Creating Value via
Corporate Social Responsibility
Bradley Googins, Philip Mirvis, Mary Jo Hatch
Traditional View
Global Executives On Role Of Business
Which of the following statements best describes the role
that large corporations should play in society
16%
Focus solely on providing highest
possible returns to investors while
obeying all laws and regulations
84%
Generate high returns to investors
but balance with contributing to the
broader public good
Source Dec 2005 McKinsey Quarterly survey of 4,238 global business executives
3
4
What is the meaning of CSR?
Source: Fleishman Hillard/National Consumers League study,
“Rethinking Corporate Social Responsibility”
5
Societal Views of Large Corporations
Around the world...
60-70%
10-20%
Sources: GlobeScan, Wirthlin, Edelman
6
Expectations are high for Business
Companies “Held Completely Responsible for,” Average of 25 Countries
7
2t. I am going to read a list of things some people say should be part of the responsibilities of large companies.
For each one, please tell me to what extent you think companies should be held responsible. In answering,
please use a scale of 1 to 5, where 1 is “Not held responsible,” 3 is “Held partially responsible,” and 5 is “Held
completely responsible.” What about…?
Stages Of Corporate Responsibility
9
Stage 1:
Compliant
Stage 2:
Engaged
Stage 3:
Innovative
Stage 4:
Integrated
Stage 5:
Transforming
Citizenship
Concept
Jobs, Profits &
Taxes
Philanthropy,
Environmental
Protection
Stakeholder
Management
Sustainability or
Triple Bottom
Line
Change the
Game: Business
in Society
Strategic
Intent
Legal Compliance
Reputation
Business case
Value Proposition
Market Creation
or Social Change
Leadership
Lip Service,
Out of Touch
Supporter,
In the Loop
Steward,
On Top of It
Champion,
In Front of It
Visionary,
Ahead of the
Pack
Structure
Marginal:
Staff driven
Functional
Ownership
Cross-Functional
Coordination
Organizational
Alignment
Mainstream:
Business Driven
Issues
Management
Defensive
Reactive,
Policies
Responsive,
Programs
Pro-Active,
Systems
Defining
Stakeholder
Relationships
Unilateral
Interactive
Mutual Influence
Partnership
Alliance
MultiOrganizations
Transparency
Flank Protection
Public Relations
Public Reporting
Assurance
Full Exposure
Brands feel the
impact as activists
target customers
Financial Times
Brands feel the
impact as activists
target customers
Financial Times
CSR from OUTSIDE IN
To be more responsible….
Success in tomorrow’s markets means
working with stakeholders to
understand, predict, and shape our
future environment and ways of living.
Tackling important problems together
will require teamwork and respect.”
Jeff Immelt
Current CEO,
General Electric
Socially Responsible
Business Models
Business And Society:
Risk And Opportunities
SOCIETY
Risk
B
U
S
I
N
E
S
S
S
Risk
Opportunity
Climate Change
Nationalization
Digital Divide,
Access to Medicine
Youth Unemployment,
Access to Credit
Corruption
Piracy
Cheap Labor/Sourcing,
Base of the Pyramid,
Opportunity Obesity/Consumerism,
Micro-Finance,
Environmental Damage,
Eco-Effectiveness
Bribery
CSR Partnerships
Source: Beyond Good Company
Revolutionary Renewal
Strategic activities contribute both
to repairing and also to building
society and environment
Sustainable Enterprise
Benefit to
Society
All functions and actions are sustainable in
economic, social and environmental terms
Social Responsibility
Society and environmental initiatives are
integral to strategy – “do good”
Compliance & Disclosure
“Do no harm”
Act within legal and ethical
codes of conduct
Benefit to Business
18
CSR creates financial value along 4 dimensions
New markets
New products
Growth
China with market share above 70%
New customers/ market share
Innovation
Reputation / differentiation
Operational efficiency
Return
on capital
▪ Novo Nordisk: Earned market leadership in
Workforce efficiency
Reputation/price premium
▪ Verizon: Increased sales by $6 million, with
potential growth of a new market of over
$600 million
▪ Dow: Invested $1 billion over 10 years to
reduce its energy consumption and improve
its efficiency and has saved $7 billion in last
5 years
Regulatory risk
Risk
management
License to operate
Supply chain/security of supply
Reputational risk
Leadership development
Management
quality
Adaptability
Long-term strategic view
Source: Mirvis/McKinsey Study
▪ Nestlé: Earned $4.5 billion in 2007 through
the sales of PPP (Popularly Positioned
Products)
▪ IBM: Improved global leadership skills,
employee retention and commitment to
IBM, new knowledge and skill contribution
to IBM
Although many companies create value from ESG, very few assess the financial value
creation and even fewer communicate that to the markets
Percent of companies interviewed = 100%
Creating value
ESG program
Assessing value
Communicating value
-40%
-10%
Maximizing value
from ESG
Established metrics
to monitor program
-40%
-5%
Converting ESG
metrics to
financial value
Communicate ESG
value to CFOs,
investors
Source: BCCCC/McKinsey Study
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21
The Role of Citizenship on Corporate Reputation
11 March
2008
J&J Partnership with the American Association of Colleges of
Nursing


Linking Johnson & Johnson with:

Caring, Education, and Hospitals
Key Drivers




Standing behind products and services
Vision for the futures
Supporting good causes
Meeting needs
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23
Corporate Branding and CSR
Brilliant!
Bullshit!