Corporate Social Responsibility

Class 3:
CSR Management System
Syllabus developed by Jens Trummer

Agenda
CSR Management System
Reading:
1. Daimler 360, Facts on Sustainability, 2010
For those interested in more detailed information:
- Designing a CSR Structure, Business for Social Responsibility, 2002
- CSR An Implementation Guide for Business, IISD

Class 3:
CSR Management System

CSR LAB

What is difference ?

and

2 Types of Business Models:

1. Sustainable Business Model
= CSR???
CSR
Management
System

2. Business Model with CSR Programs:

Evolution of CSR:

Stage 1:
CSR
nonexistent

Stage 3:
Strategic CSR:
Strategy
complimenting
business activity

Stage 4:
CSR
Management Sustainability
Stage 2:
Intrinsic
System
CSR non-strategic:
business
- Philanthropy
- Donations
- Volunteering, etc.

strategy/
Activity:
Still CSR ??

CSR Management System

needs
Framework for
Strategic
Integration
TOOL to compliment core business activities

Framework for Strategic Integration

- Theory of Practice
- No one size fits all
- Not necessarily chronological
- Must be adaptive

Why?

CSR implementation on-going

Continuous adaptation to changing

Driving Forces
Class 1

Framework for Strategic Integration:

3+1
=
3 Steps + 1 Continuous Action
Step 1 ???

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis
2. Stakeholder Process (See Class 2)
- Stakeholder Analysis
- Stakeholder Dialogue
3. CSR-SWOT

Step 1: Analysis

1. CSR Audit
As-is Analysis
Goal: Assess the whole picture
Basis for Gap Analysis

Step 1: Analysis

1. CSR Audit

- CSR definition - 4 key criteria ???

- Existing CSR policies, standards, values, Corporate Motivation
Nalco
- Understand current CSR commitments, external standards
used
- Structures: Current departments, functional areas,
cross-functionality
- CSR issues currently being addressed
- Stakeholder Overview of current stakeholder dialogue

External Divers/Motivation

Re-active vs. Pro-active

Nike, Gap, BP, Starbucks ??
What about Nestle???
LINK

Step 1: Analysis

1. CSR Audit
Internal
Drivers/Motivation
- Honest (self-) analysis
- Philanthropic and /or(??)
business incentives

Step 1: Analysis

1. CSR Audit

- CSR definition
- Existing CSR policies, standards, values, Motivation
- Understand current CSR commitments, external standards
used
- Structures: Current departments, functional areas,
cross-functionality
- CSR issues currently being addressed
- Stakeholder Overview of current stakeholder dialogue
- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit
Which CSR programs
are not necessarily referred to as CSR ?

Step 1: Analysis

1. CSR Audit
- ISO 14001/EMAS
- Health and Safety (SA 8000)

ISO for CSR ???

Step 1: Analysis

1. CSR Audit
ISO for CSR

ISO 26000: Launched November 1st, 2010 !

Guidance standard on social responsibility

Step 1: Analysis

1. CSR Audit

- CSR definition
- Existing CSR policies, standards, values, Motivation
- Understand current CSR commitments, external standards
used (e.g. ISO 14001, SA 8000)
- Structures: Current departments, functional areas,
cross-functionality
- CSR issues currently being addressed
- Stakeholder Overview of current stakeholder dialogue
- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit:
I I I
Internal Intelligence Investigation:

Which departments responsible for

CSR issues ?

Step 1: Analysis

1. CSR Audit
CSR Departments
- Communications/PR
- Marketing
- Human Resources
- (Senior) Management

Which department typically most reactive

or slow on take-up ?

Step 1: Analysis

1. CSR Audit

- CSR definition
- Existing CSR policies, standards, values, Motivation
- Understand current CSR commitments, external standards
used (e.g. ISO 14001, SA 8000, ISO for CSR ???)
- Structures: Current departments, functional areas,
cross-functionality
- CSR issues currently being addressed

Which stakeholders
almost all companies
irrespective of existing
CSR strategy???

- Stakeholder Overview of current stakeholder dialogue

- Current CSR programs and activities

Step 1: Analysis

1. CSR Audit

How would you do an

Audit ???

Step 1: Analysis

1. CSR Audit

How?
Method:
Internal:
1. Desk-top study: Document Analysis
2. Executive, Management & Staff Interviews
External:
3. Reputation surveys, benchmarking, CSR Reports (GRI,
AccountAbility Rating)

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis
2. Stakeholder Process
- Stakeholder Analysis Components ???
- Stakeholder Dialogue
3. CSR-SWOT

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis

See Class 2!

2. Stakeholder Process
- Identification of Issues
Stakeholder
- Selection of Stakeholder
Analysis
- Prioritization of Stakeholders
- Stakeholder Dialogue
3. CSR-SWOT

Step 1: Analysis
2. Stakeholder Process
- Identification of Issues
Stakeholder
- Selection of Stakeholder
Analysis
- Prioritization of Stakeholders
- Stakeholder Dialogue
Significance:
More adaptive to External
Drivers (Social Expectations &
Globalization)

Class 2

Step 1: Analysis

However:
Class 2

Outsourcing
CSR:
Risking
hodgepodge of
un-coordinated
CSR activities
and
philanthropic
activities?
What do you
think?

Step 1: Analysis

Does Kramer & Porter InsideOut/Outside-In Model work better ??

Class 1

Inside-Out:
Impact on Society

Outside-In:
Impact on Competitive Positioning

Source: Strategy and Society, Porter & Kramer

Step 1: Analysis

CSR
Impact of Society on

Impact of Company on

Company

Society

How does this compares with Stakeholder Model ?

Step 1: Analysis
Class 2

Both
ways?

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis
2. Stakeholder Process
- Stakeholder Analysis
- Stakeholder Dialogue

And/or
Kramer & Porter:
Inside-Out/Outside-In Model

3. CSR-SWOT

Step 1: Analysis

Step 1: Analysis
1. CSR Audit Gap Analysis
2. Stakeholder Process
- Stakeholder Analysis
- Stakeholder Dialogue

And/or
Kramer & Porter:
Inside-Out/Outside-In Model

3. CSR-SWOT

Step 1: Analysis

3. SWOT
CSR-SWOT Analysis:
- Putting it all together
- Linkage to next part

Framework for Strategic Integration:

Step 1: Analysis
Step 2 ???

Step 2: CSR Strategy

2. CSR Strategy
Strategy to compliment business activity
CSR is Business Strategy
(see EU Definition !)

1st Step??

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation
2. CSR Structure
3. Staffing Plan
4. Budget

Step 2: CSR Strategy

1. Policy Formulation
- Priorities
- Core Values
- Formulation of Policy Statement

Step 2: CSR Strategy

1. Policy Formulation
- Formulation of Strategy
How long before public starts identifying
CSR strategy with company ?

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation
2. CSR Structure
3. Staffing Plan
4. Budget

Step 2: CSR Strategy

2. CSR Structure
Choose structural framework
- Size
- Corporate structure
- Sectors involved
... geographic locations, risk areas, commitment
- New or improved structure?

Step 2: CSR Strategy

What is important for an effective

Structure ?

Step 2: CSR Strategy

Cross-Functional
Why so important in CSR ?

Step 2: CSR Strategy

2. CSR Structure:
CSR is cross-functional:
- Environment
- Government
- Communities
- Employees
- Supply Chain
- Customers
- Shareholders

7 Stakeholder
Groups

Step 2: CSR Strategy

2003:

Embedding

Step 2: CSR Strategy

Framework for Strategic Integration

Integrating sustainability into companys:
- Values
- Culture
- Operations
- Business decisions

= Embedding

at all levels of the organization

Step 2: CSR Strategy

2. CSR Structure:
Mechanisms for involving functional areas, departments, etc.
Roles and responsibilities of each employee and/or group
(committee) involved with CSR efforts
(Board committee, executive committee, specific CSR
committee, etc.)

Increasing level of CSR commitment

Source: Designing a CSR Structure, BSR

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation
2. CSR Structure
3. Staffing Plan
4. Budget

Step 2: CSR Strategy

3. Staffing Plan
Identify CSR-specific staff roles and responsibilities at the
different levels.

Step 2: CSR Strategy

Daimlers Corporate Governance Structure

How would you design Daimlers CSR

Structure?

Step 2: CSR
Strategy
Daimlers
Sustainability
Governance
Structure
(P. 16)
1. Key
Stakeholder
Groups

???

2. CrossFunctionality

Step 2: CSR
Strategy
Daimlers
Sustainability
Governance
Structure
(P. 16)
1. Key
Stakeholder
Groups
2. CrossFunctionality
Notice:
Integration

Core
Business
Activity

Which ones??

Step 2: CSR Strategy

Centralized, de-centralized ?
Top-down, bottom-up ?

Step 2: CSR Strategy

Daimlers Environmental Structure p.19

Bottom-up, Top-down ?

Life-cycle
Analysis

Step 2: CSR Strategy

Daimlers CSR Structure

Hybrid

Step 2: CSR Strategy

Daimler:
Committed to CSR ?

Step 2: CSR Strategy

Daimlers CSR Structure

Where is Daimler (Page 16)?

Increasing level of CSR commitment

Step 2: CSR Strategy

Step 6: Daimlers CSR Structure

Where is Daimler (Page 13)?

Board of Management

Sustainability Board

Increasing level of CSR commitment

Step 2: CSR Strategy

Daimlers CSR Structure

Centralized or decentralized ?

Step 2: CSR Strategy

Daimlers CSR Structure

Sustainability Office

Step 2: CSR Strategy

Mobiles CSR Structure

Step 2: CSR Strategy - Subsidiary of KBC (Belgium, Flemish)

- Required CSR in 2005
- Communications Intern tasked

Step 2: CSR Strategy

2006: Allocated budget: New CSR Policy:

1. Professional Business Ethics
2. Employees and their families
3. Attitude to the environment
4. Care for the community (CSR-led sponsorship)

What evolutionary stage of CSR

strategic, non-strategic?

How to manage CSR?

Step 2: CSR Strategy

2007: CSR Expert Task Force (ETF):

1. Head of External Communications
2. Head of Retail Segment Marketing
3. Head of PSB Retail Segment
4. Head of Human Resources
5. Head of Legal
6. Head of Public Affairs
7. Head of Marketing Communications (with an advisory vote power)
8. CSR Officer
9. CSR Manager

Main focus area of ETF ?

Step 2: CSR Strategy

2007: CSR Expert Task Force (ETF):

Main focus areas:
- Risk Management & Compliance
- PR, Communications & Marketing

2007: CSR Expert Task Force (ETF)

ETF =
CSR Manger
+

Problem ?

2008: Country Team Sustainability

Committee (CTSC)

CTSC =
CSR Manger
+

Step 2: CSR Strategy

2008: Country Team Sustainability

Committee (CTSC) :
1. CEO of SOB Pojiovna
2. PSB and Direct Banking Business Senior executive director
3. Corporate banking Senior executive director
4. Corporate Office Director
5. External Communication Director
6. CSR Manager

Step 2: CSR Strategy

Country Team Sustainability Committee (CTSC)

CSR
Manager

2. Votes on
general
budget
components
(Budget: 0.5% net profit)

1. Identifies
risks, proposes
strategies

CSR Expert Task Force

3. Votes on
specific
programs
Implementation by CSR Team

Step 2: CSR Strategy

Step 2: CSR Strategy

1. Policy formulation
2. CSR Structure
3. Staffing Plan
4. Budget

Step 2: CSR Strategy

4. Budget
Assess budget structure and size

Typically, CSR Budget in EE Companies

what percentage of net profit?
More effective if tied with PR Budget!

Framework for Strategic Integration:

Step 1: Analysis
Step 2: Strategy
Step 3 ???

Step 3: Implementation

Step 3: Implementation
Goal: Long-Term Integration
Embedding CSR management system into processes and programs

Reporting & Monitoring

Communication

Management Tool

See Class 4

Framework for Strategic Integration:

3+1
=
3 Steps + 1 Continuous Action ?

Continuous: Building Senior Vision & Support

Building Senior Vision & Support

Especially if
Re-active (or not -active):
- Get clear CSR Mandate
- Educate Board, CEO and employees
- Build Board & CEO level support
- Strengthen company-wide support

Continuous: Building Senior Vision & Support

Building Senior Vision & Support

its all about (internal) communication!
- Workshops
-Training
- Personal Contact
- Etc.
Gradual Process, building on success.

Framework for Strategic Integration

Step 1: Analysis

Step 2: CSR Strategy

1. CSR Audit

1. Policy formulation

2. Stakeholder Process

2. CSR Structure

- Stakeholder Analysis
(Identification, Selection and
Prioritization)
- Stakeholder Dialogue

3. Staffing Plan

OR
Kramer & Porter
Inside-Out/Outside-In
Model

Step 3:
Implementation
1. Monitoring &
Reporting

4. Budget

3. SWOT

Building Senior Vision and Support