Socially Responsible Business Practices:

Discretionary Business Practices and Investments to

Support CausesLecture # 8

SRBP?

• Socially Responsible Business Practices are where the corporation adapts and conducts discretionary business practices and investments that support social causes to improve community well-being and protect the environment

From obligation to discretion

• SRBP can actually raise profits and have the potential for increasing revenues.

• Consumers now have more choices and options based on criteria beyond the four Ps. The purchase decision is based on the product’s reputation for SRBP and commitment to social welfare.

• Investors and stakeholders are subjecting organizations to more scrutiny

• An interest in increased worker productivity and retention has turned corporate heads towards ways to improve employee satisfaction and well-being

• The media has become extremely powerful and provides increased visibility and coverage of corporate activities especially when things go wrong giving birth to vapid corporate scandals

• The bar for disclosure has been raised and customers have an expectation that they will be fully informed regarding business practices, including product content, sources of raw materials and manufacturing processes.

Typical SRBPs

1. Designing facilities to meet or exceed environmental and safety recommendations and guidelines, such as for increased energy conservation

2. Developing process improvements which may include practices such as eliminating the use of hazardous waste materials , reducing the amount of chemicals used in growing crops, or eliminating the use of certain types of oil for deep fat frying.

3. Discontinuing product offerings that are considered harmful but not illegal e.g. McDonald discontinuing their super size portions of French fries.

4. Selecting suppliers based on their willingness to adopt or maintain sustainable environmental practices and supporting and rewarding their efforts

5. Choosing manufacturing and packaging materials that are most environmentally friendly , taking into consideration goals fro waste reduction , use of renewable resources and elimination of toxic emissions.

6. Providing full disclosure of product materials and their origins and potential hazards, even going the extra mile with helpful information.

7. Developing programs to support employee well-being, such as work place exercise facilities or on-site day care.

8. Measuring tracking and reporting of accountable goals and actions, including the bad news as well as the good.

9. Establishing guidelines for marketing to children to ensure responsible communications and appropriate distribution channels.

10. Providing increased access for disabled populations using technology such as assisted listening devices , voice recognition mechanisms and alternate print formats.

11. Protecting privacy of consumer information , an area of increasing concern with sophisticated data collection , recognition and tracking of individuals and their movements

12. Making decisions regarding plant, outsourcing, and retail locations, recognizing the economic impact of these decisions on communities.

Environmental protection is a priority for the conservation of precious natural resources and the continued health of our planet. Apple recognizes its responsibility as a global citizen and is continually striving to reduce the environmental impact of the work we do and the products we create.

Apple plans to completely eliminate the use of polyvinyl chloride (PVC) and brominated flame retardants (BFRs) in its products, and arsenic in the glass of flat-panel displays by the end of 2008. Apple helps to safeguard the environment — as well as consumers’ safety — by restricting the use of environmentally harmful compounds in our materials and manufacturing processes. For example, our restricted substances program limits the use of heavy metals and ozone depleting substances in our products and manufacturing processes.

Benefits of SRBP

• Decreases Operating costs.• Increases community good will for the

corporation.• Creates Brand Preference with Target

Markets.• Builds influential partnerships.• Enhances employee well-being and

satisfaction.• Contributes to desired Brand positioning.

Decreases Operating costsCisco's philosophy for new construction is to "plan it right," which means thinking about energy efficiency during the design phase, before a building is actually constructed.

Effective planning requires improved collaboration between groups with different expertise. "We used to have discrete facilities and maintenance groups, which is typical in most companies. Now, those groups operate together. We've combined people who specialize in the design side with people who have day-to-day working familiarity with the buildings to leverage each other's knowledge," says Mike Lavazza, Cisco manager for operations and engineering.

Cisco designed and built its San Jose, CA, headquarters to exceed California's state Title 24 energy standards by 15 to 20%. By exceeding these standards, Cisco not only lowers costs and lessens environmental impacts, but also takes advantage of incentives offered by energy supplier Pacific Gas & Electric (PG&E). "At two of our headquarters sites, which include 4.9 million square feet of space in 25 buildings, we conserve an average of 49.5 million kilowatt-hours per year. We expect to save about $4.5 million per year in operating costs. On top of that, those energy savings qualified us for $5.7 million in PG&E rebates when construction was completed," says Sheikh Nayeem, facilities engineer.

Designing and building environmentally sensitive, cost-efficient facilities benefits Cisco - but it's only part of the conservation equation. For facilities to have a positive environmental and financial impact, constant monitoring and behavioural change is required. "It's essential to communicate and coordinate with employees and business units to show them the value of conservation. We make it clear that conservation should not affect product quality or compromise business interests. Our message to employees is that it is good business to use energy efficiently," says Nayeem.

Programming computer monitors to shut down after 10 minutes of inactivity is one of the many measures Cisco has implemented to reduce energy use across the company. Because of these efforts, Cisco was recognized for its participation in the Environmental Protection Agency's Energy Star Million Monitor Drive. The national campaign's goal was to activate power management on one million computer monitors nationwide. By achieving this goal, the program saved more than $15 million in energy costs, conserved 200 million kilowatt-hours, and prevented more than 150,000 tons of carbon dioxide emissions.

Increases community good will for the corporation

• According to The Coca-Cola Company (2007), people around the world drink various beverages produced by them more than 1.3 billion times a day. The company has a presence in people’s lives not only as a simple moment of refreshment, but also as an employer, a business partner, a part of the community and a “global citizen.” The company places high value on these relationships – and the trust and responsibility that come with them.

In Africa, The Coca-Cola Company is the largest private-sector employer in the continent. In South Africa, for instance, for every one job created by the Coca-Cola system, 16 jobs are created in the informal retail sector (The Coca-Cola Company, 2007). With the widespread of HIV/AIDS in Africa, it not surprising that many of Coca-Cola’s employees, as well as their spouses and children are suffering from HIV/AIDSAlthough the exact number of Coca-Cola’s employees with HIV/AIDS is not known, many people have argued that the company ought to do more for its employees and the continent as a whole with regards to HIV/AIDS (Lobe, 2002). In October 2002, AIDS activists around the world held rallies and demonstrations in several cities around the world to protest against what they considered the lack of sufficient action on the part of this global soft-drink giant, which they charge must do more to help and treat its HIV infected workers and their families in sub-Saharan Africa.

HIV/AIDS in Africa: The Coca-Cola system provides comprehensive HIV/AIDS coverage for all 60,000 Coca-Cola system associates, as well as their spouses and children. We also support campaigns such as "Dance4Life," which aims to raise community awareness of HIV/AIDS. The Coca-Cola Africa Foundation has pledged $2.5 million over a three-year period to further develop programs in Egypt, Ethiopia, Kenya, South Africa and Tanzania.

Creates Brand Preference with Target Markets

Every year, across the globe, millions of pairs of athletic shoes end up in landfills or are disposed of in some other way. That’s a lot of shoes going to waste that contain valuable materials that could be re-used. So with a degree of imagination, some ingenious engineering and a persistent pursuit of the principles of sustainability, we created the Nike Reuse-A-Shoe program in 1990. Since then, we’ve recycled more than 21 million pairs of athletic shoes and contributed to more than 265 sport surfaces to provide access to places to play for kids as part of Letmeplay Nike’s global community investment program.

Nike recycles much of their scrap material left over from the manufacturing of Nike footwear and together the shoes and shoe materials are ground up and purified to become a material we affectionately call Nike Grind– Nike Grind Rubber, Nike Grind Foam and Nike Grind Upper.

Nike partners with industry-leading sports surfacing companies to incorporate Nike Grind into their quality sports surfacing product ranges – basketball and tennis courts, running tracks, soccer fields, fitness flooring and playground safety surfacing. Together, They are working towards a common goal: to create the highest-quality sports surfaces available using the most innovative methods and advanced recycling technology.

Builds influential partnerships

• Companies engaging in socially responsible business practices may experience less scrutiny from national as well as government agencies.

• In many cases such companies are subject to fewer inspections and less paperwork, and may be given preference or ‘fast track’ treatment when applying for operating permits , zoning variances or other form of governmental permission

Motorola, Inc. is the first major cell phone manufacturer to redesign all its mobile phone and accessory chargers (external power supplies) to be ENERGY STAR-qualified. ENERGY STAR is designed to help consumers identify energy-efficient products which meet strict energy efficiency guidelines set by the US Environmental Protection Agency (EPA) and the US Department of Energy (DOE).

Climate change is widely recognized as one of the greatest challenges facing the world today, and Motorola is doing its part to help protect the environment and spur innovative solutions such as ENERGY STAR-qualified power supplies.

According to EPA, if every phone sold in the U.S. this year used an ENERGY STAR qualified adapter in its charger, the energy saved could light 760,000 homes for a year. In addition, it would prevent well over 1 million tons of greenhouse gas emissions, the equivalent emissions of more than 200,000 cars.

Enhances employee well-being and satisfaction

Environmental, Health and Safety Policy• Intel Corporation and its subsidiaries are

committed to achieving high standards of environmental quality and product safety, and providing a safe and healthful workplace for our employees, contractors and communities.

• We seek a healthful and safe workplace, free of occupational injury and illness. We emphasize individual responsibility for safety by all employees and at all levels of management.

• We expect employees to report potential safety hazards and issues, and be involved in implementing solutions. We will not conduct any operations or market a product without adequate safeguards.

• We will strive to be leaders in reducing, reusing and recycling, and we expect our employees to implement measures to properly dispose of any remaining wastes in a safe and environmentally sound manner.

• We will establish and maintain appropriate controls, including periodic review, to ensure that this policy is being followed.

                                       

     

Contributes to desired Brand positioning

Potential Concerns

• People will be skeptical of the corporation’s motives

• They will look for actions that back up words and fulfill promises

• They will want to know if this is long-term commitment or short term campaign

• They will have questions about whether and how the new practices will make a real difference

• They will want to know what you used to do• They will be waiting to hear the results of your

efforts.

Keys to Success

• Conviction – real improvement not PR• Commitment – commit and deliver• Communication – open and honest with

stakeholders• Consistency – Continuous improvement• Credibility – meet third party standards and

measure performance honestly• Stay in touch with political, social and economic

issues• Select an issue that meets a company need as

well as a social one.

When should one practice SRBPs?

• Under all situations should this attitude be adopted and responsibility should be taken by the organization for the impact its operation have on the community, environment.

• However there may be times when adopting SRBPs becomes the optimal choice:– When a company has been offered a financial

incentive– When adopting a new practice would reduce

operating costs

• When a current practice is adding to a social problem

• When there is a chance to improve employee health, safety and well-being

• When engaging in a new practice offers a point of differentiation

• When there is an opportunity to create powerful alliances

• When changing practice will improve quality of product

• When change in practices will strengthen relationship with supplier and distributors.

Identify business need

Identify social problems that

the business can contribute to

Integrated, planned approach for implementation

Set golas and establish mechanism for

measuring tracking , and reporting results