What is CSR?

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Booz & Company
Jeddah, April 2013
Sustainable CSR
Saudi CSR Forum 2013
Session I: Achieving a Triangular Partnership in Social Responsibility
By Salim Ghazaly (Principal Booz & Company)
This document is confidential and is intended solely for
the use and information of the client to whom it is addressed.
0
CSR is about businesses internally integrating and externally
impacting social, economic and environmental concerns
What is CSR?
CSR is a concept whereby companies integrate social
and environmental concerns in their business
operations and in their interaction with their
stakeholders on a voluntary basis
Triple Bottom Line (TBL) approach defines the
economical, social and environmental performance
of a company as a criteria to measure its overall
success
The Global Reporting Initiative (GRI) has pioneered
the development of the world’s most widely used
sustainability reporting framework setting out the
principles and indicators to measure and report their
economic, environmental, and social performance
Social
Social success is defined by
the adherence of the company
to fair and beneficial business
ethics towards labor and the
community
Environmental
Environmental success is
defined by the ability of
business practices to reduce
harm and increase benefits
to the environment
Economic
CSR
Economic success is
defined by the capability to
achieve business
sustainability and answer
stakeholders financial
needs and aspirations
Source: Desk research, Booz and Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
1
CSR has evolved from risk mitigation to creating value and
becoming a source of competitive advantage
CSR Value Creation and Strategic Benefits
Brand Equity Value of CSR
1
Estimate Enterprise Value of the
Firm
USD 1.4 Bn
CSR Reporting
of Top 250
Fortune 500
companies
increased from
52% in 2005 to
85% in 2010
CSR Strategic Benefits - CXO’s Perspective
(Survey of ME Executives) (2010)
3%
7%
7%
Estimate Value of Brand Equity
Estimate Value of CSR
Component
3
Client CSR program will range depending on the level of
sophistication of the program. USD 35 million represents
CSR value corresponding to a best in class program
2%
20%
3%
2%
18%
40%
USD 270 Mn
USD 35 Mn
(13%)
5%
18%
20%
35%
2
2%
30%
40%
47%
33%
30%
Capture New
Markets
and Market
Share
Attract New
Customers
58%
40%
Maintain/Build
Strong
Reputation
Attract and
Retain
the Best
Employees
40%
Foster
Innovation
Strongly Disagree
Neutral
Disagree
Agree
Strongly Agree
Source: Branding Insider, Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
2
CSR clearly results in growth, human development, innovation,
and better environmental performance
CSR Correlation with Development Indices
6
Key Takeaways
5
Global Innovation
Index
Growth Competitiveness
Index
The Arab Responsiveness Competitiveness Index vs. Growth Competitiveness,
Human Development, Innovation, and Environmental Performance Indices
R2 = 0.66
3
0
 Clear positive correlation
between front end policies
regarding responsibility
and actual growth
competitiveness in the Arab
World
R2 = 0.75
0
53
60
68
50
Human Development
Index
1
R2 = 0.80
0
53
60.5
68
Arab Responsibility Competitiveness Index
60
70
Arab Responsibility Competitiveness Index
Environmental Performance
Index
Arab Responsibility Competitiveness Index
R2 = 0.18
53
60
 Governments and business
leaders in the region have a
strategic interest and various
levers to activate:
− Increase national
competitiveness
− Increase national income
− Achieve social benefits
− Promote human
development and
innovation
− Etc.
68
Arab Responsibility Competitiveness Index
Source: 2009 Responsible Competitiveness Index, 2009 Growth Competitiveness Index, Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
3
In developing countries in particular, CSR is perceived as a means
of social and economic development
ILLUSTRATIVE
Perception of CSR
(Developed Vs. Developing Countries)
Citizens want “Core” CSR Projects
Citizens Want CSR to Promote National Development
80
Ensuring products
are safe/healthy
66
71
Not harming
the environment
62
68
Treating employees
fairly
57
66
Ensuring responsible
supply chain
58
57
Providing quality products /
services at the lowest pric
55
56
Applying same high
standards globally
42
Developed Countries
40
Increasing global
economic stability
40
40
Reducing human
rights abuses
38
37
Helping reduce
rich-poor gap
39
33
Supporting charities /
community projects
47
32
Solving social
problems
Supporting progressive
government policies
KSA
Education
Employability
40
China
Worker Safety
Countering
Pollution
27
36
Developing Countries
Source: Corporate Socieal Responsibility Monitor 2009, Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
4
To ensure sustainable CSR, companies need to coordinate and
align with governments, academia, and civil society organizations
ILLUSTRATIVE
Sustainable CSR Framework
 Provide regulatory incentives
 Issue CSR legislations
 Institutionalize CSR
Governments
Companies
 Integrate CSR in academic
curriculum
 Support CSR research
Civil Society
Organizations
 Seek and Challenge CSR
commitments from companies
 Advocate CSR regulations
Academia
Source: Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
5
The MENA region has started witnessing some emerging CSR
trends, however several steps could be followed going forward
ILLUSTRATIVE
Current MENA Trends and the Way Forward
MENA Trends
Looking Forward
MENA Companies Joining UN Global Compact
Engage Senior Leaders
(*)
34% have CSR guidelines
10% communicated CSR goals
3% have CSR office
67%: CSR benefits our company
+259

262
3

2003
Strengthen Corporate Governance and Transparency
2012
Egypt - Care with Love


Improve the living conditions of those in need
for short or long term health care
Provide Job opportunities for unemployed
young people in the field of health care
Greater Autonomy to MNC MENA Subsidiaries
Donate books and provide teacher training to132 schools in
11 countries across the ME

More than 250 HSBC volunteers helping with community
events

The program was awarded an International Business Award
for CSR Program of the Year in the ME
Looking Forward
EXAMPLE
“Al Muhaidib Group:
Corporate Governance
Creates a CSR Agenda”
Bank Muscat: Fullfledged CSR
Department
Only 4 in KSA
Social Businesses / Entrepreneurship Proliferation

65%: CSR is our responsibility
Majority in Iraq (61),
UAE (41), Syria (32),
and Egypt (36)
Integrate with the Operating Model
Both
internal and
external
CSR should be part
of the business
strategy
Leverage Business Capabilities
Employee
Skills
Technology
Capabilities
Social
networks
Partner with Experts
Civil Society Organizations
Public-Private Partnerships (PPP)
Social Business Ventures
Measure Results
Currently:
Measure Input
Target:
Measure Results
(*)
A strategic policy initiatives for businesses committed to aligning their operations and strategies to 10 principles in the areas of human rights, labor rights, environment, etc.
Source: Corporate Social Responsibility Monitor 2009, Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
6
In addition, a successful CSR environment requires efforts from
government, private sector, and non-governmental organizations
Potential Activities
Synopsis
CSR Impact Assessment
ILLUSTRATIVE
Government
Academia
Civil Society
Governments have an evident interest
in CSR as it is a very cost-effective
means of enhancing sustainable
development
World-class academic institutions play
an important role in promoting CSR
through their curricula, regional
academia should follow
Civil society organizations are growing
in the region and attracting more
support as governments are partnering
with them
Enact Legislation to Promote CSR (e.g.
corporate governance laws)
Include CSR in Higher Education
Partner with Private Sector Companies
Develop a CSR Institutional Framework
Train Teachers on CSR
Lend Credibility to CSR Initiatives
Provide CSR Incentives
Include CSR in School Plans
Monitor Private Sector and Government
Performance
Provide CSR Training and Launch
Promotional Campaigns
Produce CSR Research
Promote “Venture Philanthropy”
Partner with Companies on CSR
Initiatives
Source: Booz & Company analysis
Booz & Company
April 2013
CSR Forum Jeddah.ppt
7
Over time, Booz & Company CSR program developed to become
integrated within the company’s DNA
Management Consulting CSR Maturation Process
High
 Intensive interactions through high
profile programs and partnerships
 Mainly with pro-bono consulting
services, on-going support, etc.
Resources / Investment
 Indirect engagement
 Limited scope of activities
 Mainly in the form of monetary and inkind donations
 Opportunistic engagement with
selected organizations
 Mainly in the form of co-marketing
effort, employee volunteerism,
fundraising, etc..
Current Booz & Company
positioning
Philanthropic
Transactional
Integrative
Low
CSR Maturation
Booz & Company
April 2013
CSR Forum Jeddah.ppt
8
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