Corporate Citizenship

Making the Business Case.

Public Affairs Management,
New Delhi

Milton Friedmans position that the responsibility of
business is exclusively to maximize profit for
shareholders, has lost the debate.
Alice Tepper-Marlin, President, Council on Economic
Priorities

If we are the leading corporate citizen --- we will
attract better employees and the highest caliber of
people. Theyre going to want to come work for a
company like Ford.
William Clay Ford. Jr., Ford Motor Company

The 21
st
Century company will be different. Many of
Britains best-known companies are recognizing that
every customer is part of the community and that
social responsibility is not an optional extra.
Tony Blair, Prime Minister of United Kingdom

What is Corporate Citizenship:
To manage effectively a companys actual and
potential economic, environmental, and social
impact
on the COMMUNITIES where it operates
and on SOCIETY as a whole,
while enhancing corporate REPUTATION
and increasing PROFITS.
STRATEGIC PHILANTHROPHY
Whats behind the timing?

1. Globalization and growth in competition
2. Increased size and influence of companies,
particularly through mergers and acquisitions
3. Retrenchment or repositioning of government
and its roles
4. Information
5. War for Talent
6. Growth of global civil society activism
7. Increased importance of intangibles

Business Goals of Social Investments
Enhance Corporate Image
Develop Trust in the Company
Develop Local Talent
Support Programs with Specific Goals
Improve Ability to Recruit
Protect Current Investment
Retain Employees
Broaden Tax Base
Expand Customer Base
Create New Markets
Meet Compliance Requirements
Operate More economically
Business Impact Of Corporate
Citizenship
Reputation Development
Risk Management
Product, marketing and distribution innovation
Organization and network development
Strategic design and management

The 10 Largest Corporate Contributors
(U.S.: 1996)
($ Millions)
Merck & Company 140.5
IBM 100.8
Johnson & Johnson 88.5
Pfizer Inc. 85.5
Hewlett-Packard 71.6
General Motors 66.7
Eli Lilly 66.3
Bristol Myers Squibb 64.7
Microsoft 59.2
Intel 55.6
10 Largest Corporate Foundations
By Total Grants (U.S. : 1996)
Foundation Grant ($)
AT&T 37,738,769
Wal-Mart 32,571,556
Ford Motor Company 28,948,869
GE 28,637,618
Proctor & Gamble 27,341,322
General Motors 27,041,994
GTE 23,558,526
General Mills 23,000,048
Chrysler Corporation 22,701,371
SBC 21,261,053
Corporate Leaders in Educational Reform:
Arthur Anderson Community Learning Center
AT&T Learning Network
Bell Atlantic Project Explorer
Bell South Superintendents Leadership Network
Hewlett-Packard E-Mail Mentor Program
IBM Corporation Reinventing Education Grant
Microsoft Corp. teacher.training@microsoft
Panasonic Foundation Partnership Program
United Airlines Virtual Trade Mission
**Aditya Birla Group Aditya Birla India Centre,
London Business School
Managerial Challenges for
Corporate Citizenship


Managing New Directions
Mix cash, product, people, services
Integrate branding,marketing, image and
reputation with community
Focus on long-term nonprofit/NGO partnerships
Global scope, local emphases
Even more alignment with business
Venture philanthropy
Socially responsible / sustainable investing


Key Steps in New Citizenship

Define principles and values
Define stakeholders
Define key issues for stakeholders
Define and apply measures
Benchmark performance
Assess performance

Source: The Corporate Citizenship
Company, David Logan





Managerial Challenges

Measuring and reporting value (e.g..
Triple Bottom Line)
Doing more with same or less
Strategic use of technology
Staying focused
Communicating values across cultures /
applying global frameworks
Linking programs with values



Managerial Positions Before

Senior Vice President, Community
Activities
Vice President, Corporate Community
Relations
Vice President, Philanthropy
Vice President, Corporate Social
Responsibility


Managerial Positions Emerging

President, International Foundation
Vice President, Global Community Affairs
Vice President, Global Social Investment
Vice President, Stakeholder Relations
Director, Community Partnerships
Director, Emerging Issues

Critical Success Factors
Top level Leadership and Communication
Transparency
Stakeholder Engagement
Management Systems
Performance Measurement
Consistency
Internal buy-in and coordination
Align message and performance
Source: Enron

Facts to Remember

1. CEOs say the environment & sustainable
development is the prime future success factor

2. Boards say citizenship on their agenda or basis of a
decision in past six months

3. Managers say challenge is growing one global
identity and integrating with business decisions

4. All agree reputation, image, brand, and talent
recruitment are major drivers


Corporate Citizenship in the 21st Century
Demonstrate commitment to societys values
Insulate society from negative impacts of
operations, products, and services
Share benefits with stakeholders and
shareholders
Demonstrate do well by doing good
New Roles of Business in
Society
The Body Shops Key Principles
The relationship between value creation and
resource consumption determines sustainable
success
Measuring the broader impact of business is key to
continuous improvement
Business success is dependent on relationships
with key stakeholders

Shells Strategy Principles
Key audiences are special publics - the opinion
drivers
Social responsibility is just one issue: addressing
all reputation components requires a PR-led
approach
Globalization of special publics needs a global
strategy with local nuance
Centre-led but operation unit owned
Credible engagement on an adult to adult
approach

Redefining Corporate Excellence

Traditional Formula

Excellence = f [ Turnover
Profitability
Exports
Sales
Costs . ]
New Economy Definition
Excellence = f [ Business Conduct
Business Ethics
Shareholder Value
CRM
Corporate Governance
Employee Branding
Socially Sensitive Investment Funds
People Practices
Innovation
Imagination
Speed
Technology
Networked Culture
Knowledge Management ..]

Key Players / Stakeholders
E = f [ Corporate Leaders
Civil society
Ngos
Mncs
Think-tanks
donor Agencies
HR Specialists ]
Trends
in Global Corporate
Citizenship
The increasing tendency to look to corporations, not
government, for leadership in social and environmental problems

Philanthrophy will increasingly be required to make a strategic
contribution to business by leading to enhanced reputations and
financial gain

Strategic Philanthropy and corporate citizenship will go global

More companies will accept and value a broadened social and
environmental performance role





Shareholder activism and socially screened investment funds will
proliferate.

Positive corporate images will continue to influence consumer
choice.

NGO partners will serve as informal consultants to business

Corporate conduct will come under increased scrutiny from
competitive high-tech media, which will monitor and expose
irresponsible practices.



The business of auditing corporate performance will expand
beyond financial statements to social and sustainable development
performance reporting

Employees will be more attracted to socially responsible
companies.



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