Corporate Social Responsibility

Tool to create a positive brand image

What will we discuss

• What do we mean by CSR

• The great debate about CSR

• CSR as a business strategy

• Tools to use CSR to build trust

• Effects of CSR

What is CSR

There is no single accepted definition of CSR, which cause

confusion as what exactly constitutes a CSR activity.

Definition 1

“Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.

World Business Council for Sustainable Development definition

Definition 2

“A concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis”.

European Union definition

CSR is called different things

Corporate Responsibility

Corporate Sustainability

Corporate Citizenship

Sustainable business

Social responsibility

Stake holders

• Can be divided in two groups

– Contractual stakeholders (Employees, suppliers, customers – has a legal relationship with the business)

– Community stake holders ( Society and community at large)

Debate on CSR

• Not all companies behave in a socially responsible manner

• Two schools of thought:

– Free market view: The job of business is to create wealth for share holders

– CSR view: Business should be concerned with social issues

The case against CSR

The business of business……is business.

- Milton Friedman

The only one responsibility of business towards society is maximization of profits to the share holders within the legal frame work and ethical custom of the country.

Time, 1970

The case for CSR

• In recent years business has been viewed as a major cause of social, environmental and economic problems. Companies are widely perceived to be perceived as prospering at the expense of the broader community…….

The legitimacy of business has fallen leading to a diminished trust in business.

- Michael Porter

Harvard Business Review, 2010

2 questions raised

What is business

for

What contribution

should it make to society

But both are interdependent

Society needs business

Employment & wages

Investment & innovation

Profits & taxes

Business needs society

Create demand

Public assets and

infrastructure

Legal protection

How has CSR changed in the last decade

CSR is a moral issue.

We want to do the right thing. We want to invest in the community.

2000 CSR is a strategic / profit issue.

Ignoring CSR potentially damages shareholder value. Embracing it creates value.

2012

New role for CSR

In today’s world where business have become global but governments and society have

remained local, companies have to bear the social responsibility for their actions.

CSR as a business strategy

What % of global CEOs are planning to change strategies significantly in the next three years as they expect stakeholders to factor in companies'

environmental and corporate responsibility practices into purchasing decisions?

Source: PwC’s annual global CEO survey 2011

CSR as a business strategy

• Those that rely on consumers as a primary source of revenue 49%

• Those that rely on businesses as a primary source of revenue 53%

• Those that rely on governments as a primary source of revenue 51%

Source: PwC’s annual global CEO survey 2011

CSR as a brand aid

CSR aids the building of brand equity, especially when there is a consistent commitment to CSR efforts in the long term by an organisation. One example is the company SalesForce.com who donate 1% of company profits, 1% of employee time and 1% of equity to other charities.

The SalesForce.com policy also attracts a committed and high achieving team of employees. In order to build this brand equity, consumers need to have faith in the company commitment to CSR

CSR in practice

• Increasing awareness and concern for social causes Cause Promotion

• Contribution to causes based on sales Cause related marketing

• Behaviour change initiatives Corporate social

marketing

• Donating directly to causes Corporate Philanthropy

• Employees donating time and talent in community Community volunteering

• Discretionary practices and investment to support causes Socially responsible business practices

Source: Kotler & Lee, CSR, 2005

CSR in practice

• http://www.tesco.com/raceforlife/ Cause Promotion

• http://wildlife.dawn-dish.com/en_US/savingwildlife/home.do Cause related marketing

• http://www.drinkiq.com/en-IN/pages/home.aspx Corporate social

marketing

• http://www.dell.com/Learn/in/en/incorp1/corp-comm/cr-giving-philosophy?c=in&l=en&s=corp&delphi:gr=true Corporate Philanthropy

• http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc/corporate-sustainability/employee-volunteering Community volunteering

• http://www.lifebuoy.com/socialmission/global-handwashing-day/

Socially responsible business practices

Source: Kotler & Lee, CSR, 2005

One example

CSR and reputation

Effects of CSR

• According to the research carried by Cone Inc., 79% of consumers would switch to a brand associated with a good cause.

• According to a study by The Economic Times, donations by listed companies grew 8% y-o-y.

• As many as 108 companies donated up to 20% more than the previous year.

World’s most reputable companies

BMW SONY

Walt Disney

Source: http://www.reputationinstitute.com/

World’s most reputable companies

Daimler Apple Google

Source: http://www.reputationinstitute.com/

World’s most reputable companies

Microsoft VolksWagen Canon

Source: http://www.reputationinstitute.com/

World’s most reputable companies

LEGO Adidas Colgate

Source: http://www.reputationinstitute.com/

World’s most reputable companies

Panasonic Nike Intel

Source: http://www.reputationinstitute.com/

World’s top ranked CSR companies

Microsoft Google Disney

Source: http://www.reputationinstitute.com/

World’s top ranked CSR companies

BMW Apple Daimler

Source: http://www.reputationinstitute.com/

World’s top ranked CSR companies

Volkswagen Sony Colgate

LEGO

Source: http://www.reputationinstitute.com/

To end

It takes 20 years to build a reputation. And only 5 minutes to destroy it.

- Warren Buffet

Thank you