Corporate Social Responsibility

Class 3:CSR Management System

Syllabus developed by Jens Trummer

Reading:

1. “Daimler 360, Facts on Sustainability”, 2010

For those interested in more detailed information:- “Designing a CSR Structure”, Business for Social Responsibility, 2002

- “CSR – An Implementation Guide for Business”, IISD

Agenda

CSR Management System

Class 3:

CSR Management System

CSR LAB

What is difference ?

and

2 Types of Business Models:

1. “Sustainable” Business Model= CSR???

2. Business Model with CSR Programs:

CSR Management

System

Stage 1:CSR non-

existent

Stage 4:Sustainability

Intrinsic business strategy/Activity:

Still CSR ??

Stage 3:Strategic CSR:

Strategycomplimenting business activity

Stage 2:CSR non-strategic:

- Philanthropy- Donations

- Volunteering, etc.

Evolution of CSR:

Ethical/Philanthropic

Good for BusinessCSR

COMPLIMENT

NOTCONTRADICT

CSR is a business strategy:

CSR Management

System

?

CSR Management System needs

“ Framework for‘Strategic’

‘Integration’ ”

TOOL to compliment core business activities

“Framework for Strategic Integration”

- ‘Theory of Practice’

- No ‘one size fits all’

- Not necessarily chronological

- Must be adaptive – Why?

CSR implementation on-going

Continuous adaptation to changing‘Driving Forces’

Corporations CSR

CSR ‘Drivers’:

2. Globalization

1. SocialExpectations

Class 1Class 1

Framework for Strategic Integration:

3 + 1=

3 Steps + 1 Continuous Action

Step 1 ???

Step 1: Analysis

1. CSR Audit → Gap Analysis

2. Stakeholder Process (See Class 2)- Stakeholder Analysis- Stakeholder Dialogue

3. CSR-SWOT

Step 1: Analysis

1. CSR Audit

“As-is Analysis”

Goal: Assess the whole picture

Basis for “Gap Analysis”

Step 1: Analysis

1. CSR Audit

- CSR definition - 4 key criteria ???

- Existing CSR policies, standards, values, Corporate Motivation Nalco

- Understand current CSR commitments, external standards used

- Structures: Current departments, functional areas, cross-functionality

- CSR issues currently being addressed

- Stakeholder Overview of current stakeholder ‘dialogue’

- Current CSR programs and activities

Step 1: Analysis

External Divers/Motivation

Re-active vs. Pro-activeNike, Gap, BP, Starbucks ??

What about Nestle???

LINK

1. CSR Audit

Internal Drivers/Motivation

- Honest (‘self’-) analysis

- Philanthropic and /or(??) business incentives

Step 1: Analysis

Decisions made by Humans

1. CSR Audit

- CSR definition

- Existing CSR policies, standards, values, Motivation

- Understand current CSR commitments, external standards used

- Structures: Current departments, functional areas, cross-functionality

- CSR issues currently being addressed

- Stakeholder Overview of current stakeholder ‘dialogue’

- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit

Which CSR programs …

… are not necessarily referred to as “CSR” ?

Step 1: Analysis

1. CSR Audit

- ISO 14001/EMAS

- Health and Safety (SA 8000)

ISO for CSR ???

Step 1: Analysis

ISO for CSR

ISO 26000: Launched November 1st, 2010 !Guidance standard on social responsibility

1. CSR AuditStep 1: Analysis

1. CSR Audit

- CSR definition

- Existing CSR policies, standards, values, Motivation

- Understand current CSR commitments, external standards used (e.g. ISO 14001, SA 8000)

- Structures: Current departments, functional areas, cross-functionality

- CSR issues currently being addressed

- Stakeholder Overview of current stakeholder ‘dialogue’

- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit:

‘I I I’

Internal ‘Intelligence’ Investigation:

Step 1: Analysis

Which departments responsible for CSR issues ?

1. CSR Audit

‘CSR Departments’

- Communications/PR- Marketing

- Human Resources- (Senior) Management

Which department typically most reactive … or ‘slow’ on take-up ?

Step 1: Analysis

1. CSR Audit

- CSR definition

- Existing CSR policies, standards, values, Motivation

- Understand current CSR commitments, external standards used (e.g. ISO 14001, SA 8000, ISO for CSR ???)

- Structures: Current departments, functional areas, cross-functionality

- CSR issues currently being addressed

- Stakeholder Overview of current stakeholder ‘dialogue’

- Current CSR programs and activities

Step 1: Analysis

Which stakeholders almost all companies

irrespective of existing CSR strategy???

1. CSR Audit

How would you do an Audit ???

Step 1: Analysis

1. CSR Audit

How?Method:

Internal:1. Desk-top study: Document Analysis2. Executive, Management & Staff Interviews

External:3. Reputation surveys, benchmarking, CSR Reports (GRI, AccountAbility Rating)

Step 1: Analysis

Step 1: Analysis

1. CSR Audit → Gap Analysis

2. Stakeholder Process- Stakeholder Analysis … Components ???- Stakeholder Dialogue

3. CSR-SWOT

Step 1: Analysis

Step 1: Analysis

1. CSR Audit → Gap Analysis

2. Stakeholder Process- Identification of Issues- Selection of Stakeholder- Prioritization of Stakeholders- Stakeholder Dialogue

3. CSR-SWOT

Stakeholder Analysis

Step 1: Analysis

See Class 2!

2. Stakeholder Process- Identification of Issues- Selection of Stakeholder- Prioritization of Stakeholders- Stakeholder Dialogue

Stakeholder Analysis

Step 1: Analysis

Significance:

More adaptive to External Drivers (Social Expectations &

Globalization)

Corporations CSR

CSR ‘Drivers’:

2. Globalization

1. SocialExpectations

Shareholder Model

drive management1. Separation of responsibilities between private & public sectors

2. Fiduciary Duty of Management Board to Shareholders: Profit

Shareholder Model:Inflexible to change

Stakeholder Model:Adaptive to change

Class 1

Class 2

However:

Step 1: Analysis

Ethical/Philanthropic

Good for BusinessCSR

COMPLIMENT

NOTCONTRADICT

CSR is a business strategy:

Summary:Stakeholder Process: Good for business and Stakeholders

1. Stakeholder Analysis:

Step 1: Identification of Issues

Step 2: Selection of Stakeholders

Step 3: Prioritization (mapping)

2. Stakeholder Dialogue

Formulation of CSR Strategy

Stakeholder Process

High Priority:

Manage Closely

Medium Priority:

Keep Satisfied

Medium Priority:

Keep Informed

Low Priority:

Monitor (Minimum effort)

Po

we

r o

f S

take

hol

de

r

Interest of Stakeholder(e.g. Automotive industry – product safety, climate change

Tobacco Industry – … )

Stakeholder Mapping

?

Can Stakeholder Approach compliment business model?

Or too much focus on Stakeholders → distractionof finding CSR programs that compliment business activities ???

Class 1Class 2

‘Outsourcing’ CSR:

Risking ‘hodgepodge’ of un-coordinated CSR activities

and philanthropic

activities?

What do you think?

Does Kramer & Porter Inside-Out/Outside-In Model work

better ??

Step 1: Analysis

Arguments for CSR

Philanthropic: Cliché, but basic truth!

Company Society

Relevance in strategic aspect of CSR:Strategy should focus on compatibility, NOT on friction

Healthy Society needs well functioning companies!!

(Jobs, taxes, goods & services)

Company needs:

Tangible Benefits:Infrastructure, police, employees

& customers

Intangible Benefits:Water, fresh air, facilitating

investment through functioning government

Source: “Strategy and Society”, Porter & Kramer

Inside-Out:Impact on Society

Outside-In:Impact on “Competitive Positioning”

Class 1

Step 1: Analysis

Impact of Society on

Company

Impact of Company on

Society

CSR

How does this compares with Stakeholder Model ?

Step 1: Analysis

High Priority:

Manage Closely

Medium Priority:

Keep Satisfied

Medium Priority:

Keep Informed

Low Priority:

Monitor (Minimum effort)

Po

we

r o

f S

tak

eho

lde

r

Interest of Stakeholder

Automotive industry – product safety, climate changeNike, BP, Tobacco Industry – …

Stakeholder MappingClass 2

Both ways?

Step 1: Analysis

1. CSR Audit → Gap Analysis

2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue

3. CSR-SWOT

Step 1: Analysis

And/orKramer & Porter:

Inside-Out/Outside-In Model

Step 1: Analysis

1. CSR Audit → Gap Analysis

2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue

3. CSR-SWOT

Step 1: Analysis

And/orKramer & Porter:

Inside-Out/Outside-In Model

3. SWOT

CSR-SWOT Analysis:

- Putting it all together

- Linkage to next part

Step 1: Analysis

Framework for Strategic Integration:

Step 1: Analysis

… Step 2 ???

2. CSR Strategy

Strategy to compliment business activity

… CSR is Business Strategy(see EU Definition !)

1st Step??

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation

2. CSR Structure

3. Staffing Plan

4. Budget

Step 2: CSR Strategy

1. Policy Formulation

- Priorities

- Core Values

- Formulation of Policy Statement

Step 2: CSR Strategy

1. Policy Formulation

- Formulation of Strategy

How long before public starts identifying CSR strategy with company ?

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation

2. CSR Structure

3. Staffing Plan

4. Budget

Step 2: CSR Strategy

2. CSR Structure

Choose structural framework

- Size- Corporate structure

- Sectors involved

... geographic locations, risk areas, commitment

- New or improved structure?

Step 2: CSR Strategy

What is important for an effective

Structure ?

Step 2: CSR Strategy

‘Cross-Functional’

Step 2: CSR Strategy

Why so important in CSR ?

2. CSR Structure:

CSR is cross-functional:

- Environment- Government- Communities- Employees

- Supply Chain- Customers

- Shareholders

7 StakeholderGroups

Step 2: CSR Strategy

2003:

‘Embedding’

Step 2: CSR Strategy

Stage 1:CSR non-

existent

Stage 4:‘CSR’

Intrinsicbusiness strategy/activity

??

Stage 3:Strategic CSR:

Strategycomplimentingbusiness activity

Stage 2:CSR non-strategic:

- Philanthropy- Donations

- Volunteering, etc.

Evolution of CSR:

Classes 2 to 4

CSR Sustainability?

Framework for Strategic Integration

Integrating sustainability into company’s:

… at all levels of the organization

= ‘Embedding’

- Values - Culture

- Operations- Business decisions

Step 2: CSR Strategy

2. CSR Structure:

Mechanisms for involving functional areas, departments, etc.

Roles and responsibilities of each employee and/or group (committee) involved with CSR efforts

(Board committee, executive committee, specific CSR committee, etc.)

Step 2: CSR Strategy

Increasing level of CSR commitment

Source: Designing a CSR Structure, BSR

Step 2: CSR Strategy

1. Policy formulation

2. CSR Structure

3. Staffing Plan

4. Budget

Step 2: CSR Strategy

3. Staffing Plan

Identify CSR-specific staff roles and responsibilities at the different levels.

Step 2: CSR Strategy

Step 2: CSR StrategyDaimler’s Corporate Governance Structure

How would you design Daimler’s CSR Structure?

Daimler’s Sustainability Governance

Structure(P. 16)

Step 2: CSR Strategy

1. KeyStakeholder

Groups

???2. Cross-

Functionality

Daimler’s Sustainability Governance

Structure(P. 16)

Step 2: CSR Strategy

1. KeyStakeholder

Groups

Which ones??

2. Cross-Functionality

Notice:‘Integration’

CoreBusinessActivity

Centralized, de-centralized ?Top-down, bottom-up ?

Step 2: CSR Strategy

Daimler’s Sustainability Governance

Structure(P. 16)

Step 2: CSR Strategy

1. KeyStakeholder

Groups

Which ones??

2. Cross-Functionality

Notice:‘Integration’

Step 2: CSR Strategy Daimler’s Environmental Structure p.19

Life-cycleAnalysis

Bottom-up, Top-down ?

Daimler’s CSR Structure

‘Hybrid’

Step 2: CSR Strategy

Daimler:Committed to CSR ?

Step 2: CSR Strategy

Daimler’s Sustainability Governance

Structure(P. 16)

Step 2: CSR Strategy

1. KeyStakeholder

Groups

Which ones??

2. Cross-Functionality

Notice:‘Integration’

Daimler’s CSR StructureWhere is Daimler (Page 16)?

Step 2: CSR Strategy

Increasing level of CSR commitment

Step 6: Daimler’s CSR StructureWhere is Daimler (Page 13)?

Board of Management

Sustainability Board

Step 2: CSR Strategy

Increasing level of CSR commitment

Daimler’s CSR Structure

Centralized or de-centralized ?Step 2: CSR Strategy

?

Sustainability Office

Daimler’s CSR StructureStep 2: CSR Strategy

Mobile’s CSR StructureStep 2: CSR Strategy

Step 2: CSR Strategy - Subsidiary of KBC (Belgium, Flemish)- Required CSR in 2005

- Communications Intern tasked

2006: Allocated budget: New CSR Policy:

1. Professional Business Ethics2. Employees and their families3. Attitude to the environment

4. Care for the community (“CSR-led sponsorship”)

What evolutionary stage of CSR– strategic, non-strategic?

Step 2: CSR Strategy

How to manage CSR?

2007: CSR Expert Task Force (ETF):1. Head of External Communications2. Head of Retail Segment Marketing

3. Head of PSB Retail Segment4. Head of Human Resources

5. Head of Legal6. Head of Public Affairs

7. Head of Marketing Communications (with an advisory vote power)8. CSR Officer

9. CSR Manager

Main focus area of ETF ?

Step 2: CSR Strategy

2007: CSR Expert Task Force (ETF):

Main focus areas:

- Risk Management & Compliance- PR, Communications & Marketing

Step 2: CSR Strategy

2007: CSR Expert Task Force (ETF)

ETF =CSR Manger

+Problem ?

2008: Country Team Sustainability Committee (CTSC)

CTSC =CSR Manger

+

2008: Country Team Sustainability Committee (CTSC) :

1. CEO of ČSOB Pojišťovna2. PSB and Direct Banking Business Senior executive director

3. Corporate banking Senior executive director4. Corporate Office Director

5. External Communication Director

6. CSR Manager

Step 2: CSR Strategy

Step 2: CSR Strategy

CSR Expert Task Force

1. Identifies risks, proposes strategies

2. Votes on general budget components(Budget: 0.5% net profit)

Country Team Sustainability Committee (CTSC)

3. Votes on specific programs

Implementation by CSR Team

CSRManager

Step 2: CSR Strategy

1. Policy formulation

2. CSR Structure

3. Staffing Plan

4. Budget

Step 2: CSR Strategy

4. Budget

Assess budget structure and size …

Typically, CSR Budget in EE Companies what percentage of net profit?

More effective if tied with PR Budget!

Step 2: CSR Strategy

Framework for Strategic Integration:

Step 1: AnalysisStep 2: Strategy

… Step 3 ???

Step 3: Implementation

Goal: Long-Term Integration

Embedding CSR management system into processes and programs

Step 3: Implementation

2003:

‘Embedding’

Step 2: CSR Strategy

Stage 1:CSR non-

existent

Stage 4:‘CSR’

Intrinsicbusiness strategy/activity

??

Stage 3:Strategic CSR:

Strategycomplimentingbusiness activity

Stage 2:CSR non-strategic:

- Philanthropy- Donations

- Volunteering, etc.

Evolution of CSR:

Classes 2 to 4

CSR Sustainability?

Reporting & Monitoring

Communication Management Tool

See Class 4

Framework for Strategic Integration:

3 + 1

=

3 Steps + 1 Continuous Action ?

Building Senior Vision & Support

Especially ifRe-active … (or not ‘-active’):

- Get clear CSR Mandate- Educate Board, CEO and employees

- Build Board & CEO level support- Strengthen company-wide support

Continuous: Building Senior Vision & Support

Building Senior Vision & Support

… it’s all about (internal) communication!

- Workshops-Training

- Personal Contact- Etc.

Gradual Process, building on success.

Continuous: Building Senior Vision & Support

Step 3: Implementation

1. Monitoring & Reporting

Step 2: CSR Strategy

1. Policy formulation

2. CSR Structure

3. Staffing Plan

4. Budget

Step 1: Analysis

1. CSR Audit

2. Stakeholder Process- Stakeholder Analysis(Identification, Selection and Prioritization)- Stakeholder Dialogue

ORKramer & PorterInside-Out/Outside-In Model

3. SWOT

Framework for Strategic Integration

Building Senior Vision and Support