Creating Low-Code Loan Applications using the Trisotech Mortgage Feature Set
Corporate social responsibility
1. Organizational Dynamics, Vol. 37, No. 2, pp. 125–144, 2008 ISSN 0090-2616/$ – see frontmatter
ß 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.orgdyn.2008.02.002
www.organizational-dynamics.com
Understanding and
developing strategic
corporate social
responsibility
PETER A. HESLIN1 JENNA D. OCHOA
C reation of shareholder wealth, once
considered the ultimate corporate
objective and yardstick of organizational
Mark Kramer, is to undertake CSR in a stra-
tegic manner by making social and environ-
mental contributions only in ways that also
value, is slowly becoming overshadowed enable tangible business benefits. However,
by a broader conception of organizational imitating other organizations’ strategic CSR
success. In 2006, about one in every ten ‘‘best practices’’ would be imprudent for the
dollars of assets under management in the same reason that benchmarking often leads
U.S. – an estimated $2.3 trillion out of $24 to disappointing results. Organizational lea-
trillion – was invested in companies that rate ders tend to inadequately appreciate the
high on some measure of social responsibil- subtle differences in organizational compe-
ity. In 2007, 64% of the Fortune Global 100 tencies and contexts whereby a given prac-
published a Corporate Social Responsibility tice enables one organization to fly, but leads
(CSR) report outlining their economic, envir- others to flounder. Thus, we argue that effec-
onmental, and social performance. Many tive CSR initiatives are those derived from
large companies, such as General Motors, careful analysis of each organization’s
Procter & Gamble, and Vodafone, now have unique culture, competencies, and strategic
a senior level corporate officer who is opportunities. Fortunately, organizational
charged with directing the organization’s leaders do not have to reinvent the wheel.
corporate social initiatives. While the particular CSR practices that some
In contrast to debates over the last dec- organizations adopt might not necessarily be
ade about whether organizations have a useful for others, many of the principles
social responsibility and whether CSR per- underlying them are applicable to a wide
formance predicts corporate financial per- range of organizations. After briefly review-
formance, business leaders are increasingly ing the history and nature of strategic CSR,
concerned with how their organization can as well as why many organizations are striv-
prosper from addressing social and environ- ing for CSR, we outline a range of examples
mental challenges. One widely accepted of strategic CSR undertakings. The 21
guideline, advanced by Michael Porter and exemplary CSR practices we discuss are
Acknowledgments: We thank Peter Cappelli, Carolyn Jennings, John Slocum, and Theo Vermeulen
for valuable input on an earlier draft of this manuscript. This paper is dedicated to the lifetime of
inspiring social contributions made by the Australian Distinguished Professor Dexter Dunphy.
1
The authors contributed equally and so are listed alphabetically.
125
2. clustered into seven principles for enacting production and consumption. Human sus-
strategic CSR. These principles could serve tainability involves creating an equitable,
as a guiding stimulus for other organizations developmental, and healthy workplace for
intent on discovering and capitalizing on employees, as well as adding value to stake-
their unique opportunities to do well by holders including suppliers, customers, and
doing good. other community members. Such value-
added initiatives can be delivered to external
stakeholders through avenues including the
provision of educational, health, career,
THE ROOTS AND NATURE OF
energy-saving, pollution-reducing, or envir-
CORPORATE SOCIAL
onmental beautification opportunities.
RESPONSIBILITY
According to Chad Holliday (2001, p.
CSR has roots in a pivotal 1953 decision by 134), chairman and CEO of DuPont:
the New Jersey State Supreme Court which
Sustainable growth should be viewed not
removed legal restrictions on corporate phi-
as a program for stepped-up environ-
lanthropy. A shareholder who objected to
mental performance, but as a compre-
Standard Oil donating money to Princeton
hensive way of doing business; one that
University brought a lawsuit against Stan-
delivers tremendous economic value and
dard. The court ruled in Standard’s favor,
opens up a vast array of new opportu-
accepting the argument that its donations to
nities. Capitalizing on these benefits may
Princeton’s Engineering Department were
require relentless determination and
intended to benefit Standard Oil by helping
tenacity, but ultimately companies will
to educate future potential employees. This
find that they can generate substantial
decision paved the way for other companies
business value through sustainability,
in the United States to engage in corporate
while both enhancing the quality of life
giving. CSR initiatives increasingly involve
throughout the world and protecting the
strategically directed donations of equip-
environment.
ment or core employee skills.
There are various definitions of CSR, but
By virtue of being self-sustainable, stra-
most share the theme of engaging in econom-
tegic CSR can become an integral and invalu-
ically sustainable business activities that go
able part of business strategy and operations,
beyond legal requirements to protect the
rather than merely off-the-shelf or sponta-
well-being of employees, communities, and
neous ‘‘good deeds.’’ Developing prudent
the environment. Strategic CSR seeks to do
CSR is thus much less a matter of organiza-
this in ways that simultaneously create tan-
tional imitation than real-time customiza-
gible business benefits, thereby being finan-
tion.
cially self-sustaining and less prone to
eliciting outcries about squandering share-
holder wealth. Granted that CSR includes
Complicating Factors
both environmental and human sustainabil-
ity components, we follow CSR scholars who Many organizations appear to be strong in
use the terms corporate sustainability and some areas of CSR performance yet weak in
CSR synonymously. others. Should Wal-Mart Stores be deemed
Environmental sustainability involves socially responsible for providing low-priced
using scientific insights to reduce the envir- goods for impoverished and budget conscious
onmental footprint of an organization’s customers, or irresponsible for paying its
operations and products. Doing so can help employees low wages, providing minimal
to address issues including the earth’s dimin- health care benefits, and for adversely affect-
ishing supply of nonrenewable resources ing independent merchants? Does BP exhibit
and capacity to absorb the waste from our CSR by recognizing and striving to address
126 ORGANIZATIONAL DYNAMICS
3. global climate change, or is it irresponsible for These include growing consumer demand
continuing to produce fossil fuels? Is Hewlett- for responsibly made products, challenges
Packard socially responsible because of its to organizations’ reputations by nongovern-
community development initiatives, or lack- mental organizations (NGOs), industry
ing CSR for abandoning its long-standing codes of conduct, assessments and rankings
policy of guaranteeing job security? Given of CSR performance, pressure from socially
the complexity of such issues, our intention responsible investors through public interest
in this paper is to offer principles to guide the proxy resolutions, as well as the socially
identification of strategic CSR initiatives, conscious values of organizational managers
rather than to imply judgments regarding and employees. Issues such as disparities in
the overall CSR of particular organizations. access to quality education, employment,
Enron undertook admirable social initia- and healthcare are gaining increasing media
tives, such as making substantial charitable attention, as is the need for technological and
donations, while simultaneously defrauding other innovations that address pressing
its investors. Ford Motor publicized a strong environmental challenges. These challenges
commitment to reducing its environmental include air and water pollution, unsustain-
impact while also lobbying against increases able fishing and harvesting, as well as
in federal fuel economy standards. Besides increasing greenhouse gas emissions that
apparent hypocrisy, these examples illustrate according to the 2007 Intergovernmental
that to optimize progress in addressing social Panel on Climate Change almost certainly
and environmental challenges, organiza- lead to global warming.
tional initiatives, public policies, and corpo- Catastrophic consequences likely to
rate regulators must work in concert. The result from global warming include increas-
Human Rights Watch 2006 annual report ing Category 4 and 5 hurricanes, rising sea
revealed that firms such as Google have con- levels devastating coastal areas worldwide,
cluded that CSR can place them at a compe- and the spread of harmful insects such as
titive disadvantage by shutting them out of malaria-carrying mosquitoes. There is an
certain markets. If Google did not comply emerging consensus that such critical envir-
with the Chinese government’s censorship onmental and social issues must be
policies, they could not operate in China, addressed without delay and that, in addi-
keeping them from doing business in the tion to public policy changes, organizations
largest emerging market for e-commerce have a responsibility and key role to play in
and Internet use. As a result, large organiza- identifying and implementing remedial
tions’ CSR initiatives increasingly include actions. This responsibility is underscored
lobbying for legally enforceable corporate by the increasing realization that both gov-
standards that apply to all firms. Starbucks ernments and individuals can also ‘‘vote’’
provides healthcare benefits to all employees their social preferences through what they
who work at least twenty hours a week and purchase, where and how hard they choose
spends more on healthcare than on coffee to work, and where they invest.
beans. Not surprisingly, Starbucks actively Enhancing organizational reputation
advocates for national healthcare legislation. was once the prime motivator for CSR. It is
Wal-Mart, General Electric, DuPont and a relatively easy to contribute money to a cause
growing number of other organizations simi- or place it in a corporate foundation without
larly all back some form of carbon regulation. a mandate for how the funds are to be spent
or what outcomes are expected. With grow-
ing recognition of looming human and envir-
onmental crises, there is a groundswell of
DRIVERS OF CSR
public and private sector organizations striv-
Powerful social and political forces encou- ing to make measurable contributions to
rage organizations to act more responsibly. sustainability issues. Over 4,000 organiza-
127
4. TABLE 1 THE 10 PRINCIPLES OF THE UNITED NATIONS GLOBAL COMPACT
Businesses should:
Principle 1: Support and respect the protection of internationally proclaimed human rights
Principle 2: Ensure that they are not complicit in human rights abuses
Principle 3: Uphold the freedom of association and the effective recognition of the right to collective bargaining
Principle 4: Eliminate all forms of forced and compulsory labor
Principle 5: Abolish child labor
Principle 6: Eliminate discrimination in respect of employment and occupation
Principle 7: Support a precautionary approach to environmental challenges
Principle 8: Undertake initiatives to promote greater environmental responsibility
Principle 9: Encourage the development and diffusion of environmentally friendly technologies
Principle 10: Work against corruption in all its forms, including extortion and bribery
tions from more than 100 countries are now initiatives. These include the need for growth
members of the United Nations Global Com- in market share, organizational learning,
pact (UNCG), established in 1999 by U.N. committed and engaged employees, suppor-
Secretary General Kofi Annan. UNGC is an tive external stakeholders, and positive
international initiative that brings together investor relations.
companies, UN agencies, labor organizations
and civil society in support of 10 principles
Growth in Market Share
covering human rights, labor, the environ-
ment, and corruption. UNGC member orga- Positive consumer responses to an orga-
nizations pledge to abide by and integrate nization’s CSR efforts have resulted in
into their business practices the 10 principles increased sales of premium priced products
outlined in Table 1. and services. These include Fair Trade pro-
Besides value-driven small to medium- ducts, whereby producers are paid an above-
size companies, large corporations that are world-market price for their produce. In
active members of the UNGC include BHP Great Britain, sales of Fair Trade products
Billiton and Foster’s Group (Australia), Ara- – including coffee, bananas, chocolate, and
cruz Celulose and Petrobras (Brazil), Toshiba flowers – increased by 51% between 2003 and
and Nissan (Japan), Cemex and Corporacion 2004.
Durango (Mexico), BP and Royal Bank of CSR initiatives can also open up new
Scotland (United Kingdom), as well as Cisco markets, especially in developing economies.
Systems and Coca-Cola (United States). Companies who find a way to engage with
Thousands of other organizations strive for the world’s poorest citizens have been help-
CSR in concert with institutions that include ing to alleviate poverty and improve the
the 1% for the Planet Alliance, America’s economies of these countries, while also prof-
Promise, Ashoka, the Aspen Institute, the iting from their efforts and creating new
Clinton Global Initiative, Net Impact, the customers and markets for their goods. Ara-
Social Venture Network, the Organization vind Eye Hospitals in India perform 200,000
for Economic Cooperation and Develop- cataract surgeries per year for roughly U.S.
ment, and the World Business Council for $50 per patient. In 2001–2002, the hospitals
Sustainable Development. Each of these posted a profit of U.S. $46.5 million. By crea-
institutions provides helpful guidelines for tively using economies of scale, high produc-
effective CSR initiatives that are reflected in tivity and top quality medical equipment,
the following discussion. these hospitals restored the sight of hun-
Organizational myopia regarding short- dreds of thousands of people. This in turn
term profitability can be addressed by stimulates the Indian economy by freeing up
exploring how five key drivers of business both the blind, as well as those who cared for
prosperity can be positively affected by CSR them, to enter the labor force and potentially
128 ORGANIZATIONAL DYNAMICS
5. earn an income that ultimately helps to pay to work for a socially responsible firm.
increase consumer spending. In concert with Peter Drucker once argued that CSR may
public policy makers, healthcare organiza- become increasingly necessary to attract
tions can explore viable business models the best available workers. A 2006 survey
for broadening the base of essential health- of 2,100 M.B.A. students by Net Impact
care consumers within a range of other revealed that 59% of respondents planned
developing and developed economies. to seek socially responsible work immedi-
ately upon graduation, and 79% indicated
that they would seek out socially responsible
Organizational Learning
work at some point in their careers. These
Cutting edge CSR is more than corporate results signal the growing importance of
philanthropy. Strategic CSR programs pro- social and environmental engagement to
vide opportunities for organizations to learn the generation now entering the workforce.
from the projects they invest in and use that Besides enabling organizations to attract
knowledge to build the organization’s core employees who are driven by socially con-
competencies, while simultaneously improv- scious values, CSR can also keep them
ing social or environmental conditions. CSR engaged and eager to become increasingly
initiatives can be used as learning labora- valuable to the organization. Anne Mulcahy,
tories to study different ideas, methods, chairman and CEO of Xerox, chose to work at
and processes without the time pressure Xerox because of the reputation of the sales
and other typical constraints on the delivery department as a meritocracy, rather than an
of commercially contracted products and old boy’s club. But she has stayed for more
services. Knowledge gained through CSR than 30 years and counting because of a
endeavors can flow back into the organiza- culture that broadly defined citizenship to
tion and drive new innovations throughout include how you treat your people, your
the company. When Bell Atlantic undertook customers, your suppliers, and the commu-
Project Explore in Union City, New Jersey in nities where we work and live. Because of its
the early 1990s, it strived to improve inner commitment to corporate citizenship, Xerox
city children’s learning with technology. did not just get a talented salesperson in
During the process, Bell Atlantic developed Mulcahy. Instead they attracted and retained
new insights about networking technologies the future acclaimed CEO of the company.
that more than justified the cost of the project. Highlighting to employees an organiza-
These insights led to a patented and profit- tion’s positive social contributions can be a
able technology that became Bell Atlantic powerful route for motivating and retaining
Infospeed DSL. Strategic CSR undertakings committed and productive employees. The
provide fertile ground for organizational medical technology company Medtronic
learning and innovation, while also benefit- conducts annual parties at which employees
ing humanity and our deteriorating bio- meet patients whose lives have been
sphere. improved by their products. According to
the company’s founder and Director Emer-
itus, Earl E. Bakken, ‘‘All Medtronic employ-
Committed and Engaged
ees have a ‘defining moment’ in which they
Employees
come face to face with a patient whose story
A company attitude of fairness and com- deeply touches them.’’ Research by Adam
passion often influences how employees feel Grant and colleagues has shown that when
about the organizations, as well as how they organizations provide employees with
act while performing their work. Research opportunities for appreciative contact with
has shown that potential employees are more the beneficiaries of their work, employees
attracted to socially responsible organiza- exhibit greater effort, persistence, and job
tions, and some are willing to receive less performance, compared with those who have
129
6. less opportunity to see how their work makes tions, the U.S. Environmental Protection
a positive difference. Agency successfully prosecuted BP under
new laws requiring chemical plants and refi-
ners to proactively identify where potential
External Stakeholders
accidental spills or toxic releases could occur
Acknowledging the need for CSR shows a and design preventative safeguards. BP com-
company’s recognition that business and mitted to investing an additional $400 mil-
society need each other if both are to thrive. lion in safety upgrades geared towards
External stakeholders can powerfully affect future accident prevention.
organizational survival and prosperity.
Healthy societies expand demand for busi-
Financing and Investor
ness as more human needs are met and
Relations
aspirations grow. Successful businesses con-
tribute to robust economies and livable com- An organization’s CSR performance
munities, without which there would be attracts attention from financial analysts and
fewer consumers of goods and services, investors. Ceres, a coalition of over 80 inves-
resulting in less need for many businesses tor, environmental and public interest orga-
to exist. nizations, periodically ranks 100 global
External stakeholders often view CSR pro- corporations on their strategies for curbing
grams as a measure of the trustworthiness of greenhouse gases. There is a growing trend
an organization. Thus, a favorable opinion of for investors to direct their money towards
a company’s CSR practices can solidify a explicitly socially responsible organizations.
positive relationship between an organiza- The amount invested in ‘‘green’’ mutual
tion and its stakeholders. Engaging stake- funds in the U.S. rose 695% in the last six
holders proactively can thereby help insure years. During the last three years, the amount
the success of a project. In 2007, when two of money invested in clean energy has reached
private equity firms sought advice for their U.S. $70.9 billion globally. Firms such as Citi-
bid on the large utility company TXU, Gold- bank and Goldman Sachs carefully assess the
man Sachs advised that the buyout plan be foreseeable environmental impact of their
modified to accommodate more environ- lending decisions in developing countries.
mentally sound practices. Specifically, Gold- Banks such as Wainwright Bank and Trust
man Sachs urged their clients to insist that in Boston, as well as the New Resource Bank of
the number of new coal-powered energy San Francisco offer discounted financing for
plants TXU planned to build be drastically projects that will be built using ‘‘green’’ con-
reduced from 11 to 3, and that the dollars struction standards. ShoreBank Corp of Chi-
saved be invested in an alternative energy cago employs a triple bottom line manager
source such as wind power. Acceptance of who assesses implications for people, planet,
this advice pleased the environmental advo- and profits of loans for green building pro-
cacy group Environmental Defense and jects. These trends highlight the increasing
paved the way for TXU board members to awareness of the need for environmental
accept the buyout offer. stewardship and financiers’ desire to sponsor
The potential peril of ignoring external companies that adopt CSR business practices.
stakeholders is illustrated by the notoriously Poor CSR performance can conversely
huge costs of CSR activist protests and boy- have significant negative financial implica-
cotts against firms such as Dow Chemical, tions. In May 2006, the California Public
Levi Strauss, Nike, and Shell Oil. In 2007, BP Employees’ Retirement System (CalPERS) –
agreed to pay over $60 million in fines for the largest public pension fund in the U.S. –
violations of the U.S. Clean Air Act in Texas banned investments in nine companies that
and Alaska. In addition to collecting the do business in Sudan, until the government
largest fine ever assessed for clean air viola- of Sudan halts the genocide that has resulted
130 ORGANIZATIONAL DYNAMICS
7. in egregious human rights violations. For the board for organizational initiatives aimed at
same reason, major universities including creatively identifying and developing viable,
Harvard, Yale, and Stanford also sold their value-adding and self-sustaining strategic
shares in firms with substantial investments sustainability opportunities. In addition,
in Sudan. In 2002, even before the start of the the organizations mentioned are not being
Darfur conflict, Talisman Energy of Canada endorsed for necessarily having high overall
withdrew from the Sudan after CSR-driven CSR. As mentioned, many organizations are
divestments by investors in the U.S. and strong in some areas of CSR performance and
Canada led to a 35% decline in its share price. weak in others. Instead the following exam-
Wall Street and investors worldwide are ples are offered merely to illustrate our seven
paying attention to CSR. Their opinion of a strategic sustainability principles.
particular business’ CSR is likely to increas-
ingly impact its access to capital and the
Principle 1: Cultivate Needed
resulting fortune of companies who excel,
Talent
fail, or fall in-between with regard to CSR
performance. Like Standard Oil, Marriott International
and Microsoft both undertake targeted CSR
initiatives that cultivate suitable future
employees for their businesses. In 1999, Mar-
STRATEGIC CSR PRINCIPLES
riott initiated a program called ‘‘Pathways to
Seven strategic CSR principles and 21 exam- Independence’’ that taught chronic welfare
ples of CSR initiatives that illustrate these recipients life and job skills. In return, Mar-
principles are presented in Table 2. These riott offered each program graduate a job
principles should not be interpreted as a from its employment openings. Topics cov-
checklist of best practices, but as a spring- ered during the program include managing
TABLE 2 STRATEGIC CSR PRINCIPLES AND EXEMPLARY PRACTICES
STRATEGIC CSR PRINCIPLES CORPORATION EXEMPLARY STRATEGIC CSR PRACTICES
1. Cultivate needed talent Marriott Provide extraordinary career opportunities
Microsoft Nurture required IT talent
GlaxoSmithKline Expand access to medications
2. Develop new markets Philips Electronics Produce resource-efficient products
Globe Telecom Create first-time consumers
Whole Foods Specialize in organic products
3. Protect labor welfare Levi Strauss Replace exploitation with education
Odegard & Rugmark Certify ethical production
Starbucks Enhance farmers’ productivity and welfare
4. Reduce your DuPont Create more value and less ‘‘stuff’’
environmental footprint Ethel M Produce abundant life from wastewater
Norsk Hydro Renew raw materials
5. Profit from by-products Fuji Xerox Redesign products for learning and profits
Shaw Industries Adopt cradle-to-cradle manufacturing
Manildra Convert grain and starch waste to fuels and food
6. Involve customers Target Enable customers to improve education
Hewlett-Packard Reduce the environmental cost of IT use
Patagonia Educate and engage customers
7. Green your supply chain Nestle Optimize transportation
Wal-Mart Reduce packaging across the supply chain
S.C. Johnson Identify, publicize and reward greener alternatives
131
8. finances and a household budget, how to soft made a $15 million software grant to the
search for a job and improve one’s interview- African-American collegiate community.
ing skills, workplace etiquette, and standards The resulting better-educated community
of professional conduct. college graduates help Microsoft address
Marriott benefited from a wide pool of its significant shortage of IT workers, while
more diverse and eager employees who have simultaneously providing celebrated educa-
filled positions in a broad number of areas tional and career opportunities to tradition-
including reservations, housekeeping, res- ally underrepresented populations within
taurant serving and cooking, grounds the software industry.
keeping, luggage service, reception, and Attracting and retaining top scientific
maintenance. Pathways to Independence talent is also a major challenge in the com-
also opened up career development oppor- petitive pharmaceutical industry, especially
tunities for participants by allowing them to in light of consumer backlash against the
begin obtaining the experience needed to high cost of medicine. GlaxoSmithKline
enter the ranks of Marriott management. (GSK) has taken steps to improve access to
The program substantially decreased turn- needed medications and vaccines around the
over at Marriott. Seventy percent of program world. This sustainability commitment has
participants were still working for Marriott resulted in drawing leading scientific talent
after one year of employment. This retention to work for GSK. Initiatives include licensing
rate is almost 50% better than the hotel indus- local companies in Africa to produce generic
try average for hourly employees. Pathways versions of GSK’s patented AIDS medica-
to Independence also helped revitalize inner tions, selling vaccines at volume, nonprofit
city economies by providing stable, well- discounts to developing countries, and ded-
compensated employment opportunities to icating a team of researchers to develop a
the chronically unemployed. Marriott in turn malaria vaccine.
obtained the reciprocal benefit of growing It is rather unusual to find a pharmaceu-
future employees and managers who are tical company directing R&D resources to
fully immersed and largely committed to diseases such as malaria or avian influenza,
Marriott’s ‘‘Spirit to Serve’’ corporate cul- as the bulk of the people who can benefit
ture. Marriott has also benefited from a range from the vaccine cannot pay cost, much less
of other community outreach partnerships the established retail price for inoculation.
aimed at helping individuals (e.g., racial Many companies claim that drugs are so
minorities and those with a disability) who expensive because of the high cost of R&D.
face barriers to employment, as well as by Therefore, they do not look into developing
addressing environmental issues that affect compounds unless they can be sold at a price
the communities in which it operates. that at least recoups the company’s cost of
Microsoft has long experienced the need capital. GSK is somewhat unique in looking
for a robust supply of skilled information beyond immediate profits to provide its
technology (IT) workers. In 1997, Microsoft employees with an opportunity to work
pursued a collaborative opportunity to bol- towards eradicating menacing diseases.
ster the IT education infrastructure and make Employees claim to value working for GSK
it possible for more college students to because their work is making a positive dif-
receive the training necessary to prepare ference to the lives of millions.
them for an IT career. In light of antiquated A hallmark of our knowledge economy is
technology, IT curricula, and faculty skills organizations engaging in a war for talent.
within community colleges across the U.S., Three broad strategies for building an orga-
Microsoft contributed software, volunteered nization’s capacity to attract and retain a
expertise, and provided $47 million to help motivated, skilled workforce are to offer
the American Association of Community extraordinary career opportunities, make
Colleges address these issues. In 2003, Micro- community-based collaborative investments
132 ORGANIZATIONAL DYNAMICS
9. to cultivate required talent pools, and pro- and 1% of transactions $20 and above. The
vide employees with opportunities to use program allows over 1.3 million people who
their professional or occupational skills in cannot afford to have a bank account, or do
ways that directly help people in most need not live near a bank or landline telephone, to
of assistance. now engage in banking and other consumer
transactions.
Beyond land-line infrastructure accessibil-
Principle 2: Develop New
ity issues, a large percentage of the world’s
Markets
population is functionally illiterate, making
Philips Electronics is a leading producer of the complexities of banking as practiced in
energy efficient appliances, lighting, and developed economies a significant challenge.
medical equipment. Philips is also becoming Even illiterate individuals, however, often
a leader at expanding the market for its goods become competent and comfortable at bank-
and services by tailoring its offerings to the ing by cell phone. Savvy companies such as
local infrastructure and economy of develop- Globe Telecom, as well as Vodacom in South
ing countries. One project involves the devel- Africa, have discovered that there is an enor-
opment of traveling medical vans that bring mous untapped market for providing pro-
primary healthcare to isolated villages in rural ducts and services to often overlooked and
India. Using satellite technology, the vans link underserved populations.
up with doctors in an urban center, allowing New markets can also be found in niche
them to diagnose and treat patients remotely. areas that attract the business of consumers
Additionally, Philips has introduced a low- seeking a more socially and environmentally
cost water purification system and a wood- responsible lifestyle. A leader in one of these
burning stove that is smokeless, which helps niches is Whole Foods Market—an Austin,
to decrease deaths related to pulmonary dis- Texas-based retailer of natural and organic
ease from exposure to cooking smoke. These foods that was founded in 1980 and is now a
are desperately needed items that many com- Fortune 500 company. Whole Foods operates
panies have not invested in because the bot- close to 200 stores in locations throughout the
tom line does not appear to justify the cost. U.S. and the U.K., making it the world’s
However, as seen with the Aravind Eye Hos- largest natural and organic food supermar-
pitals in India, substantial volume can drive ket chain. Whole Foods’ dramatic growth
profit. Meeting the needs of the developing provides compelling evidence that a serious
world is a natural fit for the intersection of CSR commitment to CSR can be financially viable.
and volume-based revenues. Whole Foods is selective about the pro-
Globe Telecom’s ‘‘G-Bank’’ program is ducts it sells and is dedicated to maintaining
another example of this principle. This busi- the highest quality standards, while requir-
ness capitalizes on the fact that the infrastruc- ing fair labor standards and sustainable agri-
ture for mobile telecommunications has culture. Central to the Whole Foods
expanded exponentially across the globe philosophy is the belief that ‘‘companies, like
during the past decade. The same cannot individuals, must assume their share of
be said for bank branches or traditional land- responsibility as tenants of Planet Earth.’’
line telephone infrastructure in remote sec- This is a primary reason for the company’s
ond- and third-world villages. Located in the active support of organic farming, which is
Philippines, Globe Telecom enables custo- widely seen as the best method for the pro-
mers to use text messaging and prepaid motion of sustainable agriculture. Organic
phone cards to send and receive cash via agricultural practices provide tangible bene-
their cell phones. They can also pay bills or fits to the health and safety of farm workers,
purchase goods at stores. This innovative who are no longer exposed to dangerous
program makes money for Globe, which chemicals and pesticides that are often used
charges 20 cents for transactions below $20, by large industrial agricultural companies.
133
10. Whole Foods’ social and environmental to school, while the company continued to
credentials are increased by habitual engage- pay their wages. Upon completion of their
ment in community initiatives, such as sup- schooling, a job awaited them at the factory,
porting local area food banks, sponsoring provided that the applicant could provide
neighborhood events, and contributing a their school completion certificate. Because
minimum of 5% of total net profits to not- many Bangladeshi people appear younger
for-profit organizations. Whole Foods addi- than their chronological age, the company
tionally provides employees paid time off for provides dental exams to help screen appli-
community service work. Whole Foods was cants who do not have a school certificate,
rated by Fortune magazine as one of the ‘‘100 but are old enough to be employed. This
Best Companies to Work For’’ for the tenth helps prevent the unnecessary rejection of
consecutive year in 2007. The employee age-qualified potential employees. Encour-
enthusiasm and commitment reflected by aged by Levi Strauss’s example, the Bangla-
this achievement probably fueled Whole desh Garment Manufacturers and Exporters
Foods’ growth and retention of its socially Association and other trade groups have
conscious customer base. given $1 million to support underage work-
Growth is often essential to organizational ers’ education.
prosperity. Anticipating and catering to the Odegard addresses child labor exploita-
emerging markets for eco-friendly products tion issues in the luxury rug industry. Ste-
and services, as well as adapting offerings phanie Odegard started a design company
and business models to tap previously that promotes rugs that are certified as being
neglected markets, are opportunities for made under fair labor conditions. Many
business growth that also sustain humanity developing countries in the Middle East
and our biosphere. and South Asia count fine rugs as one of
the backbones of their economies. Children
are valued as laborers for several reasons:
Principle 3: Protect Labor
their small fingers and sharp eyesight make
Welfare
them gifted at the detailed work of crafting
Ensuring that products are made without rugs and they have greater stamina than
child labor is a concern for many companies, adults to work hard for long hours in hot,
especially those that have been caught in the dusty, and cramped factories. Odegard
crosshairs for doing so in their overseas fac- decided to take her mission a step further
tories. One classic case of how this predica- and so helped to found a nonprofit organiza-
ment can be addressed involves Levi Strauss, tion, Rugmark, which certifies that rugs are
a company that tackled this legal and public made without child labor. The certification
relations problem with a creative CSR solu- provides interior designers and consumers
tion. To address the substantial backlash with assurance that the rugs they purchase
against employing children younger than are not the product of child exploitation. The
15 years of age, Levi Strauss considered sim- growth of Rugmark certified products as a
ply firing all the child laborers. However, fashionable choice in the design industry
analysis of the labor market in Bangladesh helps to promote the reduction of child labor
made clear that in a significant number of in rug manufacturing. The initiative has
families, these children were the sole bread- helped take 10% of an estimated 300,000
winners. Losing the factory work would child rug laborers away from the loom and
have had dire consequences for the children put them back in school. It also potentially
and the family members who depended on helps raise awareness and concern with elim-
the childrens’ wages. inating exploitative labor practices in other
Realizing the devastation this would industries.
cause, Levi Strauss developed an innovative Starbucks takes a holistic approach in their
solution. All children under age 15 went back efforts to enhance labor welfare. The com-
134 ORGANIZATIONAL DYNAMICS
11. pany has a range of programs designed to have most of the desirable characteristics of
help coffee farmers build profitable and sus- older materials such as nylon, Dacron, and
tainable businesses. The Farmer Support Lycra. However, unlike its predecessors,
Center in Costa Rica offers training and tech- Sonora is produced using fermented corn
nical support on farming practices that result sugar, a renewable resource, rather than
in the growth of high quality coffee. Star- the petrochemical-derived materials it
bucks’ policy is to pay premium prices for replaces. Knowledge intensity is increased
coffee beans in order to provide farmers with by initiatives including the creation of Sim-
a living wage that allows them to support plyengineering, which generates revenue
their families and grow their business. The from selling copyrighted engineering guide-
company also has programs that provide lines, calculations, and models, as well as
farmers with affordable loans, increasing SafeReturns, a DuPont consultancy that
their ability to invest in their farms and build helped Texas Instruments reduce its work-
a sustainable business. To reward farmers place injuries by 65%.
who practice socially and environmentally The environmental sustainability attained
responsible farming practices, Starbucks by DuPont’s integrated science and knowl-
has established guidelines that allow suppli- edge intensity strategies is assessed with a
ers to qualify for preferred seller status. customized metric called the ‘‘shareholder
One of Starbucks’ overarching business value added per pound of production’’
philosophies is that the health of their busi- (SVB/lb). According to DuPont chairman
ness is only as robust as that of the many and CEO Chad Holliday, this metric helps
farmers from whom they purchase coffee. DuPont focus on shareholder value creation
Thus, money invested in fostering the through increased productivity, waste
long-term welfare, viability, and prosperity reduction, and the development of new ser-
of their suppliers is considered as an essential vices and other sources of revenue genera-
business investment. The rapid growth in tion, while helping meet this chemical
demand for the premium-priced coffee pro- company’s stretch goals for decreasing
ducts sold by Starbucks illustrates the poten- energy consumption and toxic emissions—
tial viability of this business policy. all essentially by producing ‘‘more value and
During the closing decades of the 20th less stuff.’’
century, minimizing labor costs was widely Ethel M operates a uniquely designed
seen as imperative for organizational pros- wastewater treatment system at its chocolate
perity and even survival. Levi Strauss, Ode- factory in Las Vegas, Nevada. Adjacent to the
gard & Rugmark, as well as Starbucks, factory is the ‘‘Living Machine,’’ an ecosys-
highlight that organizations can indeed do tem containing plants, snails, bacteria, fish,
well while striving to safeguard the liveli- and other organisms. Distributed throughout
hood and well-being of their labor force. an acre of tanks, marshes, and reed beds, the
factory’s wastewater enters the Living
Machine and is ‘‘treated’’ by being processed
Principle 4: Reduce Your
through and by the living inhabitants inside.
Environmental Footprint
The water is then reused for industrial pur-
DuPont seeks to increase its financial pros- poses. Visitors to the factory can take a self-
perity through strategies that simultaneously guided tour, view the chocolate manufactur-
produce demonstrable reductions in the ing process, sample the company’s products,
organization’s environmental footprint. Stra- and then explore the Living Machine and
tegies for sustainable development include view examples of ‘‘before’’ and ‘‘after’’ trea-
integrated science and knowledge intensity. ted water. Treated water is reused within the
DuPont integrates the scientific fields of factory where appropriate, as well as to wash
chemistry and bioengineering to produce a the company’s vehicle fleet and provide irri-
new line of polymers, called Sorona, that gation for the botanical cactus garden located
135
12. on the property. The company makes a posi- technology and bottom line. After changing
tive environmental difference, while also cul- their corporate strategy from selling to only
tivating its reputation and sales by leasing office equipment, Fuji Xerox began
reclaiming a natural resource and educating servicing rather than disposing of rented
its visitors on environmental sustainability. photocopying machines that no longer oper-
Norsk Hydro strives to become more ated properly. Careful study and redesign of
energy efficient while meeting the world’s a few key components – which cost as little as
increasing demand for aluminum. When the $140 – resulted in reconditioned equipment
company did a life cycle assessment, it dis- being restored to better-than-original work-
covered that recycling aluminum used just ing order. This initiative saved the company
5% of the energy needed to produce primary $14 million in its first year. Studying the
aluminum. It is well known that aluminum kinds of malfunctions and defects that
has a key advantage of outstanding recycl- occurred and incorporating this knowledge
ability, whereby its composition and quality into new product and parts design led to
is not changed or altered in the recycling R&D advantages that resulted in even more
process. It can be remade into usable material reliable generations of office equipment that
over and over again, without any loss of its cost the company less to maintain. Organiza-
integrity. Aluminum is used for airplane tional learning is also heightened as employ-
bodies and propellers, door and window ees discover what works and what does not
frames, furniture, beverage containers, when manufacturing, maintaining, and
power lines, and in components of televi- repairing products. The program has put
sions, radios, refrigerators, and air condi- machines back into use that would otherwise
tioners. Granted the widespread use of have been destined for landfill. The Austra-
aluminum and the small fraction of energy lian division of Fuji Xerox is thus considered
used to recycle versus produce it, the poten- a model of strategic CSR for other Fuji Xerox
tial positive environmental impact of recy- divisions worldwide.
cling aluminum is enormous. Of the 3.9 Shaw Industries’ $150 million commercial
million tons of aluminum Norsk Hydro carpet and tile business has adopted a ‘‘cra-
delivered to customers in 2005, approxi- dle to cradle’’ model. When carpet needs
mately 1.8 million tons or 46% had been replacing, Shaw takes it back from the con-
recycled. In doing so, companies such as sumer, breaks down the materials, and then
Norsk Hydro have both flourished and pro- uses those materials to make new carpet.
tected the earth from some of the unneces- Often only heavily trafficked areas require
sary toxic by-products of superfluous carpet replacement; by servicing just those
aluminum production and landfill. spots, Shaw saves its customers money and
Whether through new business strategies, perfectly good carpet is not removed and
reduced energy consumption (not illustrated discarded. By changing the incentive struc-
because examples and opportunities abound ture for keeping carpet for the full duration of
in this area), reuse, or recycling of products its useable life, the human and natural
and materials, there are countless ways for resources consumed in providing quality
organizations to benefit from initiatives that carpeting is substantially reduced. This inno-
serve to reduce their environmental foot- vative approach saves Shaw a great deal of
prints. money, as the price of raw materials now
exceeds the cost of recycling old carpet into
new. Interface, the world’s leading commer-
Principle 5: Profit from
cial and industrial carpet manufacturer also
By-products
recycles through their ReEntry1 Carpet
Fuji Xerox Australia exemplifies how new Reclamation Project. To date, Interface has
business models that are good for the envir- recycled 84 million pounds of carpet that
onment can also help a company improve its would otherwise have gone to landfills,
136 ORGANIZATIONAL DYNAMICS
13. where it takes an average of 50 years to checks are mailed directly to school princi-
decompose. pals. This CSR program puts money into
Manildra developed a range of innovative community schools across the United States.
reuse processes that allow the company to Over $200 million has been contributed since
benefit by putting its by-products to produc- the program’s inception. More than 2.5 mil-
tive use. Started as a single flour mill in the lion customers have enrolled in the program.
Shoalhaven region of Australia in 1952, Man- This initiative allows an individual with no
ildra has grown into an international proces- other connection to Target aside from being a
sor of grains and starches, as well as a global consumer of Target’s products to participate
leader in using wheat for industrial pur- in a corporate wide CSR program and to
poses. Manildra uses ‘‘waste’’ products from choose the educational beneficiary of their
grain processing to make other useful sub- purchases.
stances, profiting from what would other- Hewlett-Packard (HP) involves its custo-
wise be discarded and helping to protect mers in recycling and energy reduction
the environment by creating less waste. Man- initiatives by offering educational content
ildra’s ability to make comprehensive use of on their Web site. In ‘‘5 Steps to Greener
their raw materials comes from over 50 years Computing,’’ tips are offered for reducing
of increasing vertical integration. Starting the environmental impact of both business
with grain and ‘‘waste starch,’’ Manildra and personal computer usage, ranging from
manufactures ethanol and agricultural feed. major initiatives to small changes in every-
Effluent wastewater from the mill, used to day practices. Advice is offered regarding
irrigate a farm located next to one of the organizational policies and checklists, recy-
processing plants, contains organic nutrients cling policies, methods for disposal of used
and replaces harmful chemical fertilizers equipment (e.g., batteries), and applicable
typically used in agriculture. The farm government guidelines. HP provides a ‘‘take
annually produces over 10,000 tons of back’’ recycling program for all of its pro-
organic rye grass that is used for feed by ducts and advocates recycling all used IT
the local cattle and dairy industries. By the equipment. Small actions such as buying
time the wheat and all by-products have been recycled paper, using both sides of paper
processed, little waste is left over, achieving a before recycling, and utilizing the low power
minimal environmental footprint. states on electronic devices can together sub-
Adoption of Manildra’s practices by other stantially reduce energy consumption. HP
grain processors could help increase the also strives to raise awareness of sustainable
availability of ethanol for alternative fuel, issues and practices among all its employees,
as well as reducing unnecessary and harmful as well as throughout the IT industry.
CO2 emissions. The sustainability initiatives Beyond its educational initiatives, HP has
of Fuji Xerox, Shaw Industries, and Manildra recycled more than 1 billion pounds of elec-
illustrate how useful lessons and valuable tronic equipment. Its goal is to double that
resources can be derived by the prudent number by 2010.
analysis and utilization of an organization’s Patagonia, a leading manufacturer of
by-products. environmentally protective outdoor clothing
and recreation equipment, involves its cus-
tomers in its CSR by using a mail order
Principle 6: Involve Customers
catalog and Web site as forums for education
Since 1997, Target has contributed 1% of about social and environmental issues. In
all purchases at Target stores and 1/2 percent 1972, the company published a catalog with
of all other purchases charged to a Target an essay by founder and owner Yvon Choui-
credit card to benefit the elementary, junior nard entitled ‘‘Clean Climbing.’’ Chouinard
high, or high school of the cardholder’s advocated the use of climbing equipment
choice. In March and September each year, that does not scar or destroy rock in the
137
14. climbing process. He counseled his readers focus on reducing waste and consumption
to heed the words of 19th century environ- ´
of resources. Since 1991, Nestle has reduced
mentalist John Muir: ‘‘Leave no mark except its use of packaging materials by 315,000
your shadow.’’ The response was so positive tons. To minimize impact after finished
that Patagonia has continued to use the cat- goods leave the manufacturing facility, Nes-
alog, as well as more recently their Web site, ´
tle strives to optimize shipments and part-
as an avenue for dialogue with their custo- ners with other producers to share available
mers. Chouinard is deeply committed to space on trucks and rail cars to maximize the
protection of the environment, and Patago- amount of goods that can be moved per trip.
nia’s catalog and Web site have served as key Another transportation efficiency tool is the
media for advocating and guiding environ- use of software that optimizes pallet place-
mental involvement and preservation. Each ment, which maximizes usable space and
issue of the catalog contains a balance of reduces the amount of travel needed to ship
roughly 55% products and 45% ‘‘message’’ goods to their final destination. Each of these
– the articles and original thought pieces initiatives not only saves transportation
related to social and environmental topics, costs, it also reduces the adverse environ-
often written by Patagonia customers. Inter- mental effects of transportation, which
estingly, Patagonia documented that chan- invariably include energy use and pollution.
ging this balance in favor of devoting more Wal-Mart, often criticized for its practices
space to products resulted in a decrease in towards employees and the environment, is
sales. Patagonia thus identified a way to attempting to use its power in the market-
actively engage their customers with envir- place to proactively require more humane
onmental issues and opportunities of mutual labor conditions, such as a living wage, as
concern, while involving them in the com- well as sustainable harvesting and produc-
pany’s growth and CSR efforts. tion practices by Wal-Mart’s suppliers. In
It is becoming undeniable that at least in 2008, Wal-Mart plans to begin measuring
certain markets, customers care about the its 60,000 worldwide suppliers on how well
environmental and human consequences of they reduce packaging and conserve natural
their buying and consumption habits. Provid- resources. Wal-Mart expects a 5% reduction
ing customers with viable concrete actions in overall packaging to keep millions of
they can take that will make a positive differ- pounds of trash from entering landfills,
ence, as well as insights and information that thereby keeping 667,000 metric tons of car-
illuminate the helpful consequences of their bon dioxide from entering the atmosphere.
collective action, is a relatively inexpensive This is the CO2 equivalent of taking 213,000
though socially and environmentally useful trucks off the road, using 323,800 less tons of
way to foster customer loyalty. coal, and 66.7 million gallons less diesel fuel.
Wal-Mart CEO Lee Scott elaborates on this
point: ‘‘Even small changes to packaging
Principle 7: Develop a Green
have a significant ripple effect. Improved
Supply Chain
packaging means less waste, fewer materials
´
Nestle the largest food and beverage com- used, and savings on transportation, manu-
pany in the world and a prominent member facturing, shipping, and storage.’’
of the U.N. Global Compact, uses a variety of S.C. Johnson & Son has a long history of
practices throughout their supply chain environmentally friendly practices, but their
aimed at environmental protection. Begin- pinnacle achievement occurred in 2001 with
ning with raw materials and ingredients the development of a unique and highly
´
purchased for use in Nestle products, strict influential environmental reference docu-
quality controls include limiting potential ment: the GreenlistTM. It classifies raw mate-
´
environmental contaminants. Nestle’s fac- rials based on their environmental impacts
tories employ processing technologies that and is designed to improve the development
138 ORGANIZATIONAL DYNAMICS
15. process of S.C. Johnson products. The format MAKING STRATEGIC CSR
of the Greenlist allows users to compare HAPPEN
substances listed with one another in terms
The organizational benefits of strategic CSR
of their environmental and human health
can be substantial, but so too are the potential
implications. The system rates ingredients
challenges encountered in making the orga-
on a scale of 0–3. A substance with a rating
nizational changes needed to implement
of 0 is classified as a restricted material and
strategic CSR. Five guidelines for putting
senior management must directly approve
strategic CSR into action are as follows.
its use in a product. The culture at SC John-
son strongly discourages the request for
approval of a ‘‘0’’ rated ingredient because Focus your CSR Initiatives
the company is so dedicated to reducing its
Based on careful analysis of your organi-
environmental impact. Substances that rate a
zation’s strategic challenges and opportu-
‘‘1’’ are deemed acceptable, ‘‘2’’ is better, and
nities, initially focus on just a few CSR
a rating of ‘‘3’’ indicates this is the best choice
initiatives with the most promise to yield
for people and the environment. The Green-
both business value and social/environmen-
list is available on line to all S.C. Johnson
tal contribution. Prioritizing in this way can
scientists, allowing them instant access to the
provide the focus needed to attain substan-
best-rated ingredients for the product or pro-
tial positive CSR and business outcomes,
cess under development. Employees receive
rather than diluting organizational resources
incentives in the form of annual merit
with an overly ambitious range of CSR initia-
increases and bonuses for using the best-
tives.
rated materials, and the company creates a
Focus is facilitated by establishing a com-
greener supply chain by encouraging suppli-
pelling CSR vision, together with clear state-
ers to offer products that rate highly on the
ments about what that vision does and does
Greenlist. Since the program started, S.C.
not encompass. BP’s vision of ‘‘Beyond Pet-
Johnson has reduced the amount of volatile
roleum’’ is elaborated with the explicit state-
organic compounds (VOCs) in the environ-
ment that it does not mean that BP is
ment by over 10 million pounds. Use of the
abandoning oil and gas, getting out of hydro-
Greenlist criteria reduces the amount of
carbons, or focusing only on alternatives
VOCs used by 2.6 million pounds annually.
(e.g., renewable energy sources). Rather,
Like Wal-Mart, Starbucks, and Whole
what Beyond Petroleum does entail includes
Foods, S.C. Johnson is sharing its innovations
developing new ways to produce and supply
with its suppliers so as to green the company’s
oil and gas – through clean fuels, through
entire supply chain. S.C. Johnson has further
greater efficiency, and through substitution –
leveraged the positive impact of its Greenlist
as well as developing new fuels that can over
by sharing it with the U.S. Environmental
the long term begin to provide new energy
Protection Agency, Environment Canada,
choices.
the Chinese EPA, the U.K.’s Forum for the
Future, the World Business Council on Sus-
tainable Development, industry associations,
Identify and Engage Relevant
universities, corporations, and others. We pre-
Stakeholders
dict that these examples of CSR undertakings
´
by Nestle, Wal-Mart, and S.C. Johnson merely Stakeholders encompass employees, man-
foreshadow the types of logistical, incentive, agers, suppliers, subcontractors, customers,
role-modeling, standard setting, and informa- shareholders, local communities, govern-
tion-sharing initiatives that innovative orga- ment regulators, and interest groups.
nizations will develop and apply to have a Although interest groups do not necessarily
lucrative and substantial positive human and have a contractual connection to an organi-
environmental impact. zation, their power to influence public opi-
139
16. nion and organizational outcomes can be guidelines, however, raised cynicism about
substantial. A Greenpeace campaign against Google’s corporate philosophies that
Shell U.K. exemplifies the impact interest ‘‘Democracy on the web works’’ and that
groups can have on organizational opera- ‘‘You can make money without doing evil.’’
tions. Shell wanted to dispose of the Brent Reducing costs by moving production
Spar, an off-shore oil storage tank, by sinking overseas can trigger thorny ethical dilem-
it into the deep waters of the North Sea off the mas. These include decimating the viability
coast of Scotland. After research identifying of small communities that are highly depen-
the deep-sea disposal method as the most dent on a particular manufacturing facility,
environmentally sound option, Shell as well as the challenge of ensuring that
obtained the British government’s support cheap production costs are not the result of
for this course of action. However, Shell human exploitation. Maintaining quality and
failed to include environmental advocacy safety standards is also more difficult when
groups in the decision-making process, and production is outsourced, exemplified by
Greenpeace mounted a costly campaign to problems encountered with toys, toothpaste,
stop Shell’s proposed disposal of the tank. and pet food produced in China.
After three months of falling share prices Ethical issues will arise for organizations
and public boycotts, Shell announced they planning strategic CSR initiatives, so careful
would no longer pursue the deep-sea dispo- analysis and sound reasoning is required.
sal of the Brent Spar. The storage tank was Organizational leaders need to carefully con-
eventually moved intact to a Norwegian sider relevant ethical principles that pertain
fjord, a process that probably led to more to their business operations, such as those
environmental harm than Shell’s original produced by the UNGC and outlined in
plan. Both sides incurred battle scars in the Table 1, as well as other sources identified
process: Shell lost money, customers, and in the selected bibliography. After examining
shareholders. Greenpeace lost credibility relevant ethical guidelines, one well-known
when investigations revealed it had grossly heuristic is to avoid actions that you would
over-estimated the amount of oil left in the regret seeing on the front page of a news-
storage tank, thus misrepresenting the paper. Realize that in practice ethical princi-
amount of potential environmental damage ples often conflict, necessitating a reasoned
that could have occurred. Proactive engage- assessment of the short-, medium-, and long-
ment with environmental stakeholders early term foreseeable positive and negative con-
in the process – which is increasingly the sequences for all stakeholders of adopting a
norm, especially for potentially environmen- particular major organizational initiative.
tally sensitive projects – would have saved Engaging with stakeholders to craft unique
Shell the substantial financial and other costs solutions – as illustrated earlier by how Levi
incurred by striving to merely meet environ- Strauss dealt with its child labor issue – can
mental regulatory requirements. be challenging though prudent. Finally,
appointing a devil’s advocate can help high-
light blind spots or flawed reasoning in ethi-
Grapple with Inevitable Ethical
cal analyses.
Dilemmas
Methodically working through ethical
Implementing strategic CSR routinely issues helps to ensure that CSR initiatives pass
poses ethical challenges for organizations. the scrutiny and win the approval of relevant
Conducting business directly in China stakeholders. Indeed, proactive management
enabled Google to dramatically increase its of ethics is critical not only for attracting
market share and ostensibly expand the employees, customers, and investors con-
potential access to information of over a cerned with CSR, but also for avoiding the
billion people. Doing so in accordance with potentially devastating wrath of regulators,
the Chinese government’s strict censorship interest groups and investors who are eager to
140 ORGANIZATIONAL DYNAMICS
17. expose and dissociate themselves from orga- can be a useful source of CSR measurement
nizations with questionable ethics. ideas, quality metrics tend to be crafted to
provide both financial and nonfinancial indi-
cators of an organization’s progress against
Develop Appropriate Metrics
its unique CSR goals.
What gets measured in organizations is
what gets done. Organizations first embark-
Embed in Senior Leadership and
ing on a path to strategic CSR need to make a
with Rewards
fundamental shift in measurement systems
beyond traditional operational and financial Valuable strategic CSR opportunities can
metrics. The triple-bottom-line perspective of emanate from any level within an organiza-
assessing the impact of organizational opera- tion, or even from outside it. Senior manage-
tions on people and planet, as well as profits, ment nonetheless needs to play a crucial role
can be helpful in this regard. in championing, guiding, and nurturing
The Leadership in Energy and Environ- potential CSR initiatives if they are to become
mental Design (LEED) Green Building Rat- a fundamental aspect of business operations
ing SystemTM provides building designers, – and thereby a strategic imperative, rather
developers, owners, and operators with per- than merely a transient, ostentatious expres-
formance measures in five key areas of sion of ‘‘good will.’’ During the early imple-
human and environmental health: sustain- mentation of CSR initiatives, at least some
able site development, water savings, energy people tend to refuse to buy in. It can take
efficiency, materials selection, and indoor time and perseverance for all organizational
environmental quality. LEED materials members to appreciate the business impera-
selection criteria include using building tive and benefits of truly strategic CSR initia-
materials that have been extracted or manu- tives, rather than dismissing them as merely
factured from within 500 miles of the project keeping up with business fashion, as mani-
site, thereby supporting the use of indigen- fested through cynical expressions such as
ous resources and reducing the adverse ‘‘this, too, will pass. . .’’
environmental impacts resulting from trans- To weave strategic CSR into the fabric of
portation. Potential financial incentives for corporate culture, senior leaders need to
complying with such standards are illu- unambiguously and consistently express
strated by the Embrey Engineering Building their commitment to whatever strategic
at Southern Methodist University which CSR initiatives an organization chooses to
received additional donations as a result of adopt. Involvement and commitment with
certification that it had been designed and CSR initiatives needs to be recognized
constructed to the LEED Gold Standard. through organizational reward systems,
Similarly, Texas Instruments’ (TI) new thereby helping to integrate strategic CSR
LEED-certified manufacturing facility in into organizational culture. This persua-
Richardson, Texas was built under budget sively communicates to employees the orga-
and is expected to save TI $4 million in nizational value of pursuing and attaining
energy costs annually from the environmen- strategic CSR objectives.
tally friendly innovations designed into the
building.
Further ideas for CSR metrics may be
gleaned from CSR institutions including Sus- CONCLUSION
tainAbility (www.sustainability.com/), the
United Nations Global Compact (www.un- There is no business to be done on a dead
globalcompact.org/), and the World Busi- planet.
ness Council for Sustainable Development –David Brower, Executive Director,
(www.wbcsd.ch/). While such resources Sierra Club
141
18. Exxon Mobil argues that other organiza- ders who are not inherently passionate about
tions have more competence at tackling addressing environmental or social issues.
environmental issues than it does, so it is As mentioned, engaging in strategic CSR
better for Exxon to leave that market segment can yield growth in market share, increased
to them. Viewed in light of Exxon’s recent organizational learning, retention of deeply
financial triumphs, this perspective high- engaged employees, support from external
lights that CSR is not a panacea for organiza- stakeholders, and favorable relationships
tional prosperity with appeal to all with investors.
organizations. A growing multitude of organizations
Jeff Immelt, the CEO who pioneered and are finding innovative and prosperous ways
champions GE’s ‘‘Ecomagination’’ strategy to grow their business while simultaneously
was asked recently: ‘‘Do you recycle?’’ His helping people in need and sustaining our
response: ‘‘I’m not sure. Maybe somebody in fragile planet. The principles we have offered
my house does. It’s not like I’m Johnny will hopefully inspire and guide many other
Appleseed here. This is purely about the organizations to identify unique, viable, and
science of business. I don’t consider myself worthwhile opportunities to nurture their
an environmentalist. I’m a business leader business prosperity, as well as the commu-
who says this is an important trend.’’ While nities in which we and future generations
Starbuck’s chairman Howard Schultz clearly live and work.
sees CSR as both a moral and business
imperative, Immelt’s comment illustrates
how CSR can make good sense even to lea-
142 ORGANIZATIONAL DYNAMICS
19. SELECTED BIBLIOGRAPHY
The relationship between CSR and financial C. K. Prahalad’s The Fortune at the Bottom of
performance is documented by Marc the Pyramid (Upper Saddle River, N.J.: Whar-
Orlitzky, Frank Schmidt, and Sara Rynes in ton School, 2006) provides many examples of
‘‘Corporate Social and Financial Perfor- organizations that are creating viable busi-
mance: A Meta-Analysis,’’ Organization Stu- ness opportunities in poor, underdeveloped
dies, 2003, 24, 403–441, as well as in ‘‘Misery markets.
Loves Companies: Rethinking Social Initia- Comprehensive practical guidelines for
tives by Business,’’ J. D. Margolis & J. P. leading the implementation of CSR initia-
Walsh, Administrative Science Quarterly, tives are provided by Dexter Dunphy,
2003, 48, 268–305. Andrew Griffiths, & Suzanne Benn in Orga-
For further useful insights about strate- nizational Change for Corporate Sustainability
gic CSR opportunities, metrics, and ethical (New York: Routledge, 2007). Analysis of the
principles, see: 1% For the Planet Alliance potential rewards and pitfalls of engaging in
(www.onepercentfortheplanet.org/), Ameri- CSR are discussed by Daniel Vogel in The
ca’s Promise (www.americaspromise.org/), Market for Virtue: The Potential and Limits of
Ashoka (www.ashoka.org/), the Aspen Corporate Social Responsibility (Washington,
Institute (www.aspeninstitute.org/), the D.C.: Brookings, 2006). For insights on devel-
Clinton Global Initiative (www.clintongloba- oping sustainable metrics to assess CSR
linitiative.org/), the Global Reporting Initia- attainments, see Chad Holliday’s ‘‘Sustain-
tive (http://www.globalreporting.org/), able Growth, the DuPont Way,’’ Harvard
Mayors for Climate Protection (www.cool- Business Review, 2001, September, 129–134,
mayors.org), the Global Sullivan Principles as well as Dunphy et al. (2007).
for Social Responsibility and Endorsers’ Best To learn more about how CSR can con-
Practices (www.thegsp.org), Net Impact tribute to organizational learning, see ‘‘From
(www.netimpact.org/), the Organization Spare Change to Real Change’’ by Rosabeth
for Economic Cooperation and Development Moss Kanter, Harvard Business Review, 1999,
(www.oecd.org/), the Social Venture Net- May/June, 122–132, as well as Dunphy et al.
work (www.svn.org/), SustainAbility (2007). Keeping employees engaged and com-
(www.sustainability.com/), the United mitted to one’s organization is discussed in
Nations Global Compact (www.unglobal- Daniel Turban and Daniel Greening’s ‘‘Cor-
compact.org/), and the World Business porate Social Performance and Organiza-
Council for Sustainable Development tional Attractiveness to Prospective
(www.wbcsd.ch/). Employees,’’ Academy of Management Journal,
‘‘Strategy and Society: The Link Between 1996, 40, 658–672; and Jeff Barbian’s ‘‘The
Competitive Advantage and Corporate Charitable Worker’’ Training, 2001, 38, 50–
Social Responsibility,’’ by Michael Porter 55. ‘‘Impact and the Art of Motivation Main-
and Mark Kramer (Harvard Business Review, tenance: The Effects of Contact with Benefici-
2006, December, 78–92), outlines the concept aries on Persistence Behavior,’’ Organizational
of strategic CSR and provides a framework Behavior & Human Decision Processes, 2007, 103,
for evaluating how a proposed CSR initiative 53–67, by Adam M. Grant, Elizabeth M.
fits into an organization’s business strategy. Campbell, Grace Chen, Keenan Cottone,
143
20. David Lapedis, and Karen Lee, documents To learn more about the exemplary stra-
motivation as a function contact with the tegic CSR initiatives featured in this paper,
beneficiaries of prosocial work. For more on see Hewlett-Packard (http://www.hp.com/
the relationship between CSR and external hpinfo/globalcitizenship/environment/
stakeholders, see Porter and Kramer (2006), index.html), Interface (www.interfaceflor.
as well as Michael Barnett’s ‘‘Stakeholder com/images/photos/ReEntry_demo.html,
Influence Capacity and the Variability of Levi Strauss (http://www.levistrauss.com/
Financial Returns to Corporate Social Respon- Citizenship/CaseStudies.aspx,),
sibility,’’ Academy of Management Review, 2007, Manildra Group (www.manildra.com.au/
32, 794–816. frameset. htm), Nestle (www.nestle.com/
For information on the impact of CSR on Shared ValueCSR/), Norsk Hydro
investor relations, see Alison Mackey, Tyson (www.hydro. com/en/global_commitment/
Mackey, and Jay Barney’s ‘‘Corporate Social environment/resource_management/), Star-
Responsibility and Firm Performance: Inves- bucks (www.starbucks.com/aboutus/origi-
tor Preferences and Corporate Strategies,’’ ns.asp), Target Stores (http://
Academy of Management Review, 2007, 32, www.target.com), Wal-Mart (http:walmart-
817–835; ‘‘How To Make a Buck Green’’ by stores.com/GlobalWMStoresWeb/), and
Jane Bryant Quinn, Newsweek, April 12, 2007, Whole Foods (http://wholefoods.com/
63–66; and ‘‘The Street Turns Green’’ by John- company/index.html).
nie Roberts, Newsweek, March 12, 2007, 40.
Peter A. Heslin is assistant professor of management at the Cox School of
Business, Southern Methodist University, Dallas, TX. He received his
Ph.D. in organizational behavior and human resource management from
the Rotman School of Management, University of Toronto. Heslin teaches
graduate courses in organization behavior, leading organizational
change, and managing across cultures. He has consulted in these areas
to corporations including Citibank, IBM, Zurich Insurance, KPMG, and
Procter & Gamble. Peter has authored or co-authored over a dozen
articles published in journals such as Applied Psychology: An International
Review, Journal of Applied Psychology, Journal of Organizational Behavior,
Journal of Occupational & Organizational Psychology, Organizational
Dynamics, and Personnel Psychology (Tel.: +1 214 768 4170; e-mail:
heslin@cox.smu.edu; www.peterheslin.com).
Jenna D. Ochoa is a corporate relief pharmacist for Tom Thumb, a
division of Safeway. She serves as an interim manager in a range of Tom
Thumb pharmacies throughout the Dallas/Fort Worth Metroplex. Ochoa
also serves as a volunteer pharmacist at the Collin County Adult Clinic, as
well as a subject matter expert for the Health and Sciences Television
Network. After completing a B.S. (Pharmacy) at the University of Texas at
Austin, Ochoa worked as a staff pharmacist for three intensive care units at
the Presbyterian Hospital of Dallas. Subsequently she worked as a
consulting pharmacist at Merck-Medco, LLC. Since completing her
Professional M.B.A. at Southern Methodist University, Ochoa is in the
process of transitioning into a management and strategy consulting role,
with a focus on addressing strategic sustainability opportunities within the
healthcare industry (Tel.: +1 214 403 2846; e-mail: jenna.ochoa@gmail.com).
144 ORGANIZATIONAL DYNAMICS