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Current News. TXU Is Bought Out by Environmentally Minded Equity Firms ... Current News. Sanofi-Aventis to Make Malaria Pill Available At-Cost ... – PowerPoint PPT presentation

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Title: CSR

CSR BrandingCSR HR
  • MBA 292C-1
  • 7 March 2007
  • Professor Kellie A. McElhaney

  • Team Meetings Sign Up
  • Strategic CSR Issues Analysis
  • Who is doing what?
  • Who needs a team or a topic?
  • Projects Updates
  • CSR in the News
  • CSR Branding
  • CSR HR

Current News
  • Technology Firms Launch Group to Cut Industry's
    Electricity Usage
  • A group of 11 technology firms representing 90
    percent of computer system manufacturers in the
    world have joined forces in a bid to cut the
    industrys electricity usage.
  • The group called The Green Grid aims to tackle
    ways to make the data center ecosystem more
    energy efficient and has published three white
    papers on electricity use in data centers.
  • The firms involved include Advanced Micro
    Devices, Inc., Dell Inc., Hewlett-Packard Co.
    (HP), IBM Corp., Intel Corp., Microsoft Corp. and
    Sun Microsystems, Inc.

Current News
  • TXU Is Bought Out by Environmentally Minded
    Equity Firms
  • In a deal negotiated with U.S. environmental
    groups beforehand, Texas energy company TXU Corp.
    was acquired by two private equity firms,
    Kohlberg Kravis Roberts Co. and Texas Pacific
    Group, in the largest private buyout ever of 45
  • The deal ensures that TXU Corp. will cancel
    plans for eight of the 11 coal plants it had
    planned TXU Corp. will back U.S. federal
    regulation of carbon emissions TXU Corp. will
    create a sustainable energy advisory board with
    representatives of Environmental Defense (ED) and
    the Natural Resources Defense Council (NRDC) and
    TXU Corp. will adopt corporate governance and
    executive compensation programs that tie the
    operations and goals of the company to climate
  • ED executive director Fred Krupp says, Ive been
    at Environmental Defense for 22 years, and Ive
    never seen environmental issues play such a big
    role in a major transaction.
  • NRDC Texas head Jim Marston, who was also part of
    the negotiations, says, I didnt want to kiss
    them on the lips in public, but this is exactly
    what weve been asking corporate America to do.

Current News
  • Sanofi-Aventis to Make Malaria Pill Available
    At-Cost In partnership with Médecins Sans
    Frontières, French pharmaceutical firm
    Sanofi-Aventis has developed a simple malaria
    drug called ASAQ that will be available at-cost
    in several African countries. The treatment
    consists of two pills per day for three days for
    adults and costs less than U.S. 1. For children,
    the treatment consists of one pill per day for
    three days and will cost less than 50 cents.
  • Vodafone Wins U.K. ACCA Award for Best CSR Report
    U.K. telecommunications firm Vodafone Group plc
    has won the best U.K. CSR report award from the
    Association of Chartered Certified Accountants
    (ACCA). Vodafones report was noted for its
    clarity and readability and for disclosure on
    impacts of mobile phones on health, the economic
    value of technology and responsible use of
  • IKEA to Charge U.S. Customers for Plastic
    BagsSwedish retailer IKEA International A/S has
    announced it will charge 5 cents for disposable
    plastic bags in a bid to reduce the estimated 100
    billion plastic bags thrown away by U.S.
    consumers per year. The price of IKEAs 99-cent
    sturdier, reusable bags will be reduced to 59
    cents to encourage their use.
  • Coca-Cola, Pepsi to Label Caffeine
    AmountU.S.-based soda makers The Coca-Cola Co.
    and PepsiCo, Inc. have announced they will
    include the amount of caffeine on their beverage
    labels in the United States.

Current News
  • Costly Red Campaign Reaps Meager 18 Million
  • Bono Co. Spend up to 100 Million on Marketing
  • Julie Cordua, VP-marketing at Red and a former
    Motorola marketing exec and director-buzz
    marketing at Helio, said the outlay by the
    program's partners must be understood within the
    context of the campaign's goal sustainability.
    "It's not a charity program of them writing a
    one-time check. It has to make good business
    sense for the company so the money will continue
    to flow to the Global Fund over time." She added
    that since many of Red's partners haven't closed
    their books yet on 2006, more funds likely will
    be added to the 18 million
  • There is a broadening concern that business is
    taking on the patina of philanthropy and crowding
    out philanthropic activity and even substituting
    for it," he said. "It benefits the for-profit
    partners much more than the charitable causes."

Using CSR as Branding Tool
Channel Selection MattersInternet growing
strongly at expense of TV, Newspapers
Source Edelman Annual Trust Barometer, Jan 06
Using Non Traditional Channels
Where do you go to learn about CSR for companies?
Source Fleishman-Hillard White Paper 2006
Employees As CSR Brand Ambassadors
Source Fleishman-Hillard White Paper 2006
Integration is Critical
There are risks
  • Dows new Human Element Campaign
  • http//youtube.com/watch?vi3byt7xMSCA
  • A redux on Bhopal
  • http//youtube.com/watch?vlbpuSPL-FNU

Part of an overall strategy
Corporate Responsibility Marketing Toolbox
Source Adapted from Kotler and Lee 2005
Cause Marketing can stand apart from other efforts
Demand on Resources
Cause Marketing can have a high Social ROI
relative to other efforts.
Corporate Marketing
Cause Marketing
Corporate Philanthropy
Degree of Social Impact
An action through which a company markets an
image, message, product, or service for mutual
A Cause-Marketing Framework
Global scale
ad hoc
Long term/Permanent
Short term
First world
Third world
Broad issue
Business focused
Public benefit
Consumer benefit
Engaging consumers
Engaging employees
High level action
Product based action
Lone Ranger
Serious/Weighty issue
Lighthearted/ Everyday
Applying the Framework
Global scale
ad hoc
Long term/Permanent
Short term
First world
Third world
Broad issue
Business focused
Public benefit
Consumer benefit
Engaging consumers
Engaging employees
High level action
Product based action
Lone Ranger
Serious/ Weighty issue
Lighthearted/ Everyday Issue
Trust in global companies in decline (Consumer)
Net Trust, Decreases over Past Year, 20012005
Source The 2002 data come from the Voice of the
People survey, a collaboration between GlobeScan
and Gallup International.
A Trust Discount for U.S. Brands Tell me how much
you TRUST each company or organization to do what
is right ?
Source Edelman Annual Trust Barometer, 2006
Opportunity to Link CSR to Drivers of Trust in

Source Edelman Annual Trust Barometer, Jan 06
CSR is a powerful predictor of reputationif known
Emotional Appeal
Social Responsibility
Feel Good About Admire and Respect Trust
Supports Good Causes Environmental
Responsibility Community Responsibility
ReputationQuotientSM (RQ)
Products Services
Vision Leadership
Market Opportunities Excellent Leadership Clear
Vision for the Future
High Quality Innovative Value for Money Stands
Financial Performance
Workplace Environment
Outperforms Competitors Record of Profitability
Low Risk Investment Growth Prospects
Rewards Employees Fairly Good Place to Work Good
Source C. Fombrun, Reputation Institute, Harris
CSR can lead to brand loyalty
2 tie
2 tie
Source Rethinking Corporate Responsibility,
Fleishman-Hillard /National Consumers League, 2006
Importance of CSR in forming consumerimpressions
is increasing
Unprompted, First Mention, Trends 19992005
Most Important Factors in Forming Impressions of
Companies Social Responsibilities
Consumers on CSR Issues
Source Fleishman-Hillard White Paper 2006
Consumers on Purchasing
Source Fleishman-Hillard White Paper 2006
Who Cares Most About CSR?
  • Females (employees, consumers, investors)
  • Gen Yers Ages 8-24 (cause focus)
  • Boomers (say v. do)
  • More educated
  • More diverse (gender, sexual orientation,
  • More affluent..enter, Walmart!

The LOHAS Typology is the CR Industry Standard
  • Lifestyles Of Health And Sustainability
  • LOHAS Consumer Segment Overview
  • Strong environmental and social values, and base
    many purchase decisions accordingly
  • Dont just buy organic food or energy efficient
    appliances, theyre active in all LOHAS-related
    product categories
  • Demanding green products are not enough they
    need to feel, taste, and perform as well (or
    better) than conventional counterparts

As green products make inroads among
Wal-Marts budget-conscious masses, they are
gathering cachet among an affluent new consumer
category which marketers call LOHAS. (7/17/06)
Sources The Natural Marketing Institute Adler,
Going Green.
The segmentation model
LOHAS Profound sense of environmental and
social responsibility, the most likely segment to
buy a range of environmentally and socially
responsible products.
LOHAS 60 Million U.S. Adult Consumers
NOMADICS The largest segment (nearly four in ten
adults), less resolute in their LOHAS attitudes,
still show moderate levels of related concern and
select low-impact LOHAS behaviors.
Indifferents 12
Indifferents 12
Centrists 27
Centrists 27
Total U.S. Population
CENTRISTS A lack of relevance in LOHAS attitudes
becomes more evident.
Nomadics 38
Nomadics 38
INDIFFERENTS So disinterested that they do not
even consider the environment or related
Source The Natural Marketing Institute
LOHAS ? Tree Hugger
  • Demographics skew wealthy and educated
  • Value premium products and brands
  • Top 3 Activities to Protect Environment are
  • Control thermostat (95)
  • Recycle cans, bottles (85)
  • Recycle Paper (84)
  • LOHAS are premium consumers
  • Great Upside Potential for cool products
  • Success hinges on compelling non-environmental
    benefits, such as function or status

Sources The Natural Marketing Institute Ottman,
Avoiding Green Marketing Myopia.
Case Study Philips Lightbulbs
  • Philips called its original compact
    energy-efficient fluorescent (CFL) light
    "EarthLight" to communicate the bulbs'
    environmental advantage.
  • Benefit appealed to only a small green niche of
  • Reintroduced product in 2000 under the name
    "Marathon," to emphasize the bulb's five-year
    life and more than 20 in energy savings over the
    product's life span.
  • Repositioning the features into advantages that
    resonated with consumer values--convenience,
    ease-of-use, and credible cost savings--ultimately
    sparked an annual sales growth of 12 in a
    mature product market.

Source Ottman, Avoiding Green Marketing Myopia.
Another Ready Market Segment
  • Women are more likely than men to
  • Volunteer in their local communities
  • (VolunteerMatch Corp. for National and
    Community Service)
  • Investigate a companys environmental reputation
    before making a purchase
  • (National Association of Women Business Owners)
  • Invest in companies screened for different
    criteria including environmental practices, the
    hiring and promotion of women and minorities,
    labor practices and tobacco manufacture
  • (Yankelovich Partners)
  • Purchase a product with a percentage of profit
    earmarked for charitable donation
  • (Cone Research)
  • Participate in company sponsored social programs
  • (Pfizer)
  • Be a member of Net Impact
  • (Net Impact Membership data)

A Ready Market Segment
  • Women are more likely than men to
  • Indicate that it is important to ensure that
    workers inside and outside the U.S. are paid a
    living wage (68 percent versus 57 percent).
  • Give corporations a poor rating for current CSR
    performance (18 percent versus 11 percent of
    men). Men are far more likely than women to rate
    companies as excellent or good (31 percent
    versus 13 percent, respectively).
  • Indicate that it is extremely important for
    companies to make relevant donations to charities
    and philanthropies (27 percent versus 19 percent,
  • Indicate that it is important to use workers in
    the U.S. to the fullest extent possible before
    hiring labor overseas (68 percent versus 54
  • Source Fleishman Hillard National Consumers
    League Study, Rethinking Corporate Social
    Responsibility, 2006

Womens power of the purse
  • Women make more than 80 of purchasing decisions
    in the United States
  • Women are less likely to act impulsively, and are
    more likely to do research and weigh information
    before making purchases

Source Faith Popcorn and Lys Marigold, 2000
CSR Branding Trends
  • Select consumer segments ready (LOHAS, women, Gen
    Y, LGBT)
  • Reporting does not equal communication
  • POS communication is critical
  • Blogs increasing in effectiveness
  • Simple messages, language
  • Use employees as ambassadors
  • Link to/ integrate with brand, all company
  • Numbers increase credibility, but stories stick

Using CSR as an HR Tool
Employees Very Interested- Participating in
Company Community-Improvement Initiatives
Source Globescan 2005
Employees Care About CSRVery Interested in
Participating in Company Community-Improvement
Source Globescan 2006
Employees are motivated by CSR activities
Source HP employee survey, June 2005
Employee Attraction, Retention, Satisfaction
Skill Set of a CSR Expert
  • Confidence to take risks, learn from experiences
  • Flexible
  • Ability to deal with ambiguity, lack of facts
  • Brings together disparate views, voices
  • Persists in face of obstacles, challenges
  • Short-term and long-term balanced
  • Innovation
  • Stakeholder engagement/ listening
  • Strategic thinker
  • Integrity-based actions
  • Ability to operate in 2 worlds simultaneously
  • Sees possibilities where others see problems
  • Works well across functions, collaboratively
  • Proactively senses problems, acts
  • Proactively senses opportunities, acts
  • Ability to deal with complexity

Leadership Skill Set Desired at J J
What companies hire for
--2005 survey by Economist Intelligence Unit of
characteristics sought by 225 senior executives
What BSR hears from their member companies
  • Our company doesnt have anyone in-house with
    really good stakeholder engagement facilitation
  • We increasingly need managers with a
    sophisticated understanding of public policy and
    international affairs
  • Our management team needs assistance in taking a
    systems-thinking approach to new product design
  • How should we define what environmental and
    social issues are material to our company?
  • Who can help us work with other companies in our
    industry to reduce the costs of auditing our
    supply chain?
  • What would ethical decision-making criteria look
    like in this situation?

  • Build CSR in to internal company messaging
  • Make CSR part of employee value proposition
  • Educate employees about CSR (integrate into
    in-house training)
  • Work CSR out across business units
  • Build CSR metrics in to performance appraisals
  • Engage employees with CSR strategy, councils,
  • Let employees communicate CSR they are more
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