MBA 292C.121 January 2009

Professor Kellie A. McElhaney

Welcome!

CSR in the News

About the Course ◦ Us: Professor & Graduate Student Instructor (GSI)◦ You: Registration, adds, drops

The Projects

Surprising survivors: Corporate do-gooders◦ As companies cut costs, social responsibility may seem like an easy

target. But many big names are sticking with the program.

◦ Tough season for Intel. Its stock price slipped 42% in 2008 and its fourth-quarter numbers were poor, with net income off 90% from a year earlier. Days before releasing its fourth-quarter results, the company launched the Small Things Challenge, a commitment of up to $300,000 to education and development in countries like Afghanistan, Cambodia, Haiti and Uganda in partnership with non-profit groups Kiva.org and Save the Children.

◦ "You can't save your way out of recession - you have to invest your way out," Intel chairman Craig Barrett told Fortune. "We look at our CSR activities in pretty much the same way: you can't just do them in good times and then just forget about them in bad times and hope to get any results."

Surprising survivors: Corporate do-gooders

Starbucks' stock lost more than half its value in 2008. CEO Howard Schultz responded quickly, outlining more than $400 million in cost reductions for 2009.

There was one area that escaped relatively unscathed: corporate responsibility. While Starbucks will cut some undisclosed costs, it recently launched a (Product) RED card to benefit African HIV and AIDS programs and plans to become the world's largest purchaser of fair trade coffee this year, among other efforts.

◦ Short-term thinking in a recession can lead to the "false belief that investments in people and training can wait; that corporate social responsibility can be put on the back burner," Schultz wrote in a November essay in the Huffington Post. "Now is a time to invest, truly and authentically, in our people, in our corporate responsibility and in our communities. The argument - and opportunity - for companies to do this has never been more compelling."

Wal-Mart Mexico Inaugurates Largest Sun-Operated Photovoltaic Installation in Latin America

◦ Solar panels will generate 20% of the store's energy requirements for a full year

◦ 1,056 solar panels were installed on the roof of Bodega Aurrera Aguascalientes

◦ 140 tons of CO2 emissions will be eliminated

◦ In 2005, Wal-Mart Mexico committed to the following sustainability efforts: 100% renewable energy sources by 2025 Zero water discharges by 2025 25% increase in eco-friendly items by 2012 Zero waste by 2025

One Year On, Clorox's Green Works Dominates Market

◦ Clorox's green gamble appears to be paying off: A year after the company launched its Green Works line of natural cleaning products, the brand has established itself as a leader in the category, capturing 42% market share.

Times Square Advertisers Turn to Wind Power

◦ Thirty of the Times Square's iconic lighted billboards - including Coca-Cola's long-running red sign - have shifted to 100% wind power.

Coca-Cola Enterprises Boosts Commitment to Sustainability with Launch of Largest Hybrid Electric Delivery Trucks in North America

◦ Coca-Cola Enterprises (NYSE: CCE) Chairman and Chief Executive Officer John F. Brock announced the deployment of the largest hybrid electric delivery trucks in North America

◦ CCE plans to deploy 185 hybrid electric trucks across the United States and Canada in 2009, bringing their total number of hybrid electric delivery trucks to 327, the largest such fleet in North America

Starbucks and Service

In celebration of Martin Luther King Jr. Day and the Inauguration, Americans are being encouraged to volunteer. Inspired by this effort and as part of the Starbucks(tm) Shared Planet(tm) commitment to communities, beginning January 21, Starbucks is teaming up with HandsOn Network for the "I'm In!" campaign

http://pledge5.starbucks.com/

"I'm In" invites our customers to pledge five hours to volunteer and connects them with projects in their communities. Our goal is to have one million hours pledged by January 25.

Join us! Starting Inauguration Day, make a pledge and encourage colleagues, friends and family to as well. We're offering a free cup of tall brewed coffee to anyone who fills out a pledge card to celebrate this call for service

http://www.cnn.com/video/#/video/politics/2009/01/20/obama.inauguration.speech.cnn

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control - and that a nation cannot prosper long when it favors only the prosperous.

The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart - not out of charity, but because it is the surest route to our common good.

BA from Harvard University

Focusing her MBA studies on strategic corporate responsibility, social venture finance, and social entrepreneurship 

Serves as a co-principal on the student-managed SRI fund

GSI’ed for Metrics of Sustainability and Undergraduate Accounting

Spoke at the 2008 Social Capital Markets Conference and SRI in the Rockies Conference

Worked at KLD Research & Analytics, an SRI research firm, researching the social, environmental, and governance performance of food and beverage, CPG, and energy companies

Interned at Nike in the Corporate Responsibility department

{Is sort of a slacker}

Has been on sabbatical for a year

Wrote a book (see required reading)

Consulted

Got told she looked like Sarah Palin

Got a tattoo

Worked in Haiti

And is excited to be back in the classroom!

Philanthropy?

Employee volunteerism?

PR?

Transparent reporting?

Sponsorships?

Workplace diversity?

Human rights?

Risk management?

Sustainable development?

Corporate governance?

Business ethics?

Employee treatment?

Environmental impact?

Safe products? Solving socialproblems?

How would you define CSR?

A business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.

Dow Jones Sustainability Index

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

European Commission

Using the power of business to create a better world.

Net Impact

Increase sales, penetrate new markets, engage employees, reduce

operating expenses, improve reputation, protect brand, beat

competitors

Technology, financial services, marketing, food, automobiles and

knowledge management

Strategic corporate social responsibility is a business strategy that is embedded in day to day business operations, supports

core business objectives, and leverages core competencies

to create business value and positive social change.

Country/CompanyGDP/Revenues ($ bil) Global 500 Rank

1. United States $13,202 N/A2. Japan 4,340 N/A3. Germany 2,907 N/A4. China 2,668 N/A.

22. Exxon Mobil 340 123. Poland 339 N/A24. Austria 322 N/A25. Wal-Mart 315 226. Norway 310 N/A27. Saudi Arabia 310 N/A28. Royal Dutch Shell 307 329, Denmark 275 N/A30. BP 268 4

McDonald’s exampleTriggers

•McDonald’s adds salads to menu

•Issues first Social Responsibility Report

•Announces plan to use “improved cooking oil” to cut trans fat in French fries

•McDonald’s launches “I’m lovin’ it” campaign promoting a healthier and higher-quality image

•Introduces ”Go Active!” adult meal

•McDonald’s eliminates “Super Size” option from the menu

•Announces its commitment to “balanced lifestyles”

McDonald’s Actions •McDonald’s

settles transfat suit for $8.5M

•Ronald McDonald gets leaner, sportier look

•McDonald’s to include nutritional information on all product packaging

•McDonald’s launches “Moms’ Quality Correspondents”

•Teens file class action lawsuit claiming McDonald’s is responsible for their obesity; case thrown out

2001 2002 2004 20052003

2006 2007

McDonald’s Stock

•Disney discontinues promo tie-ins with unhealthy food

•Agreement reached to start replacing high-calorie drinks in schools with healthier options

•BanTransFat.com group sues McDonald’s claiming it failed to reduce fat in French fry oil as promised

McDonald’s posts first quarterly loss

of $344M

McDonald’s reports a

quarterly loss of $126M

•Fast Food Nation published

•Lawsuit based on beef additives in French fry oil

•Surgeon General reports annual cost of obesity is $117B

•States begin banning school vending machines

•Super Size Me documentary released

McDonald’s Supporters: “People don’t go to sleep thin

and wake up obese.” “The understanding and

comprehension of what hamburgers and French fries do has been with us for a long, long time.”

"That's absurd. People interested in the real issues are talking about the totality of an individual's lifestyle. McDonald's will do its part, but the lawsuits are publicity gimmicks."

"When this first came out, we teased [that] restaurants would have to put warning labels on their hamburgers. This opinion seems to be headed in that direction."

Fast Food Opponents: “A fast-food company like

McDonald’s may not be responsible for the entire obesity epidemic, but let’s say they’re 5% responsible. Five percent of $117 billion is still an enormous amount of money.”

“The changes are part of the food companies’ image campaign. Without accountability and legal standards, as soon as attention is focused elsewhere, they will pull back.”

"Chicken McNuggets, rather than being merely chicken fried in a pan, are a McFrankenstein creation of various elements not utilized by the home cook."

About business strategy Real-world, current, emergent Fast-paced, packed in, like drinking from a fire hose Taught using multiple methods A unique learning experience Experiential, hands-on, active Something that will stay with you A lot of work with high expectations Fun!

Typical b-school course with HBS cases Traditional, straight-lecture, cut and dry, neatly

packaged For the close-minded or risk-averse Good for passive non-participators in learning For those who like to skip classes For those attached to their lap tops, PDAs and cell

phones Easy

Overview of Class CSR in the News Project Issues Lecture/ Discussion Surprise Guests Review Key Points

Components of Strategic CSR

Strategic Frameworks & Systems

CSR Reporting CSR Communications CSR Metrics Corporate

Philanthropy Employee

Volunteerism

CSR Tools Corporate Green CSR & Branding Strategies of

Change Management

CSR, Leadership & Innovation

Using Social Technology

Limitations of CSR

Ability to take classroom learnings and apply them immediately

Involves “teaching” strategic CSR to companies High profile, high visibility Complex and critical Connected to overall corporate strategy Informing real practice Multi-disciplinary Conduits to internships and jobs….

Students retain:

◦ 5% of what they hear in lecture◦ 10% of what they read and hear◦ 20% of what they see, read, and hear◦ 50% of what they discuss, see, read, and hear◦ 75% of what they do, discuss, see, read, and hear◦ 90% of what they teach to others, do, discuss, see,

read, and hear

Initial Meeting Weekly Status Reports Letter of Engagement Project Work Plan “State of Project” Meeting with GSI Interim In-Class Project Presentation “State of Project” Meeting with Instructor Final (oral) Presentation Final (written) Deliverable

2020 Strategies, LLC Autodesk Better Place Dow Chemical

Company eBay Everywun PMI Twitter Microsoft

US EPA Levi Strauss & Co. NIVDIA Corporation PACT Apparel Synergos Institute Wal-Mart SAP Yum! Brands Intel PG&E

No Drops after Tuesday, January 27 at 9 am

No Adds after Tuesday, January 26 at 9 am

Do not bid on projects unless you are absolutely defiantly 100% sure you are taking this course!