EIAT Conference 2011 Belgrade, Serbia

Pauline J. Sheldon, PhD School of Travel Industry Management

University of Hawai’i

Outline

  What is CSR?   Why is it so important now?   Why is it important to tourism and hospitality?   How tourism firms can manage their CSR efforts   Two questions for you

  Financial Crisis   Peak Oil   Climate change   Food & water shortages   Human rights   Technology

Society is changing its mind   In 1970 it was OK to smoke on planes   In 1970 it was OK to do a lot of things, and…

  In 1970, it was OK for Milton Friedman to say: The only social responsibility of business is to make a profit.

  Not OK now…

Why? Changing Values

Firms are changing too…. Property-Centered

Corporation:   Maximum growth   Maximum profits   Creating wealth for

financial elite and CEO

  Employees as costs   CORPORATION AS

PIECE OF PROPERTY

Life-Centered Corporation:

  Organic growth   Ethical profits   Creating values for a

variety of stakeholders   Employees as key

assets

  CORPORATION AS LIVING SYSTEM

Uniting Enterprise and Responsibility

 “Let us choose to unite the power of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of future generations.”

  Kofi Annan, Former UN Secretary General

Socially Responsible Investments outperform others

Question 1: Do you think CSR is more important for Tourism & Hospitality than for

other industries? If so why? If not, why not?   A major ‘user’ of environmental and cultural

resources - responsibility   Natural flow of wealth from developed to

developing nations – poverty alleviation (MDG goal)

  Tourism experience can to educate and change life styles of tourists

  Tourists can be engaged in CSR efforts   Socially and environmentally conscious tourists

– pushing and networking

How to Make CSR Part of Corporate Strategy?   Place it on Organizational Chart

 Manager of Sustainable Practices  Responsible Business Coordinator  VP for Responsible Tourism

  Create an Environment and Social Council to meet regularly

  Create Measurement Systems: “What gets measured gets managed”:  Create goals and track over time  Report activities in Annual Report:

  E.g. KLM, Cathay Pacific, Banyan Hotels – CSR Reports online

Identify strategic points of intersection between firm’s activities and society

 Inside-out linkages   Boeing International Relief Flights

 Outside-in linkages   Starwood - Waikiki beach

Society Firm

What type of CSR Programs?

 SIX TYPES

Environmentally Responsible Business Practices

  Recycling, energy saving, pollution minimization, clean-up

  Aspen Skiing Company: wind power, bio-diesel, certified green buildings, and ISO 14001 certification. 100 % renewable energy.

  Species and Nature Protection Programs (engaging visitors)  Banyan Hotels – turtles, plantings

Socially Responsible Practices (engaging visitors)

  Community educational and social programs

  Exotissimo Travel – connects guests with cultural events – e.g. guests fund ceremonies that residents otherwise could not afford. Guests visit the authentic ceremonies.

  Shinta Mani Hotel – guests contribute to the surrounding community and see their impact.

Corporate Philanthropy

  Financial contributions directly to a cause or a destination community

  “Outsourcing” CSR   Harness Visitors

 British Airways “Change for Good Program” Starwood: “Check out for Good”

Community Volunteering   Employees’ donation of time and talents for

social or environmental programs in the destination  Marriott’s employees help sick children, build houses, mentor

students, assist in disaster recovery and clean up.

 Increasingly important in natural disaster areas

Cause Promotion   Increase awareness of social causes or

disadvantaged populations

 Supporting Special Olympics

 Singapore Airlines  pledged $4 million to the Movement for the

Intellectually Disabled of Singapore (MINDS) employing up to 400 intellectually disabled members.

Look inside: Value-based programs in the firm

 Do business with responsible suppliers  Tour Operators Initiative

 Labor practices that value employees  Tourism Concern

 Triple Bottom Line Accounting

Question 2: How would you convince a tourism firm that CSR is a competitive strategy?

  Build brand value and market share with environmentally and socially conscious tourists;

  Enhance ability to recruit, motivate and retain employees

  Be favored by destinations who prioritize sustainability

  Be better positioned to respond to risks and opportunities.

  Attract socially conscious investors, improving access to capital and building share value

Where do we go from here?

Move along the CSR Continuum

Call to Action for Tourism & Hospitality to become a ‘lighthouse’ industry

• Realize our unique potential to transform destinations, employees and tourists

• Realize our unique opportunity for stewardship of environmental and socio-cultural resources

• I invite you to be a champion for CSR • ...Make a difference and be inspired..............and inspire!

Thank you! psheldon@hawaii.edu

Strategic Corporate Involvement in Society

Generic Social Impacts

Value Chain Social Impacts

Social Dimensions of Competitive Context

Good citizenship Mitigate harm from Value chain activities

Transform value-chain activities to benefit society while reinforcing strategy

Strategic CSR that leverages capabilities to improve areas of competitive context

Corporate Social Responsibility (CSR)  Concept began in 1950’s (Carroll, 1999)

 Transferred more recently to Tourism and Hospitality in the context of sustainability  BESTEN Think Tank on CSR in Tourism:

2006  Graham Miller – UK studies: Nancy McGehee

US hospitality industry

Reasons for CSR (Porter and Kramer, 2006)

  Moral obligation   Sustainability   License to operate   Reputation

Which is most mobilising?

A Continuum of Social Responsibility Strategies

Blending tourism with social causes

 United Way partnered with Cheaptickets.com to launch a website for people planning holidays with a service component in 2007.

 ASTA and Global Volunteers launched an initiative late 2006 to promote volunteer service travel as “a unique way to experience new places, people and cultures while making a positive contribution.”

WTTC Social Leadership www.wttc.org

  Abercrombie and Kent

  Accor Hotels   Avis   British Airways   Marriott Hotels   Carlson Group

  Radisson Hotels   Singapore Airlines   Taj Hotels   TUI Group   Worldspan

  CSR is particularly important for tourism due to dependence on destination’s environment and society (Mean=6.2; St.Dvn=1.1).

  CSR is more important now than ever before (Mean=6.2; SD=1.1).

  If practicing CSR, what are the benefits?  Good way of marketing (Mean=5.5; SD=1.3)  Important for competitive advantage (Mean=5.3;

SD=1.5),  Important for bottom line (Mean=4.9; SD=1.5).

 Why is your company engaged in CSR?   Part of corporate mission   Right/ethical thing to do

 Why is your company NOT engaged in CSR?  Limited resources  Lack of interest/need

  34% have a mission statement incorporating CSR

  24% have a designated employee for CSR   75% have engaged in CSR during 2006-07   Word associations and CSR:

 vague (79%), ethical (73%), long-run (66%), mutually beneficial (61%), competitive (56%)

  (Other words not ranking highly: voluntary, expensive, nuisance, overdue, cumbersome, profitable, people-centered, environment-centered, necessary)

Are Tourism Firms Awakening?

 Not enough  Sincerity over tokenism is needed  Action over rhetoric  Certification may help  Need Innovation  Need Collaboration

  Tourism/hospitality industry members think:   CSR is particularly important for

the travel industry due to high dependence on destination (environment, society)

  CSR is more important now than ever before.

  CSR is a good marketing tool (image, competitive advantage).

  CSR is mainly about the environment.

  Concept of CSR is vague.

  Tourism/hospitality industry members do:  CSR actions < CSR rhetoric   Limited resources  Many initiatives,

associations, but still not widespread

IBM Survey of CSR in 250 Global Companies

 Customer loyalty  New products ad

services  Market share  Opportunity to build or

damage brand

 The Abercrombie & Kent Global Foundation provides assistance to reserves and parks and surrounding communities and helps to cope with the environmental consequences of man-made disasters.  In 2001, $500,000 in support was given for

projects in 20 countries. Guests often visit project sites, providing an opportunity for meaningful contact between travelers and residents.

U.S. 1,306 McKinsey & Company (‘08)

World 1,122 Economic Intelligence Unit (‘08)

U.S. 751 Center for Corporate Citizenship, Boston College (‘07)

• Common findings:   CSR is increasingly important, and will be more so in the future.   Perception (rhetoric: what should be) ≠ Reality (what’s done)   Good/important for reputation  66% see CSR as new revenue stream  IBM study of 250 global companies

Ashoka social entrepreneurship Smart tourism slow tourism deep tourism Boeing – International Relief Flights

Socially Responsible Investment

 Provides greater demand, higher share price, and access to capital

 $2.34 trillion invested in such portfolios in US ($1 in $8)

 DJSI, FTSE4GOOD,

CSR in Hong Kong

 Government leadership would help  Richard Welford - Supply Chain Audits  Local operations versus intl operations.  SME’s vs. conglomerates. (expertise)

Seven CSR Approaches

  Value-based Programs within the Firm   Corporate Philanthropy   Cause Promotion   Community Volunteering   Corporate Social Marketing   Socially Responsible Practices   Environmentally Responsible Business

Practices

Social Entrepreneurs

“Social entrepreneurs are not content just to give fish or to teach how to fish. They will not rest until they have revolutionized the fishing industry” Bill Drayton, Ashoka (www.ashoka.com)

Corporate Social Marketing

  Behavior change campaigns such as education of travelers

 Travelocity’s “Travel for Good” program  Promotes ‘voluntourism’  “Change Ambassadors” Grant program launched

in 2006 – up to $5,000 for travel to a volunteer trip

Human Values Matter in Business

  Sustainable economic competitive advantage is correlated with ethical corporate behavior

  Performance is higher where company values and personal ethics/spiritual values coalesce

  While most people have strong personal ethics/spiritual values, few feel that they can act on them at work

Determine Values to Drive CSR for your firm

 Consider ‘duty’ and the ‘rights’ of others  Justice – fair trade in tourism

 Consider desired outcomes   Improved reputation, improved bottom line

 Other- e.g. family values  Example: Kaanapali Beach Hotel, Maui

Market Shifts in Tourism Demand  Value Simplicity  Committed to Authenticity  Spiritually Engaged  Believe in Engaged Action & Service  Concerned about Ecology  Are Altruistic and Self Actualizing

Source: Peter Yesawich, 2005

Are we awake enough?

 Need to speed up the awakening  Action over rhetoric  Sincerity over tokenism

 Need a shift in values in all stakeholders  Need collaboration  Need more agility

CSR Networks

Tourism Firms SME’s/Global

Champions Social entrepreneurs Host communities Associations NGO’s

Destination Governments National/local

Civil Society

TUI, TOI and WWF

Customers