u$lice/%ectations that societ, has of $usiness".

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Cor%orate Social Initiati!es

$orporate social initiatives are major activitiesundertaken by a corporation to support social causesand to fulfill commitments to corporate social

responsibility.

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Cor%orate Social Initiati!es& Si/O%tions for Doin+ Good Cor#orate Ca!se PromotionsIncreasin+ Aareness and

Concern for Social Causes

Ca!se-"elated arketing0a*in+ Contri$utions to Causes

#ased on Product Sales Cor#orate Social arketingSu%%ortin+ #eha!ior Chan+e

Cam%ai+ns

Cor#orate Philanthro#y0a*in+ a Direct Contri$ution to aCause

Comm!nity .ol!nteeringEm%lo,ees Donatin+ Their Timeand Talents

Socially "es#onsi$le !siness PracticesDiscretionar,#usiness Practices and In!estments to Su%%ort Causes

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Causes most often su%%orted throu+h theseinitiati!es are&

Communit, health i"e") AIDS %re!ention) earl, detection for$reast cancer) timel, immuni2ations3

Safet, desi+nated dri!er %ro+rams) crime %re!ention) use ofcar safet, restraints3)

Education literac,) com%uters for schools) s%ecial needseducation3)

Em%lo,ment 4o$ trainin+) hirin+ %ractices) %lant locations35

En!ironment rec,clin+) elimination of the use of harmfulchemicals) reduced %ac*a+in+35

Communit, and economic de!elo%ment lo6interest housin+loans35 and

Other $asic human needs and desires hun+er) homelessness)animal ri+hts) !otin+ %ri!ile+es) antidiscrimination efforts3"

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WHAT ARE THE TRE7DS? /ncreased cor#orate gi'ingcharita$le +i!in+ $, for6

%rofit cor%orations has risen from an estimated 89": $illionin 1999 to 81;"19 $illion

/ncreased cor#orate re#orting on social res#onsi$ility

initiati'es cor%orate annual re%orts ith s%ecial sectionson communit, +i!in+ and) increasin+l,) the %u$lication of ase%arate annual communit, +i!in+ re%ort"

The esta$lishment of a cor#orate social norm to dogood Dell) Helett6Pac*ard) 0cDonald(s) 7i*e

Transition from gi'ing as an o$ligation to gi'ing as astrategy& #usiness o$4ecti!es are ali+ned ith communit,interests instead of 4ust s%endin+ cash to sho off"

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WH< DO GOOD?

#ecause then com%anies ould loo* $etter) feel $etter)do $etter) and li!e lon+er"

Increased sales and mar*et share"

Stren+thened $rand %ositionin+"

Enhanced cor%orate ima+e and clout"

Increased a$ilit, to attract) moti!ate) and retainem%lo,ees"

Decreased o%eratin+ costs" Increased a%%eal to in!estors and financial anal,sts"

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Increased Sales and 0ar*etShare

'Ei+ht,6four %ercent said the, ha!e a more %ositi!eima+e of com%anies that do somethin+ to ma*e theorld $etter".

'Se!ent,6ei+ht %ercent of adults said the, ould $e

more li*el, to $u, a %roduct associated ith a causethe, cared a$out".

'Si/t,6si/ %ercent said the, ould sitch $rands tosu%%ort a cause the, cared a$out".

'Si/t,6to %ercent said the, ould sitch retail stores to

su%%ort a cause".

'Si/t,6four %ercent $elie!e that cause6related mar*etin+should $e a standard %art of a com%an,(s acti!ities".

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Stren+thened #rand Positionin+

'S%irit of the $rand.

=What does it $elie!e in?( . Consumers are mo!in+ toards the to% of 0aslo(s Hierarch,

of 7eeds and see*in+ =self6reali2ation"(

'#en > err,(s. stood for cause a+ainst +lo$al armin+ and%eo%le %ositioned it %ositi!el, as a conse-uence"

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Im%ro!ed Cor%orate Ima+e andClout

Business &thics %u$lishes a list of '1@@ #est Cor%orateCiti2ens). reco+ni2in+ com%anies( cor%orate social res%onsi$ilit,toard sta*eholders) includin+ the en!ironment and thecommunit," In ;@@;) the to% fi!e #est Cor%orate Citi2ens ereI#0) Helett6Pac*ard) annie 0ae) St" Paul Com%anies) andProcter > Gam$le"

Sociall, res%onsi$le com%anies are $ein+ +i!en less scrutin,and more free rein $, $oth national and local +o!ernmententities"

0cDonald(s durin+ the 199; South Central Bos An+eles riots

Positi!e cor%orate ima+e ma, also influence %olic, ma*ers asell

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Case of AT>T&

Due to AT>T(s %hilanthro%,) and su%%ort for !ariouseducation and art %ro+rams for children) PresidentClinton called on Allen to s%ea* a$out the informationsu%erhi+ha," In front of the nation) the CEO of AT>T

as a$le to ma*e a %oint crucial to the com%an,(s+o!ernment relations strate+,& the su%erhi+ha, should$e a %ri!ate rather than a %u$lic initiati!e".

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Increased A$ilit, to Attract)0oti!ate) and Retain Em%lo,ees

Positi!e im%act on %ros%ecti!e and current em%lo,ees) as ellas citi2ens and e/ecuti!es"

In a related sur!e,) @ %ercent of res%ondents said the, ould$e li*el, to refuse to or* at a com%an, if the, ere to find

out a$out ne+ati!e cor%orate citi2enshi% %ractices" 0ore than half of the ;)1@@ 0#A students sur!e,ed indicated

the, ould acce%t a loer salar, in order to or* for a sociall,res%onsi$le com%an,"

At Tim$erland) em%lo,ees are +i!en @ hours of %aid time offto %erform communit, ser!ice5 9 %ercent of Tim$erland(s F"S"

em%lo,ees ere %artici%atin+ in the %ro+ram" Tim$erland isconsidered as one of its '1@@ #est Com%anies to Wor* or".

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Decreased O%eratin+ Costs

En!ironmental initiati!es to reduce aste) reusematerials) rec,cle) and conser!e ater and electricit,"

At Cisco S,stems) for e/am%le) an ener+, conser!ation

initiati!e called 'Cleaner Air and 0illions in Sa!in+s. ise/%ected to sa!e the com%an, a$out 8" million %er,ear in o%eratin+ costs" In addition) these ener+,sa!in+s ill e!entuall, -ualif, the com%an, for anestimated 8" million in re$ates from the local ener+,

su%%lier) Pacific Gas > Electric"

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Increased A%%eal to In!estorsand inancial Anal,sts

In!ol!ement in cor%orate social initiati!es can e!en increasestoc* !alue"

Increased a$ilit, to attract ne in!estors

Reduce e/%osure to ris* in the e!ent of cor%orate or

mana+ement crises

An often6-uoted stud, $, the Fni!ersit, of SouthesternBouisiana) 'The Effect of Pu$lished Re%orts on FnethicalConduct on Stoc* Prices). demonstrated that %u$licit, a$outunethical cor%orate $eha!ior loers stoc* %rices for a minimumof si/ months"

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WHAT ARE THE 0AOR CFRRE7TCHABBE7GES TO DOI7G GOOD?

Choosin+ a Social Issue

Selectin+ an Initiati!e to Address the Issue

De!elo%in+ and Im%lementin+ Pro+ram Plans

E!aluation

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Choosin+ a Social Issue

The, ill $e faced ith tou+h -uestions) includin+ these&

Ho does this su%%ort our $usiness +oals?

Ho $i+ of a social %ro$lem is this?

Isn(t the +o!ernment or someone else handlin+ this?

What ill our stoc*holders thin* of our in!ol!ement in this issue?Is this somethin+ our em%lo,ees can +et e/cited a$out?

Won(t this encoura+e others in!ol!ed in this cause to a%%roach us$u+ us3 for funds?

Will this cause $ac*fire on us and create a scandal?

Is this somethin+ our com%etitors are in!ol!ed in and onalread,?

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One of the %itfalls in this decision ma*in+in real terms

Dre,er(s decided to su%%ort the cause of fi+htin+ $reast cancer"'It had atched other com%anies conduct cam%ai+ns $ac*in+the search for a cureand had seen their lo+os dis%la,ed atell6attended rallies and their %roducts festooned ith thecause(s si+nature %in* ri$$ons".

When Dre,er(s a%%roached the omen oundation) hoe!er)the, found that

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Selectin+ an Initiati!e to Address theIssue

Ho can e do this ithout distractin+ us from our core$usiness?

Ho ill this initiati!e +i!e !isi$ilit, to this com%an,?

Do these %romotions reall, or*? Who %a,s attention to them?

What if e tie our fundin+ commitment to sales and end u%ritin+ them a chec* for onl, 81@@? Ho ill that loo*?

What if consumers find out that the amount of the sale thatactuall, +oes to the cause is minuscule?

Ha!e e calculated the %roducti!it, cost for +i!in+ ourem%lo,ees time off for !olunteerin+?

Gi!in+ !isi$ilit,) es%eciall, shelf s%ace in our stores) for thiscause doesn(t %encil out" Shouldn(t e 4ust rite a chec* or+i!e a +rant?

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De!elo%in+ and Im%lementin+Pro+ram Plans

e, decisions at this %oint include&

Whether to %artner ith others and) if so) ith hom5

Determinin+ *e, strate+ies) includin+ communicationsand distri$ution channels5

Assi+nin+ roles and res%onsi$ilities5

De!elo%in+ timeta$les5 and determinin+ $ud+etallocations and fundin+ sources"

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Real time issues are&

Ho can e do this hen mone, is needed for increased%erformance?

What do e sa, to stoc*holders ho see this as mone, that$elon+s to them?

Wh, is our de%artment $ein+ as*ed to fund this?

Will e $e doin+ enou+h +ood for the cause to 4ustif, thee/%ense?

Isn(t this 4ust $rand ad!ertisin+ in dis+uise?

Ho do e *ee% from loo*in+ h,%ocritical?

What is our e/it strate+,?

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Phili% 0orris $e+an a social mar*etin+ initiati!e in 1999 iththe slo+an) 'Tal* to ,our *ids a$out not smo*in+" The,(lllisten". This mass media cam%ai+n included %rint ads inma+a2ines) a free 1:6%a+e) four color $rochure) and a e$ siteith ti%s and lists of additional resources for %arents"

or some) this initiati'e #ro$a$ly rang hollow) ith %eo%le%erha%s -uestionin+ the authenticit, of a claim that a mem$erof the to$acco industr, is not interested in a marketre#resenting an estimated one $illion #acks of cigarettesa year0

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E!aluation

The science of measurin+ return on in!estments incor%orate social initiati!es is !er, ,oun+) ith littlehistoric data and e/%ertise"

0ar*etin+ %rofessionals and academic e/%erts in the field

confirm this challen+e" Since the $enefits related to CSR are not directl,

measura$le) and most firms do not disclose e/%ensesrelated to such acti!ities) it is difficult to directl, assessthe return on CSR in!estment"

And ,et) shoin+ that the %ro+ram as a morefinanciall, %roducti!e %romotional tool than other%ossi$le %romotional tools is $ecomin+ increasin+l,necessar,"