Corporate Social Responsibilty

Microsoft(503) 555-0167 Newsletter Date Volume 1, Issue 1 BY- SOHAM MADAN XI-I Of Special Interest CSR

Corporate Citizenship
As an industry leader and the world's largest software company, Microsoft has a responsibility to act as a good corporate citizen. Whether it is complying with local laws and regulations, demonstrating ethical business standards, mitigating risks to the environment, or protecting human rights, Microsoft is committed to being a global leader in corporate responsibility. Corporate citizenship is also core to the Microsoft business strategy and the way that we interact with customers, partners, governments, and employees. It is a way of doing business that recognizes the effect that Microsoft has on society and the effect that society has on our business.

CSR at Microsoft
Dan Bross, Microsofts Senior Director of Corporate Citizenship. Seven years ago, Microsoft started a corporate social responsibility program called Corporate Citizenship. Citizenship is a set of corporate activities that add business value and address a range of social issues. If these activities are merely add-ons, the value that they add will be very limited. For this reason, under the leadership of Dan Bross, the Corporate Citizenship program seeks to build these activities into the very structure of Microsoft. How is this integration achieved? First, they developed a global strategy that was summarized in a 12-page

DAN BROSS Then they asked their citizenship leagues to localize it based on the issues that are most relevant for them. For example, branches in Switzerland chose to address issues around child safety by focusing on protecting children from child predators. They worked with schools and citizen groups to teach parents how to use privacy settings to prevent predators from contacting their children. In Japan, the focus has been on aging populations. The citizenship strategy helped local teams to identify and develop a citizen plan around the issues that are most relevant for their context.

Here in Washington, Microsoft has partnered with the state government to provide training to the unemployed and to veterans. They provide vouchers so that people can take short courses on Microsoft Word, for instance, and gain skills that will help them find work. Microsoft is also seeking to reduce its environmental impact. Last week, I had lunch in their corporate cafeteria. Theyve obviously taken huge steps to reduce waste by providing receptacles for recycling and composting. Eating utencils are made of compostible materials as well. The environmental team worked with developers of the Windows 7 Operating System to increase its energy-saving functionality. Reducing the power usage of the Windows 7 also gave them a new way to market their product. Bross did note that one of Microsofts challenges is creating more transparency in theirsupply chain. In early February, he met with

numerous investors and investment firms in Europe, whose combined stockholdings were in the hundreds of millions of dollars. These stockholders were deeply concerned about how Microsoft was addressing issues of human rights and carbon emissions. Bross said that he looked forward to working with supply-side operations to improve transparency. He reflected, I am very proud to be able to work at a company where that kind of feedback is received openly with a willingness to listen and to learn and to improve. That is not always the case. Another challenge is communicating more widely with shareholders. Those investors knew what Microsoft was doing because they were able to talk with Bross directly. But they asked him, If this is so core [to your mission], why isnt it more visible on the homepage of your website? Hes seeking to make his team more effective in getting corporate citizenship initiatives into the central marketing group messaging. Microsoft does engage in reporting and Bross argued that GRI is definitely the most effective reporting mechanism. But citizenship metrics can be hard to measure. Its important to measure them, however, so that companies will view CSR as a program that adds value to the organization. He recommended reading Bill Gates speech on Creative Capitalism, which provides a model for value-adding. Assessment - Bross made several comments stating that corporate citizenship aligns with increasing stockholder value. Yet this clearly is not always the case. There are times when being a good corporate citizen clashes with increasing stockholder value, especially in the short term. In the current corporate legal framework, such clashes are very difficult to navigate. Yet after Bross talk, I was left to wonder if and how the Corporate Citizenship programs at Microsoft address these tensions.

- Microsoft makes one of its most exciting

contributions through their basic business structure. According to Bross, Microsoft has over 600,000 business partners globally. For every $1 that Microsoft makes, their partners make $8.70 on average. This means economic development for local economies throughout the world. It translates into jobs, income, and food on the table for partners and their employees in developing countries. Thats the classical model at its best! Yet what surprised me about the Corporate Citizenship program is something that Bross didnt mention. As many are aware, Microsoft has been accused of anti-trust activities that are detrimental to competitors. In 2008, the European Commission fined Microsoft 899m euros ($1.4 bn), claiming that Microsofts tying of Internet Explorer to the Windows operating system harms competition between web browsers, undermines product innovation and ultimately reduces consumer choice.1 After hearing Bross describe the numerous programs and activities in which Microsoft is engaged to build a better world, it struck me as problematic that they mightat the same timebe engaging in illegal activities that stifle competition and the growth of local innovation and economies. I suspected that their CSR activity really was simply an addon that had little impact on Corporate Governance, Operations, or the Legal/Ethics department of the organization. Yet when I did a bit of research, I was surprised to see that their Corporate Citizenship report indicated more integration within the company than Id expected. For example, the citizenship report listed the resolution with the European Commission as one of the goals and accomplishments for 2010.