Corporate Social

Responsibility
Opportunities & Risks for Business

Neil Reape, Kristina Modee

Finpro Services Team, Finpro Energy & Environment Team
March 2009
Definition of CSR

"A concept whereby companies integrate social and environmental

concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis.” European Commission’s Directorate-General for Enterprise and
Industry

¾CSR covers social and environmental issues, in spite of the English term
corporate social responsibility;

¾CSR is not or should not be separate from business strategy and operations:
it is about integrating social and environmental concerns into business strategy
and operations;

¾CSR is a voluntary concept;

¾an important aspect of CSR is how enterprises interact with their internal and
external stakeholders (employees, customers, neighbours, non-governmental
organisations, public authorities, etc.)
CSR is dead……isn’t it?

“Thank goodness, now the recession's here we can forget

all that nonsense about corporate social responsibility
(CSR) and get back to trying to make some money”
Stefan Stern, Financial Times, Feb 2009
Times are changing……

“It’s a market transition

¾ Economic Volatility and if you catch market
transitions you can
¾ Globalization change the economic
future of the company
¾ Demographic upheaval and perhaps the
participation of…..global
citizenship”
¾ Climate change & scarce
resources John Chambers, CEO, Cisco

¾ Technology revolution
¾ Capital markets
The impact on citizens……
¾ Rise of the conscience consumer - Consumers feel
empowered as individuals and are willing to make
changes in their consumption habits.
¾ Disillusion concerning the faith in existing institutions
of providing solutions
¾ A new willingness to participate and take action
¾ Individuals are increasingly looking to align their
personal values with their careers
¾ Increase of “social intrapreneurs”
¾ Increase in the number of formal training programs,
such as MBAs, now focused on social entrepreneur-
ship and sustainability.
¾ Increase in demand of energy-efficient products,
technologies and related services – decrease of
demand of energy-intensive products
What drives companies?

Internal External
Stakeholders Stakeholders
•Management
•Customers
•Shareholders
•NGOs
•Employees
•Competitors
•Governments
Society/ •…
Environment Decisions
•Climate Change Cost…
•Resources, Prices Investment…
•New Technology Profit…
Image…
•Globalization Acceptance…
•… Compliance..
Regulation
•Financial incentives
•Legal obligations
From Corporate Governance to Corporate
Social Responsibility

Missing local
CG New regulation regulation CSR
threatening

Deregulation of Globalization
• Transparency welfare state • Finding sustainable
solutions that
• Business Ethics Pressure benefit both
Climate
from NGOs
• Governance Change company and
structure society
Growing customer,
employee & investor
awareness Environmental Investors
Investors
scandals Shareholders
Shareholders Customers
NGOs
…
The link between the employee and CSR

Case Study Mars Germany Based

on
ie w
Interv nd
o la
with R lent
ein , T a
St r
Directo
Euro p e
Mars used experts in “Employer Branding” to tie the values
of the company to those of the existing & future employees

¾Quality

¾Responsibility

¾Mutuality

¾Efficiency

¾Freedom
The link between the employee and CSR

Case Study Mars Germany Based

on
ie w
Interv nd
o la
with R lent
ein , T a
St r
Directo
Euro p e
Mars used experts in “Employer Branding” to tie the values
of the company to those of the existing & future employees

¾Quality

¾Responsibility
¾“By recruiting ethical people well suited to their jobs and
trusting them, we ask associates to be accountable for their
own high standards”

¾Mutuality
¾“Our actions should never be at the expense, economic or
otherwise of those with whom we work”

¾Efficiency

¾Freedom
The link between new business opportunities
and CSR

Case Study Cisco

Cisco looks at 4 key area’s in linking CSR to their business

¾Social Investments
¾Cisco Networking Academy
¾21st Century Schools l Y u t r zenka,
Michae D i r ector &
iv e
¾Global Education Program Execut M anage
r
Se n i o r
¾New partnership for Africa’s development
o m m unity
Fo r C o
t m e n t, Cisc
¾How we treat employees Inves n
s F o u ndatio
¾Environmental Impact System

¾Governance Practices
The link between new business opportunities
and CSR

Case Study Cicso

“Cisco is the first
Cisco looks at 4 key area’s in linking CSR to their business company to take a bold
step by investing now to
create demand in its
¾Social Investments to create demand
favour as well as
Public Private Partnerships focused on Education, in particular e- accelerate growth for
learning and collaboration in target markets within the Middle-East
which combines Cisco technology with initiatives that benefit the years to come.“
community:
Mark De Simone, VP
™ Jordan: Initiating partner to create a modern day education Middle East & Africa
curriculum and corresponding technological infrastructure in
Jordanian schools
™ Saudi Arabia: Working with 44 partners for Cisco Networking
Academy to qualify females in Cisco Certified Network
Associate
™South Africa: Building of an IP network for newly merged
cities in SA. Support by providing know-how, best practices,
necessary skills
Opportunities for new Service business (1)

People
Education Management

Demographics Values Collaboration

Transparency
Auditing
State Role
CSR Life Cycle
Technology
Corp.
Governance CSR
Su Accounting/Meas
s
Str taina Partnerships
uring
ate b
gie le Globalisation
s /P
roc
es s
Concrete Stakeholder
Opportunities: Engagement
Supply Chain
Management
Opportunities for new Service business (2)

CSR Opportunity Area Identified Service Opportunities (Selected Examples only)

Sustainable • Developing competitive advantage through Sustainable strategy
Strategy/Processes • Process Design/re-Design
• Cost saving/competitive advantage through Life Cycle processes
and technologies
• Marketing & Communications in CSR
Collaboration • Sharing information, managing and tracking shareholder
activities/opinions
• Collaborating with the wider community i.e. trend spotting,
networking, opinion barometer
• e-learning/blended learning concepts
Other (e.g. Financial) • Carbon Offset trading
• Retrofitting buildings/refurbishment e.g. “green real etate
consultants
• Insurance: Risk analysis, education
• Gaming for education purposes or fun
• Public Private Partnership Initiatives
The impact on business……

¾ Competitive Edge
Cost efficiency, better quality, better image, better
services, utilizing new windows of opportunities,
differentiation

¾Keep the room to manoeuvre

“Acting in an ethical way
Staying ahead of & impacting on regulation
is not only the right thing
to do — it also unlocks
¾Risk Management new ways for us to do
Dealing with corruption, health & safety, class action, business better “
reputational damage… Dan Henkle, SVP of
Social Responsibility,
GAP Inc
¾Retaining qualified employees
Improve employee motivation and loyalty
Conclusions

… and Big
Big Challenges…. Opportunities
¾ Cost efficiency
¾ Rising energy prices ¾ Better image &
¾ Critical customers reputation

¾ Increasing competition ¾ Differentiation from

competition
¾ Stricter regulation
¾ Reduced risks
¾ Fewer qualified
workers ¾ New markets &
customers
Appendix
The link between reputation and CSR

“Corporate Responsibility is no longer a specialist subject of interest

to particular interest groups, but part of the general concern of
consumers, investors, suppliers, customers, and of course
employees. That is reflected in our plans to integrate CR into our
mainstream reporting.” [Olli-Pekka Kallasvuo, CEO Nokia]
Nokia’s image in Germany
• Nokia is seen as the
industry leader regarding 3.7.08: Agreement
with local govt
CSR activities
• BUT: In August 2008 the
company still had not
recovered from its
dramatic image loss after 16th of May:
Final closure
the closure of a
production facility in
Bochum, Germany.
Growing consumer power and
awareness
CSR through Upturns & Downturns

Ï Economic & Social

concern re: globalisation
Ï Value Shift(s)
s Ï New Generation Activites
rend
pT
Ï Economic Growth
Ï Ozone Hole Discovery
U
Ï Green Politicians
Ï Green Consumer
Ï Corporate Environmental
Reporting

Ï Earth Day
Ï OPEC Oil Shock
Ð International Ecomic
Recession
Ð War
Ð Shell Nigeria
Ð Body Shop Report „your
Ð International Ecomic stolen future
Recession
Ð Political Changes USA
Ð BSE
av es
nw
Dow

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