Corporate Social Responsibility

Class 3: CSR Management System

Syllabus developed by Jens Trummer

Agenda
CSR Management System
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

Class 3:

CSR Management System

CSR LAB

What is difference ?

and

2 Types of Business Models: 1. Sustainable Business Model = CSR???

CSR Management System

2. Business Model with CSR Programs:

Evolution of CSR: Stage 3: Strategic CSR: Strategy complimenting business activity

CSR is a business strategy:

NOT CONTRADICT

Ethical/ Philanthropic

CSR

Good for Business

COMPLIMENT

Stage 1: CSR nonexistent

Stage 4: CSR Management Sustainability Stage 2: Intrinsic System CSR non-strategic: business - Philanthropy - Donations - Volunteering, etc.

strategy/ Activity: Still CSR ??

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

CSR Drivers:
Class 1
1. Social Expectations

Corporations

CSR

2. Globalization

Framework for Strategic Integration:

3+1 = 3 Steps + 1 Continuous Action Step 1 ???

Step 1: Analysis

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

External Divers/Motivation

Re-active vs. Pro-active

Nike, Gap, BP, Starbucks ?? What about Nestle??? LINK

Step 1: Analysis

1. CSR Audit
Internal Drivers/Motivation
- Honest (self-) analysis - Philanthropic and /or(??) business incentives

Decisions made by Humans

Step 1: Analysis - CSR definition

1. CSR Audit

- 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

1. CSR Audit
ISO for CSR

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

Step 1: Analysis - CSR definition

1. CSR Audit

- 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:

Which departments responsible for CSR issues ?

Step 1: Analysis

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 - CSR definition

1. CSR Audit

- 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

Which stakeholders almost all companies irrespective of existing CSR strategy???

- Stakeholder Overview of current stakeholder dialogue

- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit

How would you do an Audit ???

Step 1: Analysis

1. CSR Audit

How?
Method: Internal: 1. Desk-top study: Document Analysis 2. 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

See Class 2!

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

3. CSR-SWOT

Step 1: Analysis

2. Stakeholder Process - Identification of Issues Stakeholder - Selection of Stakeholder Analysis - Prioritization of Stakeholders - Stakeholder Dialogue
Class 1
Shareholder Model

CSR Drivers:
1. Social Expectations

Significance:
Corporations

1. Separation of responsibilities between private & public sectors 2. Fiduciary Duty of Management Board to Shareholders: Profit

CSR

drive management

2. Globalization

More adaptive to External Drivers (Social Expectations & Globalization)

Shareholder Model:
Inflexible to change

Stakeholder Model:
Adaptive to change

Class 2

Step 1: Analysis

However:
Class 2
Class 1
CSR is a business strategy:

NOT CONTRADICT

Can Stakeholder Approach compliment business model? Or too much focus on Stakeholders distraction of finding CSR programs that compliment business activities ???
Summary:
Stakeholder Process: Good for business and Stakeholders 1. Stakeholder Analysis:
Stakeholder Mapping

Ethical/ Philanthropic

CSR

Good for Business

COMPLIMENT

Outsourcing CSR: Risking hodgepodge of un-coordinated CSR activities and philanthropic activities? What do you think?

Step 1: Identification of Issues

Power of Stakeholder

Medium Priority: Keep Satisfied

High Priority: Manage Closely

Stakeholder Process

Step 2: Selection of Stakeholders Step 3: Prioritization (mapping)

Low Priority: Monitor (Minimum effort)

Medium Priority: Keep Informed

2. Stakeholder Dialogue

Interest of Stakeholder
(e.g. Automotive industry product safety, climate change Tobacco Industry )

Formulation of CSR Strategy

Step 1: Analysis
Class 1

Does Kramer & Porter InsideOut/Outside-In Model work better ??

Arguments for CSR
Inside-Out: Impact on Society

Philanthropic: Clich, but basic truth!

Healthy Society needs well functioning companies!! Company (Jobs, taxes, goods & services) Society

Company needs: Tangible Benefits: Infrastructure, Outside-In: police, employees & customers Intangible Benefits: Water, fresh air, facilitating investment through functioning government

Impact on Competitive Positioning

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

Source: Strategy and Society, Porter & Kramer

Step 1: Analysis

CSR
Impact of Society on Impact of Company on

Company

Society

How does this compares with Stakeholder Model ?

Step 1: Analysis
Class 2

Stakeholder Mapping
Power of Stakeholder
Medium Priority: Keep Satisfied High Priority: Manage Closely

Both ways?

Low Priority: Monitor (Minimum effort)

Medium Priority: Keep Informed

Interest of Stakeholder Automotive industry product safety, climate change Nike, BP, Tobacco Industry

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis 2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue

And/or Kramer & Porter: Inside-Out/Outside-In Model

3. CSR-SWOT

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis 2. Stakeholder Process - Stakeholder Analysis - Stakeholder Dialogue

And/or Kramer & Porter: Inside-Out/Outside-In Model

3. CSR-SWOT

Step 1: Analysis

3. SWOT
CSR-SWOT Analysis:

- Putting it all together - Linkage to next part

Framework for Strategic Integration:

Step 1: Analysis Step 2 ???

Step 2: CSR Strategy

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
Why so important in CSR ?

Step 2: CSR Strategy

2. CSR Structure:
CSR is cross-functional: - Environment - Government - Communities - Employees - Supply Chain - Customers - Shareholders

7 Stakeholder Groups

Evolution of CSR:

Step 2: CSR Strategy

Stage 1: CSR nonexistent

Stage 3: Strategic CSR: Strategy complimenting business activity

Stage 2: CSR non-strategic: - Philanthropy - Donations - Volunteering, etc. CSR

Classes 2 to 4

Stage 4: CSR Intrinsic business strategy/ activity ?? Sustainability ?

2003:

Embedding

Step 2: CSR Strategy

Framework for Strategic Integration

Integrating sustainability into companys:
- Values - Culture - Operations - Business decisions

= Embedding

at all levels of the organization

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.)

Increasing level of CSR commitment

Source: Designing a CSR Structure, BSR

Step 2: CSR Strategy

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

Daimlers Corporate Governance Structure

How would you design Daimlers CSR Structure?

Step 2: CSR Strategy Daimlers Sustainability Governance Structure (P. 16)

1. Key Stakeholder Groups

???
2. CrossFunctionality

Step 2: CSR Strategy Daimlers Sustainability Governance Structure (P. 16)

1. Key Stakeholder Groups Core Business Activity

Which ones??

2. CrossFunctionality
Notice: Integration

Step 2: CSR Strategy

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

Step 2: CSR Strategy Daimlers Sustainability Governance Structure (P. 16)
1. Key Stakeholder Groups

Which ones??

2. CrossFunctionality
Notice: Integration

Step 2: CSR Strategy

Daimlers Environmental Structure p.19

Bottom-up, Top-down ?

Life-cycle Analysis

Step 2: CSR Strategy

Daimlers CSR Structure

Hybrid

Step 2: CSR Strategy

Daimler: Committed to CSR ?

Step 2: CSR Strategy Daimlers Sustainability Governance Structure (P. 16)

1. Key Stakeholder Groups

Which ones??

2. CrossFunctionality
Notice: Integration

Step 2: CSR Strategy

Daimlers CSR Structure Where is Daimler (Page 16)?

Increasing level of CSR commitment

Step 2: CSR Strategy

Board of Management

Step 6: Daimlers CSR Structure Where is Daimler (Page 13)?

Sustainability Board

Increasing level of CSR commitment

Step 2: CSR Strategy

Daimlers CSR Structure

Centralized or de-centralized ?

Step 2: CSR Strategy

Daimlers CSR Structure

Sustainability Office

Step 2: CSR Strategy

Mobiles CSR Structure

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

Step 2: CSR Strategy

2006: Allocated budget: New CSR Policy:

1. Professional Business Ethics 2. Employees and their families 3. Attitude to the environment 4. Care for the community (CSR-led sponsorship)

What evolutionary stage of CSR strategic, non-strategic?

How to manage CSR?

Step 2: CSR Strategy

2007: CSR Expert Task Force (ETF):

1. Head of External Communications 2. Head of Retail Segment Marketing 3. Head of PSB Retail Segment 4. Head of Human Resources 5. Head of Legal 6. 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

2007: CSR Expert Task Force (ETF)

ETF =
CSR Manger +

Problem ?

2008: Country Team Sustainability Committee (CTSC)

CTSC =
CSR Manger +

Step 2: CSR Strategy

2008: Country Team Sustainability Committee (CTSC) :

1. CEO of SOB Pojiovna 2. PSB and Direct Banking Business Senior executive director 3. Corporate banking Senior executive director 4. Corporate Office Director 5. External Communication Director

6. CSR Manager

Step 2: CSR Strategy

Country Team Sustainability Committee (CTSC)

CSR Manager

2. Votes on general budget components

(Budget: 0.5% net profit)

1. Identifies risks, proposes strategies

CSR Expert Task Force

3. Votes on specific programs Implementation by CSR Team

Step 2: CSR Strategy

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!

Framework for Strategic Integration:

Step 1: Analysis Step 2: Strategy

Step 3 ???

Step 3: Implementation

Step 3: Implementation
Goal: Long-Term Integration
Embedding CSR management system into processes and programs
Evolution of CSR:

Step 2: CSR Strategy

Stage 1: CSR nonexistent

Stage 3: Strategic CSR: Strategy complimenting business activity

Stage 2: CSR non-strategic: - Philanthropy - Donations - Volunteering, etc. CSR

Classes 2 to 4

Stage 4: CSR Intrinsic business strategy/ activity ?? Sustainability ?

2003:

Embedding

Reporting & Monitoring

Communication Management Tool

See Class 4

Framework for Strategic Integration:

3+1 = 3 Steps + 1 Continuous Action ?

Continuous: Building Senior Vision & Support

Building Senior Vision & Support

Especially if Re-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

its all about (internal) communication!
- Workshops -Training - Personal Contact - Etc. Gradual Process, building on success.

Framework for Strategic Integration

Step 1: Analysis
1. CSR Audit 2. Stakeholder Process
- Stakeholder Analysis (Identification, Selection and Prioritization) - Stakeholder Dialogue

Step 2: CSR Strategy

1. Policy formulation 2. CSR Structure 3. Staffing Plan 4. Budget

Step 3: Implementation
1. Monitoring & Reporting

OR Kramer & Porter Inside-Out/Outside-In Model

3. SWOT

Building Senior Vision and Support