©SHRM 2009

SHRM-Morris County Chapter – Brian J. Glade, SPHR, GPHR – February 11, 2009

Corporate Social Responsibility and Business Sustainability: HR’s Leadership Role

©SHRM 2009 2

CSR and Business Sustainability: Defining the Terms

CSR• Used since the 1970s to denote ethical and socially responsible

business behavior

Sustainability/Business Sustainability• Dates back to 1987 World Commission on Environment and

Development• Combines traditional CSR concept with longer-term renewable

approach to business practices

CSR-Business Sustainability• Today, the two terms are used interchangeably and are defined by

World Council for Sustainable Business as:

“Contributing to sustainable development by working to improve the quality of life for employees, their families, the local community and stakeholders up and down the supply chain”

©SHRM 2009 3

CSR and Business Sustainability: HR’s Leadership Role

Today’s Agenda

• Evolution of CSR/Business Sustainability• Triple Bottom Line• SHRM’s 2007 CSR Pilot Study• HR’s Leadership Role in CSR/Business Sustainability• Barack Obama: our “Green” President

©SHRM 2009 4

CSR/Sustainability Evolution: Early Pioneers

Founded in 1978 with a social purpose

Shares rewards with its employees and the community

Sources ingredients from socially conscious suppliers.

In 1992, first U.S. public company to sign onto the CERES Principles to protect the environment.

©SHRM 2009 5

CSR/Sustainability Evolution: Early Pioneers

UK cosmetics company founded in 1976 with a commitment to sell products not testedon animals.

Company went on to support environmental causes, HIV/AIDS awareness, human and animal rights, and campaigns against domestic violence.

In the early 1990s, sponsored employee trips to work in orphanages in Romania, raising international awareness of the poor conditions of the facilities and the children’s health.

©SHRM 2009 6

CSR/Sustainability Evolution: Heavyweights Jump In

Goals:

Be supplied 100% by renewable energy, create zero waste, and seeproducts that sustain natural resources and the environment.

Increase the efficiency of its vehicle fleet by 25% by 2010 and by 50% by 2020.

Reduce by 30% the amount of energy used in its stores by 2010.

Reduce solid waste in its stores by 25% by 2010.

It may invest $500 million in various sustainability projects.

©SHRM 2009 7

CSR/Sustainability Evolution: Heavyweights Jump In

Launched Eco Options labeling initiative to identify 2,500 products that are environmentally friendly.

Began replacing the incandescent bulbs in its lighting department displays with more eco-friendly CFL bulbs.

Partnered with The Conservation Fund to offset all carbon emissions created by the company's Atlanta headquarters and a portion of emissions created by associates commuting to work and traveling on business.

Will fund planting of thousands of trees in Atlanta as part of the program.

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CSR/Sustainability Gains Momentum

1960s-1970s:

• Early CSR pioneers gain media attention and prestige• Civil rights activism grows• Ralph Nader leads a consumer awakening• Ecological devastation and Earth Day build environmental

consciousness • Anti-Vietnam War movement empowers youth

1980s-1990s:

• Heavyweights begin jumping on CSR bandwagon• Companies add environment, volunteerism to their responsibilities• Companies seek safer products following 1982 Tylenol poisonings• 1987 Bruntland Commission introduces “sustainable development”

©SHRM 2009 9

CSR/Sustainability Goes Mainstream

2000-Present:

• CSR/Business Sustainability goes mainstream• Terrorist attacks on World Trade Center raise questions about our

legacy• Scandals at Enron and others lead government to Sarbanes-Oxley Act • Global Warming threatens the planet and companies commit to action• Gas hits $4 a gallon, sparking calls to develop renewable energy

sources

©SHRM 2009 10

Triple Bottom Line

• People, Planet, Profit:> Term coined by John Elkington that expands criteria for

organizational success to include social, environmental, and economic factors

• People:> Fair and beneficial business practices towards labor and the

community in which a corporation conducts its business

• Planet:> Sustainable environmental practices

• Profit:> Lasting economic impact by an organization on its economic

environment, not just internal profit made by the company

©SHRM 2009 11

Stakeholder Interest

Triple Bottom Line• Company responsibility should be to stakeholders, rather than to

shareholders

Stakeholder• Anyone who is influenced, either directly or indirectly, by the actions of

the firm

Objective• Business entity should promote stakeholder interests, instead of just

maximizing shareholder or owner profit

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Corporate Social Integration

Common Ground• TBL approach suggests companies and community groups find

common ground to benefit both

HBR Article• Harvard professor Michael Porter proposed business-society

sustainability framework focusing on integration, rather than opposition

New Thinking• According to Porter, NGOs, governments, and companies must start

thinking in terms of corporate social INTEGRATION

Progress• Companies are embracing CSR and NGOs that campaigned against

businesses are forming partnerships with them on CSR initiatives

©SHRM 2009 13

TBL Balancing Act

.

Sustainability

Profits

People

Planet

©SHRM 2009 14

Age of Corporate Accountability

Andy Savitz• Author of book, Triple Bottom Line, compares corporate focus in 1950s

and 1970s to today’s Age of Corporate Accountability

1950s Focus• Make money• Provide philanthropy

1970s Focus• Money, philanthropy ++• Protect the environment• Products

©SHRM 2009 15

Age of Corporate Accountability

Today’s Focus• Money, philanthropy, environment, protect products ++• Promote diversity• Protect workers• Prevent child labor• Foster public health• Ensure human rights• Provide technology• Oppose corrupt regimes• Patrol supply chain• Engage stakeholders• Measure and report benchmarks

©SHRM 2009 16

CEOs are CSR Fans

79% of CEOs in 2006 said sustainability was vital to profitability—up from 69% in 2005.--Sustaining Value through People, 2006, PricewaterhouseCoopers

Companies active in CSR in 2008 had annual profit and share price growth of 16% and 45% -- vs. 7%and 12% for weak CSR firms--Economist Intelligence Unit survey of 1,200global C-suite executives, 2008

©SHRM 2009 17

GE Ecomagination

‘Green is Green’—Jeff Immelt, GE CEO

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SHRM 2007 CSR Pilot StudyParticipation in CSR Activities

.

81%

91%89%

95%

9%11%

15%19%

9%11%

5%

85%89%

91%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

United States (n =405)

Australia (n = 273) India (n = 160) China (n = 98) Canada (n = 1084) Mexico (n = 109) Brazil (n = 152)

Yes No

©SHRM 2009 1919%14%14%6%16%8%15%Positive financial

bottom line

26%19%12%7%15%10%15%Increased workforce productivity

19%26%17%13%22%15%17%Competitive advantage

25%24%25%17%18%18%19%Increased recruitment of top employees

23%32%29%12%16%24%24%Increased employee retention

59%40%44%37%35%38%39%Position as an employer of choice

66%45%41%61%56%44%42%Increased brand recognition

60%48%45%51%40%36%45%Increased consumerconfidence

59%55%41%28%43%44%48%Increased employee loyalty

68%61%50%26%58%63%61%Improved employee morale

81%67%76%67%67%65%74%Stronger public image

Brazil(n = 135)

Mexico(n = 88)

Canada(n = 844)

China(n = 82)

India(n =134)

Australia(n = 214)

UnitedStates

(n = 309)

SHRM 2007 CSR Pilot StudyEmployment Branding: Positive CSR Outcomes

©SHRM 2009 20

Corporate Culture: Promoting Ethical Behavior

SHRM 2007 CSR Pilot Study

35%25%13%16%19%10%9%A report dedicated exclusively to CSR is issued

64%64%47%27%35%57%34%

Efforts are included in organization’s annual report

75%64%59%51%53%56%55%Efforts are included in organization’s mission statement

72%69%65%63%55%59%57%Efforts are part of organization’s goals

79%69%65%67%61%73%69%

Efforts are covered in organization’s newsletters/other publications

Brazil(n = 126)

Mexico(n = 67)

Canada(n = 632)

China(n = 63)

India(n = 74)

Australia(n = 168)

United States

(n = 211)

©SHRM 2009 21

SHRM 2007 CSR Pilot Study

41%49%89%

Health & safety considerations

Environmental considerationsContribution to societyBrazil

(n = 148)

41%46%75%

Public relations strategyEnvironmental considerationsContribution to societyMexico

(n = 112)

40%51%71%

Environmental considerationsPublic relations strategyContribution to societyCanada

(n = 1,138)

36%52%71%

Competitive advantagePublic relations strategyContribution to societyChina

(n = 114)

40%43%77%

Environmental considerationsPublic relations strategyContribution to society

India(n = 163)

36%50%70%

Environmental considerationsPublic relations strategyContribution to society

Australia(n = 284)

33%53%70%

Employee activismPublic relations strategyContribution to societyUnited States

(n = 429)

321

Corporate Culture: Top 3 CSR Drivers

©SHRM 2009 22

SHRM 2007 CSR Pilot StudyCorporate Strategy: 2 Select CSR Practices

S

32%19%8%10%13%9%7%Track sources of global raw materials

73%53%22%19%39%17%15%Monitor global fair labor standards

48%27%32%31%31%32%25%Cause marketing /branding

70%37%38%22%39%36%27%Partner with environmentally friendly companies

65%42%53%23%39%50%34%Monitor the impact of business on the environment

25%20%19%--22%12%39%Partner with woman-or minority owned companies

62%26%54%35%38%52%47%Consider the overall social impact of business decisions

73%45%58%26%57%51%66%

Support community through company-sponsored volunteer projects

30%61%51%69%70%68%77%Donate/collect money for natural disasters

74%76%90%64%60%84%88%Donate/collect money for local charities

Brazil(n = 149)

Mexico(n = 113)

Canada(n =1,106)

China(n = 108)

India(n =161)

Australia(n = 266)

UnitedStates

(n = 420)

©SHRM 2009 23

Transparency: Publicizing CSR Activities

SHRM 2007 CSR Pilot Study

35%25%13%16%19%10%9%A report dedicated exclusively to CSR is issued

64%64%47%27%35%57%34%

Efforts are included in organization’s annual report

75%64%59%51%53%56%55%Efforts are included in organization’s mission statement

72%69%65%63%55%59%57%Efforts are part of organization’s goals

79%69%65%67%61%73%69%

Efforts are covered in organization’s newsletters/other publications

Brazil(n = 126)

Mexico(n = 67)

Canada(n = 632)

China(n = 63)

India(n = 74)

Australia(n = 168)

United States

(n = 211)

©SHRM 2009 24

Role of HR in CSR and SustainabilityHR must take the lead

SHRM Pilot Study• 2/3 of U.S. HR professionals directly involved in CSR, but only 13%

mainly responsible for creating strategy -- Only 23% charged with implementing strategy

2007 BusinessWeek Survey• Executives interviewed said leadership should be by HR on CSR social

programs (64%), but 50% thought Operations should lead environmental programs

Leadership Void• A holistic approach to business sustainability is missing at most

organizations and HR needs to fill this leadership void

Logical Leadership Role• HR is already heavily involved in developing employment policies that

overlap social issues

©SHRM 2009 25

CSR as Recruitment-Retention Tool

HR and CSR• Research shows that CSR can be a potent recruitment and retention

tool–areas of HR responsibility

2008 Grant Thornton Survey• Recruitment and retention was main driver for CSR programs at 65% of

U.S. privately held companies surveyed

2007 Cone Consumer Survey• 77% of U.S. consumers surveyed said they would take into account a

company’s environmental reputation when considering it for employment

2008 SHRM Green Workplace Survey• 61% of respondents were “very likely” or “likely” to stay at their current

organizations because of their CSR programs.

©SHRM 2009 26

Role of HR in CSR/Business SustainabilityGlobal Reporting Initiative

HR owns or shares 24 of 79 GRI indicators including:

• Diversity• Benefits• Job security/loss• Labor issues• Health and wellness• Work-life balance• Pay equity• Workplace conditions• Human rights

©SHRM 2009 27

Role of HR in CSR/Business SustainabilityHR Sweet Spot

Andy Savitz• Author of influential book describes how sustainability is the “sweet

spot” where business and society interests overlap

HR-Sustainability• Savitz also describes how the intersection of a company’s HR function

with its sustainability “sweet spot” can drive bottom line results

Activism• HR should be an organization’s natural CSR “sweet spot,” but it

requires activism and commitment

©SHRM 2009 28

Role of HR in CSR/Business Sustainability

HR Attributes for Success• Respect• Ability to collaborate• Persuasiveness• Ability to think outside the box• Ability to measure• Passion

©SHRM 2009 29

Our Green President

Barack Obama promises to be our “greenest” President since Teddy Roosevelt

His election and the need to stimulate our economy should raise the profile of CSR significantly over next four years

This provides a great opportunity for HR professionals to show their strategic value in a critical area for our country

The economic stimulus package being considered by Congress includes up to $20 billion in renewable energy tax cuts

The President’s goal is to double the production of renewable energy resources in the next three years

He believes these renewable energy projects will create nearly a half million new jobs

©SHRM 2009 30

CSR and the Downturn

Will CSR be Cut?• Key factor: Strength of company’s commitment to CSR in the downturn will depend on whether CSR is considered a critical part of the business

• Strategic connection: Companies that don’t see a strategic connection between CSR and their bottom line are more likely to cut CSR programs

• Recent survey: 43% of companies in poll by Business for Social Responsibility expect 2009 CSR budgets to go unchanged -- 31% expect a decrease

• Cutting: Ford Motors will reduce 2009 funding for corporate philanthropy by 40%, and Citigroup has reduced its CSR staff along with job cuts across the company

• Maintaining: General Electric, Intel, PricewaterhouseCoopers, and Wal-Mart are sustaining or expanding their CSR commitments in 2009

©SHRM 2009 31

CSR and the Downturn – Recent Quotes

Jeff Immelt, Chairman and CEO of GE:“When we come out of this fog, this notion that companies need to stand for something --- they need to be accountable for more than just the money they earn –is going to be profound.”

Craig Barrett, Chairman Intel Corporation:“You can’t save your way out of recession… 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 expect to get any results.”

Howard Schultz, CEO of Starbuck’s:“Now is the 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.”

©SHRM 2009 32

Our Green Future

“In the future, a company’s carbon statement will be as prominent as its financial statement.”

Ian Pearson in 2007Former UK Minister of State for

Climate Change and the Environment

©SHRM 2009 33

Further Information

Society for Human Resource Managementwww.shrm.org

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