B A 342 Exam 3 Study Guide Chapter 2 3 Corporate Social Responsibility I Corporate Social Responsibility a Language Check i Used to be called CSR but went through language change ii Now Sustainability 1 50 use sustainability 25 still use CSR banks and b Business Stakeholders consulting Community Government Employees Consumers Owners Public environmental groups Local federal state Union older women minority activities Consumer activists product liability Private corporate institution i Shareholder value doesn t go away c CSR You i Why would you care ii Senior Executive documents 1 Can you manage money stuff 2 Are you comfortable managing people 3 What have you done in CSR 4 Think of this as People Money Stakeholders d Responsibility i The ability or authority to act or decide on one s own without supervision ii Can you do you the right thing iii This is the theme of B A 342 e Responsible Leadership The Financial Times i Making business decisions that take into account stakeholders such as workers clients suppliers the environment the community and future generations f Wal Mart Hurricane Katrina i The business community saved NOLA ii Over 1800 people killed iii 110 Billion in destruction iv 700 people still missing v 600 000 pets left behind vi Wal Mart to the Rescue 1 Emergency relief brought water food generators after 2 Pop tarts shipped to disaster area to help people hurricane survive head of time 3 CEO donated 10 Million vii Corporate profit was not one of Wal Mart s concerns during Katrina g Pros Cons of Wal Mart Pros Discounts One stop shop Community Creates jobs Sustainability drivers Saved the gulf Philanthropic 200 million customers Volunteer work and Largest company time occur Donate money Volunteer Help others Follow the law Set example Teach others Productive Socially aware Friendly Cons Competition Quality Downtown declines Green becomes payment Consumerism Closed culture led many activists to fight company Workforce issues Bribery scandal in MX 2012 Legal issues Care for environment Nice respectful Understanding Fair just Pay taxes Honest Responsible Supportive i Business people suit up every day not just when disasters h Individual Citizenship Characteristics multiple select i CSR Citizenship i Corporate Social Responsibility emphasis on obligation and accountability results ii Corporate Social Responsiveness emphasis on action activity iii Corporate Social Performance emphasis on outcomes and iv License to Operate doing business in a responsible way II Business Impact a CSR Business Case The Big 6 Reasons Core Benefits Innovation Cost savings Brand differentiation Customer Long term thinking engagement New business Customer retention Better relations with stakeholders Attract Retain employees Employee engagement Decrease costs Enhance reputation Increase investment Better media relations i Strategic thinking ii Building business around CSR iii Customers are expecting us to be in the game iv Increased production is NOT a direct benefit of CSR b How Firms Respond to CSR Pressure i Defensive ii Cost Benefit 1 Really straight forward and only respond when pushed 2 Example Volkswagen 1 Start to calculate actual benefits 2 Example DuPont plant in PA with pressure to clean up a Cost more to clean than the lawsuit but they still cleaned up anyway iii Strategy iv Innovation 1 Example IBM smarter planet 1 Example Tesla c IBM Study Data on CSR objectives over the past year d Corporate Performance Financial and Social i CEOs see more or the same importance of CSR to strategic i Positive Social Positive Financial Positive Reputation ii Positive Financial Positive Social Positive Reputation iii Positive Social Positive Financial Positive Reputation 1 Highlighted this one in class e CSR Duke i How do we measure social performance ii Does being good mean you re financially doing well iii Do companies perform better because doing well financially f Hershey Foods CSR Initiatives multiple select i What elements are they doing for CSR 1 Reduce waste cost and impact 2 Training farmers benefit families 3 Project Peanut Butter malnutrition 4 Building schools 5 Milton Hershey School 6 Volunteer work food banks ii Hershey CSR website Shared Goodness Tab 1 Good Business Better Life Bright Future 2 Helped increase Cocoa farmers yields by 45 over 3 years 3 11 North American facilities send zero waste to landfills CSR in the Past g Adam Smith 1723 1790 i Scotland ii iii Would be a modern day B A 342 Professor Wealth of Nations Theory of Moral Sentiments h CSR History i Economic Model 1700s 1 Small communities ii Legal Model 1800s law allows child labor iii Social Model 1850s 1 Large companies industries treat employees how the 1 Start to see change in workforce philanthropy begins iv Stakeholder Model 1950s Present 1 Where we are now v These four occurred over time not together i Iron Law of Responsibility i In the long run if we don t use power in a manner which society considers responsible will tend to lose it j 4 Part Pyramid of CSR Total Corporate Social Responsibility i Philanthropic Take a citizenship approach ii Ethical Do right avoid harm iii Legal Obey the society s laws iv Economic Make a profit v All four of these go together at the same time k What do responsible companies do Philanthropy Equality Safe product No pollution Obey laws Promote honesty Safe workplace Packaging limits impact No harassment Recycles Respond to customers Helps with medical Conserve energy Ads not misleading III Stakeholder Approach a Milton Friedman Unilever Video i ESG Environmental Social Governmental ii PnL Profit and Loss iii Businesses need to follow rules and be good corporate citizens iv CEO Paul Polman 1 Sales grew at high rate 2 Working to double company s growth while cutting environmental impact in half 3 Saved tons of money through sustainability practices b Stocks Stakes i Stockholders owners ii Stakeholders interests c Case New Holland CSR Story i Construction farming vehicles ii Had a plant in Belleville PA closed it iii Negative impact on the community d CNH Business Social Responsibility Key Stakeholder Issues Family Friends Employees losing jobs Customers farmers Town community Local businesses Suppliers Company Environment Economic development Local workforce Local schools e The Stakeholder Corporation i The Government Philosophy 1 Shareholder value responsibility ii Values Statement 1 Accountability to all stakeholders iii Measurement System f 4 Key Stakeholder Groups and