Corporate Social Responsibility

Slide 1: corporate social responsibility. Are businesses responsible for social issues 1

Slide 2: agenda. 2 Say pretty quickly. keep it moving!

Slide 3: agenda. What is Corporate Social Responsibility? Jamie 2 Say pretty quickly. keep it moving!

Slide 4: agenda. What is Corporate Social Responsibility? Jamie Arguments FOR Tom 2 Say pretty quickly. keep it moving!

Slide 5: agenda. What is Corporate Social Responsibility? Jamie Arguments FOR Tom Arguments AGAINST Jennifer 2 Say pretty quickly. keep it moving!

Slide 6: agenda. What is Corporate Social Responsibility? Jamie Arguments FOR Tom Arguments AGAINST Jennifer Case Study: Microsoft Jamie 2 Say pretty quickly. keep it moving!

Slide 7: agenda. What is Corporate Social Responsibility? Jamie Arguments FOR Tom Arguments AGAINST Jennifer Case Study: Microsoft Jamie Case Study: Microsoft Marie 2 Say pretty quickly. keep it moving!

Slide 8: agenda. What is Corporate Social Responsibility? Jamie Arguments FOR Tom Arguments AGAINST Jennifer Case Study: Microsoft Jamie Case Study: Microsoft Marie Conclusions Marie & Jen 2 Say pretty quickly. keep it moving!

Slide 9: agenda. What is Corporate Social Responsibility? Jamie 2 Say pretty quickly. keep it moving!

Slide 10: definition. “.....the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides...” csr.gov.uk 3

Slide 11: definition. “.....the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides...” csr.gov.uk 4

Slide 12: Clear business case 5 Stakeholders and customers are increasingly concerned about the environmental and social impacts of the products they buy. business can become more competitive, not less.

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Slide 23: Shareholders 10 And this is the basic argument that exists today when it comes to Corporate Social Responsibility. Shareholders have to balance out whether THEIR investments and dividends should be used to fund social initiatives

Slide 24: Profit distribution CSR Reinvest Employee bonus Shareholder 11

Slide 25: Profit distribution 12

Slide 26: Profit distribution Reinvest Employee bonus Shareholder 12

Slide 27: derives from many different areas 13 As you are probably all aware, CSR consists of many different elements

Slide 28: 14 Poverty

Slide 29: 15 investing in the community (both monetary and time investment)

Slide 30: 16 and.... but interestingly there is a debate going on about why MNEs should and shouldn’t invest heavily in CSR. And to tell us about why they should, here is Tom

Slide 31: for. Tom Fitton 17

Slide 32: Neo-Classical View 18 A Neo-Classical View of CSR which epitomizes capitalism is that the only responsibility of the firm is to maximize profit for the shareholders whilst remaining inside existing laws, for example paying wages and at least minimum wages.

Slide 33: “Few trends would so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as they possibly can” Milton Friedman, 1962 19

Slide 34: Behavioural View 20

Slide 35: “In addition to making a profit, business should help to solve social problems whether or not business helps to create those problems even if there is probably no short- run or long-run profit potential” Holmes, 1976 21 A contrasting perspective is one of the behavioral theorists, who believe management may, regardless of shareholder pressures, be influenced by non economic factors, political aspects, personnel preference resulting in a firm which takes into consideration ethics and morals whilst conducting their business.

Slide 36: Increase Customer Awareness 22 More recently academics have accepted that CSR has become an important aspect of corporate strategy, this can be attributed to; an increased customer awareness of business operations through global media exposure.

Slide 37: Media increases coverage and awareness of; • Sustainability and environmental issues • Health and obesity • International operations; worker conditions, exploitation & human rights • General ethics and morals. 23

Slide 38: Workplace 24

Slide 39: Marketplace: Customer 25

Slide 40: Marketplace: Customer 26

Slide 41: Marketplace: Supplier 27

Slide 42: Community 28

Slide 43: Ethics 29

Slide 44: Human Rights 30

Slide 45: Paradox 31 not incorporating the minimum requirements of what is deemed socially responsible in the modern business environment can have catastrophic effects in today’s media driven society… and for this reason not taking measures to do so could lower share value, so the argument that a business should concentrate on profit only is somewhat a paradox.

Slide 46: “Companies with a defined corporate commitment to ethical principles do better financially than companies that don't.” DePaul University, 1997 32 Furthermore recent research has found that a proactive approach to CSR can result in increased corporate performance

Slide 47: An 11-year Harvard University study found that "stakeholder-balanced" companies showed four times the growth rate and eight times the employment growth when compared to companies that are shareholder-only focused 33

Slide 48: Reduced Costs 34 Contrary to widely-held opinion, improved environmental management systems do not automatically result in greater cost. Over time, they improve operational efficiency by reducing waste production and water usage, increasing energy efficiency and in some cases, selling recycled materials.

Slide 49: Production of 26 toxic chemicals reduced €5.4m saved per year (yes, we know this isn’t to scale) 35 There are also company specific ways of reducing operating costs e.g. Dow Chemical Co has set themselves a target of reducing production of 26 toxic chemicals which will save them 5.4 million Euros per year BECAUSE IT COSTS THEM A LOT OF MONEY TO PROPERLY DISPOSE OF TOXIC WASTE

Slide 50: Enhance brand image and reputation 36 A good reputation is often very hard to build - and yet can be destroyed in less than a day. So much of a company's reputation results from 'trust' by stakeholders. A strong reputation in environmental and social responsibility can help a company build this trust. However, it needs to result from real practices and policies and an integrity towards the companies responsibilities. Stakeholders are not stupid and can see through 'fluff'. Non Government Organisations (NGOs) and local communities are far more willing to not take action as a result of an environmentally-damaging incident if it is evident that the company has genuinely worked hard to prevent it happening in the first place, and has in place solid management practices for rectifying the situation - quickly - and for learning and improving to prevent any repeat occurrence.

Slide 51: Increased sales & customer loyalty 37 <The coins will swap round automatically> Research has shown that consumers not only want good and safe products, but they also want to know that what they buy was produced in a socially and environmentally responsible way.

Slide 52: Increased sales & customer loyalty 37 <The coins will swap round automatically> Research has shown that consumers not only want good and safe products, but they also want to know that what they buy was produced in a socially and environmentally responsible way.

Slide 53: Increase ability to attract and retain employees 38 A company's dedication to CSR can help to recruit and retain employees. People want to work for a company that is in accordance with their own values and beliefs, Employees stay longer, reducing the costs and disruption of recruitment and retraining

Slide 54: “78% of employees would rather work for an ethical and reputable company than receive a higher salary” The Cherenson Group 39 Employees are not just worried about promotion and salary any more. <I am now going to pass you over to Jennifer who will be debating the other side of CSR>

Slide 55: against. Jennifer Chan. 40

Slide 56: Conflicting stakeholder interests 41

Slide 57: CSR or PR? 42 Commercialised. Companies under pressure to be “Green”

Slide 58: Green 43 Voluntary? Companies feel obliged to have programmes for fear being singled out and losing competitive advantage. Not the true spirit of implementing CSR. Should be about benefiting society rather than being used as a tool for PR. Important

Slide 59: Green Peace? 44 An example of this is with Greenpeace. Greenpeace have a long history of pulling publicity stunts to raise their own profile and funds rather than concentrate on the real matters of CSR

Slide 60: Green Peace? 44 An example of this is with Greenpeace. Greenpeace have a long history of pulling publicity stunts to raise their own profile and funds rather than concentrate on the real matters of CSR

Slide 61: Video from Greenpeace 45 We want to show you an example of this. Greenpeace last year ran a campaign to get people to create videos which damned Apple for their “green” initiatives. No other manufacturer of PCs was highlighted in this way. Greenpeace were using Apples brand image and publicity for their own benefit. Here is one of the videos

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Slide 63: 47 Used Apple as a publicity tool to benefit their own agenda. Other brands not singled out Hazardous materials in Apple Computers within EU regulations of whats allowed. No worse than other brands, but Apple are an easy and famous target

Slide 64: 48 The move prompted Apple to make a response in order to defend themselves against the bad publicity. Long essay was posted highlighting their current status as well as future green initiatives.

Slide 65: Weight Recycled as a % of Total Sales 30.0 28 22.5 24 20 15.0 13 7.5 10 6 5 0 2 2 2002 2003 2004 2005 2006 2007 2008 2009 2010 49 Apple pointed out that they lead the industry in respect to weight recycled as a % of past sales But why should they have to do this? Are Greenpeace using bullying tactics?

Slide 66: “Apple completely eliminated the use of CRTs in mid-2006. A note of comparison — Dell, Gateway, Hewlett Packard and Lenovo still ship CRT displays today” Steve Jobs 50 Apple retaliated for being singled out - brought other manufacturers into the conversation

Slide 67: “....businesses are using corporate social responsibility as a shield behind which to campaign against environmental and human rights regulations. CSR is in some cases counter-productive, worsening relations between business and local communities” 51 This leads me onto the next point... (read quote) the key point here is that CSR is worsening relations. the Greenpeace/Apple thing is an example of this.

Slide 68: “....businesses are using corporate social responsibility as a shield behind which to campaign against environmental and human rights regulations. CSR is in some cases counter-productive, worsening relations between business and local communities” 51 This leads me onto the next point... (read quote) the key point here is that CSR is worsening relations. the Greenpeace/Apple thing is an example of this.

Slide 69: Tool for Risk Management 52

Slide 70: Benefits are unclear and difficult to measure 53

Slide 71: How do you quantify? How do you benchmark? Where do you prioritise? 54 who decides where to invest money.... why do they invest in certain charities etc over others? creates problems on fairness.

Slide 72: Diversion of attention from more important issues 55

Slide 73: “If efforts to do good become a distraction from the core business they may actually be downright irresponsible” 56

Slide 74: case study. 57

Slide 75: $400m donated last year to non-profit organisations throughout the world. 58 Microsoft is the largest contributor in the high-tech industry and one of the largest among all businesses in the United States. Microsoft employees give more per person than any other company's employees.

Slide 76: 59 The Microsoft Unlimited Potential programme is perhaps their biggest scheme aimed at CSR. Its about helping individuals around the world have access to affordable technologies in order to transform education, foster local innovation and enabling job opportunities The goal is to create a cycle of sustained social and economic growth for everyone and not just the most economically developed countries

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bn New computer users by 2015 60 That's also the United Nations' target year for achieving the eight Millennium Development Goals.

Slide 78: “It took about 35 years to get about 1 billion people access to computers.....It can't take us another 35 years to reach another 1 billion.” Orlando Ayala, Senior VP for Microsoft Emerging Segments Group, 61 Basic goal was elaborated by Orlando Ayala, Senior VP of the Emerging Segments Group

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Slide 80: 3 Focus Areas 63 transforming education - much like tech has changed the way we learn innovation (put tech into the hands of more people, greater innovation occurs), economic opportunity (amalgamation of the above two.

Slide 81: 64 As you can see from the map above, they have activities in most of the worlds countries. <Click> And here are a few pictures of this kind of thing in action - putting technology into the hands of the youth worldwide

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Slide 84: Software package for Teachers and Students 67 As part of this, Just a few months ago Microsoft announced that they were to sell a package of Windows, Office and other software to government programs that distribute subsidized PCs to students around the world. Called this the Student Innovation Suite

Slide 85: 68 They priced this at just $3

Slide 86: If Microsoft doesn't take action, the risk is that there may be billions of these computers that will not have Microsoft software. Although Microsoft wants to "make good for the world" by increasing access to computers, it also wants to position its business to be part of the market expansion in countries like China and India. 69 There have been a few critics of this move however. Lots of growth in mobile phones and PCs in these markets. Governments have got wise to Microsofts tactics in Western society and are going with Linux. This represents a huge threat to Microsofts business and hence this move. Get countries hooked on MS software..when they become developed, charge them full price. Catch 22. If they sold at full price these countries couldnt afford it and people would complain that Microsoft isn’t doing enough. Sell them cheap and people become cynical about it. So its a tough situation for MS but I believe they did the right thing

Slide 87: 70 Other people saw this as a move against Negoponte’s OLPC... one laptop per child initiative which has a similar goal of putting technology into the hands of children in developing countries. The OLPC runs Linux and NOT Microsoft Windows.

Slide 88: “It's a scary concept for Microsoft to have 100 million to 200 million people potentially growing up using open-source software and Linux. Never underestimate the ability of Microsoft to respond to that threat” Steve Kleynhans, Gartner 71

Slide 89: 72 Just to wrap this up here is a short video from Microsoft founder Bill Gates who puts the Unlimited Potential programme into his own words

Slide 90: case study. 73

Slide 91: Pollution Sources In a Car 74

Slide 92: Exhaust Evaporative emissions emissions Refuelling losses Pollution Sources In a Car 74

Slide 93: Ford has always led the way when it comes to innovation So does it when it comes to reducing the environmental impact of the vehicles Ford was the first vehicle manufacturer in Europe to offer production passenger vehicles with Flexifuel vehicle (FFV) Technology. 75

Slide 94: Priced at a similar level to their petrol-only equivalents all the advantages of bio-Ethanol good for the environment and economic as well. 76

Slide 95: Ford is the only vehicle manufacturer developing the five serious environmentally advanced technologies of clean diesel, Flexifuel, electric hybrid, hydrogen internal combustion and fuel cell. 77

Slide 96: For example, the new Mondeo 1.8-litre TDCi has significantly better performance and fuel economy and produces around 20% less CO2 than the equivalent 1993 Mondeo model 78

Slide 97: Ford is committed to sustained progress as many areas as possible that will reduce its impact on the environment – and help people to do so too. These include: wind turbines at Dagenham, solar panels at Bridgend and new recycling initiatives in both its products and manufacturing processes. 79

Slide 98: conclusions. 80

Slide 99: The relationship between the corporation and society is inseparable, in that society needs corporations for products and corporations needs society for profits. 81

Slide 100: Profits and CSR are not mutually exclusive but go hand-in-hand. 81

Slide 101: The global business environment has changed hence the classical view of corporations to solely make profits is short-sighted. 82

Slide 102: “Evidently, embracing corporate social responsibility not only makes good business sense. Those that get left behind are missing business opportunities, competitor advantage and improved management opportunities in this increasingly globalised world. By not engaging in CSR, companies are not only under managing their impact on society and the environment, they are under managing their own economic self-interest.” 83

Slide 103: While there are some who abuse it, we feel that everybody - MNE’s, Governments and Citizens have to take responsibility for CSR, because if we don’t...... who will? 84

Slide 104: Thank you. 85

Slide 105: 86 “So just to close this up are there are questions?”

Slide 106: ? 86 “So just to close this up are there are questions?”