measuring csr tools for csr
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Measuring CSRTools for CSR
BA 292C-1
Professor Kellie A. McElhaney
2.14.07
Happy Valentine’s Evening
The Dow Case: Dow Response• There is no question that Bhopal was a tragedy of tremendous gravity and
human cost. It was a terrible tragedy and it continues to evoke strong emotions nearly a quarter of a century later. Dow, like the rest of industry, has an obligation to always remember the tragedy and to prevent such an event from ever happening again.
• However, the accusation by some NGOs and activists that we are failing to behave properly because we will not accept responsibility for an event and a site in which we did not have any involvement is entirely without foundation and ignores or misstates certain basic facts.
– * Neither at the time of this tragic disaster not subsequent to it has Dow had any connection with the Bhopal facility or its operation. Dow never owned or operated the plant, which today is under control of the state government
– * Dow acquired Union Carbide more than 16 years after the tragedy, and 10 years after the $470 million settlement - paid by Union Carbide Corporation and Union Carbide India, Limited - was upheld by the Indian Supreme Court.
– * Union Carbide remains a separate company and entity with separate financial reporting and nearly 4,000 employees. UCC manages its own liabilities.
The Dow Case: Dow Response• It is clear that the responsibility for any further action in Bhopal lies with the Indian government
and the state government of Madhya Pradesh. The Indian government agreed to ensure the healthcare of the victims of the tragedy. The state government took control of the plant site in 1998 and has the responsibility to manage the site clean up.
• We were heartened by Indian media reports stating that the Indian government is providing clean drinking water to the citizens of Bhopal and that they are interested in designing and placing a commemoration to the victims of the tragedy at the Bhopal site. We were also pleased when we heard of the state government's development of a three-phase remediation plan to complete clean up of the Bhopal plant site. We hope that this effort by the State Government to remediate the site will be allowed to go forward.
• As I mentioned on the call, I hope this note provides context to Dow's position on this issue. I
have also provided you with further information by attaching web links to Dow's 2015 goals and Dow's position statement on the Bhopal tragedy. In addition, for further information regarding Union Carbide and the Bhopal tragedy, please see the attached web link.
– http://www.dow.com/commitments/goals/index.htm
– http://www.dow.com/commitments/debates/bhopal/
– http://www.unioncarbide.com/bhopal
• We do look forward to being a partner with you on the Energy Symposium and believe that together we can make a positive contribution. Thank you again for the conversation today.
The Dow Case: BERC’s Decision
• After significant discussions with faculty, students, and Dow, the BERC leadership and the symposium organizing committee met yesterday to discuss the issue.
• As a group, BERC has decided to follow the guidelines of the ASUC Resolution and not use Dow funding for the Energy Symposium.
• In our discussion with the BERC leadership the group consistently voiced two ideals:
– BERC’s mission is to serve and connect students from every background, who are interested in energy and resources. To maintain our image and efficacy as a cross-disciplinary student group, it is important to operate with the utmost transparency and respect for our unique position within the University.
– While we are not taking the Dow funding, we feel strongly that part of BERC’s mission is to act as a bridge between the University and corporate commercial interests in the energy space. Some of these companies will have histories like Dow that many find unfavorable. Our role is not to debate these histories. BERC’s goal is to help the University engage these companies in a manner that is sensitive to history, but focused on the future and the challenge of solving our global energy problems.
Current Events
Measuring CSR
What Metrics Could Whirlpool Use?
What Metrics Could Whirlpool Use?
• Campaign for Real Beauty– Repositioned its brand around self-esteem issues– Created CampaignForRealBeauty.com to allow women to
• Vote on provocative images • Join discussion groups on various beauty stereotypes • Participate in the Dove Self-Esteem Fund
– Uses un-retouched images of women rather than models on Dove.com
• The Uniquely Me! Girl Scouts of America self-esteem program
– Donate money, Unilever employees donate time to mentor girls as part of the program.
– Program uses activity books and simple exercises to help build self-confidence in girls
• Supports BodyTalk, an educational program for schools created by the Eating Disorders Association.
"This campaign is addressing key issues and connecting with women in ways that people have not connected in a long time." - Retail analyst Marshall Cohen of the NPD Group.
• U.S. sales rose 6% in one year to $500 million
• Dollar sales jumped 2% in the month the campaign started.
• Heightened brand awareness. Ads received considerable press, more than 1 million women have visited dove.com and voted on images.
• Created buzz with the "water cooler effect"
CR Metrics
Environment Community Workplace MarketplaceBroad metric categories
Metric sub-categories
• Charitable Giving
• Community Education
• Community Lending & Investment
• Employee Volunteerism
• Business Travel
• Byproducts
• Emissions to Air
• Emissions to Water
• Energy Consumption - Electricity
• Energy Consumption - Fuel
• Environmental Projects
• Large-Scale Environmental Impact
• Waste
• Waste - Paper
• Waste - Water
• Employee Diversity
• Employee Engagement
• Employee Satisfaction & Retention
• Health & Safety
• Health & Safety - Illness
• Health & Safety - Injury
• CSR Spending
• Customer Satisfaction & Retention
• Operation control
• Supply Chain
Standard and most frequent metrics in each category area:
Environment Community Workplace
• Byproducts produced through the manufacturing process
• Emissions to air and water through manufacturing, operations, or logistics
• Energy consumption by type or total energy used
• Waste produced – paper, water, hazardous, non-hazardous, other
• Expenses or personnel involved
• Charitable corporate giving – direct, through foundation, through employee match
• Community investment – project spend, local taxes paid
• Employee activities – volunteer hours
• Customer diversity and inclusion
• Unique projects and engagements
• Employee diversity – race, age, gender
• Health and safety – injury and accident rates, works day loss rates, absenteeism, workers comp claims
• Turnover rate
• Employee satisfaction (typically from surveys)
• Training for
employees – spend, time, or number or trainings
Marketplace
• Customer satisfaction measures – surveys, complaint tracking, customers served, external rankings
• Supply chain measures – supplier satisfaction, trainings, audits, total spend on targeted supplier groups, certifications
• Customer reach in socially disadvantaged groups or areas
CSR Metrics Must Link to Corporate Strategy
CSR Metrics Must Link to CSR Priorities
• Energy– Improving energy efficiency and innovation in our
operations and products.
• Product take back and recycling– Reducing product environmental impacts through
leading-edge reuse and recycling solutions.
• Responsible supply chain– Raising standards in HP’s global supply chain and
ensuring responsible manufacturing for all products.
• Education
Types of Evaluation
INTUITION
SYSTEMS
STORIES
Goals of Measurement
• Align investment with value
• Assess actual value created
• Inform management decisions
• Help you maintain the integrity of your work
• Contribute to reporting, communication, and branding
EASY HARD
• Sales revenue• Capital assets• Investment returns• Dividends • Etc.
• Life• Freedom• Dignity• Happiness• Etc.
• Goodwill • Insurance• Depreciation• Liability• Projected revenues• Emission credits • Income changes • Education access• Earnings potential• Technology benefits• Etc.
• Health• Safety• Biodiversity• Clean air• Safe water• Education results• Political stability•Cultural Advancement• Etc.
TYPE I TYPE II TYPE III TYPE IV
Ease of Measuring
Types of Information about Value
Five basic ways of articulating value:
• Financial (accounting: cash in, cash/work out)
• Monetizable (translating non-financial value into
monetary equivalent)
• Quantitative (numbers: size, magnitude or degree)
• Qualitative (description: kind, type, or direction)
• Narrative (storytelling)
Value Chain of Metrics
Inputs Activities Outputs Outcomes
What is put into the venture
Venture’s primary activities
Results that can be measured
Changes to social systems
Goal Alignment
Activity and goal adjustment
Impact Metrics= differential change
Inputs Activities Outputs Outcomes
What is put into the venture
Venture’s primary activities
Results that can be measured
Changes to social systems
Goal Alignment
Activity and goal adjustment
What would have
happened anywayEssential
= IMPACT
-
Evaluation Roles
Outputs Outcomes
Results that can be measured in operations
Changes to social systems
• Tracked regularly• NGO, Investor, Funder
• Periodic • Need data from researchers and other stakeholders
What Types of Things Can Be Measured?
Sample Indicators of Financial Performance of Investment
Sample Indicators of Financial Performance of Investee
Sample Indicators of Socio-Economic Returns to Individuals or Investees
National or Regional Socio-economic Returns
Blending Types of Indicators
Summary of Social Impact Value Chain
• Description: social enterprise that develops community-based, integrated waste management microenterprises in Peru
• Goals: in business to create more than financial value-- wants to restore the environment, improve peoples’ health and cultivate community-based economic development
Example: Ciudad Saludable
What’s the value proposition?
• Financial value proposition is easy to count
– $$$$ revenue
– $$ Costs
• Non-financial value…?
– Outputs/measurable indicators:
• #s of customers served with waste collection
• tons of garbage recycled
• # jobs created
• # people trained, etc….
– Outcomes/results:
• Less disease, fewer deaths, healthier people, less domestic violence, sense of pride and dignity
• Cleaner water, restored fish populations & biodiversity
• Fewer lost work days due to illness, lower health expenses, greater incomes and economic security
Outputs
CS already counted the number of jobs created, the revenues from customer fees, and the amount of garbage collected.
Outcomes Monetization- Base case
Ex: Ciudad Saludable SROI Analysis
Outputs Outcomes
Ciudad Saludable collected information from: • staff• microentrepreneurs• local health authorities
SVT analyst researched “proxy studies” on: • disease and death caused by exposure to
garbage in similar regions• costs of waste management if provided by the
government in similar regions.
Monetization- Base case
Ex: Ciudad Saludable SROI Analysis
Outputs Outcomes Monetization- Base case
CS assumed “what would have happened otherwise”- if it did not exist
• what microentrepreneurs & CS staff would have earned
• what the incidence of childrens’ deaths from diarrhea in the region would be
• what it would cost for the government to collect the garbage instead of CS
• where the garbage would be if not collected by CS
Ex: Cuidad Saludable SROI Analysis
Outputs Outcomes
SVT monetized a subset of CS’s impacts using the dollar value of:
• The increase in microentrepreneurs’ earnings• The relative savings to taxpayers of having CS
do the waste management rather than the municipal government
These values were calculated relative to the investment that was required to create them.
Monetization- Base case
Ex: Ciudad Saludable SROI Analysis
Results: Value Captured with theFull Range of Types of Information
monetizedvalue
Act
ivit
y
Fram
ewor
k
Cos
t ef
fect
iven
ess
a
prim
er
RE
DF
SR
OI
Met
hod
olog
y
GS
VC
Gui
deli
nes
for
Soc
ial
Ret
urn
on
In
ves
tmen
t
Soc
ial
mea
sure
me
nt a
nd
perf
orm
ance
met
rics
DB
LP S
IA T
ool
kit
new
ec
onom
ics
fou
dati
on
SR
OI
app
roa
ch
1Understanding organisation Analytical framework Define goals
Mission and venture coherence
2 Stakeholder analysis Stakeholder analysis
3 Scope of Analysis Scope of Analysis
4Income and cost analysis Measure costs
Brainstorm non financial impacts
Cost evaluation of inputs
Quantify non financial impact
Analyse costs
5 Impact value chain
Articulate theory of change and 3 key, practical indicators
Theories of change and impact value chain Impact value chain
6Identify and collect data
Translate impacts into financial terms Tracking Monetisation
Identify and collect data
7 Projections Projections Projections
8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value
Discount the cashflows
Calculate enterprise returns Calculate SROI
9 SROI reportingGenerate SROI report Reporting SROI reporting
10Evaluation and monitoring
Effectiveness measures Evaluating
Implementation and integratio
qualitative value
Act
ivit
y
Fram
ewor
k
Cos
t ef
fec
tiv
ene
ss
a pr
imer
RE
DF
SR
OI
Met
hod
olog
y
GS
VC
Gui
deli
nes
for
Soc
ial
Ret
urn
on
In
ves
tmen
t
Soc
ial
me
asu
rem
ent
and
pe
rfor
man
ce m
etri
cs
DB
LP S
IA T
ool
kit
new
ec
ono
mic
s fo
udat
ion
S
RO
I a
ppro
ach
1Understanding organisation Analytical framework Define goals
Mission and venture coherence
2 Stakeholder analysis Stakeholder analysis
3 Scope of Analysis Scope of Analysis
4Income and cost analysis Measure costs
Brainstorm non financial impacts
Cost evaluation of inputs
Quantify non financial impact
Analyse costs
5 Impact value chain
Articulate theory of change and 3 key, practical indicators
Theories of change and impact value chain Impact value chain
6Identify and collect data
Translate impacts into financial terms Tracking Monetisation
Identify and collect data
7 Projections Projections Projections
8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value
Discount the cashflows
Calculate enterprise returns Calculate SROI
9 SROI reportingGenerate SROI report Reporting SROI reporting
10Evaluation and monitoring
Effectiveness measures Evaluating
Implementation and integratio
Act
ivit
y
Fram
ewor
k
Cos
t ef
fec
tiv
ene
ss
a pr
imer
RE
DF
SR
OI
Met
hod
olog
y
GS
VC
Gui
deli
nes
for
Soc
ial
Ret
urn
on
In
ves
tmen
t
Soc
ial
me
asu
rem
ent
and
pe
rfor
man
ce m
etri
cs
DB
LP S
IA T
ool
kit
new
ec
ono
mic
s fo
uda
tion
S
RO
I a
ppro
ach
1Understanding organisation Analytical framework Define goals
Mission and venture coherence
2 Stakeholder analysis Stakeholder analysis
3 Scope of Analysis Scope of Analysis
4Income and cost analysis Measure costs
Brainstorm non financial impacts
Cost evaluation of inputs
Quantify non financial impact
Analyse costs
5 Impact value chain
Articulate theory of change and 3 key, practical indicators
Theories of change and impact value chain Impact value chain
6Identify and collect data
Translate impacts into financial terms Tracking Monetisation
Identify and collect data
7 Projections Projections Projections
8 SROI calculationCalculate enterprise value SROI calculationCalculate social purpose value Sum the cashflowsCalculate blended value
Discount the cashflows
Calculate enterprise returns Calculate SROI
9 SROI reportingGenerate SROI report Reporting SROI reporting
10Evaluation and monitoring
Effectiveness measures Evaluating
Implementation and integratio
quantifiedvalue
financial value
narrative value
Metrics & Evaluation Take-Aways
• Simplify
• Set clear goals & establish baseline at the outset (start where you are)
• Measure a few things well as opposed to everything poorly
• Concentrate on measuring a few signature programs, with a few signature measurements
• Stories trump facts 10 times out of 10
• Move towards impact metrics, but blend in some evaluative metrics
CSR Tools
Plotting on a CSR Continuum
Level of engagement Low High
Importance to mission Peripheral Strategic
Magnitude of resources Small Big
Scope of activities Narrow Broad
Interaction level Simple Intensive
Managerial complexity Infrequent Complex
Strategic value Modest Major
EXAMPLES ACTIONS: • Donation• Grants
• Event sponsorship• Cause-related
marketing• Employee
volunteerism
• Joint-advocacy• Joint-action• Deep partnerships• Financing principles
Philanthropic Transactional IntegrativeGrowth stage:
Adapted from The Collaboration Challenge, James E. Austin
WO
RL
D
Transform multiple industries.
IND
US
TR
Y
Transform an industry. Take responsibility for our full impact (social, environmental, economic).
Take responsibility for adjacent industries.
Take responsibility for global conditions (climate change, global inter-dependence, etc.).
Be a beacon to others. Develop codes of conduct for the industry.
Build strong coalitions to effect and enforce them.
CO
MM
UN
ITY
Be a good neighbor. Innovate and demonstrate restorative business practices.
Influence the industry indirectly, by example.
Give something back.
Support local communities (corporate philan., direct programs, employee matching & volunt’ring.)
Reduce waste, consumption and emissions.
CO
MP
AN
Y
Run a good business.
Provide access to tools/ product.
Disaster relief.
COMPANY COMMUNITY INDUSTRY WORLD
Plotting on a CSR Landscape
Prioritizing CSR Actions
2005
Benchmarking Analysis
Benchmarking Analysis
Company Child LaborHarsh Treatment
Sexual Harrasment
Minimum Wages
Living Wages
Working Hours
Clif BarChiquitaStarbucksLevi StraussGap TimberlandPeet's Standards
ILOSA8000FLA
Detailed information included in Code Mentioned briefly Not included
Benchmarking Analysis
Company Code of Conduct Standards Used Auditing Auditing Method
7th Generation Yes Yes (limited) Use Verite
Chiquita Yes
SA8000 (Labor/Human Rights), Rainforest Alliance (Environment)
Yes
Internal assessment + verification from 3rd parties in different countires
Gap Yes Own Standards Yes
Internal assessment + Use SAI to review their compliance system
Levi's Yes Own Standards Yes Internal assessments
Peet's Yes Own Standards NoWorking with BSR to develop an auditing process
Starbucks Yes Own Standards Yes Self reporting
Stonyfield No NA No
Timberland Yes
UN Declaration of Human Rights & ILO Core Conventions Yes
12-15 Timberland Employees conduct 73% of audits. Remaining 27% done by 3rd parties (Verite)
1. The Company - Nokia
What are the benefits of community involvement programs for Nokia’s key constituent groups?
Stakeholder Analysis
Communities Government Employees •General social welfare
•Increased technology and educational resources
•Improved product in the region
•General social welfare •Achieve UN Millenium
goals • Assist with country-
specific initiatives
•Increased job satisfaction •CI partnerships with key operator customers could
strengthen business relationships
Takeaway: All stakeholders can benefit from properly crafted community involvement programs.
CompanyIssue/Geogr.
FocusBest Practices Takeaways
Motorola
Varied, but officially: Education, Communities and Environment
•Vendor for GSM Emerging Markets Handset Program•Provides equipment to CARE
•Primarily grant-making•Similar scale of LA business operations•Received the 2004 Award for Corporate Excellence from the US State Dept. for its citizenship activities in Brazil, but none really described well in PR materials•Some youth education/skills programs in Brazil & Venezuela that appear similar to Nokia’s•"Bridging the Digital Divide" was the theme of its 2004 CSR report, but not a particular focus of the company’s CSR activities.
Ericcson Disaster response•Partnerships w/ international NGOs: UNDP, OCHA, IFR•Newsletter about activities
•High visibility issue; only manufacturer differentiating itself on this issue
SamsungSports; some generalized support of children’s causes
•Annual webcast for charity•Very linked to core business goals •Not a traditional CI cause and not addressing great societal needs
SiemensMath and science scholarships
•Sponsors innovation competitions•Mostly philanthropic – Siemens Foundation•Math/science a good fit, but other programs miscellaneous and varied
Benchmarking CI Programs: Handset Competitors
Sources: Company websites and documents
Gap Analysis
Phased Recommendations
Short Term(Q2/Q3 2006)
• Include environmental standards in code of conduct • Implement supplier self-evaluations• Consider global standards to adopt (ex: SA8000 or ILO)
Medium Term(Q4 2006,Q1 2007)
• Evaluate suppliers based on country risk assessment tool • Develop standards for working with suppliers that are out of
compliance • Consider using a 3rd party auditor (ex: Verité)
Long Term (Q2 2007 and beyond)
• Implement a preferred vendor program based on audit performance
• Work on building long term relationships with supplier• Consider developing an industry collaborative to share
auditing costs and to increase leverage with suppliers
Plotting Partners in CSR
Synergy between Cause and Brand
Eff
ecti
ven
ess
of
Par
tner
ship Ben & Jerry's
Nickelodeon's Day of Play
Dove's Campaign for Real Beauty
Whirlpool & Habitat for Humanity
Nike and LiveStrong
Clif Bar, Inc
Care Bears
LifeTime TV
Timeline of Recommendations
Summer Fall Winter2006 2007
Spring
Finalize brochures and hangtags, including focus on “Good for Me” and “Wine as a Meal”
Develop “Sustainable Sale” Program in concert with sales mgr. sponsors and selected retail wine managers
Identify key sales managers to sponsor and advocate “Sustainable Sale” Program
Train sales force on “Sustainable Sale” program
Roll out “Sustainable Sale” program
Messaging
Distribution
CommunicationHold Regional Tasting Event #1 for Wine Managers
Attend/sponsor Farmers’ Markets
Identify and select “Sustainable Meal” partners; agree to terms
Hold 1st public tasting, highlighting “Sustainable Meal” in association with partners
Hold Regional Tasting Event #2 for Wine Managers
Begin advertising for 1st public tasting (in 2007)
Issues Analysis Telecommunications Industry
Risks OpportunitiesEnvironment
Impact of production process and disposal of old
equipment
Digital Divide Ensuring everyone has access to technology
Labor StandardsUnfair practices in the supply chain (wages, working conditions)
Youth DevelopmentDeveloping the potential of
youth to be the next leaders
Health Potential long-term side
effects of cell phone use and base stations
Disabled Providing telecom
services that cater to the blind and deaf
Versus
“Slide of Shame”Annual Grants (2005, in millions)
* Includes Foundation and Corporate giving, both cash and in-kind
0 50 100 150 200 250
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