Economic Impact of CSR - iktissadevents.com · group of companies Company Top Management Top...

Saudi CSR Forum

June 7-8th, 2011

Economic Impact of CSR:

• benefits of CSR.• relationship between CSR & company customers.• private / public partnership.

What is CSR?

2

“There are countless win-win opportunities (in corporate citizenship)

waiting to be discovered: every activity in a firm’s value chain overlaps in some way with social factors …yet very few companies have thought about this. The

goal is to leverage your company’s unique capabilities in supporting social causes, and improve your competitive context

at the same time.”

"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."

Michael PorterProfessor, Harvard

Business School

Why do companies engage in CSR?

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Moral Obligation “We are bad if we don’t.”

Reputation “People will like us.”

Sustainability “Its in our best interest.”

License to Operate “We must to do business.”

What are the benefits of CSR?

Puts a human face to the Corporation.

Invests in our community by seriously addressing major issues.

Build a reputation among key stakeholders as a significant CSR player.

Builds employee pride & thus loyalty.

Helps recruit top talent.

Builds immune system vs. PR risks.

4

Global Studies link CSR to business results

76% Likelihood to switch brands if associated with a good

cause, (price/quality equal).

86% Consumers that have more positive image of

companies doing something to make world better

place.

64% Consumers willing to pay up to 5% more for a product

associated with a cause.

20% Consumers willing to pay up to 10% more

37% Consumers refusing to buy product because they

don’t like company that makes it.

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CSR targets four sectors

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Environment

Sector Employees

Community

Toyota CSR: Employees

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Toyota CSR: Community

8

Toyota CSR: Environment

9

Toyota CSR: Sector

10

Developing a CSR Strategy

11

Developing Strategic CSR programs

A strategic approach to CSR strategy development

Generic Social Impacts

• Good citizenship

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Social Issues not significantly affected by a company’s operations nor materially affect its long term competitiveness.GE’s program to adopt underperforming public high schools near GE facilities. Although very successful, it is disconnected from its core business –even recruiting.





Value Chain Social Impacts

• Mitigate harm from value chain activities

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Proactively evaluating every step in the value chain to remove or modify activities representing a danger to the community.




• Transform value chain activities to benefit society while reinforcing strategy.

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Proactively creating new product and service value chains that build business AND the community. Toyota’s Prius, the hybrid electric car. Competitors are licensing the technology which is seen as the world standard.



Social Dimensions of Competitive Context

• Strategic philanthropy that leverages capabilities to develop / strengthen competitive advantages.

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The entire company value chain is socially responsible AND represents a highly competitive, profitable endeavor.Whole Foods Market which sells organic, healthy, natural food products.





• RESPONSIVE CSR


• Mitigate harm from value chain activities


Social Dimensions of Competitive Context

• Strategic philanthropy that leverages capabilities to develop / strengthen competitive advantages.

• STRATEGIC CSR

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Systematic Way To Build Corporate

business, image, employees, & the Community surrounding it.

ELIXIR CSR Strategy Development Module

5 Phases of Sustainable Development

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PHASE 2Qualify Appealing

Concepts

PHASE 3Develop Sustainable

Strategies

PHASE 4Ensure Sustainable

Model

PHASE 5Continuous

Marketing and PR

PHASE1Agree Objectives

and Causes

Phase 1: Agree Objectives And Causes

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Concepts


Strategies


Model

PHASE 5Continuous Marketing

and PR

CSR objectives.

CSR stakeholders.

“Wish list” from stakeholders.

Determine CSR cause.


and Causes

Company CSR’s Main StakeholdersExample of Initial List Provided

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Foundation Founders & Board Members

Company Top Talent

Company Employees

Leaders of Company Holding

group of companies

Company Top Management Top Graduating Talent

Company key suppliers

Top Market Talent targeted by company

Company key customers

Amarah

Municipality

Ministry of Labor

HNWI’s

Royal Diwan

New Customers

New Investment

Partners

New Suppliers

Community.

New Suppliers

Banks & Lenders

Ministry of Commerce Ministry of Industry

SAGIA

Central Monetary Authority

KSA Charity Organizations

KSA? Which Region

KSA? Which Region

Ministry of Social Affairs Family & Friends Outside of KSA? Where?

Cause Selection

8 Main Possible Causes/Directions:

Extreme Poverty• Hunger• Shelter• Income

Education and literacy• Schools• Vocational training• Cultural exchange

Basic health• Nutrition• Sanitation• Diseases

Children’s wellbeing• Child mortality• Child labor• Childhood development

Women’s development• Women's health• Girls’ education• Employment and leadership

Environmental Sustainability• Pollution• Land erosion• Natural disasters

Water• Drinking water• Preventing disasters• Cleaning polluted water

Economic development• Community development• Entrepreneurship• Microfinance

Source: UN Millennium goals; Copenhagen consensus; McKinsey analysis 21

Pursue an important Cause

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Unemployment

Youth Enabling

Education

Ethics

Divorce

Crime

Women Empowerment

Imp

ort

an

ce

The above data is illustrative of qualitative study results only.

Q. Which enterprise do you associate each cause with, if any.

The above data is illustrative of quantitative study results only.

Pursue an Unaddressed Cause.Don’t duplicate efforts.

0102030405060708090

Co E

Co D

Co C

Co B

Co A

Phase 2: Qualify Appealing Concepts

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Concepts


Strategies


Model

PHASE 5Continuous

Marketing and PR

Potential joint concepts.

Reactions from key stakeholders.

Recommended concept.

CSR equity pyramid.


and Causes

Develop a specific value proposition…just like you would in business

Concept Element Description Development Methodology

ACB Accepted Consumer Belief. • What is the widespread belief of our key

stakeholders? What are the key problems that need to be solved?

• Why are they not being solved properly?

• What are the barriers to solving?

Research among key stakeholders to better understand the major beliefs they have regarding:• Core issues they consider to be priorities

to be solved.• Main issues and barriers preventing the

problem to be eliminated.

Benefit Benefit.• What is the unique value-added service I can

provide to solve the issue?

• How can I talk about this cause in a way to attract supporters?

• Internal Concept Development Lab to develop several potential concepts.

• Qualitative Concept Lab to choose the most powerful concept & optimize.

• Quantitative Concept test if needed.

RTB Reason-to-Believe.• How can I convince others that I can deliver on my

promised benefit?

• Why am I the best organization to tackle this issue better than anyone else?

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Within chosen direction, select pillars

Potential pillars to qualify with stakeholders

Chosen direction

Chosen causeYouth

Enabling

Leadership Development

Leadership kindergarten

Exchange program

Model UN …

26The above data is illustrative only.

Phase 3 and 4: Develop Sustainable Strategies and Model

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PHASE 2 Qualify Appealing

Concepts


Strategies


Model

PHASE 5 Continuous

Marketing and PR


and Causes

• Form Committee with Key Stakeholders.• Develop Sustainable Strategies.• Translate into a Sustainable Social Venture

Model (Governance, $, Human Resources, Time, etc).

A World of

Need

Develop Sustainable Strategies via:“How we do it” & “How do we support it?

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SECTOR (Cause)

Theme & Pillars

How do we do it?*

Type of

Assistance

•Operational Strategies & Plan•Resources Required•Legal & Governance Structure•Strategic Partnerships•Detailed Budget•Project Management Plan•CSR monitoring processes & reporting

•Grants•Investments•Partnerships•Launching new organization•Training•Media Innovation

Your CSR

Efforts

Key Stakeholders

•Specific projects adopted by company within cause

•How to involve employees?

Phase 4

Phase 4

Phases 2,3&5

Phase 1

• Which cause? Phase 1

•Government•Employees•Consumers

* To be customized based on specific engagement

Sustainable StrategyClient Example

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BANAWI INDUSTRIAL GROUP CSR PROGRAM: The Young Business Leadership Development Initiative

VISION:

Nurture young business leaders today for a better tomorrow

KEY PILLARS

KEY TARGET: Young Business Leaders in the

Arab World

KEY TARGET: Young Business Leaders in

Saudi Arabia, 28-38 years old,

3-5 years work experience, proven skills in building

business, people, & community.

KEY TARGET: Top Senior College students

in top Saudi Arabian Universities,

High GPAs & diversified extracurricular activities.

KEY TARGET: Top performing participants from Pillars 2 & 3, willing & needing a Mentor to help

them develop their business leadership skills.

PILLAR 1: IDENTIFY BIG Leadership Definition &

Hussein al-Banawi book

Objective : Identify &

propagate the qualities of a

top business leader. The

resulting definition is based

on extensive research

among global, regional, &

local business leaders.

PILLAR 2: REWARD BIG Young Business Leadership Award.

Objective: Reward

top young business

leaders, male & female

annually via a highly

appealing reward and

recognition ceremony.

PILLAR 3: ENABLE BIG Leadership

Acceleration Program ( BIG LEAP)

Objective: Enable

emerging business

leaders via a mini-MBA

program provided by

Thunderbird, a leading

global educational

Institution.

PILLAR 4: NURTURE BIG Mentorship

Program

Objective: Nurture

young business leaders

by matching them with

top business leaders

via the Mentorship

program.

STRATEGIC PARTNER: Author John Cooney

STRATEGIC PARTNER: The Conference Board

STRATEGIC PARTNER: Thunderbird Graduate

School of Business

STRATEGIC PARTNER: TBD

BIG Committed Resources:

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3% of BIG Net Income will be

invested annually.

3

3% of BIG Leadership time will be

committed annually.

3

Each BIG business leader will

mentor 3 promising young

business leaders. Source: Elixir engagement on client CSR

Client Committed Resources

Each client business leader will3% of client Leadership time will be committed annually.

3% of client Net income will be invested annually.

Translate into Sustainable ModelClient Engagement Example

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Research Workshop Work to do

Source: Elixir engagement on Client CSR

Phase 5: Continuous Marketing and PR

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Concepts


Strategies


Model

PHASE 5Continuous

Marketing and PR


and Causes

• Communicate to public via the media (To be customized based on specific engagement).

Thank You

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