At the firm level, CSR plans are meaningless unless they are translated into action. Public relations releases to the media, speeches to employees or trade groups, or assertions of CSR in annual reports are not the end goal of CSR. Necessary as these activities may be to raise awareness about CSR within the firm and the firm’s broader stakeholder environment, CSR must be operationally integrated into the firm’s day-to-day activities. For CSR to become integrated in this way requires a CSR filter to be applied to the vision, mission, strategy, and tactics of the firm (see Figure 4.1). Granted, in a capitalist system, for-profit firms face an absolute economic imperative.
Businesses do not exist merely to be nice to constituents; they exist to meet needs in society, and this value is demonstrated via the profit the firm is able to generate. Increasingly, however, these societal needs include expectations beyond profit maximization. Ultimately, the viability of the firm—its ability to grow, make shareholders wealthy, and meet the needs of customers and other stakeholders
—presupposes both an external and internal environment that is conducive to success.
With the primacy of economics, however, other components of the firm’s activities can easily be relegated to a distant concern. The result may be a hostile environment that impairs the firm’s economic performance, even its long-term viability. A CSR perspective, integrated throughout the organization, offers an alternative business approach, one that is more likely to provide the long-term stability companies require. To achieve this, however, top-management support, a dedicated CSR officer (at least until CSR is fully integrated into the processes and culture of the firm), a well-defined CSR position statement, awareness built through measurements and rewards, a CSR audit and public report to relevant stakeholders, a code of conduct for employees and suppliers, an internal or external ombudsman, and a structure that institutionalizes these elements are merely a beginning.
Ideally, stakeholder involvement will include all affected constituencies to as great a degree as possible. Inclusion is more than just an attempt to co-opt relevant constituents. Whether internal or external, inclusion means giving stakeholders a voice and requires leaders that are both receptive and proactive to stake-holder concerns. Admittedly, the message must be managed, if for no other reason than to assure the firm’s efforts are communicated and recognized. How else can stakeholders react and become involved in the process? With transparency and corporate activism added to the mix, a firm has the basic ingredients for the successful integration of a CSR perspective throughout operations.
The ultimate test of a firm’s CSR, therefore, is its actions. And for those actions to rise above mere window dressing,115 CSR must form part of the firm’s larger strategic plan. Here, concern must focus not only on the results, but also on the methods used. This focus must also be recalibrated to
accommodate, as much as possible, the differing perspectives of the relevant constituents that the firm touches. Initially, both short-and long-term objectives are translated into action through the planning process. Then, plans are converted into budgets, which directly allocate financial and other resources. The way these actions are received by those most affected by them indicates the success of the process by which the socially responsible organization matches plans and intentions to actions and results.
The varied stakeholder issues that define CSR are the focus of Part II of Strategic CSR. Taking advantage of the Internet, which is reshaping the role of CSR within the competitive business landscape, current CSR issues are identified and discussed. Throughout, relevant Web sites provide both the specifics and implications of these issues, as well as forming jumping-off points to deeper individual research and investigation.
Questions for Discussion and Review
1. What is meant by the phrase “CSR as brand insurance?” Can you think of a firm that has benefited from CSR in this way?
2. Why do some firms, industries, and cultures have different CSR thresholds than others? Illustrate your answer with examples for all three categories.
3. What role do stakeholders play in establishing the level of the CSR threshold for a particular firm or within a particular industry? Think of an example firm and/or industry; what event do you think would push that firm or industry over its CSR threshold?
4. Why is top-management support for CSR so critical? Can CSR be delegated? If so, why and to whom?
5. List four of the eight components of a firm’s plan of action necessary to implement CSR over the short to medium term. What examples from business can you think of where firms have performed these actions successfully?
6. How does a firm avoid the perception that its CSR report is greenwash? Does it matter whether the reasons behind an action are genuine or cynical if the outcome is the same?
7. Use Figure 5.3 to develop a CSR plan for a firm of your choice. Then, evaluate the firm against your plan. How is the firm doing in terms of implementing CSR? How could it improve?
NOTES AND REFERENCES
1. David Grayson & Adrian Hodges, Corporate Social Opportunity! Seven Steps to Make Corporate Social Responsibility Work for Your Business, Greenleaf Publications, 2004,
http://www.greenleaf-publishing.com/productdetail.kmod?productid=63
2. William B. Werther & David Chandler, “Strategic Corporate Social Responsibility as Global Brand Insurance,” Business Horizons, Vol. 48, No. 4, July 2005, pp. 317–324.
3. David Grayson & Adrian Hodges, Corporate Social Opportunity! Seven Steps to Make Corporate Social Responsibility Work for Your Business, Greenleaf Publications, 2004,
http://www.greenleaf-publishing.com/productdetail.kmod?productid=63
4. Nicholas Casey, “New Nike Sneaker Targets Jocks, Greens, Wall Street,” Wall Street Journal , February 15, 2008, p. B1, http://online.wsj.com/
article/SB120303911940170393.html
5. Alan Beattie, “Spend, Spend, Spend. Save, Save, Save,” Financial Times, January 27, 2007, p. 18, http://www.ft.com/cms/s/e96ffa6e-aaa6-11db-b5db-0000779e2340.html and Marc Gunther, “Better (Red) Than Dead,” CSRWire, August 5, 2008, http://greenbiz.com/blog/2008/08/03/
8. For more details on this program, see “Employee Relations” Issue in Chapter 6.
9. William Werther & David Chandler, “Strategic Corporate Social Responsibility as Global Brand Insurance,” Business Horizons, Vol. 48, No. 4, 2005. pp. 317–324.
10. Jonathan Birchall, “Business Fights for Tougher Rules on Emissions,” Financial Times, November 20, 2008, p. 4.
11. Stephanie Strom, “Wal-Mart Donates $35 Million for Conservation and Will Be Partner With Wildlife Group,” New York Times, April 13, 2005, p. A16.
12. Malcolm Gladwell, The Tipping Point: How Little Things Can Make a Big Difference, Back Bay Books, 2002.
13. Although there are disagreements as to which categorization best fits different business models, what all these firms have in common is that their strategies seek to provide their customers with superior value.
14. In drawing these distinctions among firms, it is important to stress that the distinction between low cost and differentiation and between broad and narrow refers to a firm’s business-level strategies. As such, it is possible for a firm to have different strategies across its different business units. Apple’s range of computers, for example, (for which the firm willingly exchanges high margins for continued low market share), targets a narrow segment of the total computer market, while its i-Pods and other consumer electronic devices (such as the i-Phone) have a broader scope.
15. In July 2008, ExxonMobil announced the largest ever quarterly profit for a publicly traded U.S. company: “The company’s income for the second quarter rose 14 percent, to $11.68 billion, compared to the same period a year ago. That beat the previous record of $11.66 billion set by Exxon in the last three months of 2007. Exxon’s profits were nearly $90,000 a minute over the quarter,… (The company calculates that it pays $274,000 a minute in taxes and spends $884,000 a minute to run the business.).” Clifford Krauss,
“Exxon’s Second-Quarter Earnings Set a Record,” New York Times , August 1, 2008, http://www.nytimes.com/2008/08/01/business/01oil.html
16. Paula Dwyer, “Breach of Trust,” BusinessWeek, December 15, 2003, pp. 98–108.
17. Jesse Eisinger, “Year of the (Shrugged Off) Scandal,” Wall Street Journal, January 2, 2004, p. R3.
18. Strategic Insight, a New York fund–research firm, in “Mutual Funds,” BusinessWeek, December 8, 2003, p. 116.
19. Mallen Baker, “Financial Services: Will Banks Ever Treat Customers Fairly?” Ethical Corporation, April 1, 2008, http://www.ethicalcorp.com/content.asp?ContentID=5807
20. Ibid.
21. Richard Gibson, “McDonald’s Seeks Ways to Pitch Healthy Living,” Wall Street Journal, May 27, 2004, p. D7.
22. http://www.philipmorrisusa.com January 2007, http://www.foei.org/en/publications/pdfs/gmcrops2007 execsummary.pdf; “Monsanto Moves to Force-Feed Europe Genetically Engineered Corn,” Friends of the Earth, January 10, 2006, http://www.organicconsumers.org/ge/europecorn011106.cfm
25. Lisa Roner, “Starbucks and Oxfam Team Up on Ethiopian Development Programme,” Ethical Corporation Magazine, October 18, 2004, http://www.ethicalcorp.com/content.asp?ContentID=2961; and Alison Maitland, “Starbucks Tastes Oxfam’s Brew,” Financial Times (U.S. Edition), October 14, 2004, p. 9.
26. See Andrew Wilson, “CSR in Emerging Economies: Lessons From the Davos Philanthropic Roundtable,” January 31, 2008, http://www.eurasia.org/documents
/davosoped.pdf; “First Study on Corporate Saudi Arabia and CSR,” CSRWire.com, March 29, 2007, http://www.csrwire.com/press /press_release/15949-First-Study-on-Corporate-Saudi-Arabia-and-CSR
27. C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Wharton School Publishing, 2006; C. K. Prahalad & Allen Hammond, “Serving the World’s Poor, Profitably,” Harvard Business Review, September 2002, Vol. 80, No. 9, pp. 48–58.
28. Also see Michael Hopkins, Corporate Social Responsibility and International Development: Is Business the Solution?
Earthscan, 2007.
29. William Baue, “Corporate Social and Environmental Performance Varies Widely Across Far-East Asia,” Social Funds, March
33. “The 2005 State of Corporate Citizenship,” May 2005, http://www.bcccc.net/index.cfm?
fuseaction=Page.viewPage&pageId=694&
41. “Just Good Business: A Special Report on Corporate Social Responsibility,” The Economist, January 19, 2008, p. 4.
42. http://www.accountability21.net/
43. Simon Zadek, “The Path to Corporate Responsibility,” Harvard Business Review, December 2004, pp. 125–132.
44. Ibid.
45. The Ethics and Compliance Officer Association in the United States (http://www.theecoa.org/) believes the CEO acronym should also stand for “chief ethics officer.”
46. Patrick M. Lencioni, “Make Your Values Mean Something,” Harvard Business Review, Vol. 80, No. 7, July 2002, pp. 113–117.
47. For example, “In 2000, Enron received six environmental awards. It had progressive policies on climate change, human rights, and anti-corruption” (David Gebler, “Culture of Compliance,” CRO Magazine, http://www.thecro.com/node/68).
48. Memorandum from Kenneth Lay to All Employees, Subject: Code of Ethics, July 1, 2000.
49. Enron Corp’s Code of Ethics, p. 5.
50. Ibid, p. 12.
51. John Kay, “Weasel Words Have the Teeth to Kill Great Ventures,” Financial Times, January 14, 2009, p. 9.
52. Derrick Daye & Brad VanAuken, “Social Responsibility: The Nike Story,” July 25, 2008, http://www.brandingstrate gyinsider.com/2008/07/social-responsi.html
53. A quote from Mark Goyder, “Redefining CSR: From the Rhetoric of Accountability to the Reality of Earning Trust,” in Mallen Baker, “‘Redefining CSR’ report by Tomorrow’s Company,” Ethical Corporation Magazine, August 1, 2003, http://www.ethicalcorp.com/content.
asp?ContentID=900. The full report by Goyder can be accessed at: http://www.tomorrowscompany.com/uploads/
Redef_CSRintro.pdf
54. The title of this position will vary considerably across firms and including corporate responsibility officers, sustainability officers, and ethics and compliance officers. The important point is that a position is created and that it has the substantive support of the CEO.
55. Daniel Franklin, “‘The Year of Unsustainability,’ The World in 2009,” The Economist, November 19, 2008, p. 20,
61. Aaron Chatterji & David Levine, “Breaking Down the Wall of Codes: Evaluating Non-financial Performance Measurement,”
California Management Review, Vol. 48, No. 2, 2006, p. 35.
62. Charles J. Fombrun, “List of Lists: A Compilation of International Corporate Reputation Ratings,” Corporate Reputation Review, Vol. 10, No. 2, 2007, pp. 144–153.
63. Aaron Chatterji & David Levine, “Breaking Down the Wall of Codes: Evaluating Non-financial Performance Measurement,”
California Management Review, Vol. 48, Issue 2, 2006, p. 29.
68. Mallen Baker, “Corporate Social Responsibility: When the Competent Become the Enemy of the Good,” Ethical Corporation, February 25, 2008, http://www.ethicalcorp.com/content.asp? detailed discussion of how Nike aligned its incentive scheme for subcontractors with its corporate responsibility goals..
71. Rikki Stancich, “Recession Ethics: CSR in a Downturn—Recession-proof Ethics Can Weather the Storm,” Ethical Corporation Magazine, March 5, 2008, http://www.ethicalcorp.com/
content.asp?ContentID=5751
72. The National Oceanic and Atmospheric Administration’s Web site provides details of the Exxon Valdez oil spill at http://response.restoration.noaa.gov/spotlight/spotlight.html and images from the event at http://response.restoration.noaa.gov/photos/exxon/exxon.html. Another authoritative Web site is administered by the Exxon Valdez Oil Spill Trustee Council at http://www.evostc.state.ak.us/
73. The phrase triple bottom line was first introduced in 1994 by John Elkington of SustainAbility (http://www.sustainability.com/)
“to describe social, environmental, and financial accounting.” The term was used in conjunction with the launch of SustainAbility’s “first survey benchmarking non-financial reporting.” William Baue, “Sustainability Reporting Improves, but Falls Short on Linking to Financial Performance,” Social Funds, November 5, 2004, http://www.socialfunds.com/news/article.cgi/article1565.html
74. Deborah Doane, “Mandated Risk Reporting Begins in UK,” Business Ethics Magazine, Spring 2005, p. 13.
75. Gap Inc., Social responsibility report, http://ccbn.mobular.net/ccbn/7/645/696/index.html
76. Matthew Gitsham, “Book and Publication Reviews: Gap’s 2003 Social Responsibility Report,” Ethical Corporation Magazine, June 21, 2004, http://www.ethicalcorp.com/content.asp?ContentID=2231
77. Amy Merrick, “In Candid Report, Gap Details Violations in Its Factories,” Wall Street Journal, May 12, 2004, p. A9.
78. Elizabeth Becker, “At Shell, Grades for Citizenship,” New York Times, November 30, 2003, Section 3, p. 2.
79. Ibid.
84. Verité (http://www.verite.org/) is a good example of a firm that provides this verification service: “At Verité, we are committed to ensuring that people worldwide work under safe, fair and legal conditions. In over 60 countries around the world we provide governments, corporations, investors, factories, NGOs and workers with information on global working conditions and innovative programs to improve them.”
85. William Baue, “Survey Says: NGOs Believe Corporate Social Responsibility Reports That Reveal Faults,” Social Funds, November 14, 2003, http://www.socialfunds.com/news/article.cgi/1268.html
86. For example, see Eric Marx, “Ceres—Serious About reporting,” Ethical Corporation, June 12, 2009, http://www.ethicalcorp.com/content.asp?ContentID=6499
87. Mark Goyder, “Redefining CSR: From the Rhetoric of Accountability to the Reality of Earning Trust,” Tomorrow’s Company , 2003, http://www.tomorrowscompany.com/uploads
/Redef_CSRintro.pdf; Mallen Baker, “‘Redefining CSR’ report by Tomorrow’s Company,” Ethical Corporation Magazine, August 1, 2003, http://www.ethicalcorp.com/content.asp?ContentID=900
88. Jon Entine, “Reporting Contradictions,” Ethical Corporation, June 7, 2009, http://www.ethicalcorp.com/content.asp?
ContentID=6492
89. Lynn Paine, Rohit Deshpandé, Joshua D. Margolis, & Kim Eric Bettcher, “Up to Code: Does Your Company’s Conduct Meet World-Class Standards?” Harvard Business Review, December 2005, p. 123.
90. Debora L. Spar, “Hitting the Wall: Nike and International Labor Practices,” Harvard Business School Press [9-700-047], September 6, 2002.
91. Amelia Gentleman, “Gap Vows to Combat Child Labor at Suppliers,” New York Times , November 16, 2007, p. 6, http://www.nytimes.com/2007/11/16/business/
worldbusiness/16gap.html
92. Also in 2002, both the NYSE and NASDAQ altered their listing requirements, compelling firms listed on the exchange to adopt and disclose both corporate governance guidelines and a code of business conduct and ethics for all employees, following SEC approval of standards for such reports.
93. Section 301.4b (2002: 776), http://www.404.gov/about/laws/soa2002.pdf
94. http://www.shareholder.com/. Another company providing a similar service is EthicsPoint Inc. (http://www.ethicspoint.com/), where “about 78% of the complaints channeled through [the company] had arrived via the Web,” Phyllis Plitch, “Making It Easier to Complain,” in the supplement, Corporate Governance: The Journal Report, Wall Street Journal, June 21, 2004, p. R6.
95. Ibid.
96. Personal correspondence with authors.
97. Hannah Clark, “Chief Ethics Officers: Who Needs Them?” Forbes Magazine, October 23, 2006, http://www.forbes.com/2006/10/23/leadership-ethics-hp
-lead-govern-cx_hc_1023ethics.html
98. Lisa Roner, “Ethics Officers—Positions That Need Power,” Ethical Corporate Magazine, October 4, 2007, http://www.ethicalcorp.com/content.asp?ContentID=5411
99. “Leading Corporate Integrity: Defining the Role of the Chief Ethics & Compliance Officer (CECO),” Ethics Resource Center, 2007, http://www.ethics.org/resource/ceco
100. Michael Elliott, “Embracing the Enemy Is Good Business,” Time, August 13, 2001, p. 29.
101. Marc Gunther, “Tree Huggers, Soy Lovers, and Profits,” Fortune, June 23, 2003, pp. 98–104.
102. For a useful list of dos and don’ts in relation to green marketing, see “How to Look Good Green,” Ethical Corp, January 21, 2009, http://www.ethicalcorp.com/content.asp?ContentID=6298
103. Dave Barry, “2003: A Dave Odyssey,” Miami Herald, December 28, 2003, pp. 1M, 5M–7M.
104. http://www.nikebiz.com/
105. See the “Corporate Governance” Issue in Chapter 6.
106. Michael Hopkins, The Planetary Bargain: Corporate Social Responsibility Matters, Earthscan, 2003.
107. Paul J. Lim, “Gauging That Other Company Asset: Its Reputation,” New York Times, April 10, 2004, p. A18.
108. Ibid.
109. For additional ideas regarding a comprehensive plan of implementation, it might also be helpful to read: Susan Graff, “Six Steps to Sustainability,” CRO Magazine, June 2007, http://www.thecro.com/node/520
110. See “Our Credo Values,” http://www.jnj.com/connect/about-jnj /jnj-credo/
111. See: “HP Corporate Objectives and Shared Values,” http://www.hp.com/hpinfo/abouthp /corpobj.html and “The HP Way,” http://www.hpalumni.org/hp_way.htm
112. Kerry Capell, “Zara’s Fast Track to Fashion,” BusinessWeek, June 2008, http://images.businessweek.com/ss/06/08 /zara/index_01.htm
113. Ibid.
114. Andrew McAfee, Anders Sjoman, & Vincent Dessain, “Zara: IT for Fast Fashion,” Harvard Business School Press [9-604-081], September 6, 2007; “Store Wars: Fast Fashion,” BBC News, June 9, 2004, http://news.bbc.co.uk/2/hi/
business/3086669.stm
115. Hannah Clark, “Chief Ethics Officers: Who Needs Them?” Forbes Magazine, October 23, 2006, http://www.forbes.com/2006/10/23/leadership-ethics-hp-lead
-govern-cx_hc_1023ethics.html