Measuring CSR Tools for CSR

1. Measuring CSRTools for CSR BA 292C-1 Professor Kellie A. McElhaney 2.14.07

2. Happy Valentine’s Evening

3. The Dow Case: Dow Response • There is no question that Bhopal was a tragedy of tremendous gravity and human cost. It was a terrible tragedy and it continues to evoke strong emotions nearly a quarter of a century later. Dow, like the rest of industry, has an obligation to always remember the tragedy and to prevent such an event from ever happening again. • However, the accusation by some NGOs and activists that we are failing to behave properly because we will not accept responsibility for an event and a site in which we did not have any involvement is entirely without foundation and ignores or misstates certain basic facts. • * Neither at the time of this tragic disaster not subsequent to it has Dow had any connection with the Bhopal facility or its operation. Dow never owned or operated the plant, which today is under control of the state government • * Dow acquired Union Carbide more than 16 years after the tragedy, and 10 years after the $470 million settlement - paid by Union Carbide Corporation and Union Carbide India, Limited - was upheld by the Indian Supreme Court. • * Union Carbide remains a separate company and entity with separate financial reporting and nearly 4,000 employees. UCC manages its own liabilities.

4. The Dow Case: Dow Response • It is clear that the responsibility for any further action in Bhopal lies with the Indian government and the state government of Madhya Pradesh. The Indian government agreed to ensure the healthcare of the victims of the tragedy. The state government took control of the plant site in 1998 and has the responsibility to manage the site clean up. • We were heartened by Indian media reports stating that the Indian government is providing clean drinking water to the citizens of Bhopal and that they are interested in designing and placing a commemoration to the victims of the tragedy at the Bhopal site. We were also pleased when we heard of the state government's development of a three-phase remediation plan to complete clean up of the Bhopal plant site. We hope that this effort by the State Government to remediate the site will be allowed to go forward. • As I mentioned on the call, I hope this note provides context to Dow's position on this issue. I have also provided you with further information by attaching web links to Dow's 2015 goals and Dow's position statement on the Bhopal tragedy. In addition, for further information regarding Union Carbide and the Bhopal tragedy, please see the attached web link. • http://www.dow.com/commitments/goals/index.htm • http://www.dow.com/commitments/debates/bhopal/ • http://www.unioncarbide.com/bhopal • We do look forward to being a partner with you on the Energy Symposium and believe that together we can make a positive contribution. Thank you again for the conversation today.

5. The Dow Case: BERC’s Decision • After significant discussions with faculty, students, and Dow, the BERC leadership and the symposium organizing committee met yesterday to discuss the issue. • As a group, BERC has decided to follow the guidelines of the ASUC Resolution and not use Dow funding for the Energy Symposium.  • In our discussion with the BERC leadership the group consistently voiced two ideals: • BERC’s mission is to serve and connect students from every background, who are interested in energy and resources.  To maintain our image and efficacy as a cross-disciplinary student group, it is important to operate with the utmost transparency and respect for our unique position within the University. • While we are not taking the Dow funding, we feel strongly that part of BERC’s mission is to act as a bridge between the University and corporate commercial interests in the energy space. Some of these companies will have histories like Dow that many find unfavorable.  Our role is not to debate these histories.  BERC’s goal is to help the University engage these companies in a manner that is sensitive to history, but focused on the future and the challenge of solving our global energy problems.

6. Current Events

7. Measuring CSR

8. What Metrics Could Whirlpool Use?

9. What Metrics Could Whirlpool Use?

10. Campaign for Real Beauty • Repositioned its brand around self-esteem issues • Created CampaignForRealBeauty.com to allow women to • Vote on provocative images • Join discussion groups on various beauty stereotypes • Participate in the Dove Self-Esteem Fund • Uses un-retouched images of women rather than models on Dove.com • The Uniquely Me! Girl Scouts of America self-esteem program • Donate money, Unilever employees donate time to mentor girls as part of the program. • Program uses activity books and simple exercises to help build self-confidence in girls • Supports BodyTalk, an educational program for schools created by the Eating Disorders Association. "This campaign is addressing key issues and connecting with women in ways that people have not connected in a long time." - Retail analyst Marshall Cohen of the NPD Group.

11. U.S. sales rose 6% in one year to $500 million • Dollar sales jumped 2% in the month the campaign started. • Heightened brand awareness. Ads received considerable press, more than 1 million women have visited dove.com and voted on images. • Created buzz with the "water cooler effect"

12. CR Metrics Broad metric categories Environment Community Workplace Marketplace • Business Travel • Byproducts • Emissions to Air • Emissions to Water • Energy Consumption - Electricity • Energy Consumption - Fuel • Environmental Projects • Large-Scale Environmental Impact • Waste • Waste - Paper • Waste - Water • Charitable Giving • Community Education • Community Lending & Investment • Employee Volunteerism • Employee Diversity • Employee Engagement • Employee Satisfaction & Retention • Health & Safety • Health & Safety - Illness • Health & Safety - Injury • CSR Spending • Customer Satisfaction & Retention • Operation control • Supply Chain Metric sub-categories

13. Standard and most frequent metrics in each category area: Environment Community Workplace Marketplace • Byproducts produced through the manufacturing process • Emissions to air and water through manufacturing, operations, or logistics • Energy consumption by type or total energy used • Waste produced – paper, water, hazardous, non-hazardous, other • Expenses or personnel involved • Customer satisfaction measures – surveys, complaint tracking, customers served, external rankings • Supply chain measures – supplier satisfaction, trainings, audits, total spend on targeted supplier groups, certifications • Customer reach in socially disadvantaged groups or areas • Charitable corporate giving – direct, through foundation, through employee match • Community investment – project spend, local taxes paid • Employee activities – volunteer hours • Customer diversity and inclusion • Unique projects and engagements • Employee diversity – race, age, gender • Health and safety – injury and accident rates, works day loss rates, absenteeism, workers comp claims • Turnover rate • Employee satisfaction (typically from surveys) • Training for employees– spend, time, or number or trainings

14. CSR Metrics Must Link to Corporate Strategy

15. CSR Metrics Must Link to CSR Priorities • Energy • Improving energy efficiency and innovation in our operations and products. • Product take back and recycling • Reducing product environmental impacts through leading-edge reuse and recycling solutions. • Responsible supply chain • Raising standards in HP’s global supply chain and ensuring responsible manufacturing for all products. • Education

16. Types of Evaluation INTUITION STORIES SYSTEMS

17. Goals of Measurement • Align investment with value • Assess actual value created • Inform management decisions • Help you maintain the integrity of your work • Contribute to reporting, communication, and branding

18. Ease of Measuring EASY HARD TYPE I TYPE II TYPE III TYPE IV • Sales revenue • Capital assets • Investment • returns • Dividends • Etc. • Goodwill • Insurance • Depreciation • Liability • Projected revenues • Emission credits • Income changes • Education access • Earnings potential • Technology benefits • Etc. • Health • Safety • Biodiversity • Clean air • Safe water • Education results • Political stability • Cultural Advancement • Etc. • Life • Freedom • Dignity • Happiness • Etc.

19. Types of Information about Value Five basic ways of articulating value: • Financial (accounting: cash in, cash/work out) • Monetizable (translating non-financial value into monetary equivalent) • Quantitative (numbers: size, magnitude or degree) • Qualitative (description: kind, type, or direction) • Narrative (storytelling)

20. Value Chain of Metrics Inputs Activities Outputs Outcomes Goal Alignment Changes to social systems Activity and goal adjustment What is put into the venture Venture’s primary activities Results that can be measured

21. Impact Metrics= differential change Inputs Activities Outputs Outcomes Goal Alignment Changes to social systems Activity and goal adjustment What is put into the venture Venture’s primary activities Results that can be measured What would have happened anyway - Essential = IMPACT

22. Evaluation Roles Outputs Outcomes Changes to social systems Results that can be measured in operations • Periodic • Need data from • researchers and • other stakeholders • Tracked regularly • NGO, Investor, • Funder

23. What Types of Things Can Be Measured?

24. Sample Indicators of Financial Performance of Investment

25. Sample Indicators of Financial Performance of Investee

26. Sample Indicators of Socio-Economic Returns to Individuals or Investees

27. National or Regional Socio-economic Returns

28. Blending Types of Indicators

29. Summary of Social Impact Value Chain

30. Example: Ciudad Saludable • Description: social enterprise that develops community-based, integrated waste management microenterprises in Peru • Goals: in business to create more than financial value-- wants to restore the environment, improve peoples’ health and cultivate community-based economic development

31. What’s the value proposition? • Financial value proposition is easy to count • $$$$ revenue • $$ Costs • Non-financial value…? • Outputs/measurable indicators: • #s of customers served with waste collection • tons of garbage recycled • # jobs created • # people trained, etc…. • Outcomes/results: • Less disease, fewer deaths, healthier people, less domestic violence, sense of pride and dignity • Cleaner water, restored fish populations & biodiversity • Fewer lost work days due to illness, lower health expenses, greater incomes and economic security

32. Ex: Ciudad Saludable SROI Analysis Outputs Outcomes - Base case Monetization CS already counted the number of jobs created, the revenues from customer fees, and the amount of garbage collected.

33. Ex: Ciudad Saludable SROI Analysis Outputs Outcomes - Base case Monetization • Ciudad Saludable collected information from: • staff • microentrepreneurs • local health authorities • SVT analyst researched “proxy studies” on: • disease and death caused by exposure to garbage in similar regions • costs of waste management if provided by the government in similar regions.

34. Ex: Cuidad Saludable SROI Analysis Outputs Outcomes - Base case Monetization • CS assumed “what would have happened otherwise”- if it did not exist • what microentrepreneurs & CS staff would have earned • what the incidence of childrens’ deaths from diarrhea in the region would be • what it would cost for the government to collect the garbage instead of CS • where the garbage would be if not collected by CS

35. Ex: Ciudad Saludable SROI Analysis Outputs Outcomes - Base case Monetization • SVT monetized a subset of CS’s impacts using the dollar value of: • The increase in microentrepreneurs’ earnings • The relative savings to taxpayers of having CS do the waste management rather than the municipal government • These values were calculated relative to the investment that was required to create them.

36. Results: Value Captured with theFull Range of Types of Information monetized value financial value narrative value quantified value qualitative value

37. Metrics & Evaluation Take-Aways • Simplify • Set clear goals & establish baseline at the outset (start where you are) • Measure a few things well as opposed to everything poorly • Concentrate on measuring a few signature programs, with a few signature measurements • Stories trump facts 10 times out of 10 • Move towards impact metrics, but blend in some evaluative metrics

38. CSR Tools

39. Plotting on a CSR Continuum Philanthropic Transactional Integrative Growth stage: Adapted from The Collaboration Challenge, James E. Austin

40. Plotting on a CSR Landscape

41. Prioritizing CSR Actions 2005

42. Benchmarking Analysis

43. Benchmarking Analysis Detailed information included in Code Mentioned briefly Not included

44. Benchmarking Analysis

45. 1. The Company - Nokia Stakeholder Analysis What are the benefits of community involvement programs for Nokia’s key constituent groups? Takeaway:All stakeholders can benefit from properly crafted community involvement programs.

46. Benchmarking CI Programs: Handset Competitors Sources: Company websites and documents

47. Gap Analysis

48. Phased Recommendations

49. Plotting Partners in CSR

50. Messaging Distribution Communication Timeline of Recommendations 2007 2006 Spring Summer Fall Winter Finalize brochures and hangtags, including focus on “Good for Me” and “Wine as a Meal” Roll out “Sustainable Sale” program Hold Regional Tasting Event #1 for Wine Managers Hold Regional Tasting Event #2 for Wine Managers Identify key sales managers to sponsor and advocate “Sustainable Sale” Program Attend/sponsor Farmers’ Markets Hold 1st public tasting, highlighting “Sustainable Meal” in association with partners Begin advertising for 1st public tasting (in 2007) Develop “Sustainable Sale” Program in concert with sales mgr. sponsors and selected retail wine managers Identify and select “Sustainable Meal” partners; agree to terms Train sales force on “Sustainable Sale” program