CHAPTER1

The Case for Doing at Least Some Good

For many years, community development goals were philanthropic

activities that were seen as separate from business objectives, not
fundamental to them; doing well and doing good were seen as
separate pursuits. But I think that is changing. What many of the
organizations that are represented here today are learning is that
cutting-edge innovation and competitive advantage can result from
weaving social and environmental considerations into business
strategy from the beginning. And in that process, we can help
develop the next generation of ideas and markets and employees.
Carly Fiorina, Hewlett-Packard, at the Business for Social
Responsibility Annual Conference, November 12, 2003

WHAT IS GOOD?
Corporate social responsibility is a commitment to
improve community well-being through discretionary
business practices and contributions of corporate
resources.
Voluntary commitment
The term community well-being in this definition
includes human conditions as well as environmental
issues.

 World Business Council for Sustainable Development

defines CSR as:
Business commitment to contribute to sustainable
economic development, working with employees, their
families, the local community, and society at large to
improve their quality of life.
Business for Social Responsibility defines CSR as:
Operating a business in a manner that meets or
exceeds the ethical, legal, commercial, and public
expectations that society has of business.

Corporate Social Initiatives

Corporate social initiatives are major activities
undertaken by a corporation to support social causes
and to fulfill commitments to corporate social
responsibility.

Corporate
Social Initiatives: Six
Corporate Cause Promotions: Increasing Awareness and
Concern for Social Causes
Options
for Doing Good
Cause-Related Marketing: Making Contributions to Causes

Based on Product Sales

Corporate Social Marketing: Supporting Behavior Change
Campaigns
Corporate Philanthropy: Making a Direct Contribution to a
Cause
Community Volunteering: Employees Donating Their Time
and Talents
Socially Responsible Business Practices: Discretionary
Business Practices and Investments to Support Causes

Causes most often supported through these

initiatives are:

Community health (i.e., AIDS prevention, early detection for

breast cancer, timely immunizations)
Safety (designated driver programs, crime prevention, use of
car safety restraints),
Education (literacy, computers for schools, special needs
education),
Employment (job training, hiring practices, plant locations);
Environment (recycling, elimination of the use of harmful
chemicals, reduced packaging);
Community and economic development (low-interest housing
loans); and
Other basic human needs and desires (hunger, homelessness,
animal rights, voting privileges, antidiscrimination efforts).

WHAT ARE THE TRENDS?

Increased corporate giving: charitable giving by forprofit corporations has risen from an estimated $9.6 billion
in 1999 to $12.19 billion
Increased corporate reporting on social responsibility
initiatives: corporate annual reports with special sections
on community giving and, increasingly, the publication of a
separate annual community giving report.
The establishment of a corporate social norm to do
good: Dell, Hewlett-Packard, McDonalds, Nike
Transition from giving as an obligation to giving as a
strategy: Business objectives are aligned with community
interests instead of just spending cash to show off.

WHY DO GOOD?
Because then companies would look better, feel better,
do better, and live longer.
Increased sales and market share.
Strengthened brand positioning.
Enhanced corporate image and clout.
Increased ability to attract, motivate, and retain
employees.
Decreased operating costs.
Increased appeal to investors and financial analysts.

Increased Sales and Market

Share
Eighty-four percent said they have a more positive
image of companies that do something to make the
world better.
Seventy-eight percent of adults said they would be
more likely to buy a product associated with a cause
they cared about.
Sixty-six percent said they would switch brands to
support a cause they cared about.
Sixty-two percent said they would switch retail stores to
support a cause.
Sixty-four percent believe that cause-related marketing
should be a standard part of a companys activities.

Strengthened Brand Positioning

Spirit of the brand
What does it believe in?

Consumers are moving towards the top of Maslows Hierarchy

of Needs and seeking self-realization.
Ben & Jerrys stood for cause against global warming and
people positioned it positively as a consequence.

Improved Corporate Image and

Clout

Business Ethics publishes a list of 100 Best Corporate

Citizens, recognizing companies corporate social responsibility
toward stakeholders, including the environment and the
community. In 2002, the top five Best Corporate Citizens were
IBM, Hewlett-Packard, Fannie Mae, St. Paul Companies, and
Procter & Gamble.
Socially responsible companies are being given less scrutiny
and more free rein by both national and local government
entities.
McDonalds during the 1992 South Central Los Angeles riots
Positive corporate image may also influence policy makers as
well

Case of AT&T:
Due to AT&Ts philanthropy, and support for various
education and art programs for children, President
Clinton called on Allen to speak about the information
superhighway. In front of the nation, the CEO of AT&T
was able to make a point crucial to the companys
government relations strategy: the superhighway should
be a private rather than a public initiative.

Increased Ability to Attract,

Motivate, and Retain Employees

Positive impact on prospective and current employees, as well

as citizens and executives.
In a related survey, 80 percent of respondents said they would
be likely to refuse to work at a company if they were to find
out about negative corporate citizenship practices.
More than half of the 2,100 MBA students surveyed indicated
they would accept a lower salary in order to work for a socially
responsible company.
At Timberland, employees are given 40 hours of paid time off
to perform community service; 95 percent of Timberlands U.S.
employees were participating in the program. Timberland is
considered as one of its 100 Best Companies to Work For.

Decreased Operating Costs

Environmental initiatives to reduce waste, reuse
materials, recycle, and conserve water and electricity.
At Cisco Systems, for example, an energy conservation
initiative called Cleaner Air and Millions in Savings is
expected to save the company about $4.5 million per
year in operating costs. In addition, these energy
savings will eventually qualify the company for an
estimated $5.7 million in rebates from the local energy
supplier, Pacific Gas & Electric.

Increased Appeal to Investors

and Financial Analysts

Involvement in corporate social initiatives can even increase

stock value.
Increased ability to attract new investors
Reduce exposure to risk in the event of corporate or
management crises
An often-quoted study by the University of Southwestern
Louisiana, The Effect of Published Reports on Unethical
Conduct on Stock Prices, demonstrated that publicity about
unethical corporate behavior lowers stock prices for a minimum
of six months.

WHAT ARE THE MAJOR CURRENT

CHALLENGES TO DOING GOOD?

Choosing a Social Issue

Selecting an Initiative to Address the Issue
Developing and Implementing Program Plans
Evaluation

Choosing a Social Issue

They will be faced with tough questions, including these:
How does this support our business goals?
How big of a social problem is this?
Isnt the government or someone else handling this?
What will our stockholders think of our involvement in this issue?
Is this something our employees can get excited about?
Wont this encourage others involved in this cause to approach us
(bug us) for funds?
Will this cause backfire on us and create a scandal?
Is this something our competitors are involved in and own
already?

One of the pitfalls in this decision making

in real terms

Dreyers decided to support the cause of fighting breast cancer.

It had watched other companies conduct campaigns backing
the search for a cureand had seen their logos displayed at
well-attended rallies and their products festooned with the
causes signature pink ribbons.
When Dreyers approached the Komen Foundation, however,
they found that Yoplait had an exclusive contract to be the only
yogurt manufacturer involved in this cause.

Selecting an Initiative to Address the

Issue

How can we do this without distracting us from our core

business?
How will this initiative give visibility to this company?
Do these promotions really work? Who pays attention to them?
What if we tie our funding commitment to sales and end up
writing them a check for only $100? How will that look?
What if consumers find out that the amount of the sale that
actually goes to the cause is minuscule?
Have we calculated the productivity cost for giving our
employees time off for volunteering?
Giving visibility, especially shelf space in our stores, for this
cause doesnt pencil out. Shouldnt we just write a check or
give a grant?

Developing and Implementing

Program Plans
Key decisions at this point include:
Whether to partner with others and, if so, with whom;
Determining key strategies, including communications
and distribution channels;
Assigning roles and responsibilities;
Developing timetables; and determining budget
allocations and funding sources.

Real time issues are:

How can we do this when money is needed for increased

performance?
What do we say to stockholders who see this as money that
belongs to them?
Why is our department being asked to fund this?
Will we be doing enough good for the cause to justify the
expense?
Isnt this just brand advertising in disguise?
How do we keep from looking hypocritical?
What is our exit strategy?

Philip Morris began a social marketing initiative in 1999 with

the slogan, Talk to your kids about not smoking. Theyll
listen. This mass media campaign included print ads in
magazines, a free 16-page, four color brochure, and a web site
with tips and lists of additional resources for parents.
For some, this initiative probably rang hollow, with people
perhaps questioning the authenticity of a claim that a member
of the tobacco industry is not interested in a market
representing an estimated one billion packs of cigarettes
a year.

Evaluation
The science of measuring return on investments in
corporate social initiatives is very young, with little
historic data and expertise.
Marketing professionals and academic experts in the field
confirm this challenge.
Since the benefits related to CSR are not directly
measurable, and most firms do not disclose expenses
related to such activities, it is difficult to directly assess
the return on CSR investment.
And yet, showing that the program was a more
financially productive promotional tool than other
possible promotional tools is becoming increasingly
necessary.