The Value Proposition
for Corporate Citizenship
by Steven A. Rochlin and Bradley K. Googins, Ph.D.
A Center for Corporate Citizenship at Boston College Monograph
To the Reader:
This monograph is intended for executives who find
themselves on the front line of balancing the expectations of stakeholders—shareholders, employees,
communities, government and activists—with the
management of a successful business.
A value proposition for corporate citizenship provides
a company with the vision, policy direction, and strategy to guide its journey to excellence. Many of the
world’s most successful companies are following this
course and proving that the intangibles of values can
be put to work to create bottom-line results. Values
have become a key driver for citizenship in many leading companies, and their importance will continue to
grow with the complexities of the globalization.
This monograph provides a wide-lens perspective on
the benefit of values using the experiences of dozens
of the world’s leading companies. There is no onesize-fits-all model. To successfully use values to
anchor business strategy, a company must plot its
course based on the very specific coordinates determined by its history, industry, workforce, and other
aspects of its competitive environment. More universal are the four principles of corporate citizenship.
The Center for Corporate Citizenship at Boston
College defines the essence of citizenship as how a
company delivers on its core values in a way that:
•
•
•
•
Minimizes harm
Maximizes benefit
Is accountable and responsive to key stakeholders
Supports strong financial results
In the 21st century, business success will depend on
how well a company defines its core values and embeds
them into strategy and performance, effectively creating
the value proposition for corporate citizenship.
This monograph series is supported by
General Motors
T H E C E N T E R F O R C O R P O R AT E C I T I Z E N S H I P AT B O S T O N C O L L E G E • w w w. b c . e d u / c o r p o r a t e c i t i z e n s h i p
The Value Proposition for Corporate Citizenship
Introduction
In an era that holds ever-increasing expectations of the role of business in society, good corporate citizenship rests at the heart of competitive business strategy. The challenges of the 21st-century company
include such issues as transparency, stakeholder expectations, accountability, trust, and reputation.
Second, in the 21st century, excellence in operations
means making core values real. In the recent past,
ensuring quality throughout the production line and
value chain became a fundamental benchmark of good
business practice. In the same fashion, so too must values become embedded in every decision an employee—from leadership to the line—makes.
VALUES: CENTERPIECE OF CITIZENSHIP
Opportunity
Risk
Values
For Business
All companies have values—some more explicit than
others. Some values appear socially constructive, and
some seem destructive. The values companies truly act
upon are always at the heart of strategy for financial
success but are often less connected to the core principles of corporate citizenship.
Figure 1
To Business
Third, to make core values real, companies need to
build a value proposition for values and build a valuesbased operating system.
At worst, the values that most truly define the character,
conscience, and, ultimately, citizenship of the company
are provided only lip service. The vigilance afforded to
ensuring that the company minds its core assets and
competencies and creates profit stops short of ensuring
that its values are in place. At best, these values are
To Stakeholders
First, good corporate citizenship now requires a company to go well beyond compliance programs and charitable giving and align its values with the societal expectation that business serve the common good.
Too often companies have made distinctions between
their full values, the values that society expects them to
hold, and the fundamental design of their value proposition, or the “implicit promise a company makes to
customers to deliver a particular combination of values—price, quality, integrity, performance, convenience, and so on.”1
For Stakeholders
A major transition is under way in leading companies
to replace the traditional ways of practicing corporate
citizenship with a more strategic and integrated model.
At the core of this transition is the recognition that corporate values have to be taken more seriously and be
operationalized throughout the company. This, in
effect, is the foundation of the new corporate citizenship and represents the key driver of three critical shifts
in the role of business in society.
1Michael Treacy and Fred Wiersema, The Discipline of Market Leaders. 1995. Addison-Wesley Publishing: Reading, MA. p., xiv
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The Value Proposition for Corporate Citizenship
assumed healthy, present, and accounted for until
deemed otherwise. It is, in the parlance of sports, as if
companies are minding the blocking, while blithely
assuming the tackling will take care of itself. It won’t.
Every day across every industry, evidence pours in
demonstrating the consequences of companies
neglecting to build true commitments to values and
corporate citizenship. This is not a tenable situation for
the 21st-century company. While financial success
remains central, society’s growing expectations for
business require that the full scope of values be given a
prominent place at the table with return on investment.
The impetus for this includes:
• Governments around the world possess fewer
resources and solutions for intractable problems
and increasingly look to companies to lead the
charge of social and environmental innovation.
• Increasing pressures to limit regulation and oversight are creating countervailing pressures from
vocal social activists to find alternative policing
mechanisms, be they self-imposed by companies
or otherwise.
• The convergence of amassed corporate wealth and
power with the explosion of information and communication technology has emboldened the call
for greater transparency and accountability.
The drive for greater transparency and accountability
opens the curtain more and more. If a company says it
is committed to specific values, then it had better deliver on this statement or prepare for front-page headlines, lawsuits, charges of breach of trust from key
stakeholders, or all of the above.
Increasingly, businesses are becoming exposed to the
risks associated with the gap between what they say and
what they do. Credibility, reputation, and integrity in its
truest sense all require a new framing of corporate values. In the 21st century a company’s values must go far
beyond profits, for no other reason than that key stakeholders expect and demand it.
Today a company succeeds or fails on the strength of its
system of values. To be a great company, you have to be
a good company first, as GE CEO Jeffrey Immelt says.
“The world’s changed. Businesses today aren’t
admired. Size is not respected. There’s a bigger gulf
today between haves and have-nots than ever before.
It’s up to us to use our platform to be a good citizen.
Because not only is it a nice thing to do, it’s a business
imperative,” Immelt told Fortune (Nov. 15, 2004).
Sam Palmisano, CEO of IBM, suggests that companies
need a values-based management system: “You have to
empower people while ensuring that they’re making
the right calls the right way. And by ‘right,’ I’m not talking about ethics and legal compliance alone; those are
table stakes. I’m talking about decisions that support
and give life to IBM’s strategy and brand, decisions that
shape a culture. That’s why values for us aren’t soft.
They’re the basis of what we do, our mission as a company. They’re a touchstone for decentralized decisionmaking.”2
And in the 21st century a company cannot afford to
have one value dominate its “values-based management system” at the expense of others. This is at the
root of the Enron debacle and will mire others with
similar priorities into the same mess. Competitive companies of the future will find ways to fundamentally
align and embed their core values—including the values that society expects them to hold—in their operations, from strategy, to management, to the myriad
decisions large and small made by employees from top
to bottom.
These values must be fundamental to the corporate
value proposition that helps articulate the company’s
strategy to create and maintain competitive advantage.
But where do values fit in the corporate value proposition? Values belong at the center of business performance, thus creating a corporate citizenship value proposition defined as the implicit promise a company
makes to society to minimize harm, maximize benefits,
build accountability and responsiveness, and support
and drive financial results. Core values become one half
of the bifocal through which companies assess risks
and opportunities and respond to business interests
and stakeholders. Core values shape the decisions a
company—from leadership to the line— makes every
day. The business case for citizenship comes down to
2The HBR Interview: Samuel J. Palmisano,” (Harvard Business Review. December, 2004. p. 64-65)
2 • THE CENTER FOR CORPORATE CITIZENSHIP AT BOSTON COLLEGE • www.bc.edu/corporatecitizenship
The Value Proposition for Corporate Citizenship
advancing a company’s values. The challenge is to create a proposition that expresses the benefit of the values
and becomes an integral part of how wealth is created.
Ultimately, what distinguishes a company’s practice of
corporate citizenship is the way in which it delivers its
core values. Ascribing to the four principles of corporate citizenship is just the beginning. Each company
must customize the answers to a long list of questions.
For example, how does one limit harm? What defines a
true harm? How far should a company go to ensure
that harms are not committed? What happens when
either consequence of a choice will create some kind of
harm? What if society’s expectations demand unjust
behaviors? What if society’s expectations would make
the business unprofitable? The questions go on. While
typically receiving a great deal of attention from business ethicists, these questions are rarely noticed inside
businesses.
This paper provides answers and a three-part framework for creating the value proposition for corporate
citizenship.
1 Understand, align, and enhance the company’s
values:
• Recognize values as the foundation for corporate citizenship and elevate to the prominence
of financial success.
• Make choices on how to best bring the expectations of society into alignment with internal
corporate values.
• Ensure that the full scope of values underlies
all other tests for strategic decision-making.
2 Embed these balanced, integrated values into core
strategy:
• Assess risks.
• Identify opportunities.
• Blend strategy, values, risks, and opportunity to
drive innovation and improve existing business
performance.
3 Create supporting systems to reinforce values
in action:
• Provide training and incentives.
• Manage trade-offs, conflicts, and tension
among values.
1. Understand, Align, and Enhance Values
For the most part, businesses have stated values that
extend beyond making a profit for owners. In fact, a
recent survey conducted by The Center in conjunction
with the U.S. Chamber of Commerce finds that 75
percent of executives place their core values at the
heart of their commitment to corporate citizenship.3
the purpose of the enterprise and how it will work and
guide decisions from the most strategic to the most
mundane.4 Waddock and Graves confirm the corollary,
that respected third-parties judge the “Built to Last”
companies as being top corporate citizens.5 Further
research supports these claims.6
Research supports that companies with strong values
perform better. In their seminal work, Built to Last,
Collins and Porras find that high-value, enduring companies are built on a foundation of values that establish
A recent Booz Allen Hamilton/Aspen Institute survey
noted that 89 percent of global companies have value
statements that include such items as “ethical behavior/integrity” (90 percent of those with value state-
3The State of Corporate Citizenship in the U.S.: A view from inside 2003-2004. (Boston, MA: The Center for Corporate Citizenship at Boston College, 2004).
4Collins, J.C., and J. Porras, Built to Last: Successful Habits of Visionary Companies. (New York: HarperBusiness, 1994)
5Waddock, S.A. and S. Graves, “The Corporate Social Performance-Financial Performance Link.” (Strategic Management Journal, 18 (4): 303-319, 1997)
6Weiser, J. and Zadek. S., “Conversations with Disbelievers.” (Brody, Weiser, Burns and Institute of Social and Ethical AccountAbility, November 2000); “Buried
Treasure,” (SustainAbility, 2001); Cameron, K., and Caza, A., “Exploring the Relationships between organizational virtuousness and performance.” (The American
Behavioral Scientist, February 2004, vol. 47 #6 pp.766-785)
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The Value Proposition for Corporate Citizenship
Figure 2
COMPANY VALUES
Values attributes taken from statements of 10
highly successful global companies.
Respect
Integrity
Innovation
Results-focused
Honesty
Transparency
Prosper
Speed
Leadership
Performance
Community
Trust
Imagination
Empathy
Professional
Keep our promises
Customer
Focus
Courage
Responsibility
Decisive
Authentic
Teamwork
Contribution
Agility
Accountability
Knowledge
Passion
Competition
Excellence
Persevere
Initiative
Originality
ments), commitment to customers (88 percent), commitment to employees (78 percent), teamwork and
trust (76 percent), commitment to shareholders (69
percent), honesty/openness (69 percent), accountability (68 percent), and social responsibility/citizenship (65 percent).7
Figure 2 lists the key values drawn from the value
statements of 10 companies from industries including apparel, financial, healthcare, high-tech, manufacturing, oil and gas, and pharmaceutical.
But, to be frank, values like these often trap companies.
Despite the effort to communicate values through written statements, flashy posters, wallet-sized cards, or
massive granite edifices, research suggests that in only
a few circumstances do the employees of companies
successfully internalize and operate from these values.8 Quiz a group of average employees and watch
them struggle to remember the values they are supposed to embody every day.
1) Recognize values as the foundation for corporate
citizenship and elevate to the prominence of
financial success.
The challenge for companies is to explicitly commit to
linking their chosen qualities of good citizenship to the
attributes traditionally associated with the marketplace.
A number of large, global, mainstream companies
such as Johnson & Johnson, 3M, IBM, HewlettPackard, GE, BP, Novo Nordisk, and Novartis are building on strong cultures and historical commitment to
reinvigorate the status and strengths of corporate citizenship values in shaping strategy and decision-making. It’s important to note that many of these companies have faced challenge and controversy. Each one,
however, is investing time, energy, and resources to
emphasize their values and build a strong foundation
for corporate citizenship and the business.
After identifying and aligning expectations, the company should assess whether its current values need to be
modified and enhanced. IBM conducted this process
using technology to create what it called a “values jam,”
in which all employees could participate in setting
company values. According to Johnson & Johnson, the
language of its famous credo, first introduced by
founder Robert Wood Johnson in 1943, “has been
updated and new areas recognizing the environment
and the balance between work and family have been
added. But the spirit of the document remains the
same today as when it was first written.”
7Kelly Chris, Kocourek Paul, McGaw Nancy, Samuelson Judith. Deriving Value from Corporate Values. (The Aspen Institute and Booz Allen Hamilton, 2005).
Pages, 2-3.
8Sharp Paine, L., Value Shift. (New York: McGraw-Hill, 2003)
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What’s notable about the value statements of IBM and
3M is that both companies use a mix of generality and
specificity (see box below). With modest exceptions,
neither value statement explicitly promises to minimize harm, maximize benefit, and build accountability
and responsiveness. In practice, however, both sets of
values are understood by leadership and employees to
lead them to make decisions and choices very much in
accord with these principles.
3M attempts to make value-based decisions that help
prevent it from causing undue harm. For example, 3M
has rejected possible acquisitions of companies that
represented clear profit potential because of a misfit in
environmental or employee practices. It has also
turned away from opportunities both to produce and
export products overseas using more lenient environmental standards.
“We believe that if you’re a company that intends to be
around for the long term, then your values are the key
to long-term financial success,” says Stanley S. Litow,
IBM’s vice president of corporate community relations.
“We don’t make decisions like these because of a shortterm business case. But we have faith that making decisions like this will make our business stronger and
more profitable in the long run. The history of the company bears this out.”
In the early 1970s, IBM was among the first in its
industry to build an integrated environmental program
that conserved energy and reduced hazardous waste
and chemical emissions. When the company added its
Environmentally Conscious Products program in 1991,
there were uncertainties about the cost of the investment. IBM proceeded out of a commitment to core values to mitigate undue harms to the climate and ecosystems. The company estimates its pursuit of environmental leadership has resulted in an average annual
savings of $2 for every $1 of environmental expense. In
addition, IBM has become well positioned to manage
existing and future global compliance standards.
2) Make choices on how to best bring the expectations
of society into alignment with internal corporate
values
Good corporate citizens look beyond shareholders
when considering the values that key representatives of
society expect. Do the values of the company align with
the expectations of employees, customers, suppliers,
communities, environmental interests, human rights
activists, and government? Asking these questions
enables key stakeholders from society and the marketplace to shape and influence values and allows a company to find the “sweet spot” where the values of citizenship and the marketplace productively align and
support one another.
VALUE STATEMENTS: LINKING CITIZENSHIP TO THE MARKETPLACE
IBM
• Dedication to every client’s success.
• Innovation that matters—for our company and
for the world.
• Trust and personal responsibility in all relationships.
When IBM recently completed an extensive
process to revise its core value statement, it
built on its history. The resulting IBM values
make intuitive the terms that describe a shared
culture, drive performance, and align business
objectives with broader societal concerns.
3M
• Satisfying our customers with superior quality
and value.
• Providing investors with an attractive return.
• Respecting the social and physical environment.
• Being a company of which employees are proud
to be a part.
3M also maintains a strong commitment to its
citizenship values. Its value statement is simple, broad, and stakeholder focused.
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The Value Proposition for Corporate Citizenship
Figure 3
THE ALIGNMENT PROCESS
Existing
Values
Corporate Citizenship Principles:
Minimize harm
Maximize benefit
Build accountability
Support good financial results
Marketplace
The values alignment process outlined in figure 3 has
two advantages. First, it guides a company to reflect
strategically on its values in a way that aligns the expectations of both society and marketplace. At the same
time, the process is open and allows for businesses to
employ techniques of ethical reasoning from a variety
of traditions that best suit the preferences of corporate
leaders and employees.
The process starts by reflecting on the company’s existing values commitment. This requires an honest
assessment of both explicit and implicit values. Values
written on communications collateral often do not
reflect the true experience of the implicit values that
shape company behavior. For example, a company may
list the importance of teamwork and respect as values.
In practice, however, employees may live the implicit
values of fierce internal and external competition.
Companies should include both their aspirations as
well as their actual experience.
An accurate accounting of existing values should then
be tested against external expectations, represented in
the base of the diagram in figure 3. Do
existing values drive
behaviors and decisions that support the
core principles of corporate citizenship?
Do they align with the
expectations of key
representatives of the
marketplace—predominantly owners—
to deliver a competitive return on investment?
It is important to note
that the core principles of corporate citizenship apply to those
Society
interests that primarily focus on the duty of
companies to deliver
financial results. The
recent scandals of
Enron, MCI WorldCom, Parmalat, and others speak to
this clearly. The resulting Sarbanes-Oxley legislation
requires stricter controls and greater openness, which
make it more difficult for executives to make decisions
that benefit them while jeopardizing the fiduciary
interests of shareholders.
For other companies, the ways values are understood
and interpreted change with the times. Japanese industrial sensor and controls manufacturer Omron is a
good illustration. The company’s strong founding mission and values speak to work “for a better life, a better
world for all” and to focus its work according to the
motto, “To the machine, the work of the machine; to
man, the thrill of further creation.” The company’s
core values are captured in what Omron terms its management philosophy:
•
•
•
•
•
Offer maximum satisfaction to customers.
Adopt a challenging spirit.
Focus on gaining our shareholders’ trust.
Respect individuals.
Become a responsible corporate citizen.
6 • THE CENTER FOR CORPORATE CITIZENSHIP AT BOSTON COLLEGE • www.bc.edu/corporatecitizenship
The Value Proposition for Corporate Citizenship
• Maintain corporate ethics while promoting corporate activities.
Over time these values have grown as the company has
developed into a global enterprise. Understanding the
importance of the value of diversity has recently
become more immediate. Conforming to global expectations about the board’s role and governance, and
issues of human rights in the supply chain, have
become more central to how the company interprets
and acts upon its values. What’s more, the company’s
core mission and values align to shape core strategy.
Being responsive to stakeholders also helps a company
find potential alignment of the expectations of the marketplace and society.
• Workplace safety: It was not long ago that major
manufacturers did not prioritize investment in
employee safety. Investigative reports have exposed
chemical companies such as Monsanto, alleging
that they allowed employees to be exposed to toxic
substances and work without sufficient controls.
Demands for safety from employees and surrounding communities clashed with demands from
shareholders to tightly manage costs and grow revenues. But shareholders also expect companies to
limit exposure to undue financial risk over time.
Industry leaders such as DuPont have found that
these once seemingly competing interests actually
share much common ground.9 DuPont made investments to ensure that the company became one of the
safest manufacturers of any kind and discovered
profitable results. This commitment reflected the
expectations of employees and surrounding communities, and it supported efficient operations, productivity, and reduced risk.
• Diversity: A similar alignment is occurring in the
area of diversity. When IBM aligned the values of
the marketplace and key societal interests to
emphasize diversity as a critical competitive strategy, it also realized greater profits. In 1995, IBM
established eight task forces focused on different
minority groups. These task forces serve to “amplify” diversity within the company, allowing it to
learn from differences and create business opportunities. For example, the women’s task force was
instrumental in setting up the Market Development unit, which focuses on multicultural and
women-owned businesses in the United States.
This segment has proven to be particularly important and profitable—the company has reaped millions in additional revenue due to its new focus.10
• Environment: The environment represents a fastmaturing area of alignment. Companies such as
DuPont have adopted corporate-wide programs
termed “The Goal Is Zero” to limit harmful waste
and emissions. Doing so enhances the efficiency
and productivity of critical assets and returns
extensive cost savings.
Companies such as FedEx take this strategy and
apply it to purchasing. The company has received
extensive attention from its rollout of fuel-efficient
hybrid electric delivery trucks. Along with saving
energy and maintenance costs, the company
received reputational benefits. As Mitch Jackson
notes, however, “we understand the business case
for doing this. But what sold this inside our company wasn’t the business case, but the appeal to
our core values.”
• Trust and Ethics: The pervasive lack of trust around
the world for business represents an untenable situation for a company interested in longevity in the
marketplace. Globally, people reserve the least
amount of their trust in large international companies.11 In a recent global survey, 52 percent of
respondents said they had little or no trust in large
international companies. Every day this dynamic is
manifested through lawsuits, protests, desensitized consumers, and apathetic employees. Living
up to values holds the key for companies to lift
themselves above the fray and escape the perils of
a distrustful environment.
9Holliday Jr., C.O., S. Schmidheiny and P. Watts, Walking the Talk: The Business Case for Sustainable Development. (Sheffield, U.K.: Greenleaf Publishing, 2002)
10Thomas, D., “Diversity as Strategy.” (Harvard Business Review, September, 2004).
11“GlobeScan 2002-3 CSR Monitor Survey.” (GlobeScan survey, based on 20,000 interviews with representative samples of 1,000 citizens in 20 countries, 2002)
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3) Ensure these balanced, integrated values underlie
all other tests for strategic decision-making
For mainstream companies, placing values in the
foreground of strategic decision-making can create
opportunities for leadership that set the standards for
broader industry performance. Although they are
fierce competitors within the high-tech industry, Dell,
HP, and Intel agreed to a common approach for monitoring suppliers’ performance across several areas of
social responsibility, including labor and employment
practices, health and safety, ethics, and protection of
the environment. They believe that in the long run
this will make them more competitive. The Gap, Inc.
has gone further to call for a uniform, enforceable
code of conduct to address the responsible environmental and social practices of global supply chains.
It is not enough for businesses to design programs or
policies around their recalibrated values. Rather, corporate citizenship demands that companies make an
authentic commitment to their values, making them
fundamental to the core culture, purpose, and operations of their organization. This means leaving behind
the traditional compliance mentality that companies
bring to corporate citizenship. At 3M even the legal
counsel recognizes the benefits of leading with values.
“Our company values drive what we do,” said 3M’s legal
counsel, Mike Nash. “We see it this way because it’s in
the culture. It’s ingrained from top management. We
always ask ‘Are we doing the right thing here?’ and not
‘Are we doing the legal thing here?’ We set the standard
as going way beyond compliance…about doing the
right thing. Legal doesn’t drive it—the company drives
it.”
In short, building strategy and making decisions in a
corporate citizenship world requires understanding
how a distinctive value proposition demands companies to balance the values of broader citizenship with
those of financial return. Finding this balance requires
creating a framework to address contradictions such as:
• companies that uproot all investments from one
country whose corrupt regime perpetrates human
rights abuses, only to move into another which
offers the same compromises only with better,
more stable financial returns;
• companies whose commitment to the safety of
their employees tracks up and down depending on
the rigor of local compliance and monitoring;
• companies that profess “employees are their greatest asset,” only to support aggressive initiatives to
downsize and prevent collective bargaining;
• companies that promote communities as “one of
our most important stakeholders,” only to pursue
lobbying strategies that reduce tax burdens and
limit regulatory safeguards while bullying for building permits, and creating both literal and figurative
fences separating the company from residents.
Values must become the new test, underlying all others, for strategic decision-making. At its basic level, the
corporate citizenship value proposition directs executives, managers, and employees to build strategies that
create productive alignment among the values of citizenship and the marketplace. When this is not possible, clear leadership is needed to resolve differences in
a way that ensures values will prevail.
It is not necessarily the case that balanced values will
uniformly lead decision-makers to find the sweet spot
where the values of the company, marketplace, and
society mutually reinforce one another, and it is unrealistic to expect that companies will be able to live permanently in this sweet spot. Often, the values and
interests of stakeholders will conflict, and there will be
no easy solutions. In this situation, balanced, integrated values should help provide a structure for companies to work through conflicts. This should not turn
companies into Control Data Corporation, which
famously put its desire to contribute to social welfare so
far ahead of its obligations to generate returns that the
company failed.12 Companies should not be expected
to sacrifice the values of the marketplace.
Starbucks Coffee Company provides a good example of
balancing social values with marketplace realities.
Guided by core values, Starbucks Coffee Company has
created its own coffee-sourcing guidelines in collabora-
12Burke, E., Corporate Community Relations: The Principle of the Neighbor of Choice. (Quorum Books, Greenwood Publishing Group Inc: U.S., 1999)
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The Value Proposition for Corporate Citizenship
tion with Conservation International and the growers
themselves. Starbucks will pay higher prices to those
growers that meet a long list of social, environmental,
and quality standards. Starbucks’ goal is to ensure that
growers receive a decent price, the environment
remains preserved, and the company maintains an
extensive supply of quality coffee as it continues its
large-scale growth plans.13
Ultimately, integrating values into the value proposition should influence strategy and decision-making.
For example, DuPont, once judged America’s worst
polluter, is reinventing itself from an “old economy oilchemicals company into an environmentally friendly
life-sciences company” committed to a strategy of “sustainable growth.” This means “building businesses that
can grow, indefinitely, without depleting natural
resources.” As a consequence it made the choice to sell
off “dirty,” old economy oil and gas company Conoco,
curb energy usage, emissions, waste, and set a “gold
standard” for industrial safety. The company now looks
to change its product mix into a sustainable portfolio,
manufacturing soy protein, a corn-based fabric called
Sarona, and lightweight packaging for shippers like
FedEx that adds to fuel economy in trucks and planes.14
From here, the difficult work of embedding values into
core strategy begins.
2. Embed Balanced, Integrated Values int0 Core Strategy
The new value proposition uses The Center’s four principles of corporate citizenship (see page 10) to ensure
that a business achieves excellence by operating with
values. It delivers an organization that lives up to its
own ideals as well as the expectations of both marketplace and society by bringing financial imperatives into
greater balance with the ethical and societal imperatives specified by core values. It requires companies to
overtly align core values with core business strategy.
The proof, of course, is in the delivery, meaning companies must go beyond the rhetoric of elegantly written
plans to explicitly deliver on strategy with recalibrated
values in mind. If citizenship values and market values
align, it will affect the way companies evaluate opportunities and risks, how decisions are made, which strategies to pursue, how accountability is viewed, and how
the company looks at innovation.
GE is another company beginning to embed its values
into core strategy. For GE this commitment leads to
two key strategies. The first is to be the world’s leading
compliance company. This means that GE will adopt
the highest standards for dealing with governments
and comply with those standards in all of its worldwide
operations. It also means that GE will ensure and
enforce employee compliance with internal codes of
conduct, ethical principles, and values. Doing so is key
to GE’s effort to manage risk, build reputation, and
maintain relationships. “We’ve walked away from otherwise attractive deals because of a lack of transparency,” says Bob Corcoran, vice president of corporate citizenship for GE. “Our customers and governments
know that when you deal with GE you never ever have
to worry about how we got the job. As democracy and
public voice grows around the world, having integrity
can be a positive thing and positive selling aspect for
GE.”
The second strategy is to address what GE CEO Jeffrey
Immelt terms the “new economics of scarcity.” For GE,
as a core infrastructure company in such areas as water,
healthcare, finance, transportation, and media, this
means pursuing market-based solutions to problems
that impinge on well-being and quality of life.
By some definitions, the role of strategy is to determine
which opportunities to pursue and which risks to
accept. Typically, strategy becomes reflected through
broad vision, large goals, and specific objectives tied to
13Gunther, M., Faith and Fortune: The Quite Revolution to Reform American Business. (New York: Crown Business. 2004. p. 117-118)
14ibid, p.23
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The Value Proposition for Corporate Citizenship
FOUR PRINCIPLES OF
CORPORATE CITIZENSHIP
1. Minimize harm: Work to minimize the negative consequences of business activities and
decisions on stakeholders, including employees, customers, communities, ecosystems,
shareholders, and suppliers. Examples
include operating ethically, supporting efforts
to stop corruption, championing human
rights, preventing environmental harm,
enforcing good conduct from suppliers, treating employees responsibly, ensuring the safety of employees, ensuring that marketing
statements are accurate, and delivering safe,
high-quality products.
2. Maximize benefit: Contribute to societal and
economic well-being by investing resources
in activities that benefit shareholders as well
as broader stakeholders. Examples include
participating voluntarily to help solve social
problems (such as education, health, youth
development, economic development for
low-income communities, and workforce
development), ensuring stable employment,
paying fair wages, and producing a product
with social value.
3. Be accountable and responsive to key stakeholders: Build relationships of trust that
involve becoming more transparent and
open about the progress and setbacks businesses experience in an effort to operate ethically. Create mechanisms to include the
voice of stakeholders in governance, produce
social reports assured by third parties, operate according to a code of conduct, and listen
to and communicate with stakeholders.
4. Support strong financial results: The responsibility of a company to return a profit to
shareholders must always be considered as
part of its obligation to society.
key performance indicators. Together these shape
strategic choices around opportunities and risks. As
strategic decisions are made, executives should be
mindful of explicitly acknowledging relevant values
and embed them at the center of both corporate citizenship and business performance.
Increasingly, executives at leading companies like
General Motors and Verizon also see corporate citizenship as helping with a strategic game plan that blends
strong offense with smart defense.
In the defense strategy, corporate citizenship reduces
risks from what David Baron calls the “nonmarket”
realm that creates material consequences for shortand long-term viability.15 It can build authentic community support that insulates companies from damaging legal suits and public relations crises. It can radically shrink “carrying costs” that accrue as companies wait
for public approvals. And it can pave support from a
variety of constituencies—from customers to communities—for major operational decisions, and support
reduced employee turnover. Good corporate citizenship reduces risks to society from everything from toxic
releases to violations of rights to discriminatory practices. Altogether it helps make project investments less
risky, and less costly.
With the values-based offense strategy, corporate citizenship generates opportunities. More evidence ties
corporate citizenship to revenue generation, from customer acquisition and retention to new market development. In the U.K., for example, the Co-Operative
Bank has carefully inculcated citizenship values into
the way it conducts business. For 12 years the bank has
been guided by an ethical policy on how its customers’
money is invested and its choice of partners and suppliers. In a recent report the bank claims it can measure the impact of its corporate citizenship initiatives,
pointing to a 30 percent increase in the number of customer accounts since 1997 and a doubling of company
profits in that same time frame. In terms of customer
satisfaction, 94 percent of Co-Operative Bank’s online
customers would recommend the bank to their
friends.16
15Baron, D.P., “The Nonmarket Strategy System.” (Sloan Management Review. Vol. 37. No. 1, Fall 1995)
16The Co-Operative Bank: www.smile.co.uk/whysmile.html
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The Value Proposition for Corporate Citizenship
Corporate citizenship also builds the value of assets—
particularly so-called intangible assets such as reputation. Additionally, more companies see the commitment to align values as driving innovation.17 For society, corporate citizenship creates a range of opportunities, from supporting local community development to
strengthening democratic institutions to preserving
whole ecosystems.
those values. If, for example, a company believes its values are truly a source of competitive advantage, then a
decision that threatens to contradict core values—
which embeds the expectations of society—threatens
the integrity of the business itself.
An increasing bounty of compelling anecdotes and
experience supports these claims. Nevertheless, in
practice, companies often overlook or resist the opening to align corporate citizenship with strategic considerations around risk and opportunity.
This is part of the dynamic of GE’s “Spirit and Letter”
campaign, which has become a standard company
practice. A company of more than 300,000 employees
cannot expect perfect performance. Instead, if employees compromise core values, company leaders ask what
employees should have known and, after discovering
the mistake, whether the appropriate individuals took
action. GE’s general counsel heads the process.
Corporate citizenship and assessing risk
By making values a part of the decision-making
process, companies are more protected from exposure
to risks incurred from the social and environmental
realm. That companies create risks for societal stakeholders is not surprising. There has long been awareness, if not corresponding action, that the decisions
and behaviors of companies can create risks for a variety of stakeholders. These risks are replayed many
times over, every day throughout the world—from
companies whose round-the-clock activities disturb the
peace of the surrounding neighborhood to those who
— as Chiquita has admitted—have contributed to the
resilience of corrupt and undemocratic states.18
Every year, all employees above the level of factory
worker are obliged to sign their commitment to the
company integrity policy. GE’s 500-person audit staff
reviews integrity and compliance. Moreover, every business conducts a process called “Session D,” the
Compliance Process, in which the business unit, audit
staff, and CEO compare reviews of performance along
the company’s integrity policy. Employees receive
extensive training on compliance. As a result, the company walks away from a variety of financing deals, new
business opportunities, and potential sales that contradict the spirit and letter of its integrity policy. According
to Bob Corcoran, the potential revenues sacrificed were
more than made up for by the “ability to effectively
manage risk to our reputation and our operations.”
Activists contend that business does not adequately factor in the risks—or in the words of economics, the
“externalities”—they create. But what risks are material to society? Zadek et al., transform the standard definition of materiality to ask what risks would change the
way a reasonable stakeholder views a company as a corporate citizen.19
Values also shape the behavior and choices that 3M
aspires to make in a consistent fashion. As Kathy Reed,
vice president for environmental, health, and safety
notes, “Sometimes a company can buy its way out of a
risk, but we don’t do that. We walk away from goodlooking deals on paper because they aren’t the right
thing to do.”
For a company to truly live by its values, managers
must consider whether a given decision compromises
If values are core to both the success and the identity of
the business, than there is no need to continually
17In Focus: The Business Case, (Boston, MA: The Center for Corporate Citizenship at Boston College, January, 2005); Corporate Citizenship Performance and
Measurement Resources: A Bibliography of Readings, References and Websites. (Boston, MA: The Center for Corporate Citizenship at Boston College, 2004); Moss
Kanter, R., “From Spare Change to Real Change: The Social Sector as Beta Site for Business Innovation.” (Harvard Business Review, May 1999); Weiser, J., and S.
Zadek, “Community-enabled innovation: companies, communities and innovation.” (Institute of Social and Ethical AccountAbility, 2003)
18“Sustaining Progress.” (Chiquita Brands International Inc., 2002 Corporate Responsibility Report)
19Zadek, S. and M. Merme, “Redefining Materiality: Practice and public policy for effective corporate reporting.” (Institute of Social and Ethical AccountAbility,
July 2003)
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The Value Proposition for Corporate Citizenship
WHO QUALIFIES TO BE
A KEY STAKEHOLDER?
There are many ways companies can prioritize key societal interests using numerous criteria and ethical principles. But if values are
to take into account both the interests of the
marketplace and society, it is useful to
employ a process of identification that prioritizes societal interests in a manner that
establishes an equal weight of the concerns
of the marketplace. One method that adapts
slightly the work of Zadek and Merme, is to
apply a five part test. An affirmative answer to
any of the questions indicates that the societal concern in question is indeed a priority for
the company.
1. Is there financial risk/opportunity to the
business from the issue/behavior?
2. Is there substantial risk/opportunity to the
stakeholder from the issue/behavior?
3. Does the company say the group or interest is a priority? (For example consider the
implications from the following vision
statements taken from corporations in the
energy, high-tech manufacturing, and
pharmaceutical industries: “To Improve
the lives of people wherever we work”; “We
empower people everywhere to lead more
productive lives”; “To be the most valued
company in the world by shareholders,
customers, employees, and communities.”
4. Is it common to the industry? (For example, retail and supply chain; banking and
CRA; environment and energy.)
5. Is it becoming widely judged by the “court
of public opinion?” (For example, consider
issues such as obesity and outsourcing.)20
revisit and create cost-benefit calculations. The process
of ensuring that decisions do not place core values at
risk becomes reflexive.
But for those that need more evidence, the risks that
stakeholders with economic, social, and environmental
concerns pose to the financial well-being of business is
becoming better understood by the day. A recent report
from the World Economic Forum and International
Business Leaders Forum found that:
• over 70 percent of the companies surveyed expect
to see increased interest in corporate citizenship
issues by mainstream investors in the future
• 52 percent of fund managers/analysts and 47 percent of investment relations officers believe that
social and environmental considerations will
become a significant aspect of mainstream investment decisions over the next two years
• 59 percent of institutional investors in the U.S.,
U.K., France, Germany, Japan, and China say they
believe CEOs should practice social responsibility
rather than operate as though returns are all that
matter.21
Contemporary trends influencing these attitudes can
be traced to Shell. The now-famous events in Nigeria
regarding human rights violations and in the North Sea
with the Brent Spar oil platform provided visible and
compelling demonstrations of the potential risks to
corporate value when stakeholder groups mobilize.
A more recent example is the case of Monsanto.
Despite the company’s reliance on science, an active
body of diverse stakeholder representatives are concerned that genetically modified food production technologies innovated by Monsanto create unknown but
potentially severe risks to health and the environment.
These stakeholders also fear that the aggressive use of
intellectual property protection for seeds and other
agricultural products provides the potential for monopolistic power over small, independent farmers in lessdeveloped nations. Arguably, these campaigns are putting the very future of Monsanto at risk.
20“Practice and Public Policy for Effective Corporate Reporting.” (Institute of Social and Ethical AccountAbility, July 2003)
21Nelson, J. and C. Bergrem, “Values and Value: Communicating the Strategic Importance of Corporate Citizenship to Investors.” (WEF and IBLF. 2003)
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The Value Proposition for Corporate Citizenship
In another example, Sustainable Asset Management
(SAM) and The World Resources Institute (WRI) are
working together on a 15-year project studying how carbon emissions will become a material risk to the autoindustry and will burden manufacturers with increased
global environmental regulation. According to SAM
and WRI, companies that make serious efforts to
reduce emissions will experience increased earnings
growth of upwards of 10 percent over baseline expectations, while the others will see a 10 percent decline. The
project also suggests that companies responsive to
these environmental threats will benefit from reduced
regulatory burdens, increased manufacturing efficiency, and changing consumer demand.
The current conception of corporate citizenship
encourages companies to maintain a reactive, rather
than proactive, posture against risks. This makes compliance codes of conduct attractive to stakeholders and
even in some cases to businesses. The compliance
model provides an easy 1-2-3 check-the-box approach to
mitigating social and environmental risks. As one
moves from the engineering certainty of areas such as
environment, health, and safety to the less-tangible
areas of societal and stakeholder engagement, the
implications can approach the absurd. This is reflected
in the telling question of a regional vice president of a
global company: “How many times do we have to meet
with a stakeholder before we can say we have built trust
with them?”
The corporate citizenship value proposition changes
the way a company orients itself toward current and
potential risks. Rather than reacting to, or defending
against, risks, a company uses its values to think inventively about taking risks and turning them into productive and profitable outcomes. What this also means is
that it’s not enough to focus on risks. The value proposition also must identify opportunities.
Corporate citizenship and identifying opportunities
Corporate citizenship is not just about avoiding the
negative. It is about accentuating the positive and creating strategies that allow a company to leverage its assets
for the benefit of society. What are the benefits that
corporate citizenship should deliver to shareholder and
stakeholder alike? Neoclassical economists often make
an argument against corporate citizenship, claiming a
company is only obligated to deliver profits to shareholders, pay taxes, and obey the law. Missing from that
model is the risk and opportunity calculus related to
societal responsiveness.
Research is beginning to demonstrate that corporate
citizenship can bring value to a company, from enhancing reputation to increasing sales. Research for BT, the
British telecommunications giant, found that its corporate social responsibility activities comprise 25 percent
of the effect its reputation has on customer satisfaction
figures. Further, the research found that if BT no longer
acted with integrity, it could expect to reduce customer
satisfaction by 10 percent, which could reduce revenues
by 20 to 30 percent.22
Forward-thinking companies ask, “What are the critical
needs of stakeholders and communities that our business is suited to address and that hold profitability
potential for the company in the long run?” Forwardthinking companies see that divisions create risks and
that greater equity fosters opportunity. For example,
consider the growing interest in the economic “bottom
of the pyramid”—the approximately three billion people living on $2 a day or less. Companies from Unilever
to Hewlett-Packard see this as the next competitive
frontier. Developing this market will catalyze innovation and increase market share by an order of magnitude. But companies with strong core values realize
that to do this successfully means developing the market by supporting community and economic regeneration. Only stable, healthy, and sustainable communities
will deliver long-term returns on investment.
Additionally, the presence of reliable, basic infrastructure is essential for survival and for achieving minimum standards of quality of life. This includes access
to potable water, energy, food, transportation, healthcare, security, basic economic opportunity, and regions
with stable governance systems.
In this regard, decisions about product development
become shaped by the value proposition. GE’s CEO
22“Enlightened Values,” (BT Plc., Research Study, 2001)
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The Value Proposition for Corporate Citizenship
Jeffrey Immelt describes this as focusing on the “new
economics of scarcity.”23 This means the company
starts the product-development process not by asking,
“What will make money?” but rather by asking, “What
is a critical problem or need society faces that GE technology can solve? How can it solve the problem in a
way that creates a profitable new market?”
In another example, Whole Foods Market uses its commitment to provide fresh, natural foods that limit
preservatives, pesticides, and synthetic fertilizers as a
competitive differentiator in its value proposition. The
result is that the fast-growing chain now operates in
over 120 markets and is rising on the Fortune 1000 list.
Many U.S. companies are slowly recognizing that corporate citizenship is more than philanthropy, which
generally represents about 1 percent of corporate pretax net income. While the aggregate value of corporate
giving should not be minimized, the decisions that
companies make around the distribution of the other
99 percent of their assets hold a far more powerful
promise for impact on critical social and environmental issues. This involves taking core activities—including purchasing, hiring policy, manufacturing processes, R&D, and facility use and design—and seeking
opportunities to add value to the company while supporting critical social and environmental issues. In particular, this means leveling the playing field for traditionally disadvantaged groups and finding the means to
achieve innovation and efficiencies in other areas, such
as reduced consumption of carbon-based fuels,
improved health and sanitation, and increased literacy.
Realizing the value proposition—blending strategy,
values, risks, and opportunities to drive innovation
and improve existing business performance
When integrated into a company, corporate citizenship
is also a driver of innovation and inventiveness, creating outcomes that generate benefits for both the business and society at an order of magnitude greater than
traditional alternatives. More companies are exploring
how sustainable practices can reduce waste, increase
productivity, and stimulate new designs that find their
ways into products. More companies are looking to
community social engagements as a mechanism for
new market development.
For example, more and more companies, including
auto giant Ford Motor Company and biotech leader
Genzyme, are “designing for the environment.” Their
efforts reduce consumption, save costs, and increase
productivity. Moreover, companies such as Dupont,
3M and BP are seeking sustainable, innovative alternatives to carbon-based energy and toxic chemicals.
In his book Walking the Talk: The Business Case for
Sustainable Development, DuPont Chair and CEO Chad
Holliday describes how values align in a vision of sustainability. “We at DuPont have a long way to go in the
journey of sustainability, but we believe it can be done,”
wrote Holliday. “There are many companies operating
profitably today without giving sustainability a second
thought. However, we believe that such companies will
encounter major obstacles to growth and acceptance as
the new century progresses.”24
Both protective and generative strategies are necessary.
A true understanding of the interplay between risk and
opportunity helps encourage businesses to move from
corporate citizenship as the latest fad or panacea to a
genuine commitment, complete with reinforcing
incentives and penalties. It also helps to maintain a
necessary balance between the strictures to minimize
harm and maximize benefit.
An overcommitment to the former uses corporate citizenship defensively, falling on either one extreme—
which dresses up the questionable choices companies
make—or another, which overdoes compliance procedures to the point of constraining productivity. An overcommitment to the latter can conceal the difficult costs
business may impose on society, or vice versa. It can
degenerate into a series of very compelling, feel-good
programs that may achieve real results, but mask the
greater complexity of an organization’s relationship
with society.
In this respect, core values should serve to create balance and harmony between risks and opportunities.
23“Margins to Mainstream,” (The Center for Corporate Citizenship at Boston College, San Francisco Conference, April 2004)
24Holliday Jr., C.O., S. Schmidheiny and P. Watts, Walking the Talk: The Business Case for Sustainable Development. (Sheffield, U.K.: Greenleaf Publishing, 2002, p 24.)
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The Value Proposition for Corporate Citizenship
What may seem like a risk to the business may present
opportunities for society, and vice-versa.
Dialogue with stakeholders can spark innovative solutions that not only resolve disputes, but create new
solutions that improve lives and profit margins.25 For
example, Hewlett-Packard’s major e-inclusion initiative
uses the power of HP’s technologies to improve the
quality of life and economic opportunities for low- to
moderate-income populations around the world. In
addition, HP uses the interaction with these populations to spark innovative thinking that leads to new
products and potential new markets.
By defining corporate citizenship within the value
framework of risks and opportunities, the case for citizenship and its utility to the business will become considerably clearer.
3. Create Supporting Systems to Reinforce Values in Action
Market leaders do not simply define a value proposition. They make an enormous effort to create what
Treacy and Wiersma call a “value-driven operating
model,” which is “that combination of operating
processes, management systems, business structure,
and culture that gives a company the capacity to deliver
on its value proposition. It’s the systems, machinery,
and environment for delivering value. If the value
proposition is the end, the value-driven operating
model is the means.”26
Leading corporate citizens aim for an organizational
culture in which values guide every decision that every
employee makes—from leadership to the line. The
process by which all employees go about making decisions should be similar, whether they are in headquarters or a distant global business unit. To achieve this,
companies commit to training employees and instill
the skills and competencies to use values to guide the
choices they make.
Training and incentives
At 3M the CEO takes the responsibility to lead the
senior executive team through training on making
decisions and leading with values. 3M’s human
resources provides training to manager-level and
above on values. The results of the commitment to
build staff competencies around values-based decision-making have found their way into the core of the
company’s business practices.
The outcome is not simply a process to make yes-no,
either-or decisions. It has led to the creation of some of
the more innovative sustainability practices among
companies of its size. 3M has introduced a life-cycle
management process that makes sustainable practices
central to every stage of a product’s lifespan, from creation to disposal. Its innovative “Pollution Prevention
Pays” (PPP) program creates incentives for employee
teams to find ways to cut waste and harmful emissions
in a manner that supports the bottom line. The company makes several hundred PPP awards each year, and
estimates significant benefits to the environment as
well as millions of dollars saved.
To train its employees, GE’s Consumer Finance business has organized a series of “values weeks,” each featuring one of GE’s eight values. The weeks are organized by region and attempt to promote understanding
and embed the values. During Integrity Week, for
example, specific values were examined through the
perspective of internal and external stakeholders, who
looked at issues such as responsible lending, interest
rates, financial literacy, and privacy. Through a week-
25Weiser, J. and Zadek. S., “Conversations with Disbelievers.” (Brody, Weiser, Burns and Institute of Social and Ethical AccountAbility, November 2000);
Rochlin, S.A., and Christoffer, B., Making the Business Case: Determining the Value of Corporate Community Involvement. (The Center for Corporate Citizenship
at Boston College, 2000: 3)
26Treacy, M., and F. Wiersema, The Discipline of Market Leaders. (Reading, MA: Addison-Wesley Pub. Co.,1995, p. xiv)
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BALANCING ACT:
Society and Business, Risk and Opportunity
Finding this balance often requires innovation around both process and product. This chart captures what
goes into forming this balance. The two-by-two matrix identifies different scenarios in which risks and
opportunities create either threats or opportunities for business and society.
Business
Society
Risk
Opportunity
Risk
Opportunity
Fix
Align
Align
Leverage
In the upper left quadrant, business and society are at odds and create problems for one another. In
this scenario, business and society benefit if they work together to find a joint solution. The rising
costs of healthcare, the scourge of HIV in the developing world, and the challenge of inadequate education systems seem candidates for this scenario. Examples include IBM’s global commitment to
improving education and the work of companies such as HP, Cisco, AMD, Intel, and Nokia to bridge
the divide in information communication technologies. These businesses realize that such societal
deficiencies create risks to the business model.
In the lower right box, where opportunities for business create risks for society, the value proposition
calls for business to take leadership to create alignment. Labor practices in the global supply chain
serve as an example and companies such as Nike and Levi Strauss & Co. support innovative programs
to empower employees in the supply chain. Recently the Gap called for a global code of conduct
enforced by business and governments around the world. Food companies such as PepsiCo and Kraft
are working to take the growing risks posed by the suggested link between obesity and consumption
of their goods and turn them into opportunities. PepsiCo has set targets for healthy food product categories to grow to 50 percent of North American sales, according to Marc Gunther’s Faith and Fortune.
Alignment of a different sort occurs in the upper right quadrant as opportunities that support the
cumulative well-being for society create problems for business. Elimination of agricultural subsidies,
cheaper access to critical therapies, and access to affordable mortgages for low-income and minority
populations are examples. To be sure these issues are complex. While society may benefit, those that
lose jobs as subsidies lapse may see things differently. Nevertheless, companies that swim against the
tide of shared societal values, needs, expectations, and good policy will ultimately create costs for
themselves and society. The “misalignment” this quadrant represents holds the inspiration for
tremendous innovation to transform society and deliver returns. In this space, government and civil
society leaders play a critical role as well as offer tangible rewards for corporate innovation that supports this alignment.
In the final quadrant, an opportunity for one is an opportunity for the other. The trick here is to identify these situations and leverage them to the hilt. For example, companies and research institutions
have supported one another for years. While not without missteps, the result has engendered tremendous progress in telecommunications, medical research, aerospace and transportation, and manufacturing to name but a few. The future holds the potential to move to next generation systems that
promise breakthroughs that make access to critical infrastructure both sustainable and affordable.
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The Value Proposition for Corporate Citizenship
long series of seminars, discussion groups, case studies,
and trainings, employees were better prepared to
demonstrate GE values in their stewardship of GE
Consumer Finance’s products, processes, and people.
Consequently, through discussions and trust in an
ombudsman system, risks have been identified, noncompliant employees addressed, processes recalibrated,
new standards developed, and stellar staff—who reflect
the values in everything they do—recognized. The
Values Weeks will continue through 2005 examining
other areas such as environmental stewardship, diversity, and community engagement.
Cosmetic and beauty product manufacturer Aveda
explicitly states, “We support values that cultivate a sustainable economy and culture.” These values, stated in
the form of 11 beliefs (see box) underpin its mission to
“care for the world we live in, from the products that we
make to the ways in which we give back to society. At
Aveda, we strive to set an example of environmental
leadership and responsibility, not just in the world of
beauty, but around the world.” Aveda managers go
through a formal review process for each major decision, such as large procurement of materials, using the
prism of its values. This formal tracking system, known
as the Mission Alignment Ingredient Review, ensures
that every ingredient used by Aveda is scrutinized for
mission alignment before any project is approved by
senior management. As a consequence, senior management is given the opportunity to veto anything that
does not comply with Aveda’s mission before a prototype is produced. A task force drawn from a number of
different function areas, from marketing to research
and development to operations, ensures that every
function lives the company’s values in a pragmatic
way.27
Similarly, at Johnson & Johnson all employees operate
in a culture imbued with a strong explicit system of values. As explained on its web site: “When Robert Wood
Johnson wrote and then institutionalized the Credo
within Johnson & Johnson, he never suggested that it
guaranteed perfection. But its principles have become a
constant goal, as well as a source of inspiration.
Employees now participate in a periodic survey and
THE AVEDA BELIEF SYSTEM
1.
We believe in treating ourselves, each other,
and the planet with care and respect.
2.
We believe social responsibility is our
responsibility.
3.
We believe ecological and profit goals are
mutually achievable.
4.
We believe our authenticity and experience
are our points of difference.
5.
We believe in inspiring and educating people to integrate wellness and beauty in their
lives.
6.
We believe in the power of oneness: from
our global image to a focused network.
7.
We believe learning never ends.
8.
We believe in encouraging innovation and
empowered decision-making.
9.
We believe our actions, products, and services should always embody excellence.
10. We believe personal and organizational balance is the key to sustainable success.
11. We believe true leadership is delivered with
passion and by example.
evaluation of just how well the company performs its
Credo responsibilities. These assessments are then fed
back to the senior management, and where there are
shortcomings, corrective action is promptly taken.”
Leading companies are going the next step to evaluate
the performance of both managers and employees
against their performance in delivering results supporting the corporate citizenship value proposition. 3M is
27“Coalition for Environmentally Responsible Economies Report, 2001-2002.” (Aveda, 2002)
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an example of a company that is beginning to embed
this into performance appraisals. Employees are evaluated on a number of leadership performance attributes.
“Living the Values” is one such attribute. Employee performance on these attributes is used as part of the
determination for long-term incentives, such as the
number of stock options that employees receive—
which is intended to be a significant component of
their total compensation.
nies to pursue profit-making opportunities wherever
they may exist. The choices a company makes in its
pursuit of these values may at times conflict with the
full spectrum of stated values. Furthermore, a company’s own values create nuance and complexity. Values
such as integrity, respect, dignity, and others possess
few clear boundaries, and can be interpreted to suggest
a wide variety of qualities and behaviors that generate
differing expectations.29
UPS is an example of using a different kind of performance incentive to deliver corporate citizenship results.
The company, which remains majority owned by
employees, commits to pay a 1 to 3 percent annual stock
dividend to employee-owners on top of whatever ordinary dividend it provides. Seeing the cost savings that
energy efficiency provides, UPS has pursued a strategy
of “greening” its operations. Environmental responsibility cuts costs, which literally puts a portion of the savings back into employee pockets.28
What is important to understand is that an integrated
value proposition for corporate citizenship won’t, in
itself, always point the way to a balanced, agreeable
solution. It should, however, support decision-making
by:
In this respect, the corporate citizenship value proposition challenges companies to find opportunities for
win-win solutions. To be true to life, however, one may
not find a win-win solution to every problem. Difficult
trade-offs between values and market value will still
confront the company.
In this respect, sometimes the best way for values to
align with business strategy is to constrain it.
Companies may find ways to deliver on objectives by
taking advantage of loopholes in law or convention.
Values start by placing limits that protect society and
ensure the long-term sustainability of the company.
Johnson & Johnson speaks of its “Credo Decisions,”
which place boundaries on its strategic opportunities.
Managing trade-offs, conflicts and tension among
values
Even the most heroic efforts to bring all of a company’s
values into balance may not succeed. As noted earlier, it
is unrealistic to expect that companies can find and
operate in a sweet spot where every decision delivers a
win for the business and a win for society. Values of
financial success and shareholder return push compa-
• providing a prominent reminder that decisionmakers need to consider the full spectrum of values and avoid unreflective assumptions regarding
which values trump others.
• providing a way to think about why values are
strategically beneficial, and how to factor values
into strategic decisions. How does a given decision
support the company’s integrated value proposition? Which values now rest at the core? If a decision creates competing claims among values, and
one set of values is prioritized over another, how
does the company justify the decision? What
accommodations are made for the values whose
claims are overruled?
As a consequence, an integrated value proposition
should provide the impetus for decision-makers to create a system to help every leader, manager, and employee manage the competing claims among values. It
should define the criteria for a legitimate process of
decision-making. Much has been written by ethicists
on the way to make decisions when values compete.
There are many options that correspond to a variety of
philosophical traditions and mores.
Those at the highest levels in a company must commit
to embedding a system in their organization. Aveda,
for example, uses its detailed checklist to ensure that
managers with decision-making authority make choices according to core values.
28Gunther, M., Faith and Fortune, p.95
18 • THE CENTER FOR CORPORATE CITIZENSHIP AT BOSTON COLLEGE • www.bc.edu/corporatecitizenship
The Value Proposition for Corporate Citizenship
Any system alone will not be sufficient. Along with it
should come a commitment to openness and accountability for both the process—how decisions are made—
and for the decisions. Openness need not compromise
trade secrets, proprietary intellectual property, or core
strategies. Nevertheless, there is much space for companies to openly discuss and address decisions.
Herman Miller faced an increasingly common test
when it made the decision to downsize its workforce.
Long holding the reputation as a “good” company with
strong values, the office furniture design and manufacturing leader held a well-established policy to put
employees first. Layoffs would be a solution of last
resort, if used at all.
When the economy turned downward after the 1990s
boom, however, the business suffered. By 2003 share
price was down 60 percent. The company was pressed
to find ways to significantly cut costs. After taking
action to cut expenses, freeze pay, eliminate bonuses,
offer buyouts, and cut temporary workers, the compa-
ny still had a significant gap. Faced with an intractable
choice to uphold its values to support employees or provide returns to shareholders, Herman Miller made the
choice to pursue its first mass layoff in the company’s
nearly nine decades of operations, but to do so in the
most responsible way possible. The company spent
$30.5 million on severance and out-placement services,
and provided counseling, training, and placement services. The company has been open about its process and
related the story candidly to author Marc Gunther in his
book Faith and Fortune.
Companies with an integrated value proposition should
immediately benefit by understanding the complexity of
decisions where values conflict. It also provides a useful
test—if one value trumps another in the decision
process, does it do so at the cost of fully contradicting
the competing value? In the Herman Miller example,
the company upheld its obligations to the shareholders,
but in a way that provided for employees.
Take Action: Create a Corporate Citizenship Value Proposition
The value proposition for corporate citizenship provides a company with the vision, policy, and strategy to
guide its journey to excellence—as a growing, profitable enterprise and as a leading corporate citizen. It
does this in four ways:
become firmly embedded into the core business model,
they make their own business case. And the strategic
decisions of the business, in turn, reinforce values.
First, it changes the definition of corporate citizenship.
Instead of a “voluntary” or “mandatory” approach to
support social and environmental concerns, citizenship
focuses first on expressing core values. But not just any
values—values specific to the company and its stakeholders that align with broader societal expectations.
Third, the value proposition moves the discussion of
values and citizenship away from the emotional, and
toward the analytical. The value proposition requires
that decision-makers strategically use the values to
assess risks and opportunities. It directs companies to
align values with key business drivers, and to set specific goals and targets for results the company will achieve
as a responsible and profitable corporate citizen.
Second, the value proposition breaks out of the strict u re s t hat j ust i fy c orpor at e ci ti ze nshi p pr im ari l y
through a business case. When values themselves
Finally, the value proposition helps these aligned goals
become rooted throughout the company. It provides the
framework for all employees, from leadership to the
29Blowfield, M., “CSR and Development: Is business appropriating global justice?’ (Development, 2004, 47(3), pp. 61–68)
A R E S E A R C H C E N T E R AT B O S T O N C O L L E G E • T h e Wa l l a c e E . C a r r o l l S c h o o l o f M a n a g e m e n t • 1 9
The Value Proposition for Corporate Citizenship
line, to understand what aspects of their role are critical
to corporate citizenship. It gives them the frame by
which to understand alternatives and make decisions.
Ultimately, corporate citizenship is not about making
companies self-police—although it certainly looks to
ensure that corporate behaviors are ethical and lawabiding.
Corporate citizenship is not about making companies
change their core purpose—turning from entities of
economic value creation into glorified public service
organizations—although it certainly seeks to expand
the benefits that commercial enterprise fosters for
society.
Corporate citizenship is not about prioritizing the
needs of employees, or customers, or communities
broadly defined over the rights of the shareholder—
although it certainly pushes for companies to become
more open, equitable, and responsive to society.
Corporate citizenship is about transforming the core
values of a company into an operating system that
delivers profits to shareholders while being responsive and accountable to all key stakeholders.
This results in a company taking an expansive world
view that epitomizes the cutting edge of common sense
— companies work in a marketplace but live in a society. For companies that means managing risk to ensure
that the decisions they make impart the least amount of
harm possible to society and the environment. It also
means working productively to ensure that stakeholders have no call to harm or pose risks to the business.
Its promise is a company that builds new assets, creates new information, reduces old risks, and catalyzes
new innovations.
In order to realize this proposition, it is essential to be
very clear about what values are core to the company.
But more than defining the values of the company in
particular, the value proposition for corporate citizenship asks a company to align them with the values and
expectations held by the broader society. Rather than
creating artificial divisions between the values appropriate to a business and those appropriate for society,
the value proposition seeks to create consistency. In
this regard, the value proposition directs companies to
build an authentic approach to corporate citizenship
that promises to strengthen overall performance.
20 • THE CENTER FOR CORPORATE CITIZENSHIP AT BOSTON COLLEGE • www.bc.edu/corporatecitizenship
Authors
Bradley K. Googins, Ph.D. is Executive Director of The
Center for Corporate Citizenship at Boston College and
holds the position of Associate Professor of Organizational
Studies, the Carroll School of Management at Boston
College.
He sits on the review boards of The Journal of Corporate
Citizenship and the New Academy Review and is the author
of several books and monographs. He serves on the boards
of Bright Horizons, Inc., Corporate Voices, and the Brazilian
research and education center Uni-Ethos. Before joining
The Center in 1997, Dr. Googins founded The Center for
Work and Family at Boston University and was also a
National Kellogg Fellow. Dr. Googins holds a Ph.D. in Social
Policy from The Heller Graduate School at Brandeis
University, a MSW in social work, community organization
and social planning, from Boston College, and a B.A. in philosophy and sociology from Boston College.
Steven A. Rochlin is Director of Research and Policy
Development for The Center for Corporate Citizenship at
Boston College. Since joining The Center in 1995, he has led
or contributed to multiple research projects, including: the
first global business survey on "The State of Corporate Citizenship"; "Measurement Demystified”; and "Integrating
Corporate Citizenship Across the Business." He has been a
contributing author in numerous monographs, journals,
and books including Accountability Forum; Business in
Society; Corporate Integrity and Accountability; the Journal
of Politics; and La Nueva Empresa: Responsabilidad Social
Corporativa.
Prior to joining The Center, Rochlin worked in the areas of
technology-based economic development for the National
Academy of Sciences and the Center for Strategic and
International Studies in Washington, D.C. He holds a B.A. in
political science from Brown University and a M.P.P. from
Harvard University’s John F. Kennedy School of Government.
The Center for Corporate Citizenship at Boston College, a membership-based research
organization, is committed to helping business leverage its social, economic and human assets to ensure
both its success and a more just and sustainable world. As a leading resource on corporate citizenship, The
Center works with global corporations to help them define, plan and operationalize their corporate citizenship. Through the power of research, executive education and the insights of its 350 corporate members, The
Center creates knowledge, value and demand for corporate citizenship.
The Center offers publications including a newsletter, research reports, and white papers; executive education, including a Certificate program; events that include an annual conference, roundtables and regional
meetings; and a corporate membership program.
www.bc.edu/corporatecitizenship
 Copyright 2005. The Center for Corporate Citizenship at Boston College. All rights reserved.
A R E S E A R C H C E N T E R AT B O S T O N C O L L E G E • T h e Wa l l a c e E . C a r r o l l S c h o o l o f M a n a g e m e n t
A Monograph by The Center for Corporate Citizenship at Boston College • 2005
A Research Report and Tool Kit by The Center for Corporate Citizenship at Boston College • 2004
The Center for Corporate Citizenship at Boston College • 55 Lee Road • Chestnut Hill, MA 02467-3942
www.bc.edu/corporatecitizenship