CHIEF LEGAL OFFICERS ON THE INTERSECTION OF PRO BONO AND CORPORATE SOCIAL RESPONSIBILITY
ACC Annual Meeting October 18, 2:30 - 4:00 pm
In-House Pro Bono
• Corporate Pro Bono, “Why Do Pro Bono,” 2015. A PowerPoint summary of the benefits of pro bono to the employee, the company, and the community. http://www.cpbo.org/ whydoprobono
• Thomson Reuters, “The Rise of In-House Pro Bono,” 2015. An op-ed by Eve Runyon outlining the history of in-house pro bono, as well as the case for in-house pro bono. http:// legalexecutiveinstitute.com/the-rise-of-in-house-pro-bono/
• Corporate Pro Bono, “The Business Case for In-House Pro Bono,” 2013. An essay outlining business reasons for developing in-house pro bono programs. http://www.cpbo.org/ businesscase
• Corporate Counsel, “Stepping Stones to More In-House Pro Bono,” 2012. An article spotlighting the incredible pace at which pro bono culture has developed within the in-house community, outlining some of the challenges and solutions to developing in-house pro bono. http://www.cpbo.org/document/stepping-stones-to-more-in-house-pro-bono/
Corporate Social Responsibility (CSR)
IO Sustainability, LLC, “Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability,” 2015. A report analyzing existing research and data to asses CSR’s value to society and to businesses, and outlining a roadmap for how to best improve the effectiveness and authenticity of a CSR approach.
Center for Corporate Citizenship, “Research Reinforces Corporate Citizenship Value,” 2012. An article about the balance between values and financial performance and how corporate citizenship adds to both.
Stanford Social Innovation Review, “Catalytic Philanthropy,” 2009. An argument for the need for catalytic philanthropy, which differs from traditional philanthropy in its laser-like focus on solving an issue.
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Association of Corporate Counsel, “A Field Guide to Corporate Social Responsibility for In- House Counsel,” 2008. A history of CSR, beginning with the AP Smith case decision in 1953, and a guide for in-house counsel on the legal doctrine that impacts CSR.
Integration of Pro Bono and CSR
Center for Corporate Citizenship, “Building Corporate Citizenship Connection Creates Lasting Value,” 2012. An overview of commerce with “compassion” and an example of how CSR at the entity level may include pro bono in the legal department.
Practicing Law Institute, “Current State of Pro Bono in Legal Departments,” 2012. A discussion of the status of in-house pro bono, including integration with CSR Efforts.
Pro Bono Institute, “Letter from Esther: What CSR Teaches Us About Pro Bono,” 2012. A discussion of the best and most important aspects of CSR that are trending in the legal community and how they relate to legal pro bono.
Pro Bono Institute, “Breaking the Corporate Philanthropy Code: How to Leverage Your In- House Pro Bono Work Through Your Company’s Charitable Giving Programs,” 2002. A perspective from Joan Steinberg, Director of Community Affairs at Morgan Stanley, recommending a coordinated approach between a company’s pro bono efforts and corporate community relations or charitable giving departments.
Examples
• DLA Piper, “DLA Piper, AIG and TrustLaw Launch Report on Cross-Jurisdictional Statutory Compensation for Survivors of Human Trafficking,” 2016. An announcement that DLA Piper, AIG, and TrustLaw published a report assessing statutory compensation schemed for survivors of human trafficking in 20 jurisdictions around the world. https:// www.dlapiper.com/en/singapore/news/2016/05/dla-piper-aig-and-trustlaw-launch-report/
• Law Sites, “Legal Services Corp., Microsoft and Pro Bono Net Team Up to Create Legal-Aid Portals,” 2016. An article discussing Legal Services Corporation, Microsoft Corporation, and Pro Bono Net’s use of technology to expand access to justice. http:// www.lawsitesblog.com/2016/04/legal-services-corp-microsoft-pro-bono-net-team-create- legal-aid-portals.html
• Pro Bono Institute, “Guest Blog: Legal Pro Bono at Salesforce,” 2016. A guest blog about Salesforce’s 1-1-1 model of integrated philanthropy and how it led into a formal legal pro bono program. http://cpbo.org//guestblog:salesforce.
• Pro Bono Institute, “In-House Pro Bono Meets CSR Efforts to Increase Impact,” 2016. An article with examples of how CSR efforts and pro bono activities by legal departments are coordinated and integrated for the benefit of the organizations and their communities. http:// www.cpbo.org/document/in-house-pro-bono-meets-csr-efforts-to-increase-impact/.
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• Pro Bono Institute, “Global CSR + Pro Bono,” 2015. An outline of the ways in which various IBM projects exemplify the complementary nature of global CSR efforts and pro bono programs. http://thepbeye.probonoinst.org/2015/09/08/global-csr-pro-bono/
• Pro Bono Institute, “Partnership Develops Tools to Aid Judges in South Asia,” 2015. An overview of the partnership between Salesforce, Salesforce Foundation, and Baker & McKenzie that worked to draft a regional toolkit to deal with terrorism in South Asia. http:// cpbo.org/salesforce-partnership
• Pro Bono Institute, “2014 Partner Award Winner: American International Group, Inc. in partnership with the Iraqi Refugee Assistance Project,” 2014. An announcement highlighting the partnership between AIG and the Iraqi Refugee Assistance Project and how it works to assist refugees in the Middle East whose lives are in imminent danger due to their work with the U.S. http://www.cpbo.org/2014PartnerAward
• Pro Bono Institute, “2014 Laurie D. Zelon Pro Bono Award: Brad Smith and the Department of Legal and Corporate Affairs at Microsoft Corporation,” 2014. An announcement that Brad Smith and the Department of Legal and Corporate Affairs at Microsoft Corporation received PBI’s 2014 Zelon Award for their pro bono efforts, much of which has been dedicated to assisting young immigrants. http://www.cpbo.org/2014ZelonAward
• Hillsboro Tribune, “Volunteer Drawn to Aid Grant Program,” 2013. An article detailing ways in which Intel’s Matching Grant Program affects communities such as Hillsboro Oregon. http://portlandtribune.com/ht/117-hillsboro-tribune-news/158260-volunteer-drawn-to-aid- grant-program
• Causecast, “Business Backing Vets: Merck Gives Pro-Bono Aid to Homeless Heroes,” 2012. A feature on Merck’s support of Community Hope, Inc., which includes funding and pro bono legal services. http://www.causecast.com/blog/businesses-backing-vets-merck-gives-pro- bono-aid-to-homeless-heroes
• Metropolitan Corporate Counsel, “Doing Well By Doing Good – A Microsoft Hallmark,” 2012. An interview with David A. Heiner, Vice President and Deputy General Counsel of Microsoft Corporation, about Microsoft’s commitment to CSR and pro bono in particular.
• NY Daily Record, “Pro Bono Spotlight: Allstate Foundation Supports Domestic Violence Survivors,” 2012. An article about Allstate’s financial support of organizations assisting victims of domestic violence, as well as, the pro bono legal services its legal department provides to such victims and others.
• Practicing Law Institute, “Corporate Social Responsibility and Pro Bono,” 2012. A discussion of the importance of tying pro bono to CSR and the details of LexisNexis’s approach to both.
• Pro Bono Institute, “Corporate Pro Bono Honors the Ford Motor Company, Dykema Gossett PLLC, Legal Aid and Defenders Association, Inc., and Michigan Community Resources for Innovative Community Partnership,” 2012. A press release announcing Ford Motor, Dykema
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Gossett PLLC, Legal Aid and Defenders Association, Inc, and Michigan Community Resources as the recipients of the CPBO Pro Bono Partner Award for pro bono projects in which Ford aligned its pro bono program and CSR initiative. http://www.cpbo.org/ ford-partnership
• U.S. Chamber of Commerce Foundation, “How Allstate Helped Create a National Network Against Domestic Abuse,” 2012. An interview with Vicky Dinges, Vice President of Public Social Responsibilities at Allstate, concerning Allstate’s support of domestic violence survivors. https://www.uschamberfoundation.org/blog/post/how-allstate-helped-create- national-network-against-domestic-abuse/31755
• Inside Counsel, “Intel Builds Momentum with Pro Bono Work,” 2011. An article on Intel Corporation’s skills-based volunteer program that grew to include a pro bono program in the legal department.
• Pro Bono Institute, “CPBO Spotlight On: Verizon Communications,” 2011. A spotlight on the Verizon legal department’s pro bono program and how it complements the company’s CSR efforts. http://cpbo.org/PBEye-Verizon-Spotlight
• Pro Bono Institute, “Guest Blog: BNY Mellon’s Pro Bono Program,” 2011. A guest blog by Deborah Kaye, Managing Director and Senior Managing Counsel at The Bank of New York Mellon and Chair of its Global Pro Bono Program, about the addition of pro bono legal services to the organization’s larger CSR efforts. http://thepbeye.probonoinst.org/2011/12/22/ guest-blog-bny-mellons-pro-bono-program/
• Pro Bono Institute, “The Intersection of Pro Bono and Corporate Social Responsibility,” 2011. A blog post featuring legal departments who partner with their foundations to co-host Clinic in a Box® programs. http://cpbo.org/pro-bono.csr
• Corporate Pro Bono, “Gap Legal Department Serves Foundation Grantees,” 2010. A report that Gap partnered with The Gap Foundation, to co-host a Clinic in a Box® program and assist nonprofit organizations supported by The Gap Foundation. http://www.cpbo.org/document/ gap-legal-department-serves-foundation-grantees/
• Inside Counsel, “Doing Right: Gap Inc. Focuses Its Legal Skills on Supporting Children in the Community,” 2010. An article regarding Gap’s effort to build a pro bono program in line with the mission of The Gap Foundation.
• Inside Counsel, “GE Plays a Key Role in the Pro Bono Partnership,” 2010. Highlights of GE’s role in forming the Pro Bono Partnership and providing pro bono services for others in need.
• Inside Counsel, “Verizon Launches Pro Bono Program,” 2010. An announcement of Verizon’s new pro bono program, detailing how it got started and the focus of its efforts. http://www.insidecounsel.com/2010/05/01/verizon-launches-pro-bono-program
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• PR Newswire, “Walmart Announces Pro Bono Legal Services Program,” 2010. An announcement that the Walmart legal department initiated a pro bono program, along with a donation from the Walmart Foundation to Legal Aid of Arkansas and the Arkansas Access to Justice Commission, to increase its impact on local communities in need.
• Probono.net, “Merck and Lowenstein Sandler: Partners in VLJ’s Pro Bono Bankruptcy Program,” 2010. An account of Merck’s collaboration with the Merck Company Foundation to support the Volunteer Lawyers for Justice bankruptcy program with funding and pro bono legal services. http://www.probono.net/nationalareasearch/item.347336
• Goldman Sachs “10,000 Small Businesses: About the Program – United States,” Information about Goldman Sachs innovative CSR initiative – 10,000 Small Businesses – in which employees provide skills based pro bono, including legal pro bono, to small businesses in cities across the U.S. http://www.goldmansachs.com/citizenship/10000-small- businesses/US/index.html#
• Goldman Sachs “10,000 Small Businesses Graduates its First Class in New Orleans,” An announcement regarding the graduating class from 10,000 Small Businesses, in which small business were mentored and received pro bono legal services from Goldman Sachs employees. http://www.goldmansachs.com/citizenship/10000-small-businesses/US/news- and-events/1st-nola-grads.html
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June 2015
1025 Connecticut Avenue, N.W., Suite 205 Washington, DC 20036 (202) 729-6699 (202) 296-0303 fax www.cpbo.org [email protected] Benefits the Employee
Pro bono work offers benefits to lawyers and other legal staff by:
• Enhancing job fulfillment o Brings great personal and professional satisfaction • Helping employees hone skills and improve productivity • Offering a variety of experiences that cannot be duplicated elsewhere o Both litigation and transactional opportunities exist • Reminding lawyers why they became lawyers • Enabling lawyers to fulfill their ethical obligations
2 Benefits the Company
Pro bono work offers value to legal departments and companies by:
• Providing opportunities for all members of a legal department to work together • Building morale and promoting teamwork • Rejuvenating the legal department o Provides for new opportunities and challenges • Promoting a company’s reputation in the community o Enhances public relations • Affording the legal department the opportunity to add value to a company’s corporate social responsibility efforts
3 Benefits the Community
Pro bono work offers value to the communities where we live and work by:
• Assisting low-income and otherwise disadvantaged individuals and families, and the organizations that serve them o 80% of the legal needs of low income people go unmet • Focusing on a variety of needs that, when addressed, help stabilize communities, including: o Education o Immigration o Family relations o Housing o Community economic development o Growth of small businesses
4 Pro Bono Resources Eve L. Runyon Director, Corporate Pro Bono (202) 729-6699 (202) 296-0303 fax [email protected]
CPBO offers a number of resources on its website (www.cpbo.org), including the following: o The Business Case for In-House Pro Bono: www.cpbo.org/businesscase o Pro Bono Development Guide: How to Start an In-House Pro Bono Program: www.cpbo.org/getstarted o Best Practices Profiles: http://www.cpbo.org/resources/best-practice-profiles/ o Guide to Multijurisdictional Practice Rules: http://www.cpbo.org/mjpguide o Professional Liability Insurance for In-House Pro Bono: www.cpbo.org/insurance o Pro bono opportunities and ideas: • CPBO Clinic in a Box® Program: http://www.cpbo.org/initiatives/clinic-in-a-box/ • Pro Bono Marketplace of Ideas: www.cpbo.org/Marketplace o Benchmarking in-house pro bono: • 2012 Benchmarking Survey Report: http://www.cpbo.org/benchmarking2012 • The Corporate Pro Bono Challenge® Initiative: http://www.cpbo.org/cpbo-challenge/ o Corporate Pro Bono • Who We Are: http://www.cpbo.org/about-us/
5 Why Do Pro Bono
Corporate Pro Bono (CPBO) is a global partnership project of the Association of Corporate Counsel and the Pro Bono Institute. Through on-line services (www.cpbo.org), technical assistance to the in-house community, and educational outreach, CPBO seeks to encourage and support the participation of in-house counsel in pro bono legal services. For more information, please visit us at www.cpbo.org, or contact Eve Runyon, Director of Corporate Pro Bono, at [email protected] or 202.729.6699.
Developed by Corporate Pro Bono A global partnership project of the Pro Bono Institute and the Association of Corporate Counsel www.cpbo.org Copyright 2015 Pro Bono Institute CPBO® is a registered trademark of the Pro Bono Institute
6 The Rise of In-House Pro Bono Eve Runyon July 30, 2015
For many years, formal pro bono programs were the bailiwick of attorneys in private practice. In-house counsel volunteered on their own, but not until the 1980s and 1990s did legal departments launch formal pro bono programs. Even then, there were not many. In 2000, the Association of Corporate Counsel (ACC) and the Pro Bono Institute (PBI) formed Corporate Pro Bono (CPBO) to support and promote pro bono in the in-house community. Since then, interest in in-house pro bono has flourished, and, with CPBO’s assistance, legal departments have found solutions to many of the challenges to in-house pro bono. Now, hundreds of legal departments of all sizes and many ACC chapters are engaged in pro bono, with more and more launching pro bono programs.
Case for In-House Pro Bono
The rise of in-house pro bono can be attributed to a number of factors: the distressing gap between those desperately in need of legal assistance and the available resources (a number of studies have found that 80% of low-income persons with a serious legal problem are unable to secure legal help); the ethical obligation to provide service that is at the core of every lawyer’s professional identity; the desire to use one’s skills and expertise to make the world a better place.
Organizing pro bono programs for lawyers in legal departments can also enhance critical aspects of department operations. Pro bono engagements offer legal staff the opportunity to broaden and vary their workload, interact with different people inside and outside of the legal department, and make use of their legal skills for positive impact in the community, which can increase employee engagement, support team-building and improve morale.
Pro bono engagement also provides professional development opportunities for lawyers and legal staff to hone skills that are applicable to their work for the company, including negotiation, leadership of a team effort, and working effectively with partnering organizations. Plus, the involvement of a company’s legal department in pro bono service adds value and breadth to the company’s corporate social responsibility profile and activities, as well as improves the quality of life and stability of clients and the community at large, creating a better business climate.
Breadth of In-House Pro Bono
Engagement in pro bono for in-house counsel, whether through a pro bono project organized by their legal department, hosted by an ACC chapter, or coordinated by a local services provider, may include a wide range of topics, and involve everything from representing low-income individuals and the organizations that serve them, to children, victims of domestic violence, refugees, veterans, the elderly, and more. A few examples: Attorneys at The Pep Boys-Manny, Moe & Jack work with organizations in Philadelphia to assist clients in obtaining their birth certificates, which enables them to receive benefits, obtain medical care, or find a job. Exelon Corporation lawyers have teamed with Sidley Austin in Chicago on a complex death penalty appeal. In-house counsel from Barclays, Citigroup, and Goldman Sachs have advised small business owners in New York, working with a local legal services organization.
Moving Forward
In-house pro bono has come a long way in 15 years, but the need for more pro bono services remains great. A broad range of opportunities exist that meet the needs and interests of legal departments and ACC chapters. In addition, there is a wealth of resources available to in-house counsel interested in pro bono work.
THE BUSINESS CASE FOR IN-HOUSE PRO BONO Esther F. Lardent
During the past decade, the number of formal, organized pro bono efforts at in-house legal departments and the participation of in-house lawyers and legal staff in pro bono matters have increased dramatically. Led by a growing number of general counsel strongly committed to pro bono service and potentiated by the work of Corporate Pro Bono (CPBO), a global partnership project of the Association of Corporate Counsel (ACC) and the Pro Bono Institute (PBI) that provides tailored information, guidance, training, and support to in-house legal departments and ACC Chapters, in-house pro bono is becoming an accepted, valued, and well-integrated aspect of in-house practice.
Legal department lawyers, like lawyers in other practice settings, take on pro bono matters despite hectic work schedules for a variety of reasons: the distressing gap between those desperately in need of legal assistance and the available resources (a number of studies have found that 80 percent of low-income persons with a serious legal problem are unable to secure legal help); the ethical obligation to provide service that is at the core of every lawyer’s professional identity; the desire to use one’s skills and expertise to make the world a better place. In-house legal departments – and their legal staff – do not provide volunteer legal services to enhance their professional stature, skills, or business goals. However, properly structured, implemented, and aligned pro bono programs can, in fact, enhance critical aspects of the operations of companies and their legal departments. The pro bono business case for law firms has been established. Major law firms now realize that pro bono service can and does enhance important firm functions and goals. While the business case for pro bono service at in-house legal departments is different from that at major firms, it is equally clear and compelling.
Recruitment and Retention
There is substantial competition for in-house lawyers who have the requisite skills to add value to legal departments. Most legal departments recruit experienced laterals rather than recent law school graduates, but pro bono is a factor for both groups. In particular, the growing number of talented law firm associates and partners who have been active pro bono participants while at their firms will be attracted to legal departments that afford them the ability to continue to take on pro bono assignments. In addition, many potential hires in the legal department view a commitment to pro bono as an important indicator that the company – and its legal department – value their employees as individuals and evidence a broader commitment to society. One study (Kelly Services, 2009) found that 85 percent of job seekers around the world and across all ages “are more likely to want to work for a company that is considered ethically and socially responsible.”
While some in-house lawyers seek advancement – and aspire to become general counsels – many in-house attorneys have more limited advancement opportunities. To avoid losing able, seasoned lawyers, law departments must create a workplace environment that continues to stimulate and
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2 satisfy experienced and knowledgeable staff. Pro bono engagements offer the opportunity to broaden and vary work, interact with different people inside and outside of the legal department, and work in another environment that makes use of legal skills. The departure of a valued attorney is a major financial loss, with total costs – interruption of service, search and transition expenses, etc. – typically exceeding the annual salary of the employee. Pro bono service, for some lawyers, can be important factor in promoting retention.
Employee Engagement
Many companies and legal departments measure engagement as an expression of an employee's attachment to his or her job that influences the employee’s eagerness to succeed in the workplace. Engaged employees are more excited about and involved in their work, and therefore act in ways that further the interests of their company. They care about the future of their company and feel strong emotional bonds to their employer, which can result in higher productivity and performance, increase retention levels, and lower absenteeism.
There are a number of factors that are believed to increase employee engagement, including organizational culture and an employee’s perception of company values, recognition and rewards that incentivize staff, and quality relationships with managers and peers. Many in-house departments structure their pro bono programs to support these drivers, which contributes to an employee’s overall sense of motivation and loyalty to the company. Engaged employees are brand ambassadors for the company. Pro bono is one way legal departments can support employee engagement, demonstrate the company’s value to its employees, recognize employees for their contribution to the community, and promote positive teaming within the department, as well as cross-functionally.
Corporate Social Responsibility/Corporate Citizenship
Corporations are increasingly recognizing the importance and value of corporate social responsibility – actions that ensure that companies are good and responsible citizens of the communities in which their employees live and work. Corporate social responsibility (CSR) has been defined by the World Economic Forum’s Global Corporate Citizenship Initiative as:
[T]he contribution that a company makes in society through its core business activities, its social investment and philanthropy programs, and its engagement in public policy. That contribution is determined by the manner in which a company manages its economic, social, and environmental impacts and also manages its relationships with different stakeholders, including shareholders, employees, customers, business partners, governments, communities, and future generations.
The involvement of a company’s legal department in pro bono service adds value and breadth to that company’s CSR profile and activities. Pro bono service enhances the quality of life and stability of residents and the community at large, making an important contribution and creating a better business climate. It provides a specialized and highly desirable outlet for employee voluntarism and, often, complements the company’s charitable giving and other philanthropic activities. It should come as no surprise that the pro bono work undertaken by legal departments
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Professional Development
As large law firms have discovered, pro bono engagements provide critically important professional development opportunities not only for younger lawyers but also for more experienced counsel. Pro bono work enables lawyers to maintain their proficiency in areas such as litigation that are no longer a routine part of their daily work. It also provides the opportunity for lawyers and legal staff to hone skills that are immediately applicable to their work for the company, including negotiation, leadership of a team effort, working effectively with partnering organizations, etc.
Integration with the Company, the Community, and the Profession
Pro bono work enables members of the legal department to address a sense of isolation – from other members of their profession, from the company as a whole, from their communities – that may arise in the in-house environment. Work on a pro bono matter or project, particularly one undertaken in conjunction with a local pro bono organization or NGO, promotes interaction with other lawyers. At some corporations, legal departments are taking on pro bono projects that add a legal dimension to already existing corporate volunteer and/or philanthropic efforts. For example, the legal department at a company that focuses its charitable giving and volunteer service on enhancing children’s educational opportunities may provide legal assistance to low- income families seeking to improve the education available to their developmentally disabled children. A legal department at a company whose volunteers provide housing and food for the poor and homeless could use their legal skills to help those targeted by the company to become eligible for food stamps and to secure safe and affordable homes. In doing so, the legal department not only improves the outcomes for those whom the company is striving to help, it also demonstrates to its internal clients the value of the department’s legal skills.
Similarly, pro bono work helps the legal department, and, through its counsel, the company as a whole to better understand the communities where it is doing business and to help ensure that the company is viewed as a good citizen and a good neighbor in its communities.
Improved Teamwork and Morale
Studies have consistently demonstrated the value of voluntarism in improving morale and productivity by reinforcing a sense of pride, common values and vision, and deepening personal relationships. Pro bono projects enable members of the legal department who may otherwise have little or no contact to work together toward a common goal. Signature pro bono projects, that is those targeted to a particular area of the law or client population, can involve lawyers and non-lawyers at varying levels of seniority and across offices and areas of specialization. A number of companies that have experienced financial, legal, or reputational difficulties have found that a shared pro bono culture can play an important role in maintaining a positive outlook and a shared sense of responsibility and pride in the company.
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Enhanced Inside/Outside Counsel Relationships
The growing trend toward the development of joint pro bono ventures between and among legal departments and their outside counsel enables each party to the relationship to leverage their particular strengths and skills. It also provides an opportunity to work together “off the clock” in a manner that strengthens mutual understanding and respect. This enables outside counsel to gain a better understanding of the client legal department so they can better respond to its commercial needs.
Diversity
While in no way a substitute for attracting, retaining, and managing a diverse workforce, pro bono can intersect with and strengthen the department’s commitment to diversity. Some legal departments and law firms, for example, have focused their pro bono activity on matters of particular importance to families and communities of color. This focus affords an opportunity to all employees, regardless of race, ethnicity, gender, etc., to gain a better understanding of the issues and concerns facing these communities and individuals.
Reputation
Consumers, regulators, shareholders, employees – all of these groups view the actions and initiatives of corporations in the larger context of corporate reputation. Studies indicate that charitable giving, both dollars and in-kind, as well as a demonstrated commitment to improving local communities are particularly convincing indicia of a “good” company. On a narrower scale, legal publications that cover in-house counsel news are increasingly aware of and focused on pro bono service. For example, Corporate Counsel magazine, in launching its annual awards for best legal department, made pro bono service one important criterion for that award.
Conclusion
There is a growing recognition that a well-designed, institutionally supported legal pro bono program can enhance and strengthen the communities in which corporations operate while, at the same time, addressing key operating issues in a manner that strengthens the performance, reputation, and effectiveness of in-house legal departments.
For more information about how your company can develop an effective in-house pro bono program or enhance its existing program, please contact Corporate Pro Bono at (202) 729-6699 or visit our website at www.cpbo.org.
Developed by Corporate Pro Bono A global partnership project of the Pro Bono Institute and the Association of Corporate Counsel www.cpbo.org Copyright 2013 Pro Bono Institute CPBO®, PBI®, and Pro Bono Institute® are registered trademarks of the Pro Bono Institute
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Corporate Counsel Catherine Dunn February 21, 2012
Pro bono legal work was once the sole province of law firms. But no more. Now that terrain is increasingly being inhabited by in-house legal departments, too, according to Esther Lardent, president and CEO of the Pro Bono Institute. “What we’ve seen over the last decade is this amazing growth,” Lardent says. “It’s like a quiet revolution.”
Back in 2000, the Association of Corporate Counsel (ACC) approached the Pro Bono Institute, which has traditionally liaised with law firms, about teaming up. That led to the creation of a joint endeavor aimed at in-house counsel—the Corporate Pro Bono Project. They have since worked with 450 different legal departments, Lardent says (although not all of the departments have a formally designated pro bono program, she notes). And more than 100 legal departments have signed onto a voluntary pro bono pledge, called the Corporate Pro Bono Challenge.
Lardent chalks the change up to two major currents: the in-house legal profession has grown in stature, and more companies are emphasizing corporate social responsibility on the whole.
Whereas in-house practice was once perceived as something of a backwater, corporate counsel are now “the most powerful and respected people in the profession,” according to Lardent. Accordingly, in- house lawyers ask, “So, what can we do with that power?”
At the same time, companies are recognizing that being a “good citizen” carries sway with both shareholders and consumers. More and more U.S.-based companies are issuing annual corporate social responsibility (CSR) reports, and those in charge of CSR are often direct C-suite reports. “The idea that your reputation is creating good will is really, really important,” Lardent says.
Today, the average law department pro bono program is less than two years old. Aetna lays claim to the oldest organized pro bono program in a legal department, says Lardent. It has been running for more than 30 years.
Since pro bono has been so much a part of firm life, the migration of attorneys from firms to in-house positions has also proven transformative. Lardent cites Microsoft general counsel Brad Smith as the “poster child” of this pattern; he worked pro bono during law school and while at Covington & Burling, and then created Microsoft’s immigration law pro bono program.
The Corporate Pro Bono Project has played a key role, too, Lardent says, particularly by addressing head-on the common obstacles that arise in-house. Now, when they talk to legal departments, they already know the seven main challenges to conquer:
1. Time: Legal departments are often smaller than firms, and the in-house lawyers are already stretched on all the corporate work that needs doing. When pro bono is on the line, “there’s a nervousness about ‘How can we make that commitment and live up to it?’, ” Lardent explains. Solution: Coming up with finite, time-limited, and predictable opportunities. A classic example is the clinic-in-a-box model, such as holding a legal “health check-up” for community nonprofits.
2. Malpractice insurance: Often, legal departments don’t have it because they may, for instance, be covered by the general principles of a company’s insurance policy. Even though malpractice claims in the pro bono field are rare, lawyers wouldn’t dream of doing the work without coverage and protection.
Solution: Introducing legal departments to options for inexpensive or free coverage.
3. Skill sets: In-house lawyers who are mid-career and highly specialized may be unfamiliar with the courts and area of practice—like family law—involved in pro bono work. “There’s a fear that you’re going to mess up,” Lardent says. “It’s like being a first year out of law school, but you’re not.”
Solution: Training, mentoring, and support that allow in-house counsel to move out of their comfort zones and into areas like immigration and housing law. Also, showing lawyers that the corporate law skills they already have can help nonprofits with transactional and business needs.
4. Appearance of conflicts: In-house lawyers don’t want to take a position in a pro bono case counter to the interests of their corporate client.
Solution: Identifying those conflicts from the outset, and establishing clear policies that allow in- house counsel to steer clear of them.
5. Location: Many legal departments are located on corporate campuses far from where the pro bono clients are. Driving from Silicon Valley to the office of a nonprofit in Oakland, for instance, could mean a lot of lost time in the car.
Solution: Using telephones, computers, and the Internet to consult with clients. “Virtual pro bono,” Lardent calls the approach.
6. Practice rules: With corporations’ offices spread around the country, in-house counsel may be licensed and in good standing—but not in the jurisdiction where their desk is. That could be fine on the corporate end, but by taking on pro bono cases in that area, “the worry is you’re going to be charged with unauthorized practice of law,” says Lardent.
Solution: This is one challenge “we haven’t quite solved yet,” Lardent says. But they’re on the road to a solution. ACC and the Pro Bono Institute are working to change the applicable rules state by state— Virginia just adopted a rule to allow in-house counsel in good standing to take on pro bono, even if they’re not licensed by the state. Interim solutions also include getting court approval and the written consent of pro bono clients, and focusing on work that doesn’t require that someone be a licensed attorney at all, such as in the field of veterans benefits.
7. Making global pro bono work: As companies expand overseas into new markets, in-house counsel are also asking how they can go global with pro bono. In addition to the challenges listed above, it can be hard to source international opportunities. Solution: The Corporate Pro Bono Project has formed a task force to examine the issues involved. Some law departments do pro bono work in places like Nepal that’s oriented more toward legal research and policy development, rather than litigation.
In-house departments continue to offer creative solutions within the pro bono world, says Lardent. “I think we’re just beginning to see what they can bring to the table.”
social innovation lab
Defi ning the Competitive and Financial Advantages of Corporate Responsibility and Sustainability
Project ROI Sponsors
(Lead Sponsor)
(Supporting Sponsor)
By: Steve Rochlin, Richard Bliss, Stephen Jordan, Cheryl Yaffe Kiser IO Sustainability and Babson College thank Verizon and Campbell Soup Company for their support of the project.
Copyright IO Sustainability, 2015 Table of Contents
About The Research Organizations...... 2 Acknowledgements...... 2
I. Executive Summary...... 3
II. Introduction...... 6 Necessary, But Not Sufficient...... 6 About Project ROI...... 7 Defining Corporate Responsibility...... 8
III.I RO Findings – Firm Value, Share Price, and Risk...... 12 Company Value, Share Price, and Risk ROI Scorecard...... 12 How Does CR Drive Market Valuation and Share Price?...... 15
IV.I RO Findings – Sales and Reputation...... 17 CR Sales and Reputation ROI Scorecard...... 17 How Does CR Management Drive Sales and Reputation Benefits?...... 18
V.I RO Findings – Human Resources...... 19 CR Human Resources ROI Scorecard...... 19 How Does CR Drive Human Resource Benefits?...... 21
VI. Defining CR’s Strategic Role...... 22
VII. Strategies and Tactics for Generating Value from CR...... 30
VIII. Achieving the Target: Diagnostic Tool...... 42 Diagnostics for the Way the Company Fits CR Practices into its Business...... 42 Diagnostics for the Company’s Commitment to CR Practices...... 43 Diagnostics for the Way the Company Manages CR Practices as an Asset...... 44 Diagnostics for the Way the Company Makes Connections that Enable CR Practices to Drive ROI...... 46
IX. A Look Ahead...... 48
X. Bibliography...... 49
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 1 ABOUT THE RESEARCH ORGANIZATIONS About IO Sustainability IO Sustainability, LLC is a research and advisory services fi rm. We focus on enhancing the discipline of Corporate Responsibility and Sustainability to build strategic approaches that deliver Impacts and Outcomes (IO) for an organization and its key stakeholders. IO’s mission is to develop tools and solutions that promote a sustainable future for our clients. We do this through a commitment to continuous learning, research, and stakeholder engagement, and our unique multi-disciplinary approach to strategy and project implementation. For more information visit www.iosustainability.com
About the Lewis Institute for Social Innovation at Babson College The Lewis Institute illuminates pathways for students, faculty, staff, foundations, and corporate partners seeking social innovation solutions. By drawing upon Babson’s core methodology of Entrepre- social innovation lab neurial Thought & Action®, we activate unexpected and fruitful collaborations and integrative designs for action. The result is business prosperity and societal improvement. We extend our impact through the Babson Social Innovation Lab, an action tank powered by Toyota, that incubates people and ideas in the world of social innovation. The Institute resides at Babson College, the educator, convener, and thought leader for Entrepreneurship of All Kinds ®, and a dynamic living and learning laboratory, where students, faculty, and staff work together to address the real-world problems of business and society— while at the same time evolving our methods and advancing our programs. For more information visit http://www.babson.edu/Academics/centers/the-lewis-institute/Pages/home.aspx
About the Authors Steve Rochlin is co-founder and Co-CEO of IO Sustainability Richard Bliss is the Barefoot Family Endowed Chair, Associate Professor of Finance at Babson College Stephen Jordan is co-founder and Co-CEO of IO Sustainability Cheryl Yaffe Kiser is Executive Director of the Lewis Institute for Social Innovation at Babson College
Acknowledgements
The authors wish to thank the following for making this research and its companion report possible. First, the vision of our lead sponsor, Verizon, brought Project ROI into being. In particular, Rose Stuckey Kirk, Chris Lloyd, and Emily Bosland of Verizon were always willing to share their perspectives and experiences including Verizon’s own method of measuring their corporate responsibility (CR) programs’ ROI using a metrics-based model. This has been invaluable in grounding the research and helping to explore fruitful ideas and avenues. They have been excellent partners through the process. Dave Stangis and Niki King of Campbell Soup Company have provided equally valuable insight and partnership. Their support, along with Verizon’s, made the project a reality. We benefi ted greatly as well from the insights provided by Bob Morrissey and Mike Senackerib from the Campbell Soup Company executive leadership team. The tireless and passionate commitment of the IO Sustainability and Babson College research teams was also vital for the project’s development. We express our heartfelt gratitude to IO’s Laura Ashbaugh, Sam Charner, Stephen Davis, and Charlie Goldburg and to Babson’s Lukas Donado for their invaluable contributions. Thanks as well to IO’s Amanda Pekar, Eric Hahn, and Ian Morell. Finally IO’s Roxana Jordan and Babson’s Emily Weiner served as unsung heroes for their management oversight. We also thank the individuals from companies that participated as interview subjects. We will, as promised, respect their confi dentiality.
2 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability I. EXECUTIVE SUMMARY Corporate Responsibility (CR) practices have great potential to deliver financial returns on investment (ROI) as well as related business and competitive benefits. But it’s not enough to engage in CR activities, one must manage them well. Companies should view their combined CR practices as value-creating assets. With proper design and sufficient investment, a company’s “CR Assets” can support returns related to: • Share price and market value • Human resources • Sales and revenue • Risk and license to operate • Reputation and brand The potential ROI from CR for large, publicly traded companies, includes the following:
CR’s potential value for market value, share price, and risk reduction Increase market value by up to: Over a 15 year period, increase Increase valuation for companies 4-6% shareholder value by: with strong stakeholder USD $1.28 billion relationships: 40-80% Reduce the cost of equity by: Reduce share price volatility: Avoid market losses from crises: 1% 2-10% USD $378 million Reduce systematic risk by: Reduce the cost of debt by: 4% 40% or more
CR’s potential value for marketing, sales, and brand/reputation Increase revenue by up to: 20% Increase price premium by up to: Increase customer commitment in: 20% A core segment of 1-20% The total segment of 60% Establish CR brand and reputation Avoid revenue losses of up to: 7% value as: 11% of the total value of of the firm’s market value the company
CR’s potential value for Human Resources Reduce the company’s staff turnover Save per additional retained Improvements in CR performance rate by up to: employee: 90-200% of the has the same effect on retention 50% employee’s annual salary as an increase in annual salary of: $3,700/year
Workers willingness to accept Increase productivity by up to: Increase employee engagement variability in pay: 5% pay cut 13% up to: 7.5%
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 3 While high quality products and services, effective marketing and sales practices, well-calibrated strategies and business models, and excellent management and operational practices remain the most important drivers of ROI, strong CR practices can both: • Augment business performance to deliver additional ROI and • Make up for certain defi ciencies in business performance to preserve, protect, and even grow fi nancial ROI. From a strategic standpoint, the management and practice of CR can serve one or more of the following business-value generating missions:
Strategic, business-value creating goal Potential target range a) Boost how shareholders view performance to enhance share price and market Increasing share price value as much as 6% b) Reduce risks and protect the company’s license to operate Protecting as much as 10% of the fi rm’s value c) Nurture, grow, and protect CR-related brand and reputation value Nurturing as much as 11% of the fi rm’s value d) Enhance competitive positioning with, and deepen the engagement of, Increasing revenues as customers much as 20% e) Enhance the commitment and engagement of employees Reducing turnover as much as 50% f) Some combination of the above
It is not enough to simply fund or manage environmental, social, and governance programs, one must differentiate good CR management practices from less effective ones. Companies that make a strong commitment to CR tend to generate ROI. This means: • Articulating a commitment to clear environmental, social, and governance goals • Aligning CR management practices with business strategy and mission • Establishing quantifi able management metrics • Seeking authentic stakeholder buy-in and engagement In contrast companies perceived as not fully committed to CR are less likely to generate ROI. Such companies may engage in philanthropy and select environmental and social practices, but exhibit a disconnect between these practices and core operations. Paradoxically, while deep alignment and commitment tends to pay off for a company’s overall CR profi le, for any specifi c CR activity – from philanthropy, to environment, to human rights in the supply chain, and others – companies tend to benefi t by following the “Goldilocks” approach. Customers, employees, and shareholders look for the company to engage in just the right amount of activity. They may fi nancially “punish” the company for doing too much or too little. This stakeholder pattern is situational and depends not just on the company’s individual context, but on industry and general business patterns of behavior.
4 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability To enhance the potential for CR to deliver value, companies will benefit from adopting the management framework of: 1. Fit: Make CR commitments that fit your company’s core attributes and your key stakeholders’ expectations. 2. Commit: Make a genuine commitment to address CR issues. 3. Manage: Think of, develop, and manage your portfolio of CR practices as a valuable intangible asset. 4. Connect: Build key stakeholder awareness, trust, engagement, and affinity. These findings suggest that it is time to move away from the debate over whether CR in the abstract creates or destroys value. Companies and their managers are able to exert some measure of both choice and control over the business-related benefits that their CR management will deliver. Like other investments, some CR initiatives will pan out and others won’t. The implication for companies is to develop business-aligned and integrated CR strategies. This includes applying to CR some of the same management disciplines as any other business function. The authors intend to continue our investigation of how CR drives financial and societal value, and develop ways the systems companies can use to improve the results from their CR investments and strategies.
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 5 II. INTRODUCTION
For years a debate has raged – do corporate environmental, social, and governance (“ESG”) practices drive or distract from tangible fi nancial, competitive, and wider business performance? With the support of Lead Sponsor Verizon and Supporting Sponsor the Campbell Soup Company, the Project ROI team of IO Sustainability and Babson College has conducted extensive research to answer this question. In the process the team has identifi ed important lessons learned regarding the key strategies and tactics likely to deliver returns from CR. Our fi nding: CR practices have great potential to deliver fi nancial returns on investment (ROI) and related business and competitive benefi ts. However, it is not enough to engage in CR activities per se, one must do them well. As with every aspect of business management, some types of CR investments succeed and others fail. Companies should view their combined CR practices as a valuable collection of assets or an asset base. With proper design and suffi cient investment, a company’s “CR Assets” can support returns related to: • Share price and market value • Sales • Reputation and brand • Human resources • Risk and license to operate Companies that commit to building CR approaches that utilize systematic business analytics and tools can adopt strategies and tactics that should increase the potential to generate fi nancial and wider business value. These approaches can and should reinforce objectives to deliver tangible benefi ts for society. Necessary, but not suffi cient Environmental, social, and governance programs may contribute to overall profi tability and business success, but they are dependent on the overall business context. CR practices cannot replace the quality and attractiveness of products and services. Sound CR practices cannot make up for strategic and managerial defi ciencies in other business disciplines like strategy, fi nance, marketing, manufacturing, HR, or R&D (although they may mute the downside impacts from errors in judgment and crises). However, the fi ndings suggest that well-designed and managed CR practices help drive and support value in a number of ways. Given the outcomes that CR potentially generates, companies should embrace CR practices as a valuable contributor to competitive fi nancial and business performance.1
1 Lacey, Kennett-Hensel, & Manolis, 2014; Porter & Kramer, 2006
6 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability About Project ROI Verizon and the Campbell Soup Company launched Project ROI to support their efforts to continuously improve their ESG performance and to tangibly measure the benefits to business of environmental, social, and governance programs. They supported the research of IO Sustainability and Babson College, who undertook the work under the condition that the research team would share findings based on wherever the research led. Project ROI’s objective is to assess the business case for CR for the benefit of senior executives, boards of directors, and even Wall Street. The research has asked what, if any, potential ROI can CR deliver? We have then assessed: • What are the strategies, tactics, and practices likely to create ROI? • What lessons should executives and managers take regarding their approach to and measurement of CR practices? Our approach relied on analyzing existing research from credible analysts and institutions. The vast majority of our sources have come from academic and peer reviewed sources. In total we have investigated over 300 studies. We have supplemented our research with interviews of executives and CR practitioners and from our experience advising, studying, and training hundreds of companies across industries. The existing body of research tends to focus mostly on the experience of large, publicly traded companies. There are several reasons for this: (1) Transparency of financial results makes it relatively easier to measure the relationship between CR and financial performance. (2) Many of the benefits of CR are related to balance sheet improvements, particularly relevant to publicly-traded companies. (3) Privately held companies do not necessarily have as much pressure to deliver profitability on a quarterly basis. However, the research we have reviewed is diverse and in the opinion of the authors often does apply to large privately held firms. We would project, as well, that the research has certain relevance for small and medium enterprises. This is an area that requires deeper investigation. It is important to note that asking what returns CR brings to society is a crucial question. While our research concentrates on the business case, it is important to underscore a key finding: companies that commit to CR approaches that genuinely and authentically aim to optimize their impact and to generate positive benefits for society, stand the best chance of delivering financial and business value.
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 7 Defi ning Corporate Responsibility
We use four terms interchangeably: “ESG” (environment, social, and governance); “Corporate Responsibility” or “CR”; “Sustainability”; and “Corporate Social Responsibility” or “CSR.” The fact that no single term suffi ces to explain the practice and that every term possesses multiple (and sometimes competing) defi nitions creates challenges for the fi elds of both research and practice.
For the purposes of this report the above terms refer to a company’s efforts to:
• Reduce the corporate footprint. This discipline refers to management efforts to reduce the fi rm’s detrimental impacts on environmental, social, economic, and governance performance indicators within its surrounding community, value chain, or broader eco-system. It includes direct corporate action as well as those behaviors of the company’s wider value chain whose CR performance it infl uences through the policies, decisions, and incentives it creates. • Enhance positive solutions that improve environmental, social, economic, and governance conditions. Sometimes referred to as the corporate “handprint,” this refers to a spectrum of practices ranging from pre-competitive investments designed to improve social and economic conditions in a new market, to research and development designed to meet CR needs more seamlessly, to philanthropy and other forms of community engagement and development. • Transparently disclose and report on CR performance. • Determine the company’s accountability for CR performance in dialogue with stakeholders.2 Companies struggle to design a coherent and consistent process to manage and implement CR practices.3 IO Sustainability’s research and hands-on experience fi nds that companies typically divide CR practices across four work-streams as captured in fi gure 1.
2 The researchers recognize that there are many different attributes and complexities inherent in the broader fi eld encom- passed by CR, ESG, Sustainability, and CSR and future iterations of Project ROI will continue to explore these issues in increasing granularity over time. 3 Rangan, Chase, & Karim, 2015
8 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Figure 1: The roles and structures of CR operations
COMPLIANCE ENGAGEMENT COMPETITIVE POSITIONING INNOVATION & TRANSFORMATION
Major functions Major functions Major functions Major functions • Technical assessment, • Code and standard • Share value programming, • Stragetic planning, R&D auditing, reporting and adoptions; communications, pilot products, social and product development, improvement of regulatory stakeholder management, innovation, supplier business process redesign and voluntary systems partnership, program development, green design, reporting production
Examples Examples Examples Examples • Emissions • Giving and volunteer • Cost savings • Products foster • Legal and ethical conduct • Engagement • Pilot products sustainability • Safety • Reporting • Pilot R&D • “Net positive” footprint • SRI, ratings, standards • Cause campaign
The paradox companies face is that the left two columns – “Compliance” and “Engagement” – possess relatively clear structures, processes, procedures, policies, and management cycles. However, their business case and potential for ROI are hard to defi ne. In contrast, the “Competitive Positioning” and “Innovation & Transformation” work streams can possess more straightforward business cases. Examples that relate to these areas from Verizon and Campbell Soup include the following:
• Verizon’s Corporate Responsibility group and Wireless Business partnered with external stakeholders to design “The Coupe”, a mobile phone created specifi cally to address the unique needs of the disability and senior communities. The product launched in 2008 and sold 400,000 units, remained on back order for months, and moved to a second generation with “The Knack”, which quickly sold 100,000 units. In addition, Verizon Wireless also created a senior calling plan, which brought in 100,000 new customers. Verizon Wireless spending by the senior segment increased by 100 percent from 2007 to 2008.4 • Currently Verizon is pursuing a strategy of deploying technology solutions to incubate innovative approaches that target social issues in underserved communities that might not otherwise be addressed by the business itself.
4 Boston College Center for Corporate Citizenship & McKinsey & Company, 2009
Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability | 9 This approach provides R&D and market intelligence to the business in the form of outcomes and analysis. For example, Verizon Innovative Learning Schools (VILS) provide professional development to educators in schools to help them better leverage the power of mobile technology. Verizon uses a rigorous measurement process to assess the social impact that mobile technology— when used appropriately—has in the classroom. The initial results are positive. • The average increase in standardized math scores for VILS schools students is 6.97%, compared to the non-VILS average increase of 4.23%. 99% of teachers responding reported some positive effect on student behavior and attitudes. Verizon’s business units are using this data to develop new opportunities for the business.5
• In 2010, Campbell rolled out its 2020 goal to reduce its environmental footprint by half. While efforts are taking place at all of the company’s facilities globally, the Napoleon, Ohio, facility set the standard for the company’s green efforts as the facility makes more than two-thirds of Campbell’s beverage volume and over a third of soup volume in North America. In addition, about a fi fth of company-wide electricity consumption occurs at Napoleon. To help offset the resource needs of such a high- production facility, major renewable energy projects were implemented. In 2012, the plant transitioned to natural gas and currently recycles 95 percent of materials. In addition, two projects – a 60 acre, 24,000 panel solar fi eld, which is the largest in the United States supplying solar energy to a single private facility, and a new biodigester that converts fruit-and-vegetable waste into methane to fuel two generators – are projected to fi ll 40 percent of Napoleon’s electric demand. Campbell spent no money to install the solar system and locked in a price for 20 years at a rate that is the equivalent to or less than what the company was paying. Based on Department of Energy projections, the solar array will reduce Napoleon’s electricity costs $4 million and eliminate 250,000 metric tons of greenhouse gas over the purchase agreement’s 20-year period. • In FY2013, Campbell launched an extensive re-lighting project at its processing plant in Dixon, California. The company replaced more than 1,800 halide lighting fi xtures with more effi cient LED wall packs, fl ood, and pole lighting. The project is expected to save 180,088 kilowatt hours annually and remove 270,000 pounds of carbon dioxide, 450 grams of sulfur dioxide, and 1 million grams of nitrogen oxide from the air EPA estimates put this reduction
5 FSG, forthcoming 2015
10 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability at the equivalent of the carbon that would be sequestered by 104 acres of U.S. forest in one year, saving 14,245 gallons of gasoline, or removing 26 cars from the road. Campbell continues to invest in environmental compliance and sustainability initiatives, with that amount exceeding $17 million in FY2014. These investments have paid off, yielding savings of more than $77 million since 2009.6
One can assess the ROI for each of these examples using analytical tools commonly employed by managers. Yet, companies often find it difficult to embed these approaches in a clear system of strategic goals and objectives, management responsibility, and processes. It is even more difficult to weave all four work streams into a coherent whole. Project ROI looks at the whole picture with particular focus on the Compliance and Engagement work streams. These represent the most difficult business cases to plan and measure. They are also necessary for companies to credibly execute strategies for the latter work streams.
6 Interview with Niki King, The Campbell Soup Company, 2014
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 11 III. ROI FINDINGS – FIRM VALUE, SHARE PRICE, AND RISK Meta-analyses of hundreds of studies fi nd a positive relationship between CR performance and fi nancial performance.7 Furthermore, there is growing evidence that CR management goes beyond correlation and has a causal relationship with fi nancial performance.8 Overall, the market rewards leading CR performers more than laggards and those that dabble.9 Research typically measures the distinction between top tier, middle-tier, and bottom-tier performers by utilizing rating and assessment systems. Many different rating and assessment systems have been developed, however a common one referenced in the literature is the KLD ratings now owned and managed by MSCI. These kind of CR ratings score companies across a range of ESG performance indicators and topics. The results allow researchers to categorize samples of companies and distinguish the level of CR commitment and quality of CR performance. The quality, management, business integration, and communication of a company’s CR approach affect market value. Collectively these have the potential to infl uence the way investors weigh contextual factors and reward companies for good CR management or punish them for bad.
The upshot: Companies can use their CR approach to enhance market value. However, engaging in CR activities in and of themselves do not guarantee a positive ROI.
Company Value, Share Price, and Risk ROI Scorecard Large, publicly traded companies that adopt effective CR approaches have the potential to generate the following returns on investment.
7 Margolis & Walsh, 2001; Orlitzsky, 2003; Peloza, 2009 8 Flammer, 2013; Rodgers, Choy, & Guiral, 2013 9 Barnett & Salomon, 2012; Brammer & Millington 2008; Eccles, Ioannou, & Serafeim 2011; Tang, Hull, & Rothenberg, 2012; Wang & Choi, 2013
12 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Table 1: CR Firm Value ROI Scorecard Enhanced market performance driven by a company’s total CR profile
The potential value CR can generate:
•• Leading CR performers have the potential to outdo laggards by as much as 4% - 6%.10 Examples: •• Over a 15 year period (1991-2006) for a company in the S&P 500 Index this translates to on average: $1.28 billion in additional shareholder wealth (an average of $85M/year) for a cumulative return of 133%11 •• Over a 17 year period (1993-2010) an investment of $1 in high performing CR firms grew to $22.60. The same $1 invested in low performing CR firms grew to only $15.40 in the same period12 •• For a large corporation with an average market value of approximately $48 billion, one unit increase in a CR rating would result in approximately $17 million more in profits on average in subsequent years, a 4% increase in financial returns13 •• From between 2009-2012 an investment of $1 in: •• A CR leader grew to $1.13 •• An average performer grew to $1.07 •• A laggard stayed at par14 •• A one-standard deviation increase in CR performance is associated with a 5.08% increase in mean equity value15
Enhanced market performance driven by a specific CR practice
The potential value CR can generate:
• Strong environmental practices, for example: •• From 2004-2007 leaders in carbon reducing outperformed laggards by 3%, with a cumulative total return of 81.85% compared to 72.67%16 • Strong stakeholder relationship management practices, for example: •• Investors valued mining companies with strong stakeholder relationships 46%-86% higher than those with average or weak relationships.17 Firms that treat stakeholders well excel in market valuation18 • Effective philanthropy correlates with superior financial market aluationsv 19
Reduction in the cost of equity
The potential value CR can generate:
• Good corporate governance and CR practices can reduce the rate of return required by the company’s ordinary shareholders in order for that investor to bear the risk of holding that company’s shares by up to 1%20 • Firms with a better CR performance tend to have a lower cost of equity capital21 • Investors expect higher returns – up to 1.4% annually – on stocks facing more environmental concerns than their peers22
10 Eccles, Ioannou, & Serafeim, 2011; Koh, Qian & Wang, 2014; Luo & Bhattacharya, 2006; Park & Moon, 2011; Perez de Toledo & Bocatto, 2014 11 For the average company in the S&P500 Index. Source: Park & Moon, 2011 12 Eccles, Ioannou, & Serafeim, 2011 13 Luo & Bhattacharya, 2006 14 Perez de Toledo & Bocatto, 2014 15 Koh, Qian, & Wang, 2014 16 Innovest Strategic Value Advisors, 2007 17 Henisz, Dorobantu, & Nartey, 2013 18 Wang & Choi, 2013 19 Brammer & Millington, 2008; Jacobs, Singhal, & Subramanian, 2010; Lev, Petrovits, & Radhakrishnan, 2010 20 Derwall & Verwijmeren, 2007 21 El Ghoul, Guedhami, Kwok, & Mishra, 2011; Sharfman & Fernando, 2008 (focusing on the effects of environmental performance) 22 Chava, 2011
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 13 Reduced share price risk and volatility driven by a company’s CR approach Reduced share price risk Reduced systematic risk
The potential value CR can generate: The potential value CR can generate:
• A one-standard deviation increase in CR performance from • Strong CR performance reduces systematic risk. CR can reduce the average can cut fi rm-specifi c risk by 10% compared to its the average ß (“Beta” – a measure of the volatility, or systematic industry peer group.23 risk, of a security or a portfolio in comparison to the market as a whole) by up to 4%.25 • Firms with strong CR reputations experience no meaningful declines in share price compared to their industry peer group • Better environmental risk management reduces ß.26 during crises, whereas fi rms with weak CR reputations declined by 2.4% - 3%, a market capitalization loss of $378 million per fi rm.24
Reduced cost of debt
The potential value CR can generate:
• Superior environmental performance compared to peer group yields lower cost of debt by 40-45 basis points (bp).27
• Moving from the bottom to top governance quartile doubles the probability of an investment-grade credit rating. An investment grade credit rating reduces the cost of debt by 8% or 800 bp versus a speculative rating, leading to a reduction of $38.4 million in annual interest expense compared to the median speculative grade fi rm.28 Firms with below average CR pay 7 to 18 bp more than better CR performers on comparable debt instruments.29
• Higher levels of CR performance are rewarded with lower bond yield spreads. Contributing factors that reduce credit spreads include: • Community involvement (reducing spreads by 43.4% or ~ 40 bp for a AA-rated bond); • Product safety and quality (reducing spreads by 30.3%); • Increased employee dissatisfaction can increase credit spreads up to 88%.30 • Firms facing higher stakeholder environmental concerns than their peers pay higher interest rates on bank loans. Up to 25 bp in one study, or $1.5 million annually for the average sample loan,31 and up to 64 bp in another study.32
23 Luo & Bhattacharya, 2009 24 Schnietz & Epstein, 2005 25 Albuquerque, Durnev, & Koskinen, 2014 26 Sharfman & Fernando, 2008 27 Schneider, 2011 28 Ashbaugh-Skaife, Collins, & LaFond, 2006 29 Goss & Roberts, 2011 30 Oikonomou, Brooks, & Pavelin, 2011 31 Chava, 2014 32 Bauer & Hann, 2010
14 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability How does CR drive market valuation and share price? “No investor has ever asked us about our Corporate Responsibility practices.”33 The C-Suite executive quoted above appears to reflect a common experience. Another senior executive adds, “When we brief investors on our CR practices, they never have follow up questions or comments.”34 Recent research suggests this may change as analysts are beginning to make decisions and recommendations based in part on evaluations of CR performance.35 Yet it seems puzzling that active CR management drives up share price when few investors seem to express concerns or interest. Deriving market and share price value from CR does not require investors to initiate queries about a company’s CR performance. Instead, sound CR management practices appear to influence investors in three ways: 1) Integrating CR and intangible assets Investors appear to respond positively to firms that integrate their approach to CR with the investment and management of intangible assets such as talent, brand and reputation, and innovation.36 2) CR as a proxy for strong, well-managed companies with bright futures Investors appear to treat CR as an intangible asset and proxy signaling firm strength,37 such as: •• A sign that the firm’s future prospects are bright.38 •• An indicator of strong performance across: •• Good management. In particular shareholders perceive that CR serves as a proxy for – and may drive -- improved operating performance including improvements in labor productivity and sales growth, suggesting CR improves employee satisfaction and appeals to customers.39 •• Competitive differentiation. Any firm can imitate a specific CR program. But companies that commit to high CR performance are acquiring competencies and resources that are hard to copy or imitate and that can create a sustainable competitive advantage.40 •• Employee engagement.41 •• Organizational culture.42 •• Innovation.43 3) Reducing financial and other forms of risk Investors may perceive that CR serves as “insurance-like” protection of intangible assets when
33 Interview with C-Suite executive, 2014 34 Interview with senior executive, 2015 35 Ioannou & Serafeim, 2014 36 Luo & Bhattacharya, 2006; Surroca, Tribó, & Waddock, 2010 37 Lys, Naughton, & Wang, 2013, and 2014 38 Lys, Naughton, & Wang, 2013, and 2014 39 Flammer, 2013; Wang & Choi, 2013 40 Perez de Toledo & Bocatto, 2014; Wang & Choi, 2013 41 Surroca, Tribó, & Waddock, 2010; Brammer & Millington, 2008 42 Surroca, Tribó, & Waddock, 2010 43 Surroca, Tribó, & Waddock, 2010
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 15 events challenge the integrity of the fi rm.44
It is interesting to note that CR brings no value enhancement for fi rms in “socially contested” industries (e.g., tobacco, gambling, alcoholic beverages, and fi rearms).45
44 Godfrey, Merrill, & Hansen, 2009; Koh, Qian, & Wang, 2014 45 Koh, Qian, & Wang, 2014
16 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability IV. ROI FINDINGS – SALES AND REPUTATION “CSR is shown to be a necessary and sufficient mechanism for stronger customer relationships….” CSR is not only something that a company should engage in based on principled grounds but also something that a company must practice for strategic reasons as their customers demand it and place relational value on it.”46 Sound CR management has the potential to increase revenues up to 20% and to enhance the firm’s brand and reputational value by 11%. To achieve these results, companies must set a goal and apply targeted marketing strategies and tactics. CR Sales and Reputation ROI Scorecard Companies that adopt effective CR approaches have the potential to generate the following returns on investment. Table 2: CR Sales and Reputation ROI Scorecard Revenue from increased sales Revenue from price premiums
The potential value CR can generate: The potential value CR can generate: • Sales revenue can increase up to 20%.47 • Price premiums can increase up to 20%.49 • Every $1 in corporate philanthropic contributions can generate $6 in increased sales revenue (within limits).48
Increased customer satisfaction Insurance: reduced consumer defection from and loyalty product and other crises
The potential value CR can generate: The potential value CR can generate: • CR can affect variations in customer satisfaction • The estimated risk protection a well- by 10% or more. managed CR program tied to reputation and • While CR can motivate the purchasing behaviors integrity can deliver is estimated at 4% to of up to 60% of customers,50 the true core ready 7% of the company’s total value.53 to open their wallet is in the 1-20% range.51 •• This core segment may base their affinity on CR practices and they will promote the products whose CR they believe in. • Involving customers directly in CR activities increases their trust for your company while decreasing trust in your competitors.52
46 Lacey, Kennett-Hensel, & Manolis, 2014 47 Hainmueller & Hiscox, 2011b; Hainmueller & Hiscox, 2011c; Hainmueller & Hiscox, 2012a; Hainmueller & Hiscox, 2012b; Hainmueller & Hiscox, 2014; Tully & Winer, 2013 48 Lev, Petrovits, & Radhakrishnan, 2010 49 Ferreira, Gonçalves Avila, & Dias de Faria, 2010; Hainmueller & Hiscox 2011a; Hainmueller & Hiscox, 2011b; Hainmueller & Hiscox, 2011c; Mueller Loose & Remaud, 2013; Trudel & Cotte, 2009; Tully & Winer, 2013 50 Tully & Winer, 2013 51 Du, Bhattacharya, & Sen, 2011; Lacey, Kennett-Hensel, & Manolis, 2014; Tuppen, 2004 52 Du, Bhattacharya, & Sen, 2011 53 Janney & Gove, 2011; Peloza, 2006; Klein & Dawar, 2004; Koh, Qian, & Wang, 2014
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 17 CR Brand and Reputation Value
The potential value CR management can generate:
• 7% to 11% of a company’s value comes from the fi rm’s CR brand and/or reputation.54
How does CR management drive Sales and Reputation Benefi ts? The quality, management, business integration, leadership, and communications of your company’s CR approach affect sales and reputation outcomes. If properly aware and engaged, customers will increase their commitment to and engagement with the company.
Any combination of the following can drive sales and reputation value. Section VII on strategies and tactics provides more detail on these approaches: • Building awareness • Refl ecting the customer’s own values • Creating a pathway from guilt to pride • Differentiation • Engaging customers directly in CR activities • Enhancing the following reputation drivers: – Perceptions of a company’s citizenship – Governance – Workplace practices
54 Boston College Center for Corporate Citizenship and the Reputation Institute, 2008; Fombrun, 2003; Gidwani, 2013
18 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability V. ROI FINDINGS – HUMAN RESOURCES
“…[C]orporate social responsibility…has quickly become a crucial part of any large company’s long-term strategy – not just in marketing, but in recruiting, too: …employees now want more from their employer than a paycheck. They want a sense of pride and fulfillment from their work, a purpose and importantly a companies whose values match their own.”55 Research finds that strong CR performance increases the commitment, affinity, and engagement of employees. This in turn enhances job performance, increases productivity, reduces turnover, lowers absenteeism, and even reduces the incidence of employee corruption.56 In addition, employee engagement links to CR in a virtuous cycle. Together they reinforce one another and enhance financial performance, sales revenue, brand and reputation value, and innovative capability. The presence of environmental and social programs alone do not guarantee HR benefits. Companies must design effective and strategically targeted CR approaches to generate value for HR. CR Human Resources ROI Scorecard Companies that adopt effective CR approaches have the potential to generate the following returns on investment. Table 3: CR Human Resources ROI Scorecard Enhanced productivity Reduce turnover and increased recruitment
The potential value CR can generate: The potential value CR can generate:
• Productivity can increase up to 13%.57 • Reduces the average turnover rate over time by 25% to 50%.58 •• Reduces the annual quit rate by 3% - 3.5%.59 •• This can save replacement costs up to 90% to 200% of an employee’s annual salary for each position that stays.60 • Improving CR performance has the same effect on retention as an increase in annual salary of $3,700/year.61 • Firms higher in corporate social performance (CSP) are perceived as more attractive employers than firms lower in CSP. Prospective applicants’ job pursuit, probability to interview, and probability to accept a job offer are positively associated with a firm’s CSP.62
55 Meister, 2012 56 Burbano, 2014 57 Tonin & Vlassopoulos, 2014 58 Ipsos Mori, 2008; Vitaliano, 2010; Wong, 2011 59 Vitaliano, 2010 60 Direct replacement costs can reach as high as 50%-60% of an employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of annual salary (Allen, 2010) 61 Vitaliano, 2010 62 Greening & Turban, 2000
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 19 Reduced compensation Employee engagement
The potential value CR can generate: The potential value CR can generate:
• Workers are willing to take up to a 5% pay cut.63 • Increase employee engagement by 7.5%.65 • Workers who were informed about a CR program were willing to accept a lower wage and were more likely to go “above and beyond” for the employer by doing extra work not required for payment. Higher performing workers were more responsive to CR than lower performers.64 Table 4: Trends in Employee Attitudes Overall work force trends By the year 2020, Millennials will be 50% of the workforce.71
• 86% of workers believe it is important that their own employer • 72% of millennials said “a job where I can make an impact” was is responsible to society and the environment, with over half important to their happiness. 45% would take a pay cut for a job (55%) feeling that it is “very important”.66 that makes social or environmental impact. 58% would take a pay • 76% of Americans would not take a job with a company that cut to work for an organization with “values like my own.”72 had a bad reputation, even if unemployed.67 • 80% want to work for a company that cares about how it impacts • 75% would recommend their company if they feel it is and contributes to society. Over half would refuse to work for an environmentally responsible vs. 43% if it is not.68 irresponsible corporation.73 • 71% want to work for a company whose CEO is actively • 61% would prefer to work for a company offering volunteering involved in corporate responsibility and/or environmental opportunities.74 issues.69 • 55% said that the company’s “cause work” infl uenced their • 53% of workers said that “a job where I can make an impact” decision to accept an offer.75 was important to their happiness.70 • 7 in 10 consider themselves social activists. Three in four of these seek out employers that support a social cause.76 • 3 in 4 believe corporations should create economic value for society by addressing society’s needs.77
63 Du, Bhattacharya, & Sen, 2013 64 Burbano, 2014 65 Wong, 2011 66 Ipsos Mori, 2008 67 CR Magazine, 2014 68 Ipsos Mori, 2008 69 CR Magazine, 2014 70 Meister, 2012 71 Meister, 2012 72 Meister, 2012 73 Meister, 2012 74 Nunn, 2011 75 The Case Foundation & Achieve, 2014 76 Swinand, 2014 77 Swinand, 2014
20 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability How does CR drive Human Resource benefits? The quality, management, business integration, leadership, and communications of your company’s CR approach affect HR outcomes. If properly aware and engaged, employees will increase their commitment to and their admiration of their employer. Any one, or a combination, of these factors enables CR management to drive HR value.78 • Enhancing employees’ commitment to their employer79 • Enhancing employee engagement80 • Enhancing how attractive an employer looks81 • Improving job satisfaction82 • Increasing an employee’s sense of pride in their employer83 • Meeting employee needs84 • Increasing confidence in and affinity towards the company’s leaders85
The upshot: Firms can take actions to use their CR approach to enhance HR outcomes.
78 Burbano, 2014; Carmeli, Gillat, & Waldman, 2007; Gond, El-Akremi, Igalens, & Swaen, 2010 79 Chun, Shin, Choi, & Kim, 2011; Hansen, Dunford, Boss, Boss, & Angermeier, 2011; Peterson, 2004; Stites & Michael, 2011 80 Ketvirtis, 2012 81 Albinger & Freeman, 2000; Greening & Turban, 2000 82 Du, Bhattacharya, & Sen, 2013 83 Ellemers, Kingma, van de Burgt, & Barreto, 2009 84 Du, Bhattacharya, & Sen, 2013 85 CR Magazine, 2014; Sharif & Scandura, 2014; Vlachos, Panagopoulos, & Rapp, 2013
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 21 VI. DEFINING CR’S STRATEGIC ROLE The research suggests that the management and practice of CR can serve at least one or more of the following business-value generating goals listed in Table 5.
Table 5: CR business-value goals Strategic, business-value creating goal Potential target range a) Reduce risks and protect the company’s license to operate Protecting as much as 10% of the fi rm’s value b) Nurture, grow, and protect CR-related brand and reputation value Nurturing as much as 11% of the fi rm’s value c) Boost how shareholders view performance to enhance share price and market Increasing share price value as much as 6% d) Enhance your competitive positioning with, and deepen the engagement of, your Increasing revenues as customers much as 20% e) Enhance your competitive positioning with, and deepen the engagement of, your Reducing turnover as employees much as 50% f) Some combination of the above
A crucial step for a company to make is to identify which of the business value-creating goals it wishes to pursue. Achieving these goals means implementing a four-step process: 1. Fit: Make CR commitments that fi t your company’s core attributes and your shareholders’ expectations. 2. Commit: CR leaders outperform both laggards and dabblers. Make a genuine commitment to address priority CR issues relevant to your company. Establish and communicate strong, bedrock commitments to responsible business practices. Like Goldilocks, fi nd the amount that’s “just right” to do. 3. Manage: Think of, develop, and manage your portfolio of CR practices as an intangible asset. Use this asset to mutually reinforce brand and reputation, employee engagement, innovation and R&D, quality management, and overall fi nancial performance. 4. Connect: Build key stakeholder awareness for the company’s CR commitments, priorities, and core practices. Develop engagement strategies and related messages that build pride, create differentiation, foster trust, and create affi nity.
22 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Section VII discusses the four-step framework in detail. To summarize, across each of the strategies, managers should take the following actions: Fit ••Each strategic area of the company should have a senior executive champion and team responsible for setting direction, designing an approach, conducting research, and managing processes to determine results. A vital step is to engage with this team. Learn the approach of these business strategy teams and apply it to the design of CR strategy ••Assess the priorities the business strategy teams have defined ••Using the same approach that the business teams use, assess how CR factors align with and influence key strategic priorities ••If feasible, validate the assessment with research on the perceptions, preferences, attitudes, needs, and expectations of business and CR-related stakeholders ••If feasible, compare to the performance of peer companies ••Working with business colleagues, agree on the key needs and strategies for CR to support risk management. Commit •• Determine if sufficiently strong CR practices are in place to support the areas of priority “fit” defined above ••Assess what additional issues may create indirect risks for priority areas ••Commit to address gaps and weaknesses and ensure that areas of priority fit are well addressed ••Commit to report and disclose performance on priority areas. Manage ••Establish goals – what progress and results should the company achieve on CR issues in order to support the strategic priorities chosen from Table 5 ••Ensure sufficient resources are in place to support priority CR practices ••Establish links to relevant business colleagues to integrate strategies, implementation, measurement of results, and reporting. Connect ••When strong CR practices are in place, assess if the awareness of key stakeholders is sufficient ••Develop messages, outreach, and ways to connect to key stakeholders ••Engage stakeholders in planning, implementation, and measurement.
Brief examples bring this process and the value-creating potential of CR to life.
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 23 CASE STUDIES
Pirelli86 -- Reducing risks and protecting the company’s license to operate
The Italian multinational Pirelli is known for its high-end, luxury-brand performance tires. The company is the world’s fifth-largest tire manufacturer with a presence in over 160 countries, including 19 manufacturing sites, and a network of approximately 10,000 distributors and retailers. Customers, particularly those in the luxury market, have been slow to embrace the benefits of sustainability features in the product. Yet the company forecasts that its market will increasingly be shaped by: • Macroeconomic uncertainty: “downside risks will dominate the world economic outlook” • Regulatory constraints: “strong move to low-carbon economies” • Changes in social behavior: “demographic changes, aging population, virtual mobility, continued urbanization” In this context the company has defined a year 2020 vision to be a sustainable company, meaning it will be “smart, efficient, profitable, innovation-driven, accountable and engaged with its stakeholders.” To meet this vision, Pirelli has designed a 2013-17 integrated industrial and sustainability plan. Sustainability is viewed as a driver of core business outcomes and vice-versa. The sustainability approach needs to demonstrate a return on capital invested across the three core pillars of Pirelli’s strategy: • Governance & risk management; • Growth; and • Productivity. With regard to sustainability’s support for governance and risk management, the company took several steps in its planning process. First, the sustainability team linked to the company’s Enterprise Risk Management (ERM) process. Second, they reviewed priority enterprise risks. Third, they assessed the sustainability topics with the greatest potential to affect enterprise risks. Finally, they defined sustainability goals that would help support ERM. Examples include: • A rolling resistance reduction that in the Car segment will reach -40% in 2020 as compared with 2007. • A reduction by 90% in the workplace accident frequency rate by 2020 compared to 2009 figure. • Keeping research and development spending for premium products at 7% of net premium products sales, with the aim to further develop and increase premium products safety while lowering environmental impact. • Growing investment in risk mitigation and prevention of business interruption. • Adoption of increasingly advanced models for management of economic, social, and environmental responsibility in the supply chain, in view of shared development.
86 Case vignette drawn from: “2013-2017 Industrial Plan: Sustainability Plan 2013-2017 with Selected Targets for 2020” and the Pirelli 2013 Sustainability Report.
24 | Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability CASE STUDIES
CVS Health87-- Nurturing, growing, and protecting CR-related brand and reputation value
CVS Health (formerly CVS Caremark Corporation) is an American retailer and health care company. CVS Health operates over 7,700 CVS Pharmacy and Longs Drugs stores, a pharmacy benefit manager, mail order and specialty pharmacies, a retail-based health clinic subsidiary, MinuteClinic, and an online pharmacy, CVS.com. As of 2014, it ranked 35th in the Fortune Global 500 list of the world’s largest companies, and 12th in the United States-only Fortune 500. With the American Affordable Care Act (ACA and nicknamed “Obamacare”), CVS saw a major growth opportunity for its pharmacies and its rapidly expanding MinuteClinics, which offer basic primary care in stores. The company plans to expand the nearly 900 MinuteClinics that existed in 2014 to 1,500 by 2017. A crucial part of the MinuteClinic expansion strategy involves profitable partnerships with insurers and hospital systems. CVS had to balance competing strategies that each posed substantial risks. The presence of tobacco would undermine the company’s reputation as a health care provider. But dropping tobacco would cost about USD $2 billion in annual sales, reducing earnings by 6 to 9 cents per share. The projected sales from its expanding health services were lucrative but by no means a sure bet in the eyes of investors or consumers. In September, 2014, CVS announced to the world that it would stop selling cigarettes and all tobacco products at its more than 7,600 stores nationwide. Larry Merlo, President and CEO announced, “The sale of tobacco products is inconsistent with our purpose – helping people on their path to better health…. Cigarettes and tobacco products have no place in a setting where health care is delivered. This is the right thing to do.” To date, the risk of pursuing a business strategy based on doing the right thing and addressing wider stakeholder expectations is paying off through reputational gains that are supporting sales and share price increases. Sales in CVS’ retail pharmacy business rose 3.1%, or a half billion dollars, to $16.7 billion. Same-store sales rose 2% while a 4.8% increase in pharmacy sales offset a 4.5% decline in front store same store sales. Overall revenue rose 9.7% from its third quarter earnings in 2013. Its operating profit increased by 4.3%. Since the announcement, the company’s share price has increased by over 27%, adding $25 billion to its market capitalization.
87 Case vignette drawn from: Original Research by IO Sustainability; CVS Health, 2015; Friedman, 2014; Japson, 2014
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 25 CASE STUDIES
Lockheed Martin88 -- Boosting how shareholders view performance to enhance share price and market value
As of publication, Lockheed Martin was in the midst of a CEO-led effort to position sustainability as a key element of the company’s business strategy. Lockheed Martin is one of the world’s largest aerospace and security companies. The company employs 112,000 people worldwide. The majority of its revenues come from military sales. It operates in five business segments: Aeronautics, Information Systems & Global Solutions, Missile and Fire Control, Mission Systems and Training, and Space Systems. Its main customer is the US government. Additional customers include foreign governments, and commercial and other contracts. Marillyn Hewson, President and Chief Executive Officer, has made a commitment to incorporate sustainability messages in her presentations to investors and other stakeholders. Where some companies list the highlights of their sustainability reports to investors, Hewson takes steps to clearly specify how sustainability is vital for the company’s current and future success. In doing so, she explains why sustainability is a priority in terms that investors will understand and ties sustainability to financial and wider business value creation. For example, Hewson: Emphasizes how sustainability embeds into the company’s core messages and branding related to: • “Delivering Innovative Solutions for Today’s Global Challenges” • “Engineering a Better Tomorrow”
Links sustainability into core “megatrends” that will shape the future opportunities and risks the company must navigate: • The rise of digital technology and the risk associated with the increasingly connected world (which the company makes the case for being a sustainability challenge in its 2014 Sustainability Report) • Growing population and its demands on Earth’s resources • Economic uncertainty and how that influences the decisions and priorities of customers
Features products designed to respond to sustainability challenges such as: • Environmental monitoring • Renewable energy (ocean thermal) • Energy efficiency solutions • Health solutions • Food security solutions.
88 Case vignette drawn from: Lockheed Martin, 2015
26 | Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability CASE STUDIES
Unilever89 -- Enhancing competitive positioning with, and deepening the engagement of, customers
Unilever is a British–Dutch multinational consumer goods company co-headquartered in Rotterdam, Netherlands and London. It is one of the world’s largest consumer goods companies with products available in nearly 180 countries. Unilever is organized into four main divisions: Foods, Refreshment (beverages and ice cream), Home Care, and Personal Care. Unilever owns over 400 brands, but focuses on 14 brands with sales of over 1 billion euros: Axe/Lynx, Dove, Omo, Becel/Flora, Heartbrand ice creams, Hellmann’s, Knorr, Lipton, Lux, Magnum, Rama, Rexona, Sunsilk, and Surf. Under the leadership of Unilever CEO Paul Polman, the company has made a commitment to put sustainable and equitable growth at the heart of its business model. The Sustainable Living Plan is designed to drive increased sales while reducing costs and risks. Unilever’s ambition is captured by a bold vision for the company to double the size of its business, while reducing its environmental footprint and increasing its positive social impact. To meet this vision, the company has set three stretch goals for 2020: • Help more than a billion people improve their health and well-being; • Halve the environmental footprint of its products; and • Source 100% of its agricultural raw materials sustainability. In 2011, Unilever combined its marketing, social responsibility, and communications teams into one department where social good forms the backbone of marketing efforts. Before that, Chief Marketing Officer Keith Weed said, “Marketing people felt they were being held back by our sustainability challenge and that it took their eyes off the ball of growing their brands. On the other hand, the sustainability people thought marketing was part of the problem and would never take them seriously.”90 Weed sees social purpose and sustainability and marketing as one in the same rather than having separate missions. Along with the parent company, each of Unilever’s product divisions is charged with adding social purpose to its brand positioning. For example the first TV ad for the corporate brand, called “Bright Future Speeches,” puts Martin Luther King Jr. and Mahatma Gandhi side by side with young people giving impassioned speeches about fighting child hunger. The ad promotes Unilever’s Project Sunlight, an online hub of social programs benefiting children that works in concert with the charity Feeding America. The spot closes with the Unilever “U” and the logos of Lipton, Knorr, Hellmann’s, Suave, and Dove. The effort relates to an emerging strategy to deepen the connection of customers in CR activities. More than 2 billion customers in 178 countries use a Unilever product on any given day. Therefore, the company states that small everyday customer actions can add up to a big difference. Unilever sums it up with this equation: “Unilever brands x small everyday events x billions of consumers = big difference.”91 By the end of 2012 sales had grown from 40 billion euros in 2008, to 51 billion euros, an increase of 26 percent. Over the last three years, Unilever saw a 10 percent annual increase in sales among those brands.
89 Case vignette drawn from: Roth, 2013; Unilever, 2013; Unilever, 2015; Voight, 2015 90 Voight, 2015 91 Armstrong, Adam, Denize, & Kotler, 2014, p. 484
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 27 CASE STUDIES
For example: • Lifebuoy has reached 119 million people since 2010 with its handwashing behavior change program and achieved double digit sales growth. • Concentrated and compacted laundry detergent – which cuts CO2 by up to half – have doubled in sales. • Signal’s brush day and night health campaign has reached 49 million people so far and helped sales grow by 22 percent. • Dry shampoos, such as TRESemme and Dove, which result in 90 percent less greenhouse gas emissions compared to washing hair in heated water, grew by 19 percent in 2012. • Calorie-controlled Max and Paddle Pop children’s ice creams grew in the high double digits in 2012. Since Polman took on the CEO role in 2009, Unilever’s stock price has grown from approximately $20 per share to $40 per share (at the time of publication).
28 | Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability CASE STUDIES
IBM -- Enhancing competitive positioning with, and deepening the engagement of, employees
Research suggests that involvement in the company’s CR practices teaches employees valuable new skills that they bring back to their regular roles for the company. IBM is working to put this in practice with its Corporate Service Corps program. IBM is a globally integrated technology and consulting company. The company develops and sells software and systems hardware and a broad range of infrastructure, cloud, and consulting services. IBM focuses on the five core initiatives – Cloud, Big Daga and Analytics, Mobile, Social Business, and Security. With the Corporate Service Corps, employees bring their core competencies and skills in such areas as project management, strategic planning, marketing, or engineering to an entrepreneurial company based in one of the countries designated by IBM as emerging markets for growth such as Brazil, China, Ghana, India, Malaysia, Romania and South Africa.92 Corporate Service Corps teams tackle issues ranging from public safety to urban agriculture. The company highlights benefits such as: • Talent attraction – the program is the third most influential factor for talent seeking work at IBM after money and location; • Skills and competency development; and • New market creation. The company states the program produces a $600 million return on a $200 million investment. While the regular staff turnover rate is around 12 percent per year, the rate for employees in the Corporate Service Corps is less than 1 percent.93
92 Meister, 2012 93 Preston, 2014
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 29 VII. STRATEGIES AND TACTICS FOR GENERATING VALUE FROM CR The four-step process of Fit, Commit, Manage, and Connect helps managers design and implement value-creating CR strategies. The following unpacks each step. Fit Align CR activities to the business The payoffs to companies who align CR into their business model are signifi cantly greater than the cost savings for companies who choose to forgo it.94 Companies that align their CR efforts to their business generate higher perceived value and buying intention than non-related efforts. Efforts perceived as unrelated may decrease sales volumes.95 Aligning to the business means that CR efforts appear to make sense given: • The company’s industry, products, services, and business model; • The strategy of the company; and • The company’s brand messaging and brand promise. Understand the way shareholders, customers, and employees perceive the company, their expectations and attitudes for its CR performance, their own CR preferences, and help them understand the fi t that CR has for the company’s fi nancial performance SHAREHOLDERS Companies have opportunities to shape shareholder perspective. The challenge is to situate CR commitments in terms and rationales that make sense to shareholders. Shareholder interpretations of CR activities consistently cluster around three themes: • Alignment (whether the CR activities fi t with their knowledge of the company’s products or core competencies and the evidence that CR is actually having a positive social or environmental impact); • Usefulness (shareholders want to know the benefi ts to them); and • Unity (the company is on the same team as them, working towards common goals).96 All things equal, shareholders tend to respond favorably to: • Philanthropy (although the returns decrease as scale expands)97; • Respected CR third-party certifi cations such as ISO-1400198; • Environmental commitments, such as emissions reductions, that align with business needs such as risk mitigation or operational effi ciency;99 and
94 Barnett & Salomon, 2012; Tang, Hull, & Rothenberg, 2012 95 Du, Bhattacharya, & Sen, 2007; Peloza, 2006; Wójcik, 2013 96 Bhattacharya, Sen, & Korschun, 2011 97 Jacobs, Singhal, & Subramanian, 2010 98 Jacobs, Singhal, & Subramanian, 2010 99 Lyon, 2014; Vasi & King, 2012
30 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability •• Tangible results – for example, companies that show real results in environmental performance such as lower carbon emissions receive a premium from investors. All things equal, shareholders will tend to punish companies that: •• Make voluntary commitments that appear unrelated to their business.100 •• Focus on process with uncertain outcomes (e.g., adopting a code of conduct without stating clear objectives and expectations for results).101 CUSTOMERS Customers have preferences and expectations for CR issues. They will respond to certain issues more positively than others. All things equal, customers tend to respond more to people- related CR commitments than green-related commitments.102 However, context matters.103 Green activities will likely matter more to customers, for example, when a company has a large environmental footprint. Customers respond to what they perceive as a common sense fit among their own preferences and their impressions of the company. In this regard companies should: •• Know which CR commitments are more valued by their consumers. Start by assessing what customers judge will benefit them more directly.104 •• Understand how customers perceive the common sense fit between their perception of your company and the CR commitments it makes. For customers there is a notable corollary: If the company deviates from customer expectations and/or priorities, signal the causes’ important to the company through the size of the commitment the company makes. Support a cause people wouldn’t normally associate with your company only if you make a noticeably large commitment to it. If the fit isn’t intuitive, a large commitment signals that the company passionately cares about the issue. Customers will be more willing to embrace a perceived “poor fit” in this context.105 EMPLOYEES CR generates favorable employee-related outcomes, such as job satisfaction and reduction in turnover, partially by fulfilling employees’ essential ideological and developmental job needs including the need to make a positive impact and the need to continually develop their own professional skills.106 Employees use CR to help them fulfill four fundamental needs: •• Creating opportunities for self-enhancement; •• Improving work-personal life integration; •• Building a bridge to the company; and •• Creating a “reputation shield.”107
100 Lyon, 2014 101 Busch & Hoffmann, 2012 102 Tully & Winer, 2013 103 Auger, Devinney, Louviere, Jordan, & Burke, 2008; Grimmer & Bingham, 2013 104 Ferreira, Gonçalves Avila, & Dias de Faria, 2010; Peloza, 2006; Trudel & Cotte, 2009 105 Koschate-Fischer, Stefan, & Hoyer, 2012 106 Du, Bhattacharya, & Sen, 2013
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 31 This is a key strategy that possesses corollaries: Identify the company’s employee segments that express different CR needs and expectations from their employer Research fi nds that companies often possess three employee segments vis-à-vis their attitudes to CR: Idealists, Enthusiasts, and Indifferents. Idealists have the highest CR demand, followed by Enthusiasts, and then Indifferents.108 Prioritize the effort to accommodate employees’ needs and expectations With other stakeholders, companies should fi nd the balance and fi t between the company’s priorities and stakeholder expectations. However, the company should be more accommodating with employees. This does not mean all decisions should attune to employee needs and preferences. However, when the company deviates from employee expectations, it is vital to help employees understand the rationale. Establish the connection between the job, the company’s priorities, and the employees’ needs. When an employee perceives a poor fi t between a CR obligation and their needs and job role, they will look at the CR activity as a burden instead of a benefi t.109 Commit Be genuine, authentic, high quality, and consistent with CR commitments It is not enough to do CR, one must do it well. This means: • Treat employees, customers, and shareholders well – through good times and bad. They will see that the company is genuine, strengthening their trust, improving relationships, and boosting the fi rm’s value.110 • When a fi rm engages in CR deliberately and consistently, focuses on CR dimensions related to its business and industry, and starts with internal dimensions of CR, fi nancial performance will be enhanced. Firms that wax and wane from extensive to limited CR commitments do poorly.111 • Companies with consistently high social performance receive the highest market payoffs. Even fi rms with low but consistent levels of social performance have higher market values than fi rms with occasional spikes of high social performance.112 • If there is an inconsistency between a firm’s CR efforts and the company’s overall reputation it negatively affects the CR-value relationship.113 • Positive actions towards the company were stronger among individuals who believe that the company had genuine concern about the issues involved.114 • Firms rated as leading CR performers are perceived as more attractive employers than fi rms with with CR performance. Prospective applicants’ job pursuit, likelihood to interview, and likelihood to accept a job offer are positively associated with a fi rm’s CR. When employees see their company as adhering to higher ethical standards, they become more committed to
107 Bhattacharya, Sen, & Korschun, 2008 108 Du, Bhattacharya, & Sen, 2013 109 Economist Intelligence Unit, 2011 110 Wang & Choi, 2013 111 Tang, Hull, & Rothenberg, 2012 112 Wang & Choi, 2013 113 Servaes & Tamayo, 2013 114 Sen, Bhattacharya, & Korschun, 2006
32 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability the company. This commitment in turns spurs organizational citizenship behaviors toward other employees, and these behaviors in turn enhance financial performance.115 •• Avoid “greenwashing.”116 If new employees find that the messages about sustainable practices that initially attracted them are really just a “green veneer,” many will become resentful and some will leave. Messages about sustainability need to match the reality that new hires will experience.117 Engage leaders •• Employees perceive their employers’ CR commitment to be genuine when leaders deliver a reinforcing and consistent message. This in turn builds positive feelings of commitment, attachment, and loyalty to the firm. Employees who perceive their leaders to be ethical are more likely to be satisfied with their job, perform better, and engage in citizenship behaviors.118 •• When employees think that their manager possesses charismatic leadership qualities, they tend to attribute the organization’s motives for engaging in CR activities to intrinsic values, which, in turn, are positively associated with job satisfaction.119 •• Ethical leadership has a significant impact on ethical climate and the ethical behavior of employees. An ethical climate was found to be positively associated with employee ethical behavior.120 •• Highlight management’s commitment to sustainability—from the C-suite through to the front lines. Managers set the tone on values and organizational culture, so use managers as role models.121 Build upon a foundation of strong internal CR practices such as product quality and commitment to employees CR is most supportive of creating market value when it builds upon a foundation of strong internal CR practices. • Positive financial returns from CR are amplified in firms with higher product quality, indicating that a proper mix or combination of external CR initiatives and internal corporate abilities likely generates and sustains financial value for the firm.122 CR is most supportive of creating customer value when it builds upon a foundation of perceived product quality and well-treated employees • In certain scenarios – such as in a product crisis – customers will trade CR for product qualities. However over time, good social attributes will not make up for poor functional attributes. For example, in the case of athletic shoes, the likelihood that someone will purchase the ethical product with a premium of $4.00 without compromising functionality is 62%. However, with the same premium and having to sacrifice functionality the probability drops to 20%.123
115 Chun, Shin, Choi, & Kim, 2011; Ellemers, Kingma, van de Burgt, & Barreto, 2009; Greening & Turban, 2000 116 Wikipedia defines greenwashing as: “a form of spin in which green PR or green marketing is deceptively used to promote the perception that an organization’s products, aims or policies are environmentally friendly. 117 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013 118 Sharif & Scandura, 2014 119 Vlachos, Panagopoulos, & Rapp, 2013 120 Lu & Lin, 2014 121 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013 122 Luo & Bhattacharya, 2006
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 33 CR is most supportive in creating HR value when it builds upon a foundation of strong internal CR practices. • Employees assume that if their company is ethical, the company will also treat them in an ethical manner. On the other hand companies that are not perceived as ethical might be viewed as unlikely to treat their employees ethically, resulting in a low level of organizational commitment.124 For the entire enterprise CR approach, either go big or go small, but don’t dabble For the company’s overall CR approach, the evidence suggests that the market rewards or punishes companies according to the “U-shaped” pattern shown in Figure 2. Figure 2: The “U-shape” and “Inverse-U shape” effects of CR investment
The market can respond relatively positively to severe laggards that exhibit poor CR performance (one can imagine the strong performance of so-called “sin” industries), but it tends to respond even more positively to those that achieve the highest levels of performance in CR. Research is fi nding that the greatest valuation accrues to the companies with the highest commitment to CR. However the market tends to punish those it perceives as dabbling in between.125 For specifi c CR commitments, follow the Goldilocks approach As Figure 2 portrays, the market appears to favor specifi c CR investments according to an inverse, or upside-down, U-shaped curve. Investors and customers won’t respond favorably to too much of a specifi c CR activity, and they won’t support too little.126 Similarly the market will likely punish companies it perceives as over- investing in environmental activities.127 There is a sweet spot for investment. There’s no standard level of investment. Each company has to fi nd the amount that’s “just right” for them by assessing the right “Fit” discussed earlier.
123 Auger, Devinney, Louviere, Jordan, & Burke, 2008; Klein & Dawar, 2004 124 Peterson, 2004 125 Barnett & Salomon, 2012; Brammer & Millington, 2008; Eccles, Ioannou, & Serafeim, 2011 126 Flammer, 2013; Lev, Petrovits, & Radhakrishnan, 2010 ; Wang, Choi, & Li, 2008 127 Lyon, 2014
34 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Manage Define and treat your company’s CR performance as an intangible asset A genuine, well-designed, and well-communicated CR approach helps drive market value and serves as insurance that limits share price volatility. Effective companies view their CR approach like a resource to be nurtured and protected. To make CR a value-generating strategy, executives must understand the contexts in which responsible practices are more likely to pay off and implement those practices with specific principles, including competence, authenticity, and communication, in mind.128 Integrate CR into the way the company manages its other, core intangible assets Markets value responsible companies if they blend CR activities with investments in intangible assets and effectively communicate their purpose. There is a virtuous cycle of relationships among financial performance, CR, employee engagement, brand and reputation, innovation and R&D, and organizational culture. Figure 3: CR and intangible assets virtuous cycle
On the other hand, irresponsible CR management can negatively affect intangibles: reducing employee loyalty, harming corporate culture, harming reputation, and dragging down innovations. Intangibles are, therefore, the key elements that allow the virtuous circle of value creation to work over time. Companies interested in building and maintaining this virtuous cycle should develop and communicate CR objectives and managerial processes in the context of key intangible assets. Use external CR ratings as a proxy for stakeholder expectations, but consider developing a customized CR rating as well Third-party CR ratings are useful as a guide to understand what a company’s stakeholders expect from its CR performance. Evidence suggests that how a company performs on certain ratings may result in improved financial performance.
128 Diermeier, 2013
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 35 However, third-party ratings may not capture the expectations that stakeholders specifi cally have. Nor can they capture the strategies, products and services, leadership, brand promise, and organizational culture that the company possesses. To manage the company’s CR approach as an intangible asset, it will be useful to develop a customized rating of what above average, average, and below average CR performance looks like specifi cally for the company, based on the expectations of shareholders, customers, employees, and external stakeholders. This is the most accurate way to determine which investments the company should make in CR in a way that will enhance value. Defi ne and treat your company’s stakeholder relationships as an asset Increasing cooperation and positive feeling, and reducing confl ict with stakeholders enhances the fi nancial valuation of a fi rm.129 In addition: • Good stakeholder relations shorten periods of poor performance, allowing fi rms to get back to “normal” levels more quickly following problems.130 • When a fi rm performs well fi nancially, good stakeholder relations help sustain it for a longer period of time. Employees may work harder and/or customers will buy more products or pay more for them.131 CR’s ability to yield a return on investment depends upon the complex and value laden interpretations of the company’s stakeholders. When these interpretations are taken into account, managers can confi gure, calibrate, and communicate CR in ways that maximize returns both for society and the company. Under the right circumstances, CR can drive employees, customers, and investors to engage in behaviors that contribute to the long-term success of the organization.132
The upshot: Develop good stakeholder relations now to benefi t in the future.133
Connect Build awareness • Senior executives should view CR as a long-term commitment. A company should make a sustained effort to communicate their CR efforts such that they generate stakeholder trust.134 • Building awareness of CR commitment and performance comes with opportunities and risks. High public awareness of CR performance can enhance fi rm value. But firms with high public awareness are also penalized more when there are CR concerns. For firms with low public awareness, the impact of CR activities on firm value is either insignificant or negative.135 • When fi rms report according to a respected standard like the United Nations Global Compact, and/or get positive third-party reviews for their CR reports, they receive statistically signifi cant higher market valuation than reporting laggards.136
128 Diermeier, 2013 129 Choi & Wang, 2009; Henisz, Dorobantu, & Nartey, 2013 130 Choi & Wang, 2009 131 Choi & Wang, 2009 132 Bhattacharya, Sen, & Korschun, 2011 133 Choi & Wang, 2009 134 Barnett & Salomon, 2012; Brammer & Millington, 2008
36 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability •• Only 31% of 250 surveyed businesses listed on the S&P engaged their employees on the company’s CR objectives and initiatives.137 •• Favorable perceptions of CR are associated with higher organizational commitment and employee engagement. Perceived social responsibility and development performance will have a greater effect on organizational identification than perceived market and financial performance.138 •• CR messages can only add value if they reach job seekers. Use multiple channels to inform job seekers about your sustainability, such as company websites and careers pages, employee testimonials, recruitment handouts, conversations with recruiters, position announcements, contests, prizes, “fairs” to expose employees to CR issues, etc.139 •• Communicate CR to all employees, as it has the potential to increase employees’ organizational commitment, which may result in positive organizational outcomes.140 •• Generating sales and reputation value starts by building awareness. Customers aware of a company’s CR initiatives identify more with the company and view the company as more socially responsible compared with those who are unaware.141 •• CR activities enhance value for advertising-intensive companies. CR has either a negative or insignificant value impact on firms with low public awareness.142 •• Yet, building awareness of a wide array of CR initiatives is a challenge. Stakeholders often have low levels of awareness of a company’s CR efforts.143 This suggests that companies should pick very few CR initiatives to communicate that symbolize the wider commitment to CR. This helps cut through the clutter of marketing messages that consumers receive on a daily basis. This leads to the following corollary: Use a core initiative to symbolize your company’s commitment to citizenship For specific initiatives to support sales, messaging should focus on an emblematic initiative, issue, and/or theme.144 Customers will use this as a proxy to make judgments about the company’s total CR profile. In this regard, it’s important to have the full range of commitments key stakeholders expect. This is because a small group of “mavens” will make the effort to review the company’s dedicated efforts. These mavens will jedge whether they believe the company is sincere or greenwashing and will try to inform wider audiences. Be modest and don’t over-promote Over-promoting by aggressively and simultaneously communicating your company’s CR, innovation, and advertising, can be seen as irresponsible or ineffective.145 Be modest in promoting CR to gain customer goodwill and third-party promotion. Leading brands such as Citibank, 3M, and GE value “discrete” support for social causes. Tobacco giant Phillip Morris was criticized for spending more on promoting its charitable donations than it donated, and for insincerity in airing its own anti-smoking campaign.146
135 Servaes & Tamayo, 2013 136 Akisik & Gal, 2014; Kimbro & Cao, 2011 137 Zafar, Nawaz, Farooqui, Abdullah, & Yousaf, 2014 138 Carmeli, Gillat, & Waldman, 2007; Peterson, 2004; Wong, 2011 139 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013; Wong, 2011 140 Stites & Michael, 2011 141 Sen, Bhattacharya, & Korschun, 2006 142 Servaes & Tamayo, 2013 143 Sen, Bhattacharya, & Korschun, 2006 144 Tully & Winer, 2013 145 Luo & Bhattacharya, 2009 146 Peloza, 2006 Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 37 Communicate with the goal of building trust and ameliorating concern among key stakeholders For companies interested in generating “insurance” value to protect from risk against negative events such as product recalls, CR messages can establish a form of dialogue that establishes deeper trust. Sound CR management has a signifi cant impact on customer trust and loyalty. For companies with reputations in crisis, a track record of sound CR management can stem negative customer attitudes, attribution of blame, negative brand evaluation, and defection. It can help accelerate service recovery. For example, consumers’ purchase intentions following a product recall were twice as high for products of companies described as having a strong CR reputation compared with those with a weak CR reputation.147 Building stakeholder trust requires constant effort but can lead to rewards • Stakeholders need to see serious and sustained CR performance before a company can accrue the fi nancial benefi ts of their CR activities. A company should make a sustained effort to communicate their sustainability efforts as part of the process to build stakeholder trust.148 • Different stakeholders obtain cues about whether a fi rm has a genuine interest in their well-being from how the fi rm treats others. Companies that consistently treat customers, employees, and other stakeholder groups well perform better fi nancially than those that play favorites. If a fi rm’s treatment of a stakeholder group varies markedly with time, their CR performance will demonstrate inconsistency. Inconsistent CR performers do poorly in the market.149 The upshot: Consistently treat key stakeholders well – don’t favor one group over another and don’t dabble with one stakeholder group. Customers and shareholders will notice if you treat some of them well and not others. Don’t play favorites; participate in good social practices across multiple groups.150
CUSTOMERS All things equal, focus on people over the planet Human benefi ts, such as good working conditions, may be able to obtain a greater price premium and have wider appeal than focusing on animal or environmental benefi ts.151 Yet, when well aligned with the right company and product, environmental responsibility can still support sales in impactful ways. For example, in one study, the following green messages infl uenced consumer willingness to pay a premium for a food product: • “10 Percent Less Glass” claims led to a 1.2% price premium • “Social Responsibility” claims led to a 5.3% price premium • “Carbon Zero” claims led to a 9.6% price premium • “Environmental Responsibility” claims led to a 10.4% price premium • “Organic” claims led to a 17.6% price premium152
147 Assiouras, Ozgen, & Skourtis, 2013; Choi & La, 2013; Mattila, Hanks, & Kim, 2010; Peloza, 2006 148 Barnett & Salomon, 2012 149 Wang & Choi, 2013 150 Wang & Choi, 2013 151 Tully & Winer, 2013 152 Mueller Loose & Remaud, 2013
38 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Find the right pathway from guilt to pride Activating feelings of guilt can lead customers to respond to CR as a sales driver. However, the effects are limited. Accentuating positive messages is effective as well. There is potential in combining both approaches, which activates consumer feelings of guilt and subtle messages of right and wrong while giving them a source of pride in their purchasing decision.153 Build in, but don’t bolt on, CR messaging for luxury products CR messages can backfire for luxury brands, since customers perceive messages as undermining the claims of worth and value.154 As an example, a customer might perceive that a luxury, high-end tire “made from recycled materials” will exhibit inferior performance. For luxury brands CR cannot compromise functionality.155 However, when CR aligns with customer expectations of luxury it can support sales. Tactics to “build-in” CR to a luxury brand include: • Attributing CR activities to a more suitable sub-brand • Priming consumers with images of powerful philanthropists, such as Bill Gates. This associates “perfection” and power with “doing good” and improving society and the environment • Claiming directly how the CR attribute(s) improves functionality and/or establishes a differentiated status • Engaging the guilt-to-pride pathway • Associating with openness or tradition156 Build in but don’t bolt on, CR messaging for price-sensitive products CR messages can distract price-sensitive shoppers and create impressions that the product is either over-priced or lower quality.157 However, as the next tactic indicates, well-crafted CR messages can help differentiate both commodity products and price-sensitive products. Use CR to differentiate a commodity item For most shoppers, CR considerations become a tie-breaker when other factors are in relative parity. Because of this effect, CR characteristics can drive product switching. Once a product with greater CR attributes has captured the shopper’s commitment, it tends to create brand stickiness by retaining the shopper’s loyalty through repurchase.158 Engage customers in CR activities Positive CR beliefs held by consumers are associated not only with greater purchase likelihood, but also with longer-term loyalty and advocacy behaviors.159
153 Andrews, Xueming, Zheng, & Aspara, 2014; Antonetti, Paolo, & Stan Maklan, 2014; Peloza et al, 2013 154 Torelli, Monga, & Kaikati, 2012 155 Bhattacharya, Korschun, & Sen, 2011; Essoussi & Linton, 2010; Newman, Gorlin, & Dhar, 2014 156 Hainmueller & Hiscox, 2011c; Hainmueller & Hiscox, 2012a; Torelli, Monga, & Kaikati, 2012 157 Hainmueller & Hiscox, 2011c; Hainmueller & Hiscox, 2012a 158 Grocery Manufacturers Association & Deloitte, 2009 159 Du, Bhattacharya, & Sen, 2007 Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 39 A company can reap superior business returns among consumers who have participated in CR activities. Participant customers form a communal, trust-based bond with the company. These customers can become loyal advocates and champions. They will promote the company against competitors.160 Follow the label Third-party certifi cation from a credible organization supports a product’s CR credentials and boosts consumer willingness to pay.161 For example, brands and retailers may be able to win market share and boost sales by offering more Fair Trade certifi ed goods, either targeted at particular segments and priced at a premium or marketed generally at regular prices. Tests suggest that there are plenty of consumers ready to vote with their shopping dollars to support Fair Trade when it is offered as an option.162 Market, don’t lecture One can observe certain companies providing customers with detailed and sometimes technical information regarding their performance on CR issues. One famous brand-name retailer would print brochures for customers to review the company’s responsible supply chain program and its sustainability report. Research suggests that providing customers with CR information in formats that NGOs and other ESG stakeholders request does not change customer intent to purchase.163 The implication is that the way companies design and communicate their CR performance information should be developed in a way that is appealing for customers. EMPLOYEES Use CR as a bridge to connect the personal values of employees and job seekers to those of the organization CR draws job seekers because it helps them connect specifi c organizational values to their own personal values. Job seekers want an employer whose values are a good fi t with their own. The match a person feels with an organization is a major driver of job choice decisions. Clearly link CR initiatives to specifi c organizational values and demonstrate their authenticity. Explicitly describe company values that drive specifi c CR actions, such as values about protecting the natural environment, managing relationships with external stakeholders, addressing employee concerns, and being a responsible corporate citizen. Show job seekers how CR is infused in daily work activities, training programs, reward systems, operational practices and objectives, and hiring practices.164 Link CR to the company’s commitment to people practices • Showcase employee-driven CR initiatives to illustrate how the company’s concern for CR is tied to efforts to create meaningful and rewarding experiences for employees. • Communicate to job seekers how CR practices connect to people practices through messages like, “We strive to reduce our environmental impact because we care about how we treat the planet, just like we care about how we treat our people.”165
160 Du, Bhattacharya, & Sen, 2011 161 Trudel & Cotte, 2009 162 Hainmueller & Hiscox, 2011c; Hainmueller & Hiscox, 2012b; Hiscox, Broukhim, & Litwin, 2011a; Nielsen, 2014 163 Auger, Devinney, Louviere, Jordan, & Burke, 2008 164 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013 165 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013
40 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Use CR to build employees’ pride in their employer • CR actions often lift a company’s reputation and status, leading many job seekers to believe they’d feel proud to work for a prestigious organization admired for its sustainability. Reinforce that anticipated sense of pride by creating and celebrating a distinctive reputation for CR. Adopt sustainability practices that exceed industry norms and distinguish the company from other employers, such as by integrating CR with your brand, products, and services. • Link CR to the organization’s prestige by seeking recognition and awards from reputable third- party organizations. • Demonstrate employee pride through testimonials and by showing how you celebrate sustainability achievements.166 Engage employees in CR planning and activities Engagement scores for employees who have been involved with their organization’s CR programming in the past year are higher than those who have not. In addition, the more involved an employee is (in philanthropy, community involvement, and social innovation versus only one or two categories) the higher their engagement scores.167 CR initiatives can help fulfill employees’ needs and draw them to identify strongly with the company when managers: • Bring their employees closer to the company’s CR initiatives; • Focus on strengthening employee identification with the company; and • Engage employees in co-creating CR-value.168
Use CR as a differentiator to recruit highly-qualified workers CR increases employer attractiveness for job seekers with high levels of job choice. It plays less of a factor for populations with low levels of job choice.169 Leverage CR as a tool to develop global talent Engaged employees are happier and more productive, but CR has benefits even beyond the increased productivity that correlates with high employee engagement. Research suggests that involvement in the company’s CR practices teaches workers valuable new skills that they bring back to their regular roles for the company.170 Create opportunities for employees to make an impact 53 percent of workers said that “a job where I can make an impact” was important to their happiness. 72 percent of students said that “a job where I can make an impact” was important to their happiness. Most would even take a pay cut to achieve that goal. 35 percent would take a pay cut to work for a company committed to CSR. 45 percent would take a pay cut for a job that makes a social or environmental impact. 58 percent would take a pay cut to work for an organization with values like their own.171
166 Huffman & Klein, 2013; Jones & Willness, 2013; Willness & Jones, 2013 167 Ketvirtis, 2012 168 Bhattacharya, Sen, & Korschun, 2007 169 Albinger & Freeman, 2000 170 Meister, 2012 171 Meister, 2012
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 41 VIII. ACHIEVING THE TARGET: DIAGNOSTIC TOOL Based on the research fi ndings, companies can apply the following diagnostics, indicators, and metrics to: • Assess whether their current practices position them to deliver ROI from CR practices; • Guide the strategies and tactics they should pursue; • Evaluate results and performance; and • Determine areas to improve. A company can begin the process with the following diagnostics. However, companies will benefi t from customizing further their own diagnostics that fi t their situation.
Diagnostics for the way the company FITS CR practices into its business Defi ne CR priorities • Has the company assessed the CR performance expectations of the following stakeholders? What do they suggest are the priority CR commitments the company should make? • Core business stakeholder including customers, employees, and shareholders • Priority external stakeholders (such as CR advocates and thought leaders; CR ratings, frameworks, and standards; Socially Responsible Investments (SRIs); communities; NGOs; government; relevant media; and activists) • Has the company conducted a process to defi ne CR priorities that fi t the business and key stakeholder expectations? List the company’s main CR activities. Can the company effectively explain to key stakeholders: • The business rationale for each CR activity (connecting them explicitly to at least one of the strategic goals listed in Table 6 below)? • How these activities tie to the expectations, interests, and needs of shareholders, customers, and employees? • How these activities meet the expectations of key external stakeholders? For those CR activities defi ned as priorities and strong “Fits” for the business: • Has the company defi ned a plan to communicate to key stakeholders the rationale for identifying these as high priorities? • Has the company defi ned a business case for how its performance will support the strategic value- creating goals (see the list below in Table 6) and intangible assets (see the list below in Table 7)? • Has the company developed plans to deliver the business case that include levels of resources (budget, staff, time, capabilities, technology, R&D, etc.) required? For those CR activities that are not priorities and strong “Fits”: • Has the company defi ned a plan to communicate to key stakeholders the rationale for identifying these as low priorities? • Has the company developed plans for the type and scope of attention these lower priorities will receive?
42 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Diagnostics for the company’s COMMITMENT to CR practices Commit to be a CR leader Has the CEO – with the approval of the Board – set the goal to: • Be among the top tier of CR performers in its industry? • Be among the top tier of CR performers across a wider group of benchmark peer companies? Is the company a top-rated performer against peers with regard to key internal dimensions of CR such as: • Policies and performance that ensure the safe, ethical, non-discriminating, and fair treatment of employees? • Ethical practices and anti-corruption? • Product stewardship including quality and safety? • Health and safety? Benchmark the CR commitments, strategies, and communications of peer market leaders and laggards • How do they compare to your commitments? • How do they compare to your strategies? • How do they compare to your communications? From the benchmark assess: • Where does the company need to catch up? • Where does the company need to pare back or refocus? • Where is there an opportunity to do more to competitively differentiate? Does the company have: • A plan(s) to maintain CR commitments through the ups and downs of economic cycles? Does the company embed CR practices in the performance responsibilities and related appraisals of: • Board Members? • CEO and C-Suite Leaders? • Senior Executives? • Middle Management? • Wider Staff?
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 43 Diagnostics for the way the company MANAGES CR practices as an asset Defi ne and structure the company’s CR practices as an asset that fi ts the business model, organizational culture, and stakeholder expectations • Set a value-creating goal Has the company set a value-creating goal for its CR practices? • The research suggests there are fi ve core options. While tempting to answer “all of the above” it is more practical to select one core goal while potentially adding subsidiary objectives.
Table 6: CR business-value goals Strategic, business-value creating goal Potential target range a) Reduce risks and protect the license to operate of the company Protecting as much as 10% of the fi rm’s value b) Nurture, grow, and protect CR-related brand and reputation value Protecting as much as 11% of the fi rm’s value c) Boost how shareholders view performance to enhance share price and market Increasing share price value as much as 6% d) Enhance your competitive positioning with, and deepen the engagement of, your Increasing revenues as customers much as 20% e) Enhance your competitive positioning with, and deepen the engagement of, your Reducing turnover as employees much as 50% f) Some combination of the above
Do current CR practices align or misalign with goal priorities? • For those areas that align: • What strategies would help them enhance their ROI potential? • For those areas that misalign: • What actions would bring them into alignment? • Are there more productive and essential CR activities that would align?
Integrate CR into the way the company manages its other core intangible assets in a way consistent with the value-creating goal • Has the company set an objective for CR to support key intangible assets? • The research suggests there are four core options. While tempting to answer “all of the above” it is more practical to select one core goal while potentially adding subsidiary objectives.
44 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Table 7: CR support for intangible assets Core intangible asset Does this align with the business-value creating goal identified above? a) Brand and reputation Y/N b) Employee engagement and talent management Y/N c) Organizational culture Y/N d) Innovation Y/N e) Some combination of the above Y/N
Do current CR practices align or misalign with priority intangible assets? •• For those areas that align: •• What strategies would help them enhance their ROI potential? •• For those areas that misalign: •• What actions would bring them into alignment? •• Are there more productive and essential CR activities that would align?
Define and treat your company’s stakeholder relationships as an asset Has the company identified its priority: •• Core, business-related stakeholders? •• External stakeholders? Across business-related stakeholders, has the company identified the size and attributes of the segments depicted in the following table? Table 8: How many stakeholders fit into the following categories regarding their level of concern for the company’s CR performance? Strongly cares Moderately cares Cares Does not care Prefers that somewhat the company does not engage in CR Customers Employees Shareholders
•• Across priority external stakeholders, has the company identified key segments with regard to their size and attributes? For these core business stakeholder segments and external stakeholder types establish baselines and track progress on: •• Trust for the company as a corporate citizen
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 45 • Awareness for what the company stands for as a corporate citizen • Awareness and attitudes for the company’s CR performance • Expectations for the company’s CR commitments and overall CR stance • Needs stakeholders have for the company’s CR performance.
Set baseline metrics and track progress to determine the size and strength of commitment in your company’s stakeholder network. Do stakeholders: • Perceive they hold a stake in the company’s responsibly competitive success? • Perceive the relationship with the company as “neighbor-to-neighbor”? • Form a knowledge & intelligence sharing exchange? • Work as intermediaries? • Offer constructive criticism? Diagnostics for the way the company makes CONNECTIONS that enable CR practices to drive ROI Assess and build awareness Table 9: Track baseline stakeholder awareness and progress over time of the following Customer Employee Shareholder Priority external stakeholders How do stakeholders assess the company’s: CR commitment CR performance Key CR activities and programs Treatment of key stakeholders How they assess how the company’s CR performance factors into the company’s: Brand and reputation Human resource performance Overall trust Product and service quality Risk management Share price and market value Stakeholder engagement
46 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Customer Employee Shareholder Priority external stakeholders How do stakeholders relate CR performance to their: Level of satisfaction (e.g. customer, employee) Loyalty and commitment Overall trust Sense of engagement Support for the company’s license to operate without extensive oversight, permission, or regulation Willingness to*: Give the company the benefit of the doubt during difficult times and/or crises Invest Purchase Seek employment Speak favorably about the company to others * If applicable to the stakeholder
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 47 IX. A LOOK AHEAD
The fi ndings from this study suggest a result that has powerful implications for the management and practice of CR. That is, CR, managed well, appears to contribute to fi nancial ROI as well as competitive and wider-business benefi ts. This means that companies and their managers can exert some measure of both choice and control over the business-related benefi ts that their CR management will deliver. Like other investments, some CR initiatives will pan out and others won’t. Rather than debate whether or not CR creates or destroys value in the abstract, a more productive approach will be to develop business-aligned and integrated CR strategies. This includes applying to CR some of the same management disciplines as any other business function. As such, this Report begins to chart what these functions should be, and points out valuable new directions for continued investigation and improvement in the years to come.
48 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability X. BIBLIOGRAPHY
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60 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Roecka, K. D., Mariqueb, G., Stinglhamberb, F., & Swaena, V. 2014. Understanding employees’ responses to corporate social responsibility: Mediating roles of overall justice and organizational identification. The International Journal of Human Resource Management, 25(1): 91-112. Roth, B. 2013, September 25. How sustainability is growing Unilever’s brand equity and profit. As posted on triplepundit.com. Schneider, T. E. 2011. Is environmental performance a determinant of bond pricing? Evidence from the US pulp and paper and chemical industries. Contemporary Accounting Research, 28(5): 1537-1561. Schnietz, K. E., & Epstein, M. J. 2005. Exploring the financial value of a reputation for corporate social responsibility during a crisis. Corporate Reputation Review, 7(4): 327-345. Schreck, P. 2011. Reviewing the business case for corporate social responsibility: New evidence and analysis. Journal of Business Ethics, 103(2): 167-188. Schroder, M. J. A., & McEachern, M. G. 2005. Fast foods and ethical consumer value: A focus on McDonald’s and KFC. British Food Journal, 107(4): 212-224. Schwartz, T. & Porath, C. 2014, June 1. Why you hate work. The New York Times, p. SR1. Sen, S., Bhattacharya, C. B., & Korschun, D. 2006. The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing Science, 34(2): 158-166. Servaes, H., & Tamayo, A. 2013. The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5): 1045-1061. Sharfman, M. P., & Fernando, C. S. 2008. Environmental risk management and the cost of capital. Strategic Management Journal, 29(6): 569-592. Sharif, M. M., & Scandura, T. A. 2014. Do perceptions of ethical conduct matter during organizational change? Ethical leadership and employee involvement. Journal of Business Ethics, 124(2): 185-196. Shen, J., & Benson, J. 2014. When CSR is a social norm: How socially responsible human resource management affects employee work behavior. Journal of Management. Retrieved from http://jom.sagepub. com/content/early/2014/02/19/0149206314522300.full.pdf+html. Shuck, M. B., Rocco, T. S., & Albornoz, C. A. 2011. Exploring employee engagement from the employee perspective: Implications for HRD. Journal of European Industrial Training, 35(4): 300-325. Shuili, D., Bhattacharya, C. B., & Sankar, S. 2011. Corporate social responsibility and competitive advantage: Overcoming the trust barrier. Management Science, 57(9): 1528-1545. Skard, S., & Thorbjørnsen, H. 2014. Is publicity always better than advertising? The role of brand reputation in communicating corporate social responsibility. Journal of Business Ethics, 124(1): 149-160. Smith, N. C., Read, D., & Lopez-Rodriguez, S. 2010. Consumer perceptions of corporate social responsibility: The CSR halo effect (INSEAD Working Paper No. 2010/16/ISIC). Fontainebleau, France: INSEAD. Retrieved from http://www.insead.edu/facultyresearch/research/doc.cfm?did=43990. Stites, J. P., & Michael, J. H. 2011 Organizational commitment in manufacturing employees: Relationships with corporate social performance. Business & Society, 50(1), 50-70. Surroca, J., Tribo, J. A., & Waddock, S. 2010. Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31(5): 463-490. Swinand, A. 2014, March 25. Corporate social responsibility is millennials’ new religion. Crain’s Chicago Business. Retrieved from http://www.chicagobusiness.com/article/20140325/OPINION/140329895/ corporate-social-responsibility-is-millennials-new-religion. Tang, Z., Hull C. E., & Rothenberg, S. 2012. How corporate social responsibility engagement strategy moderates the CSR–financial performance relationship. Journal of Management Studies, 49(7): 1274-1303. Tascioglu, M. 2014. Consumers perceptions towards sustainability: A cross-cultural analysis (Dissertation Paper 1169). Statesboro, GA: Jack N. Averitt College of Graduate Studies. Retrieved from http:// digitalcommons.georgiasouthern.edu/cgi/viewcontent.cgi?article=2216&context=etd.
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 61 Tonin, M., & Vlassopoulos, M. 2014. Corporate philanthropy and productivity: Evidence from an online real effort experiment (CESifo Working Paper Series No. 4778). Munich, Germany: CESifo. Retrieved from https://www.cesifo-group.de/DocDL/cesifo1_wp4778.pdf. Torelli, C. J., Monga, A. B., & Kaikati, A. M. 2012. Doing poorly by doing good: Corporate social responsibility and brand concepts. Journal of Consumer Research, 38(5): 948-963. Trudel, R., & Cotte, J. 2009. Is it really worth it? Consumer response to ethical and unethical practices. MIT Sloan Management Review, 50(2): 61-68. Tuffrey, M. 2003. Good companies, better employees: How community involvement and good corporate citizenship can enhance employee morale, motivation, commitment and performance. Retrieved from http:// www.educationandemployers.org/wp-content/uploads/2014/06/good-companies-better-employees-ccc.pdf. Tully, S. M., & Winer, R. S. n. d. Are People Willing to Pay More for Socially Responsible Products: A Meta- Analysis (Unpublished doctoral dissertation). New York, NY: Stern School of Business. Retrieved from http:// web-docs.stern.nyu.edu/pa/winer_tully.pdf. Tuppen, C. 2004. Building a quantitative business case. In European Business Forum, EBF on CSR. Retrieved from http://www.johnelkington.com/archive/ebf_CSR_report.pdf. Turban, D. B., & Greening, D. W. 1997. Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40(3): 658-673. UN Global Compact & Accenture. 2010. A new era of sustainability: UN Global Compact-Accenture CEO study 2010. Retrieved from http://www.accenture.com/sitecollectiondocuments/pdf/accenture_a_new_era_of_ sustainability_ceo_study.pdf. UN Global Compact & Accenture. 2013. CEO study on sustainability 2013: Architects of a better world. Retrieved from http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-UN-Global-Compact-Acn- CEO-Study-Sustainability-2013.pdf. UN Global Compact & Principles for Responsible Investment. 2014. Coping, changing, shifting: Strategies for managing the impacts of investor short-termism on corporate sustainability. Retrieved from https://www. unglobalcompact.org/docs/issues_doc/lead/LEAD_ShortTermism.pdf. Unilever. 2013. Unilever sustainable living plan: Making progress, driving change. Retrieved from http://www. unilever.com.tw/Images/slp_Unilever-Sustainable-Living-Plan-2013_tcm13-388693_tcm206-395956.pdf. Unilever. 2015. Sustainable Living. Retrieved June 9, 2015 from http://www.unilever.com/sustainable-living. Vachon, S., & Klassen, R. D. 2008. Environmental management and manufacturing performance: The role of collaboration in the supply chain. International Journal of Production Economics, 111(2): 299-315. Valaster, C., Lindgreen, A., & Maon, F. 2012. Strategically leveraging corporate social responsibility: A corporate branding perspective. California Management Review, 54(3): 34-60. Vasi, I. B., & King, B. 2012. Social movements, risk perceptions, and economic outcomes: The effect of primary and secondary stakeholder activism on fi rms’ perceived environmental risk and fi nancial performance. American Sociological Review, 77(4): 573–597. Vassileva, B. 2009. Corporate social responsibility-corporate branding relationship: An empirical comparative study. Management & Marketing, 7(2): 13-28. Virvilaite, R., & Daubaraite, U. 2011. Corporate social responsibility in forming corporate image. Engineering Economics, 22(5): 534-543. Vitaliano, D. F. 2010. Corporate social responsibility and labor turnover. Corporate Governance: The International Journal of Business in Society, 10(5): 563-573. Vlachos, P. A., Panagopoulos, N., & Rapp, A. 2013. Feeling good by doing good: Employee CSR-induced attributions, job satisfaction, and the role of charismatic leadership. Journal of Business Ethics, 118(3): 577- 588.
62 | Project ROI: Defi ning the competitive and fi nancial advantages of corporate responsibility and sustainability Vlachos, P. A., Panagopoulos, N., & Rapp, A. 2014. Employee judgments of and behaviors towards corporate social responsibility: A multi- study investigation of direct, cascading, and moderating effects. Journal of Organizational Behavior, 35(7): 990-1017. Voight, J. 2015, March 23. For Unilever’s CMO, global growth and social responsibility are now inseparable goals. Adweek. Retrieved from http://www.adweek.com/news/advertising-branding/keith-weeds-plan-grow-unilever-and-reduce-its-global-footprint-163596. Wamalwa, B. P. 2014. Supply chain management as a strategic tool for competitive advantage in tea industry in Kenya. Journal of Management and Sustainability, 4(3): 157-164. Wang, A. 2011. The effects of firms’ advertising disclosures as a reflection of CSR practices on consumer responses. Social Responsibility Journal, 7(4): 592-603. Wang, H., & Choi, J. 2013. A new look at the corporate social-financial performance relationship: The moderating roles of temporal and interdomain consistency in corporate social performance. Journal of Management, 39(2): 416-41. Wang, H., Choi, J., & Li, J. 2008. Too little of too much? Untangling the relationship between corporate philanthropy and firm financial performance. Organization Science, 19(1): 143-159. Weber, M. 2008. The Business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4): 247-261. Weeden, C. 2011. Smart giving is good business: How corporate philanthropy can benefit your company and society. San Francisco, CA: Jossey-Bass. Weiser, J., Kahane, M., Rochlin, S., & Landis, J. 2006. Untapped: Creating value in underserved markets. Oakland, CA: Berrett-Koehler Publishers. Willard, B. 2012. The new sustainability advantage: Seven business case benefits of a triple bottom line. Gabriola Island, BC: New Society Publishers. Williams, L. 2013, May 13. Satisfied employees boost your stock price. Posted on nbs.net. Willness, C. R., & Jones, D. A. 2013. Green organizations: Driving change with I-O psychology. New York, NY: Routledge. Winston, A. 2014. The big pivot: Radically practical strategies for a hotter, scarcer, and more open world. Cambridge, MA: Harvard Business Review Press. Wójcik, P. 2013. The Effects of corporate social responsibility initiatives and price premiums on Polish consumers’ responses: An experimental study. International Journal of Management and Economics, 38(1): 84–101. Wong, D. 2011, June 23. Top talents attracted by socially responsible corporations. Message posted to carbon49.com World Business Council for Sustainable Development. 2010. People matter engage: Inspiring employees about sustainability. Retrieved from http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=48. World Economic Forum & Accenture. 2015. Beyond supply chains: Empowering responsible value chains. Retrieved from http://www. accenture.com/SiteCollectionDocuments/PDF/Accenture-Beyond-Supply-Chains-Report-2015.pdf. World Economic Forum & Deloitte Touche Tohmatsu. 2013. From the margins to the mainstream: Assessment of the impact investment sector and opportunities to engage mainstream investors. Retrieved from http://www3.weforum.org/docs/WEF_II_ FromMarginsMainstream_Report_2013.pdf. World Economic Forum, Ellen MacArthur Foundation, & McKinsey & Company. 2014. Towards the circular economy: Accelerating the scale- up across global supply chains. Retrieved from http://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf. Xueming, L., & Bhattacharya, C. B. 2009. The debate over doing good: Corporate social performance, strategic marketing levers, and firm-idiosyncratic risk. Journal of Marketing, 73(6): 198-213. Yasemin, S., Idrissi, A. E., Bouri, A., Mudaliar, A., & Schiff, H. 2014. Spotlight on the market: The impact investor survey. Retrieved from http://www.jpmorganchase.com/corporate/socialfinance/document/140502-Spotlight_on_the_market-FINAL.pdf. Zafar, F., Nawaz, A., Farooqui, A., Abdullah, M., & Yousaf, I. 2014. Employees’ retention through corporate social responsibility in large scale organizations. International Journal of Business and Behavioral Sciences, 4(1): 1-30.
Project ROI: Defining the competitive and financial advantages of corporate responsibility and sustainability | 63 carroll school of management center for corporate citizenship
Research reinforces corporate citizenship value
he conversation about corporate citizenship often focuses on values. “It’s Tthe right thing to do … We’re a company that cares … We all need to work together to make the world a better place … People are our most valuable asset … It is our responsibility to protect the planet.”
Establishing, reinforcing, and rewarding alignment maintain short-term returns. A conversation that bal- of business practices with core values is important ances the need for short performance gains with down- for companies that seek to actively manage the cul- stream sustainability and potential impact to reputa- ture of their firms. If the conversation starts and ends tion or other intangible assets such as firm-specific with why companies should practice good corporate knowledge might well more likely consider questions citizenship with values, corporate leaders responsible such as, “what is important to us and who do we want for managing to bottom-line financial goals – particu- to be? Now? Years from now?” larly those in companies that are publicly held – may Corporate citizenship professionals are asked fre- be challenged to maintain commitment to corporate quently why their firms should make investments in citizenship initiatives when confronting pressure to the community and environment. In a business world
28 the corporate citizen issue 7 www.BCCorporateCitizenship.org boston college
focused on the current quarter and short-term results, real value to the company such as meeting the expecta- it is helpful to have concrete research that corroborates tions of communities and consumers, and helping to the assertion that corporate citizenship has bottom- reinforce trust and loyalty. line value for the company. Nielsen’s 2012 Global Corporate Citizenship Survey A good place to start is demonstrating that there supports this. The survey of more than 28,000 respon- is an empirical link between corporate social perfor- dents in 56 countries found that 46 percent of global mance and corporate financial performance. consumers are willing to pay extra for products and “The empirical link between corporate social per- services from companies that have implemented pro- formance and corporate financial performance has grams to give back to society. been investigated for 35 years,” explained Katherine V. In the study, respondents were asked if they prefer Smith, executive director of the Boston College Cen- to buy products and services from companies that im- ter for Corporate Citizenship at the Carroll School of plement programs that give back to society. Two thirds
“The major implication of this research is that oft-cited concerns about social invest- ments reducing value for shareholders is likely misplaced. The data indicate that com- panies are not penalized for social investments and in some instances are rewarded.”
Katherine V. Smith, executive director Carroll School of Management Center for Corporate Citizenship at Boston College
Management. She cited a 2009 meta-analysis of 214 (66 percent) of consumers around the world said they studies seeking to understand the relationship of envi- prefer to buy products and services from the compa- ronmental or social corporate citizenship investments nies that have implemented programs to give back to to the financial performance of a company – “Does it society. Respondents also were asked whether they Pay to be Good? A Meta-analysis and Redirection of Re- would be willing to pay extra for those services. Nearly search on the Relationship Between Corporate Social half (46 percent) said they are willing to pay extra for and Financial Performance”. The research by Joshua products and services from these companies. These D. Margolis, Hillary Anger Elfenbein, and James P. are what Nielsen calls “socially conscious consumers.” Walsh revealed that positive corporate social perfor- Beyond their purchasing power, today’s consumers mance correlates to small but positive and significant have a different kind of power that they wield with great financial performance effects in all but 2 percent of the effect, said David Jones, CEO of Havas Global Com- studies analyzed. The conclusion: While these social munications and author of the best-selling book “Who investments yield typically only very small if any finan- Cares Wins”. “Millennials are big drivers in this new cial returns, they have not been shown to diminish world,” he said. “They have different standards and are value to shareholders. experts at using a technology that gives individuals the “The major implication of this research is that oft-cit- ability to create mass movement.” He added that these ed concerns about social investments reducing value for key stakeholders now have “unprecedented amounts shareholders is likely misplaced. The data indicate that of information about you and your actions and they companies are not penalized for social investments,” have been digitally empowered to punish those busi- Smith said, “and in some instances are rewarded.” nesses that don’t live up to their standards.” Beyond the connection between corporate citizen- Corporate citizenship’s effect on employees is an- ship and corporate financial performance, there are other tangible demonstration that corporate citizen- many other concrete ways corporate citizenship adds ship has measurable value. In his research study
the corporate citizen issue 7 www.BCCorporateCitizenship.org 29 carroll school of management center for corporate citizenship
“Corporate Social Responsibility and Labor Turnover”, ency making what was once private public, companies Donald F. Vitaliano1 showed that well-designed corpo- can derive benefit from or suffer from social media en- rate citizenship programs can help to retain employees gagements of consumers or employees. and strengthen an organization’s culture. According to the 2012 Edelman Trust Barometer, One way to harness employees for positive results trust in business continues to decline. “People think is through employee volunteerism. “A disengaged em- government’s most important role is to protect con- ployee costs the company money, is less productive, sumers and regulate business to make sure companies tends to not trust senior leaders, and has little to no are behaving responsibly,” said Edelman’s Patty Tucker. connection to the company,” said Cynthia Cecil, man- The Edelman survey asked respondents what would
Balancing priorities
Access to clean water
Improve maternal STEM Education health Reduce child mortality Protect animals Arts and culture Combat Small business Global development non-communicable diseases entrepreneurship U.S. Executives partnerships Environmental Eradicate poverty U.S. Consumers Boston Collgee Center Gender equality sustainability and hunger Nielsen Survey State of Corporate Citizeship Diversity and Create well-compensated Combat communicable inclusiveness jobs disease Universal primary education
AgreementAgreement
ager, Employee Involvement, Altria Client Services build their trust in a company. The survey found that Inc. On the other hand, she pointed out, engaged em- the factors responsible for shaping current trust in ployees are more productive, feel more connected to business are largely tied to business competence, while the company, are more satisfied with their jobs, want those that build future trust are more socially focused. to invest themselves in the company, and show an in- Listening to customer needs and feedback, treating crease in team cooperation skills. employees well, placing customers ahead of profits, taking actions to address an issue or crisis, having ethi- Reputation, trust and risk cal business practices, working to protect or improve Corporate citizenship is also central to corporate repu- the environment, addressing society’s needs, and posi- tation, trust and loyalty. In today’s social world, repu- tively impacting the local community – these are all tation has more value than ever before, and is much considered more important than delivering consistent easier to lose. People are empowered through digital financial returns. “These are the building blocks of and social technology to share their experiences with, trust,” Tucker said. and opinions of, business. With a new radical transpar- The study found a wide gap between what respon- dents think is important and how well they believe 1“Corporate Social Responsibility and Labor Turnover”, Corporate business is delivering against that. Governance, Vol. 10 No. 5 2010, pp. 563-573; Donald F. Vitaliano
30 the corporate citizen issue 7 www.BCCorporateCitizenship.org boston college
One way companies avoid reputational damage is national mining company, manages risk by creating a through proactive risk management. In many compa- robust system that spans from risk identification to as- nies, corporate citizenship and those who manage it sessment to action. Within the system is a tool for clas- add value to the company by tracking and managing sifying issues that may arise within current operations, issues and risks. Because of their interaction with a the Risk Matrix. Using the tool, the company evaluates broad range of stakeholders, they are able to identify and classifies issues initially by the likelihood of the emerging concerns that may threaten everything from risk occurring and secondly for the consequences if it a company’s reputation and license to operate, to the were to occur. Consequences to the business can in- bottom line. In the best-case scenario, they are able to clude financial, reputational, legal, and impact on local turn negative concerns and issues into opportunity for communities. All issues are scored so that actionable the company. risks (top priorities) are easily highlighted. Within the Heidi Paul, vice president of Corporate Affairs, system, corporate social responsibility professionals Nestle Waters North America, noted that when Nes- oversee social and community issues while serving as tle Waters purchased spring water provider Poland consultants for the company outside company walls. Springs along with a bottle plant and natural springs, the company became owner of 400 acres of watershed Short-termism and shareholders resources. This purchase suddenly put Nestle in a radi- A 2010 study by Accenture Sustainability Services re- cally new role – steward of the environment. It also cently compared the business performance and sustain- propelled the company to think and act with a sustain- ability performance of a representative cross-industry ability focus, and in 2008 it issued its first corporate group of 275 companies from the Fortune Global 1,000. citizenship report. The company learned what key The study, “Can Business Do Well By Doing Good”, stakeholders were thinking, obtained expertise, and found that the 50 companies ranked highest in sus- picked up best practices from others. tainability leadership also outperformed their peers in Later, Nestle conducted research on its business to terms of shareholder returns. The 50 sustainability lead- understand its carbon footprint. The 2010 Life Cycle ers outperformed the bottom-performing 50 companies Analysis found that 50 percent of the company’s car- in three-year total return to shareholders by 16 percent- bon footprint was attributable to the oil consumed age points, and outperformed the middle group of 50 creating the plastic bottle then in production. Through average sustainability peers by 6 percentage points. listening, researching and learning, the company met The value of corporate citizenship cannot be proven its goal of reducing the “amount of bottle.” exclusively through data. Corporate citizenship will al- Paul explained, “We thought we were doing pretty ways be about values, and perhaps it should be. But well,” but a major and previously unforeseen issue data, such as the studies cited here and others sum- eventually confronted them once again. Consum- marized by the Center for Corporate Citizenship in its ers felt that packaging and raw materials should not Research Briefs, can help corporate practitioners dem- be thrown away. So again, Nestle developed recycling onstrate the value of their work and how it ties to com- goals and set out to achieve them by working and pany management and performance. learning from others. “Corporate citizenship professionals are uniquely Avoiding the potential “I didn’t see it coming” re- qualified to provide perspective and add value by help- action to issues requires sound risk and issue man- ing the company understand the macro context” the agement practice which demands frequent ongoing Center’s Smith said. “The opportunity and the chal- engagement with stakeholders. Additional internal lenge is to train yourself to be able to respond to a con- coordination with all functional areas and operations, text where the landscape is continually changing – you specifically those that touch or manage an external is- are trailblazers. Our challenge is to help you get pre- sue, are also critical dialogues to foster. These steps can pared to deploy the full power of your expertise – and serve additionally to minimize issues that will arise, as access that of your colleagues – in a very flexible and they can build a basis for trust among constituents. elastic way.” n Freeport-McMoRan Copper & Gold, a leading inter-
the corporate citizen issue 7 www.BCCorporateCitizenship.org 31
Catalytic Philanthropy
By Mark R. Kramer
Stanford Social Innovation Review Fall 2009
Copyright © 2009 by Leland Stanford Jr. University All Rights Reserved
Stanford Social Innovation Review 518 Memorial Way, Stanford, CA 94305-5015 Ph: 650-725-5399. Fax: 650-723-0516 Email: [email protected], www.ssireview.com homas Siebel does philanthropy diff erently from other donors. As the founder of the software company Siebel Systems Inc., he is one of a handful of philanthropists who have the resources to devote substantial time and money to charity. His approach and the results he has achieved, however, dramati- Tcally distinguish him from most of his peers. In 2005, while spending time on his Montana ranch, Siebel became concerned about the rampant local use of methamphetamine, or “meth.” Meth is a highly addictive and physically destructive drug, and it is a particularly acute problem in rural America. In 2005, Montana had the fi fth worst level of meth abuse among all U.S. states. Half of its inmates were im- prisoned for meth-related crimes. The direct cost to the state was estimated at nearly $300 million per year, and the cost in human lives and suff ering was far greater. Rather than writing a check to a local nonprofi t, Siebel took the time to fi nd out why people become addicted to meth. After learning that fi rst-time users were typically teenagers who were unaware of meth’s risks, Siebel created the Meth Project to change teenage perceptions about the drug. He brought together experts and hired a major San Francisco advertising agency to develop a hard-hitting campaign that would reach 80 percent of Montana teens with at least three ads every week. The ads were world-class: With pro- duction budgets of $500,000 to $1 million each, they were directed by leading Holly- wood fi gures such as Alejandro González Iñárritu, director of the Academy Award- nominated fi lm Babel. The ad campaign Catalytic has won 43 awards in national and inter- national advertising competitions. The ads were gut-wrenching: Tested Philanthropy in focus groups to capture a teenager’s attention, they were far more brutal than anything the community had seen on tele- vision before. The 30-second spots begin with an ordinary teen whom kids can relate to, Despite spending vast amounts and end by showing the badly scarred and disfi gured ravages that come from using meth. of money and helping to Teens are shown attacking and robbing their own families, prostituting themselves, or dying from an overdose. In one ad, a boy describes how his mother has always been there create the world’s largest non- for him, while the screen shows him stealing her purse, hitting her, and kicking her away profi t sector, philanthropists as she screams and desperately tries to grab his leg while he runs out the door. have fallen far short of solving By Mark R. Kramer | Illustration by Emiliano Ponzi America’s most pressing prob- lems. What the nation needs is “catalytic philanthropy”—a new approach that is already being practiced by some of the most innovative donors.
30 STANFORD SOCIAL INNOVATION REVIEW • Fall 2009
And the ads were pervasive: Because Montana is a small media implementing solutions to social problems. Despite the sincere market, Siebel’s $2 million annual advertising budget generated more dedication and best efforts of those who work in the nonprofit than 45,000 television ads, 35,000 radio ads, and 1,000 billboards in sector, there is little reason to assume that they have the ability to the fi rst two years. The Meth Project became the largest purchaser solve society’s large-scale problems. of advertising in the state. The results have been stunning. Between The overwhelming majority of the 1.3 million U.S. nonprofi ts 2005 and 2007, meth use in Montana dropped 45 percent among are extremely small: 90 percent of their annual budgets are under teens and 72 percent among adults, while meth-related crimes fell $500,000 and only 1 percent have budgets greater than $10 million. 62 percent. The percentage of teenagers who were aware of meth’s Each nonprofi t is capable of helping hundreds or even thousands dangers increased from 25 percent to 93 percent, and teenagers have of people in need, and many of them do so in creative and highly even begun to dissuade their friends from trying meth. Montana’s eff ective ways. Despite their often-heroic eff orts, these nonprofi ts ranking among U.S. states in meth abuse fell from fi fth to 39th. face severe limitations. Siebel has continued the campaign, using teen focus groups to Each nonprofi t functions alone, pursuing the strategies that it develop new advertising campaigns every nine to 12 months. He has deems best, lacking the infrastructure to learn from one another’s convinced other funders to support the campaign and encouraged best practices, the clout to infl uence government, or the scale to schools and community organizations to sponsor anti-meth events. achieve national impact. A majority of the very largest nonprofi ts Siebel has also personally lobbied Congress to combat the meth prob- that might have the resources to eff ect national change are hospi- lem. Six other states have adopted the Meth Project’s program. tals, universities, and cultural organizations that focus primarily on Siebel’s success in fi ghting meth abuse stands in stark contrast to their own institutional sustainability. Collaboration throughout the the modest and often indiscernible results that most philanthropists sector is almost impossible, as each nonprofi t competes for funding have achieved, whether individually or collectively. Between 1980 by trying to persuade donors that its approach is better than that of and 2005, U.S. annual charitable giving in constant dollars grew by any other organization addressing the same issue. Very few system- 255 percent and the number of nonprofi ts more than doubled to 1.3 atically track their own impact. million. Today, per capita giving in the United States is three times However generous the donors or hardworking the nonprofi t staff , greater than any other country in the world. Yet, during this same there is no assurance—nor even any likelihood—that supporting 25-year time period, the United States dropped from second to 12th the underfunded, non-collaborative, and unaccountable approaches among the 30 countries that are members of the Organisation for of the countless small nonprofi ts struggling to tackle an issue will Economic Co-Operation and Development (OECD) in basic mea- actually lead to workable solutions for large-scale social problems. sures of health, education, and economic opportunity. The contributions of conventional donors and the good work of ef- To be sure, philanthropy cannot be blamed for the persistence of fective nonprofi ts may temporarily improve matters at a particular childhood poverty and failed schools that result from much larger place and time, but they are unlikely to create the lasting reform political and economic forces. Without philanthropy, conditions that society so urgently requires. would likely be even worse. Yet whatever benefi ts philanthropy may provide, it is not delivering the kind of social impact Siebel achieved. Four Practices of Catalytic Philanthropy If philanthropy is to become an eff ective way of solving pressing so- What is needed is a new approach to philanthropy, one that catalyzes cial problems, donors must take a new approach. the kind of social change exemplifi ed by Siebel’s Meth Project. Over the Siebel is one of the exemplars of this new approach, but there are past decade, the consulting fi rm that I cofounded, FSG Social Impact others. These exceptional donors—whether foundations, corpora- Advisors, has studied many examples of this new approach to social tions, or individuals—do not write the largest checks, but they do act change. We have distilled what makes catalytic philanthropists so ef- diff erently from other donors. They have expanded the toolkit of stra- fective into four distinct practices: They have the ambition to change tegic philanthropy beyond even the most recent thinking of venture the world and the courage to accept responsibility for achieving the philanthropists and social entrepreneurs, creating a new approach results they seek; they engage others in a compelling campaign, em- to bringing about social change that I call “catalytic philanthropy.” powering stakeholders and creating the conditions for collaboration Before turning to a discussion of the practices that distinguish this and innovation; they use all of the tools that are available to create new form of philanthropy, it is important to understand why the change, including unconventional ones from outside the nonprofi t conventional approach so rarely produces measurable impact. sector; and they create actionable knowledge to improve their own eff ectiveness and to infl uence the behavior of others. Limitations of Traditional Philanthropy Each of these practices stands in distinct contrast to the practices For most donors, philanthropy is about deciding which nonprofi ts that most donors, foundations, and corporations follow today. (See to support and how much money to give them. These donors ef- “Types of Philanthropy” on page 33.) To understand why these four fectively delegate to nonprofi ts all responsibility for devising and practices are important, each will be considered in turn.
Mark R. Kramer is the cofounder and managing director of FSG Social Impact Advisors. He is also the cofounder and the initial board chair of the Center for Ef- 1. Take Responsibility for Achieving Results fective Philanthropy, and a senior fellow at Harvard University’s John F. Kennedy Two years ago, the Bill & Melinda Gates Foundation asked FSG School of Government. Kramer is the coauthor of three Stanford Social Innovation Review articles: “The Power of Strategic Mission Investing” (fall 2007), “Changing to explore why some donors are more eff ective than others. We the Game” (spring 2006), and “Leading Boldly” (winter 2004). interviewed several dozen wealthy donors of diff erent ages and
32 STANFORD SOCIAL INNOVATION REVIEW • Fall 2009 The answer to this question led Pattillo and the Types of Philanthropy Rockdale Foundation to take a number of steps. The body of literature about microfi nance had never been CONVENTIONAL VENTURE CATALYTIC translated into Arabic, so they hired translators. PHILANTHROPY PHILANTHROPY PHILANTHROPY There had never been an international conference What is the key Which organizations How can I help to scale How can I catalyze a question? should I support and up effective nonprofi t campaign that achieves on Arab microfi nance, so they organized one. The how much money should organizations? measurable impact? lone coordinating organization in the region had a I give them? single staff member, little revenue, and no business Who is responsible Nonprofi ts Nonprofi ts Funders for success? plan, so they nurtured its growth and development. What gets Individual nonprofi ts Capacity building at Multi-sector campaigns The major funders of global microfi nance had over- funded? individual nonprofi ts looked the Middle East, so Pattillo commissioned What tools are Nonprofi t programs Nonprofi t programs All possible tools and research about the need and opportunity, then per- used? donor resources sonally brought it to their attention. In short, Pat-
How is To compare grant To increase To support the tillo pieced together the disparate elements needed information used? requests organizational campaign and motivate to catalyze the change he sought. effectiveness change The results were dramatic: In seven years, with an average annual expenditure of only $400,000, backgrounds, all of whom had been identifi ed by their peers as highly the number of Arab microfi nance borrowers grew from 40,000 to 3 eff ective, and we found a surprisingly common theme. When these million. More than 50 new microfi nance institutions began serving donors fi rst began giving away money, they followed conventional the region, supported by 18 major foundations. The leading global philanthropic practice, responding to those who asked them for microfi nance investors contributed an infl ux of debt capital, and the funds with little awareness of what impact they actually achieved. coordinating organization fl ourished. The Rockdale Foundation more They gave large sums to many diff erent organizations and were than met its goal of increasing microlending in Arab regions. viewed as prominent philanthropists in their communities, but had Our research suggests that if donors want to solve a problem, not yet distinguished themselves as highly eff ective donors. they must decide to do so themselves. This doesn’t mean that they After some time, these donors became involved in an issue of need to create their own nonprofi t or that they should ignore the great personal signifi cance: A donor’s child was diagnosed with a eff orts of others. It does mean that funders have a powerful role to rare disease; a wilderness preserve a donor hiked in as a child was play that goes beyond merely supporting existing nonprofi ts. Private about to be sold to a developer; or a donor went on a trip to a devel- donors, foundations, and corporations have the clout, connections, oping country and was exposed fi rsthand to a level of poverty and and capacity to make things happen in a way that most nonprofi ts disease that she had never imagined. The urgency of the cause and do not. By becoming directly involved and taking personal respon- the intensity of their commitment compelled each of these donors sibility for their results, these donors can leverage their personal to take an active role in solving the problem. and professional relationships, initiate public-private partnerships, These newly energized donors became deeply knowledgeable import projects that have proved successful elsewhere, create new about the issue and actively recruited collaborators, sometimes even business models, infl uence government, draw public attention to an creating a new nonprofi t to further the cause. The donors stopped issue, coordinate the activities of diff erent nonprofi ts, and attract thinking about which organizations to support, and started to think fellow funders from around the globe. All of these powerful means about how to solve a specifi c problem, using every skill, connection, for social change are left behind when donors confi ne themselves and resource they possessed. The donors formulated clear and prac- to simply writing checks. tical goals that enabled them to identify the steps needed to succeed. Catalytic philanthropists, however, must be as cautious as they Above all, the donors took responsibility for fi nding solutions to the are bold. Considerable havoc has been wrought, and billions of problem instead of waiting for the nonprofi t sector to approach them dollars wasted, by donors whose success in business or other fi elds with a proposal. Like Siebel’s campaign against meth abuse, the dif- has convinced them that they can single-handedly solve a social ference in impact was remarkable. problem that no one else has solved before. Philanthropists cannot Consider the example of Bob Pattillo, an Atlanta real estate de- catalyze change by acting alone or imposing a solution, convinced veloper who had a small family foundation, the Rockdale Founda- that they have the answer before they begin. Instead, they must tion. On a church mission to Cuba, he encountered impoverished listen to and work with others, enabling stakeholders to develop families who had benefi ted from microfi nance and wondered why their own solutions. so little microlending was taking place in the Middle East. (In 1999, there were only 40,000 Arab microfi nance borrowers, compared to 2. Mobilize a Campaign for Change millions of borrowers in Asia and Latin America.) Instead of waiting In “Leading Boldly,” an article that Ron Heifetz, John Kania, and for a nonprofi t to approach him, or asking “Whom should we give I wrote for the winter 2004 issue of the Stanford Social Innovation money to?” Pattillo focused on creating a solution by asking “What Review, we suggested that many of the problems foundations tackle infrastructure would need to be in place for microfi nance to fl our- are adaptive in nature: The people with the problem have to become ish in Arab regions?” engaged in solving it for themselves. Teenagers, for example, need
Fall 2009 • STANFORD SOCIAL INNOVATION REVIEW 33 to dissuade other teenagers from using meth. In other cases, ef- public awareness and, often, stronger government policies. Catalytic fective solutions may already be known but cannot be externally philanthropists have the wherewithal to heighten awareness, raise imposed on the existing system. It is well known, for example, that expectations, and coordinate the many disparate eff orts of other better qualifi ed teachers produce better educated students, but the funders, nonprofi ts, corporations, and governments. systemic changes needed to act on that simple solution are mind- bogglingly complex. The obstacle isn’t that no one knows any an- 3. Use All Available Tools swers, but rather that the uncoordinated actions, narrow constraints, The prominence of the U.S. nonprofi t sector and the tax deductibility and confl icting incentives of diff erent stakeholders and diff erent of donations have lulled people into thinking that IRS-sanctioned sectors of society perpetuate the status quo. philanthropy is the only way to solve social problems. Donors have Catalytic philanthropy cuts through these divisions by stimulat- the freedom, however, to complement traditional grantmaking ing cross-sector collaborations and mobilizing stakeholders to create with a wide array of other tools from outside the nonprofi t sector, shared solutions. Building alliances that create the conditions for including many that can infl uence social, economic, and political a solution to emerge and take hold is a very diff erent pursuit from forces in ways that traditional charitable giving cannot. the usual grantmaking process of trying to direct funds to the one Siebel employed an unconventional tool by hiring world-class organization that off ers the most appealing approach. Systemic re- advertising talent and purchasing prime-time advertising for his form requires a relentless and unending campaign that galvanizes anti-meth campaign, rather than accepting the less eff ective tools of the attention of the many stakeholders involved and unifi es their donated public service announcements. Other catalytic philanthro- eff orts around the pursuit of a common goal. pists have used a variety of unconventional tools for social change, in- Consider the example of Strive, a nonprofi t founded in late 2006 cluding corporate resources, investment capital, advocacy, litigation, by Nancy Zimpher, then president of the University of Cincinnati. and even lobbying, as demonstrated in the following examples. Zimpher believed that her university could not succeed in its mission Corporate Resources. General Electric Co. (GE) has helped low- unless the entering students, drawn largely from the local school performing high schools located near major GE facilities, committing systems, were adequately prepared. Recognizing that educational $150 million over fi ve years to fi ve urban school districts to improve success was the result of a long and often fragmented process that math and science education. In addition to cash contributions, GE begins with preschool and ends with career placement, Zimpher ap- and its employees have provided intensive tutoring, mentoring, sum- proached the KnowledgeWorks Foundation and the Greater Cincin- mer employment opportunities, scholarships, and management ad- nati Foundation to help form a community-wide initiative to reform vice to school administrators, and have donated technology. Within the entire continuum. More than 300 organizations and institutions four years, 100,000 students in these school systems improved their in the Greater Cincinnati area now participate in Strive, including standardized math test scores by an average of 30 percent. school districts, universities, private and corporate funders, civic Investment Capital. The F.B. Heron Foundation has invested leaders, and nonprofi ts with combined budgets of $7 billion. more than 25 percent of its endowment in investments that further The organizations are grouped into 15 networks, each of which the foundation’s mission. One of these investments is a subordinated focuses on a single educational component, such as preschool edu- loan to strengthen the balance sheet of the Minneapolis-based Com- cation or college readiness. Each network is developing a common munity Reinvestment Fund (CRF). CRF has purchased more than set of goals and progress indicators to be tracked throughout the 2,100 loans worth almost $1 billion from community development region. They employ only evidence-based solutions that have dem- corporations and other community development lenders whose onstrated progress on the agreed measures. The leaders of the or- portfolios are not large enough to attract institutional investors ganizations in each network meet every two weeks for two hours directly. Since its inception, CRF has provided liquidity for loans to discuss their progress. Participation is voluntary and does not that have generated or retained more than 35,000 jobs, fi nanced include any additional funding. Instead, organizations learn from almost 600 women or minority-owned businesses, and built more each other, reach agreement on performance standards, and fi nd than 16,000 housing units. ways to collaborate that increase the eff ectiveness of all partici- Advocacy and Litigation. The William and Flora Hewlett Foun- pating organizations. Many changes are simple—letting teachers dation has supported grantees that use advocacy and litigation to know which of their students are being tutored, and aligning class- profoundly infl uence educational policy in California. The 2004 room and after-school curricula—but these small improvements settlement of a lawsuit against the state of California brought by the throughout the region collectively improve the eff ectiveness of the ACLU and Public Advocates, funded in part by the Hewlett Founda- entire educational system. No single intervention attacks the root tion, led to $1 billion for school repairs, instructional materials, and cause of educational failure. Instead, the entire system is gradually extra support to low-performing schools. A separate lawsuit in 2005 becoming more coordinated, informed, and eff ective. After only two brought by Public Advocates and Californians for Justice, also funded years, Strive is already reporting positive progress on a majority of in part by the Hewlett Foundation, required that the state revoke the its measures of educational success. credentials of more than 4,000 underprepared teachers and pro- Mobilizing and coordinating stakeholders is messier and slower vide them with additional training before they could be considered than funding a compelling grant request from a single organization. “highly qualifi ed” under the No Child Left Behind Act. Other Hewlett Systemic change depends on a sustained campaign to increase the grantees worked to raise public awareness and to educate policymak- capacity and coordination of an entire fi eld, together with greater ers through bipartisan legislative seminars on options for education
34 STANFORD SOCIAL INNOVATION REVIEW • Fall 2009 reform, and tours that brought legislators and their staff into the 4-year-olds, and three other states have promised preschool for all schools to see conditions fi rsthand. These eff orts helped generate a children in low-income families. $1 billion bond set-aside for facilities improvements in overcrowded The Annie E. Casey Foundation used data in a diff erent way. The schools, created new longitudinal data systems to track student and foundation hired local residents to gather and report data about their teacher performance, and required the public disclosure of teacher own communities. This increased civic engagement and empowered salaries that unmasked major inequities within school districts, the community members to hold local nonprofi t service providers and fi rst such transparency requirement in the nation. government agencies accountable for their performance. In Des Lobbying. Several years ago, the Pew Charitable Trusts converted Moines, Iowa, for example, the residents used the data they had col- from a private foundation to a public charity, enabling the founda- lected to recover $2.5 million from four predatory lenders and to lobby tion to engage in lobbying. The Pew Campaign for Fuel Effi ciency, successfully for passage of a statewide lending disclosure law. for example, was instrumental in getting Congress to pass a bill Actionable knowledge is not limited to compiling and analyzing in December 2007 that raised average fuel economy standards for data. Jeff Skoll, fi rst president of eBay Inc. and founder of the Skoll U.S. automobiles for the fi rst time in 32 years. Pew coordinated the Foundation, created a for-profi t fi lm production company, Partici- work of a diverse coalition of interest groups, gathered independent pant Media, in 2004 to produce major movies that could inform and research fi ndings, created high-quality polling data, and marshaled engage the public on social issues. With projects such as Syriana, testimony from Fortune 100 CEOs and military leaders. In the three An Inconvenient Truth, and Good Night, and Good Luck—Participant weeks leading up to the Senate vote, the campaign placed 85 edito- has been a commercial and artistic success, producing enviable box rials and paid advertisements in critical congressional districts. By offi ce revenues and multiple Academy Award nominations. Partici- 2020, when the full impact of this legislation is felt, it is projected pant partners with nonprofi ts to create social action campaigns for to be the equivalent of taking 28 million cars off the road, saving each fi lm that it releases, such as benefi t screenings and educational $23 billion in consumer fuel costs and 190 million metric tons of curricula for schools. The social action campaign for An Inconvenient greenhouse gas emissions each year. Truth, one of the highest grossing documentaries of all time, led di- rectly to more than 106,000 tons of CO2 off sets, nine countries in- 4. Create Actionable Knowledge corporating the fi lm into their curriculum for high school students, Most donors rely on their grant applicants and recipients to provide and four bills on climate change introduced in Congress. them with information about the social problems the nonprofi t is tackling, focusing their inquiries narrowly on the program to be Moving Forward funded without researching the issue more broadly. Catalytic phi- Social change is a messy process in which the willpower of a deter- lanthropists, by contrast, gather knowledge about the problem they mined and infl uential person can often tip the balance. Donors who are tackling and use this knowledge to inform their own actions are serious about solving social problems must take a catalytic role, and motivate the actions of others. Making knowledge actionable mounting a campaign and knitting together the pieces of a solution requires more than just gathering and reporting data. The informa- in ways that the fragmented nonprofi t sector cannot do for itself. tion must also carry emotional appeal to capture people’s attention This is not to suggest that catalytic philanthropy is appropriate and practical recommendations that can inspire them to action. for all donors, or that other types of philanthropic engagement are GreatSchools.net, for example, is a Web-based reporting tool ineff ective. Most individual donors have neither the time nor the that makes available public school performance data (including resources to do more than contribute to deserving organizations. rankings by parents) on a consistent basis throughout the country. Conventional philanthropy serves an essential function in support- Funded by the Gates Foundation, the Walton Family Foundation, ing major nonprofi t institutions, enriching many lives, and providing and the Robertson Foundation, the site receives 35 million unique assistance to countless individuals in need. Venture philanthropy visitors each year, an estimated one-third of U.S. families. Similar and social entrepreneurship also play important roles by helping ef- information, compiled by Standard & Poor’s and funded by the fective organizations and talented leaders expand the scale of their Gates Foundation, is available at the Web sites SchoolMatters.com impact. The variety in types of philanthropy is one of the reasons and SchoolDataDirect.org. Making reliable school performance data for the nonprofi t sector’s vitality, and society would be dramatically publicly available will infl uence the behavior of many stakeholders worse off were it not for the billions of dollars in annual charitable and help create the conditions for solutions to arise. contributions from conventional donors. Actionable knowledge can also have an impact on government We should not pretend, however, that conventional contribu- spending priorities. In 2004, Pew commisioned a study showing tions will change the status quo. Instead, the much smaller set of that extending preschool to the 4 million children under age 5 living donors who have the desire and opportunity to achieve change— below the poverty line would produce a net benefi t to the economy whether professionals at foundations and corporations or individual of more than $511 billion—a $16 return from higher earnings and philanthropists with the time and resources to become personally fewer welfare payments for every dollar spent. This study enabled involved—must step forward to become catalytic philanthropists. advocates to make a compelling case for increased state spending. If they do, they will begin to see measurable impact from their ef- Between 2005 and 2008 total state spending in the United States forts and the potential to change social conditions meaningfully. on prekindergarten programs grew by 66 percent from $2.9 billion Philanthropy is indeed a powerful tool for social progress, but only to $4.8 billion; seven states have pledged universal preschool for all when donors make it so.
Fall 2009 • STANFORD SOCIAL INNOVATION REVIEW 35
carroll school of management center for corporate citizenship Building corporate citizenship connection creates lasting value
Balance is an essential ingredient to success in almost any endeavor. For companies, this plays out quite literally on a balance sheet. When corporate executives focus on the bottom line reflected in that balance sheet in the short term, tension can emerge between a desire to invest for growth and a motivation to produce profits. Properly managing this tension creates a balance that generates long-term, lasting value and makes it possible to bridge the gap between sometimes conflicting goals. Corporate citizenship can create balance aligning business strategies for creating profit with a long-term commitment to core values that are at the heart of a firm. This alignment makes it possible for a company to turn tension into a source of strength.
20 the corporate citizen issue 7 www.BCCorporateCitizenship.org boston college Building corporate citizenship connection creates lasting value
Balance is an essential ingredient to success in almost any endeavor. For companies, this plays out quite literally on a balance sheet. When corporate executives focus on the bottom line reflected in that balance sheet in the short term, tension can emerge between a desire to invest for growth and a motivation to produce profits. Properly managing this tension creates a balance that generates long-term, lasting value and makes it possible to bridge the gap between sometimes conflicting goals. Corporate citizenship can create balance aligning business strategies for creating profit with a long-term commitment to core values that are at the heart of a firm. This alignment makes it possible for a company to turn tension into a source of strength.
the corporate citizen issue 7 www.BCCorporateCitizenship.org 21
Letter from Esther: What CSR Teaches Us About Pro Bono
Lawyers share a tendency to be self-referential and somewhat insular in their thinking about their work. We view the legal profession as unique, one that strives to be business-like in its approach, rather than a bottom-line business and, as a result, we tend to look for solutions to problems plaguing the profession and the justice system within our own community. The reality is that we have much to learn from others, including those in the corporate world.
As PBI delves more deeply to understand legal departments and the companies in which they are sited, we have been exposed to the fascinating development of Corporate Social Responsibility (CSR). CSR is not a new concept, but it is growing quickly in influence, visibility, credibility, and sophistication. In brief, CSR is based on the principal that businesses must do more than simply generate profits and shareholder value; they must be good corporate citizens, responsible stewards of the environment, leaders in promoting humane policies and business practices, and key contributors of time and money to the communities in which they operate. The parallels to the role of pro bono at major law firms and in-house legal departments are obvious and the lessons learned useful. Below are some of the best most important aspects of CSR that are trending in the legal community.
Professionalism/Leadership Like pro bono at large firms, CSR has morphed from a largely volunteer, add-on effort to one increasingly defined by full-time professional managers, as a result of the growing importance and visibility of CSR and the increased sophistication, complexity, and reach of such efforts within companies. Sound familiar? It is important to note, however, that experts agree that the move toward professionalism is no substitute for ownership and leadership on CSR issues at the CEO/senior executive level. Much has been written about the importance of ensuring that such work is not siloed or viewed as the domain and responsibility of the company’s CSR professional. The corporation’s board and C-suite leadership must be engaged, knowledgeable, and focused around the work as well.
Transparency, Accountability, and Reporting As CSR has grown in importance, the demands on companies to present publicly, accurately, and thoroughly, their performance on CSR goals has intensified. In this season of reporting for major law firms – to PBI, the American Lawyer, and countless others – the CSR experience demonstrates how important the reporting function is. It suggests that, rather than waiting for a legal publication to present their annual results, law firms should consider publicizing their pro bono statistics themselves, with the ability to do so in the context of their own thoughtful analysis of that performance and to highlight their accomplishments. This development has already begun to occur. In recent weeks, PBI has served as a confidential consultant to several law firms that are not only embracing the need to account for and report their pro bono statistics, they are going deeper to analyze what those statistics may mean for the structure and focus of the firms’ pro bono efforts. While we feel your pain with respect to the demands of reporting, the CSR movement demonstrates that time spent on collecting and reviewing data is time well spent.
Increased Influence/Increased Pressure The business community has found that, as private companies have increased their reach and influence, while at the same time public and governmental sectors have diminished resources and more limited roles, the pressure – from shareholders, the media, the nonprofit sector, and, in some countries, the government and regulators – to enhance their giving, volunteer work, and good citizenship activities has also increased substantially. Given the crisis in access to justice, it is likely that the most prestigious and profitable legal sectors will face increasingly close scrutiny of their contributions to pro bono service.
Definition Matters Measurement, reporting, assessment, comparisons, and, yes, even rankings matter very little if there is no common currency with respect to the definition of what is being measured, reported, and ranked. In this area, pro bono at major law firms has outpaced CSR, but there are still important lessons to be learned. The balkanization of CSR definitions and the plethora of ratings and rankings have negatively impacted the credibility and viability of the movement. The CSR history offers an important lesson for pro bono. The fact that The American Lawyeruses the PBI Law Firm Pro Bono Challenge® definition of pro bono (though without including law students and summers) is a strength for pro bono, as is the fact that PBI speaks with a single voice in determining What Counts for purposes of that definition. While the growing interest of other institutions in gathering information about pro bono is laudable, it is essential that firms and PBI work together to try to bring uniformity and discipline to pro bono data requests and reporting from NALP, law schools, and others.
Alignment Experts agree that CSR works best when it is strategically aligned with the company’s brand, strengths, and business goals. Increasingly, we are seeing alignment emerge as an important operating principle for in-house corporate pro bono programs. Legal departments are beginning to understand that, for them and for those served by their pro bono efforts, pro bono works best when it is in sync with the focus, culture, priorities, and capacities of the company as a whole, and we believe that alignment will become an a critically important focus for law firm pro bono efforts as well.
Scaling Up Partnerships As CSR has grown in importance and breadth, companies are increasingly undertaking their CSR efforts in conjunction with other entities to leverage their work and create better and more lasting outcomes from it. Partners in the CSR arena include nonprofit groups, governments, and even other companies, but the most notable element of the evolution of CSR partnerships is the movement from individual one-off partnerships to systemic and broad based efforts. We believe that pro bono needs to take a page from this development. A quarterly clinic that is a partnership among a public interest organization, a law firm, and a legal department is certainly, when well structured and defined, a benefit to the community and the clients and a good use of the partners’ respective strengths. However, pro bono partnerships can and should be much more. They can be organic, evolving, multi-tiered, and strategic efforts whose goal is to “move the needle” on larger legal and societal issues.
Embedding Pro Bono The most pervasive criticism of the CSR movement is that it is a “mascot” effort. That is, it serves as a public relations, feel-good program without being fully integrated with and impacting the larger goals, practices, and policies of companies. The same charge could be made with respect to pro bono at major law firms and legal departments – that it is a good thing to do but in no way a part of the core functions and values of the institution. We don’t have to accept that result, and I believe that pro bono can and must evolve to become a key element of the every day life of these legal institutions and their people. In order to do so, pro bono must change, grow, and adapt to fill the “doing good, doing well” space at our institutions.
I welcome your thoughts on CSR and pro bono!
*denotes a Signatory to the Law Firm Pro Bono Challenge® **denotes a Signatory to the Corporate Pro Bono ChallengeSM
Published by the Pro Bono Institute Copyright © 2011 Pro Bono Institute. All rights reserved. The information in this newsletter has been prepared by the Pro Bono Institute (PBI) for informational purposes only and does not constitute legal advice. Neither transmission nor receipt of the information in this newsletter shall create an attorney-client relationship between PBI and the recipient. PBI, and its staff, do not provide legal advice, consultation, or representation. Page 4 - January/February 2002
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Joan Steinberg is Vice President and Director of Community Affairs at Morgan Stanley Dean Witter in New York. She actively promotes their pro bono program and has worked closely with CorporateProBono.Org since the project’s inception.
Breaking the Corporate Philanthropy Code: How to Leverage Your In-House Pro Bono Work Through Your Company’s Charitable Giving Program by Joan Steinberg
Editor’s Note: While this article is directed at corporate pro bono company’s community relations department also lends your programs, it contains valuable information for law firms concerning program stability and endurance – two of the principal how corporate in-house departments can cooperate with corporate issues with which fledgling in-house corporate pro bono philanthropic departments and provides a basic outline for law firms seeking to expand the reach of their pro bono programs by doing programs struggle. Your company’s ongoing commitment to integrating firm charitable giving efforts. a particular community initiative can serve as an external force driving the momentum of your in-house pro bono program, fueling the enthusiasm of the members of your s Director of Community Affairs at Morgan legal department, and often allowing them to get “extra AStanley, I make an effort to develop projects that credit” in other company programs. Additionally, a coordi- appeal to the diverse core competencies and interests of our nated effort will ensure that you are choosing projects and employee volunteer pool. I recently began to explore how partners that are appropriate for your firm’s philanthropic pro bono work could serve as an strategies. In many cases, this outlet for our company’s legal will greatly improve your chances department employees. After Investigate the philanthropic goals of obtaining funding for your some investigation, I soon found and strategies of your corporation nonprofit partners. myself in contact with the people here are some exem- and institutions at the forefront [law firm] and concentrate your plary cases of enduring in- of in-house corporate pro bono efforts on supporting them. T house pro bono programs locally and nationally. Much to that are not coordinated with my surprise, I learned that many their companies’ charitable in-house pro bono efforts have evolved without much giving staff. However, on the whole, these programs appear coordination with their companies’ corporate community to have been driven extensively by the individual leadership relations or charitable giving departments. of general counsel dedicated to pro bono service. Most in- The Benefits of a Coordinated Approach house law departments cannot count on this advantage. In rom my perspective, ignoring this coordinated short, you may be able to establish an in-house pro bono Fapproach forfeits enormous value in the form of program without cooperating with your corporate charitable institutional support, long-term stability and potential giving department, but there are important practical funding for your pro bono partners. reasons to consider doing so. o begin with, cooperation with existing charitable Breaking the Code Tgiving efforts practically guarantees management ow can you coordinate your in-house pro bono buy-in. Your pro bono program will complement the Hefforts with your company’s community rela- company’s planned community relations strategy – a tions initiatives? Before asking for the big check, find out strategy most likely directed and approved by senior man- what strategy your company’s corporate community rela- agement directly – rather than appearing to be a potential drain on corporate resources. Coordination with your Page 5 - January/February 2002
tions has adopted and what vehicles are available to you as 1. Thematic Consistency – This refers to maintaining an employee to get involved. The easiest way to obtain this consistency in the activities the company already funds. In information is to ask your charitable giving or company other words, a legal clinic for the homeless is more likely to foundation officer for an informational interview to get be supported by a company that already contributes signifi- acquainted with his/her programming and get direction on cantly to affordable housing initiatives or homeless shelters. how you can coordinate your efforts. As a primer for that 2. Employee involvement – Many companies provide meeting, consider the following issues: support to organizations for which their employees are Strategic Philanthropy supporters or volunteers, ou should keep in through matching gifts programs mind Ythat most corporations Plan your pro bono strategy around and “dollars for doers” initia- with formalized tives. Each company’s eligibility community relations or founda- your company’s [law firm’s] existing requirements are different, but tion programs have developed a philanthropic focuses. generally, these programs work comprehensive philanthropic as follows: strategy. Generally, this strategy Dollars for Doers programs – provide grants to is designed to develop and maintain sustained relationships organizations for which employees are active with the company’s key communities through a combina- volunteers. Some programs are based on number tion of funding opportunities and employee involvement. of hours served, and others are based on overall These strategies focus both on external constituents and on commitment to the organization. employee satisfaction with the corporation. Almost every Fortune 500 company has adopted a philanthropic strategy of this nature. Matching Gifts – corporate support that matches employees’ personal contributions. Usually these nvestigate the philanthropic goals and strategies of programs have a cap on spending and often only Iyour corporation and concentrate your efforts on match gifts to educational institutions. supporting them. 3. Geographic Focus – A Minnesota-based company Select Themes and Focuses will be more likely to fund activities in Minnesota. By ver the past two decades, the face of corporate investing in their local communities, companies are able to philanthropy has changed significantly. Corpo- O draw upon the volunteer resources of their work force, rate giving now needs both to “do good” and to make the strengthen those communities, and maximize the good will company “look good”. In order to accomplish these dual that their charitable efforts produce. goals, most corporate community relations departments restrict efforts to issues that both leverage their firm’s 4. Management Support – Management support, which distinctive strengths and meet their communities’ needs. is influenced to some extent by the three factors mentioned For example, Morgan Stanley concentrates on economic above, is a critical consideration in funding decisions. education programming and Avon supports women’s health initiatives. trategize your ask! Match your funding request to Sthe key issues that are important to your company. lan your pro bono strategy around your company’s Pexisting philanthropic focuses. Conclusion Who Gets the Money? nderstanding these basic concepts in corporate ontrary to popular belief, corporate giving and Ucharitable giving, and in particular how your Ccorporate foundation programs often have the company’s charitable giving department operates, may mean tightest budgets in the company despite year-over-year the difference between extensive institutional support and increases in the number of requests for funding. To avoid institutional peril for your in-house pro bono program. Be getting lost in the shuffle, and ultimately declined, under- sure to leverage the expertise of your community relations stand the key issues that your gatekeepers will be focused on. staff, and plan your program around their strategies. Their involvement may give you the leg up you need to launch a successful, well-funded and long-term pro bono effort. DLA Piper, AIG and TrustLaw launch report on cross-jurisdictional statutory compensation for survivors of human trafficking
5 MAY 2016
DLA Piper, in conjunction with AIG and TrustLaw (Thomson Reuters Foundation's global legal program) have published 'Road to Recovery', a first of its kind report assessing statutory compensation schemes for survivors of human trafficking in 20 jurisdictions around the world.
The research focuses on the schemes managed by each state to provide financial compensation to survivors and the barriers that particular compensation provisions may create. It also lists examples of best practice for governments when reforming systems to increase access to justice for survivors. The aim of the report is to provide constructive and practical information on the available statutory compensation schemes to survivors of human trafficking, advocates and legal advisors.
Commenting on the report, DLA Piper's Asia Pacific Pro Bono Director, Catriona Martin, said: "Whilst compensation will never undo the immeasurable trauma and suffering of survivors, or solve the problem of trafficking, it can act as a form of restorative justice for survivors, provide much needed financial support and reduce the risk of being re-trafficked. This report provides a helpful overview of state-funded compensation schemes available to survivors in a number of countries across the globe and highlights the key barriers and critical areas of law reform. We are delighted to have worked with AIG and TrustLaw on this project to assist survivors on their road to recovery and the fantastic organisations who support them to advocate for a fairer system."
“AIG is both proud and grateful to have had the opportunity to partner with DLA Piper and the Thomson Reuters Foundation to produce this report,” said Noel Condon, CEO AIG Australia & Head of Country Operations AIG Australasia. “The report reflects AIG’s ongoing commitment to providing pro bono legal services worldwide and we are confident that it will prove to be a valuable resource, not only for victims of human trafficking in obtaining monetary redress and justice for the crimes committed against them, but also for organisations committed to lobbying for changes and improvements to human trafficking laws across the 20 jurisdictions.”
Catriona added: "DLA Piper has a continued, long standing commitment to pro bono work and 40 lawyers from our global offices contributed over 700 hours to this project. The three-way partnership between DLA Piper, AIG and TrustLaw has also demonstrated the strength of pro bono collaborations between law firms, in house counsels and NGOs and it is one that we look forward to continuing."
Legal Services Corp., Microsoft and Pro Bono Net Team Up to Create Legal-Aid Portals
APRIL 19, 2016 by Robert Ambrogi
In a move aimed at enhancing access to justice, the Legal Services Corporation announced today that it is partnering with Microsoft Corporation and Pro Bono Net to develop state legal portals to direct individuals with civil legal needs to the most appropriate forms of assistance.
Initially, they will develop one or two statewide pilots intended to demonstrate how this approach can be replicated as widely as possible in an economical way.
State legal portals were a key recommendation of the LSC’s December 2013 report on the use of technology to expand access to justice.
A number of states already have legal portals designed to provide legal information and direct people to appropriate resources, such as Illinois Legal Aid and MassLegalHelp.
According to the announcement, Microsoft has committed at least $1 million in funding, technical support and project management services. Pro Bono Net will help convene local partners and provide service design expertise to execute the pilot.
LSC will manage the state selection process, consulting with the National Center for State Courts, the American Bar Association, the National Legal Aid and Defender Association, the Self-Represented Litigation Network, and other national stakeholders to identify promising jurisdictions that will be invited to compete for the opportunity to develop the pilot portals.
As the initiative moves forward, LSC will work to attract other institutional funders and identify local resources to help ensure that the pilots are a success.
Pro Bono As We See It
July 5, 2016 Guest Blog: Legal Pro Bono at Salesforce We at The PBEye are inspired every day by the Corporate Pro Bono Challenge® signatories. In celebration of the 10th anniversary of the launch of the CPBO Challenge® initiative, we are showcasing some of their projects and letting them inspire you too.
At Salesforce**, giving back is part of our DNA. Through our 1-1-1 model of integrated philanthropy, all employees are given seven days of volunteer time off (VTO) that they can use toward any cause they are passionate about. The legal team actively participated in VTO events, using our hours to volunteer at organizations like SF Food Bank and the San Francisco Zoo. While we were active volunteers, there was a hunger to help out with skills-based volunteering – to use our legal skills to help the less fortunate have access to justice, spanning the legal departments of both Salesforce and Salesforce.org, the philanthropic arm of the company.
With the support of the Salesforce General Counsel Amy Weaver, we got started quickly building a program. The Association of Corporate Counsel** quickly led me to Eve Runyon, then-director of Corporate Pro Bono, who provided a host of information, networking opportunities, and help starting the program. After talking to Eve, I went about by getting support within the department, forming a Pro Bono Committee and surveying the lawyers. Armed with feedback on our team’s interest areas, we jumped at the first opportunity to partner with the San Francisco Bar Association’s Justice and Diversity Center, along with other lawyers from firms and veteran services providers, to staff a one- day free legal and social services clinic for U.S. Veterans. From there, we continued to find events we could do at least quarterly, slowly moving from a headquarter-centric approach to a broader one that could include our global offices.
One of the most interesting projects we have worked on to date was completed globally, with contributions from lawyers in Paris, London, Toronto, San Francisco, and New York. The Salesforce legal teams partnered with Baker & McKenzie*† to draft a toolkit for judges in South Asia adjudicating terrorism cases in their national courts. The toolkit was designed to support the effective adjudication of terrorism cases by judges from the member states of the South Asian Association for Regional Cooperation. The project was a collaborative partnership between the two organizations with a truly global scope resulting in one of the strongest pro bono efforts the team has undertaken to date. The resulting toolkit will be used as a template to be adapted by judges and judicial academies in other regions throughout the world.
The legal pro bono program has really blossomed at Salesforce over the last two years and continues to be a popular way to give back to the communities in which the lawyers work and live on a global basis. You can read about our latest project in Brussels at our blog.
Shanti Ariker is SVP & General Counsel of Salesforce.org. * denotes a Signatory to the Law Firm Pro Bono Challenge® † denotes a Member of the Law Firm Pro Bono Project
** denotes a CPBO Challenge® signatoryprobonoinst.org IN-HOUSE PRO BONO MEETS CSR EFFORTS TO INCREASE IMPACT
The PBI Wire July, 2016
For years, formal in-house pro bono and corporate social responsibility (CSR) programs grew on parallel tracks at many companies. Each of these programs was able to accomplish much while operating independently within the same organization. However, increasingly, CSR efforts, charitable contribution policies and practices, and pro bono activities by legal departments are coordinated and integrated for the benefit of the organizations and their communities, bringing better organizational efficiency and greater impact to underserved populations.
On one hand, CSR programs can serve as an example, a source of support, and an opportunity to increase impact by providing a broader approach to addressing pressing needs. On the other hand, pro bono programs can provide services that address the underlying issue or critical legal needs faced by those whom the CSR program has targeted or prioritized. Let’s explore a few examples of how companies have complemented their pro bono efforts with their CSR projects.
The legal department at Verizon Communications Inc.** has aligned its pro bono program – launched in 2006 – with the company’s CSR efforts by identifying projects that are consistent with the focus of the Verizon Foundation and its CSR initiatives, including education and domestic violence prevention. Verizon attorneys and their colleagues in the legal department have provided pro bono legal services to schools for disadvantaged children, to eligible parents in securing school services for disabled children, and to victims of domestic violence in obtaining their immigration status, resulting in increased services to specific communities supported by the company as a whole.
Joint coordination of the management of a department’s pro bono efforts with its company’s community affairs initiatives is another way legal departments can integrate their efforts with the company’s CSR program. Ford Motor Company’s** legal department strategically ties its pro bono efforts to the Ford Volunteer Corps (FVC) four annual “Accelerated Action Days” to encourage and provide service opportunities for Ford employees. The legal department works with FVC to provide pro bono projects to its lawyers and other professional staff. The collaboration reduces time spent planning that can be used providing assistance and connects the department to the company, fostering increased morale and goodwill.
Legal departments also can provide legal support to the beneficiaries of the company’s CSR program. For example, the legal department at American International Group, Inc. (AIG)** reached out to its CSR department to investigate options to align its pro bono efforts with the company’s philanthropic initiatives, which included support of Career Gear, a nonprofit that provides job readiness and professional development to low-income men. Previous contributions to the organization were limited to financial and in-kind clothing donations. The legal department expanded that effort to provide pro bono legal services to Career Gear. At Merck & Co., Inc.**, the legal department’s pro bono program launched a bankruptcy clinic to help low-income individuals and families filing for Chapter 7 and reduce the backlog of bankruptcy cases pending before the courts. To help support the program, the Merck Company Foundation provided funding to the legal service provider that works with the Merck legal department on the project.
For legal departments starting a pro bono program or those with existing programs, the organization’s CSR activities can be sources of projects by adding a legal component to existing community service efforts or charitable contributions of the company. Conversely, CSR departments or staff can provide critical resources to pro bono efforts, such as websites, financial support, communications tools, and more.
For more information, we invite you to listen to the webinar “Best of the PBI Annual Conference – Integrating Pro Bono, CSR, and Charitable Giving.” You may also find additional guidance on Corporate Pro Bono’s website atwww.cpbo.org.
Pro Bono As We See It
September 8, 2015
Global CSR + Pro Bono One of the ways to increase pro bono activities within in-house legal departments is to closely align them with the company’s ethos and its global corporate social responsibility (CSR) efforts. One such example of the complementary nature of Global CSR and pro bono programs is the work done by International Business Machines Corporation (IBM), which have garnered numerous awards and recognition for the company.
IBM’s legal department’s pro bono activities routinely match with the company’s CSR initiatives through such programs as IBM’s employee Corporate Service Corps and On Demand Community. In 2011, IBM celebrated its 100-year anniversary by encouraging employees to volunteer their time to charity projects at an unprecedented level. In addition to volunteer hours, the company’s Centennial Celebration of Service provided nearly $12 million in grants to approximately 4,000 nonprofit organizations.
The support of social responsibility efforts included IBM’s legal department, whose members volunteered their skills for these programs—in addition to their existing pro bono projects. After the devastating earthquake and tsunami struck Japan, the legal department approached ShelterBox, a nonprofit humanitarian relief organization that responds in the immediate aftermath of disasters. The team of volunteers sought to help address the disaster-relief needs in Japan and provide broader legal assistance to ShelterBox’s operations. Specifically, attorneys reviewed the organization’s intellectual property, strengthened their corporate governance, and revised internal policies.
IBM’s work with ShelterBox has grown exponentially. IBM approached the law firm Baker & McKenzie*† to help deliver additional pro bono resources. Together, lawyers from both organizations have provided information and guidance related to international regulations impacting employees, volunteers, and beneficiaries of response efforts, such as providing information and guidance related to regulations impacting ShelterBox’s international staff and volunteers who were assisting families displaced by conflict in Syria.
This partnership capitalizes on the differing talents of each organization by matching attorneys to a variety of organizational needs. In addition to the legal services, both organizations inspired others to support the nonprofit financially, allowing the organization to more effectively and efficiently deliver more aid to the world’s most vulnerable people. Separately, in 2012, IBM attorneys also devoted many hours on weekends to provide pro bono disaster relief assistance after Superstorm Sandy hit New York City. They partnered with the New York City Bar Justice Center and others to start and staff pro bono legal clinics and helping to galvanize and coordinate other volunteers.
In 2014, IBM broadened its partnership with the City Bar Justice Center and participated in two important projects: the Veterans Assistance Project and the Immigrant Women and Children Project. Through this partnership, dozens of IBM attorneys provide legal assistance to veterans seeking disability benefits, and to crime victims, including domestic violence victims, needing immigration relief.
To find out more about aligning corporate social responsibility and pro bono, access our on-demand webinar on the topic.
* denotes a Signatory to the Law Firm Pro Bono Challenge® †denotes a Member of the Law Firm Pro Bono Project
Pro Bono As We See It
August 26, 2015
Partnership Develops Tools to Aid Judges in South Asia
South Asia has suffered from a significant amount of terrorist violence over the years. For example, 38 percent of terrorist incidents in 2013 occurred in South Asia, according to the Global Center on Cooperative Security. In 2014,according to the U.S. State Department, more than 60 percent of terrorist attacks took place in just five countries (Iraq, Pakistan, Afghanistan, India, and Nigeria), of which three are in South Asia; nearly 6,700 people died from terrorist attacks in Pakistan, Afghanistan, and India that year.
In recognition of the need to build expertise in the adjudication of terrorism-related cases, the Global Center and the UN Security Council’s Counter-Terrorism Committee Executive Directorate (CTED) launched a project to engage South Asian judges to develop strategies to improve the handling of such cases. One of the project’s goals was the development of a regional toolkit to help guide judges in their adjudication of such cases, which could in turn support the development of national bench books.
Pro bono lawyers from SalesForce.com** and Salesforce Foundation, in partnership with Baker & McKenzie*†, rose to the challenge of preparing such a regional toolkit.
When Salesforce began its pro bono program in 2014, it was eager to find a global project that could be done by its lawyers around the world. Drafting this regional toolkit fit the bill, and partnering with a global law firm like Baker & McKenzie allowed Salesforce to match up its lawyers with nearby law firm lawyers in different offices. Teams in Paris, London, Toronto, San Francisco, and New York contributed to the creation of this toolkit, which was recently submitted to the Global Center and CTED. The toolkit is practice-oriented and follows customary international and human rights law and norms relating to court proceedings for terrorism offenses. It is expected to be discussed at the 10th “Regional Workshop for Judges, Prosecutors, and Police in South Asia on Effectively Countering Terrorism” in Bangkok this October and may ultimately be used as a template for judges and judicial academies in other regions as well.
This project is the latest example of how partnerships in pro bono, particularly on a global scale, can provide meaningful assistance on important issues. The PBEye salutes Salesforce and Baker & McKenzie on a job well done.
* denotes a Signatory to the Law Firm Pro Bono Challenge® **denotes a Corporate Pro Bono Challenge® signatory † denotes a Member of the Law Firm Pro Bono Project
2014 PARTNER AWARD WINNER
American International Group, Inc. in partnership with the Iraqi Refugee Assistance Project
Corporate Pro Bono (CPBO), the global partnership project of Pro Bono Institute and the Association of Corporate Counsel, is proud to present the 2014 CPBO Pro Bono Partner Award to American International Group, Inc.’s (AIG) Global Legal, Compliance, Regulatory, and Government Affairs department (GLCR) in partnership with the Iraqi Refugee Assistance Project (IRAP) for their innovative collaboration that assists refugees in the Middle East, including Afghanistan, and North Africa, whose lives are in imminent danger due to their work with the U.S. government. This partnership, in which attorneys and para-professionals remotely assist clients across the globe, demonstrates the great impact that in-house pro bono can make and serves as a replicable model for other legal departments.
In 2012, as part of a successful effort to restructure the company, the AIG pro bono program was created to offer members of the GLCR meaningful opportunities to provide pro bono work to those in need. In the short time since, more than 100 dedicated professionals in eight cities around the world have provided more than 3,000 hours of legal services to organizations and individuals.
Among AIG’s first pro bono efforts was its partnership with IRAP. Since its launch, 36 AIG attorneys and para-professionals in the U.S., working in teams of three and four with the assistance of colleagues in Germany and the United Arab Emirates, have provided more than 650 hours of legal assistance to Afghan nationals who have aided the U.S., often as interpreters, and who are now targets of anti-American violence. Although Congress created a Special Immigrant Visa (SIV) program to help these persecuted allies immigrate to the U.S. in 2009, only 12 percent of the visas available to Afghans have been distributed, in large part due to the difficulty of applying. Members of the GLCR represent individual clients and tackle the process of gathering information and completing the forms and procedures necessary to navigate the complex bureaucratic system and successfully obtain SIVs for at-risk individuals. In addition, AIG has assisted IRAP with the appeal of an SIV rejection, has donated funds for the effort, and offered its government relations expertise.
Prior to this partnership, IRAP had not worked with in-house counsel. With that in mind, AIG and IRAP devoted substantial time and effort to build a robust and replicable partnership. Such efforts have included regular communication, periodic evaluation, and a training and internal support program in which IRAP trainings are accessible online to new volunteers and those who need a refresher. IRAP also provides presentations on new developments, AIG volunteers are invited to IRAP events, and AIG volunteers meet internally every six weeks to learn from one another. To date, IRAP has replicated this model with three other major corporations.
The impact of this work has been wide-ranging and powerful, from a client who successfully obtained a visa and began a new life in the U.S. to three major policy/ legislative victories. The first victory in October 2013 was the extension of the Iraqi SIV program. It was followed by landmark legislation in the National Defense Authorization Act that gave the more than 70,000 U.S.-affiliated Iraqi and Afghan SIV applicants access to counsel in overseas procedures, provided the first formal right of appeal for a visa denial, created an ombudsman for the program, and implemented quarterly reporting requirements to Congress. The third occurred in July 2014 and added an additional 1,000 visas to the Afghan SIV program.
AIG’s commitment to pro bono is exemplified through its innovative and successful partnership with IRAP. This partnership exhibits AIG’s steadfast commitment to saving the lives and families of those who served the U.S. at incredible personal risk. CPBO congratulates AIG and IRAP for their collaboration and lifesaving impact.
2014 LAURIE D. ZELON PRO BONO AWARD
Brad Smith and the Department of Legal and Corporate Affairs at Microsoft Corporation
The Pro Bono Institute’s annual Laurie D. Zelon Pro Bono Award honors Judge Zelon’s pro bono leadership and her singular contributions to enhancing justice for all. The 2014 Zelon Award is given to Brad Smith and the Department of Legal and Corporate Affairs at Microsoft Corporation, a worldwide leader in software, services, and solutions, in recognition of their outstanding commitment to pro bono legal services.
Microsoft’s Department of Legal and Corporate Affairs is a diverse and multidisciplinary team of approximately 1,100 legal, business, and corporate affairs professionals operating in 55 countries worldwide. Being a part of a company committed to creating solutions to meet the needs of the communities in which it works, members of the legal department have actively engaged in pro bono for many years. Their efforts were formalized when Executive Vice President and General Counsel Brad Smith led the charge to streamline the department’s pro bono engagement.
Ten years ago, Microsoft joined forces with the ABA Commission on Immigration to launch Volunteer Advocates for Immigrant Justice (VAIJ) in Seattle. Over the past decade, hundreds of Microsoft attorneys, paralegals, administrators, and other volunteers have provided pro bono representation to thousands of unaccompanied children, adult immigrants, and refugees facing deportation and immigration proceedings. Through VAIJ, Microsoft has helped hundreds of immigrants attain lawful immigration status and security from abuse and persecution.
In 2008, Microsoft built upon the success, infrastructure, and expertise derived from VAIJ, and co- founded another nonprofit organization, Kids in Need of Defense (KIND). KIND provides pro bono legal representation for unaccompanied children facing immigration proceedings in the U.S. where the need is greatest. KIND works at the micro-level on individual cases through volunteers from law firms, corporate legal departments, and law schools, and at the macro-level by advocating for policy changes to improve the lot of unaccompanied children.
In just five years, KIND has recruited nearly 6,000 volunteers from more than 170 law firm, corporate, and law school partners in each city and has served more than 5,000 children. In addition, it has advocated for critical changes in U.S. law, policy, and practice to improve the treatment and protection of unaccompanied children. In October 2013, VAIJ and KIND formally merged, with VAIJ folding its operations into KIND.
In addition to the work the department has done in support of streamlining and expanding services to undocumented immigrant youth, volunteers from Microsoft have worked on a number of direct service pro bono matters in the U.S. and abroad, which include providing transaction legal advice to social entrepreneurs and drafting disaster relief provisions for global relief organizations.
Under Smith’s leadership, Microsoft’s Department of Legal and Corporate Affairs has advanced legal assistance initiatives within its department and within the larger legal community to support the needs of the underserved. Smith also serves as Microsoft’s senior executive responsible for the company’s corporate citizenship and philanthropic work, which includes a new companywide commitment to create empowerment opportunities for 300 million youth around the world during the next three years.
Volunteer drawn to aid grant program Created on Friday, 02 August 2013 02:54 | Written by Jim Redden
Tiffany Burkey learned the importance of volunteerism early on. As a single mother working a minimum wage job, she was dependent on the Oregon Food Bank and other volunteer-supported organizations to help make ends meet. “When you’re pinching pennies to pay the rent, a box of food really helps,” said Burkey. Now, after slowly working her way into a project management job at Intel, Burkey is one of the most active employees in the company’s matching grant program. When employees volunteer at qualified schools and nonprofit organizations, the Intel Foundation “matches” $10 per hour as grants after a minimum of 20 hours. Burkey volunteered at a number of locations last year, including Mooberry Elementary, a Title I school in Hillsboro, which received a grant of more than $8,300 from the foundation. “I believe in giving back to the community, both the local and global community,” said Burkey, who also volunteered at organizations ranging from Volunteers of America to Meals on Wheels. Thanks to volunteers like Burkey, company employees generated nearly $355,000 for Hillsboro schools and nonprofit organizations through the Intel Involved Matching Grant program in 2012. Statewide last year, Intel employees volunteered more than 300,000 hours, earning $2 million dollars in matching grants from the Intel Foundation. Back when she was in need, Burkey had no idea she’d wind up working for a large company like Intel. She took practically every job she could find, including working on a farm, at a gas station and at a restaurant at the Portland International Airport. She finally found herself working for a company that sold computer hardware and software applications. It was bought by a bigger company, which gave her more exposure to the high tech world. When she saw an online job posting at Intel in 2000, Burkey sent in her application and was hired. She now manages a lab and programs on the Jones Farm campus in Hillsboro. Burkey was quickly drawn to the volunteer program, becoming involved in her second year at Intel and eventually chairing the committee that coordinates the program for employees at the Jones Farm campus. For her, the rewards of volunteering are immediate, whether it is helping the environment or seeing students becoming more proud of their school. “Ultimately, the Intel Involved Matching Grant Program is the number-one benefit Intel offers to me,” said Burkey, who is now 42 and has two sons. Although the program has evolved over the years, Intel first began providing monetary matches for hours volunteered in 1995. The foundation caps its grants at $10,000 for each eligible nonprofit organization per year and $15,000 for each eligible school per year. Despite the limitations, grant funds were widely distributed in Hillsboro last year. For example, more than 15,000 volunteer hours were spent at local schools and educational organizations, generating $145,000 in grants. Specific grants include: Hillsboro Parks and Recreation received $19,710 from program volunteers and $8,400 from maintenance volunteers. The Jackson Bottom Wetlands Preserve received $5,610 from Tualatin River watershed management volunteers. The Hillsboro Senior Center received a $4,125 grant from volunteers who helped prepare and serve meals. Hillsboro’s Community Emergency Response program received a $1,575 grant from the time the volunteers logged. Century High School received a $15,000 matching grant, with its boys basketball, girls lacrosse and band, speech and debate teams receiving additional funding. Hillsboro High School and its technology department received a $5,750 grant. Home Plate Youth Services received a $10,000 grant. The Hillsboro Soccer Club received a $10,000 grant. The 4-H Youth Oregon State Extension Service received a $8,850 grant. The Oregon International Air Show received a $9,470 grant.
Businesses Backing Vets: Merck Gives Pro-Bono Aid to Homeless Heroes
By Ryan Scott |May 01, 2012| Tags: Blog
Part of Causecast's Memorial Day series examining how Corporate America is finding innovative ways to help veterans through its employee engagement programs. This post was featured in The Huffington Post.
What would the world look like without the dedication of nonprofits trying to improve it? Tough to imagine, which is why I consider the business of nonprofits so vital. As a matter of fact, it’s why I built a company around helping businesses and other organizations support nonprofits through impactful volunteering and giving programs. What I’ve discovered along the way is that sometimes responsible businesses go a step further than they imagined they could, finding innovative ways to fill support gaps that no one realized existed.
Such is the case with Merck. More than a year ago, the pharmaceutical leader decided that as part of itscorporate social responsibility efforts it wanted to help homeless veterans, so the company began funding a terrific nonprofit called Community Hope, Inc. The nonprofit doesn’t limit its support to veterans, but it has become a special port in the storm for veterans who have found themselves with nowhere to go. Community Hope provides a safe haven where homeless vets - both men and women - can regain their footing, finding not only food and shelter but important job training skills that will help them become self-sufficient again. Merck’s funds were earmarked for precisely this sort of job support.
As Merck’s relationship with Community Hope deepened through its continued support, however, Merck employees realized that there was often another obstacle that many of these homeless vets faced in order to get back on their feet: legal problems. Some veterans had single legal issues and others had multiple issues that overwhelmed the veteran as well as the Community Hope staff attempting to assist them. It might be divorce agreements from the past, or housing, or parking tickets or health issues that required legal counsel in order to secure benefits - but whatever the issue, it often served as a roadblock to stability. A lightbulb went on above the collective Merck head. The company’s attorneys realized that they could provide services through their substantial pro-bono program that would be as valuable if not more so than the checks their company was writing to support Community Hope. Thus was born the Hope for Veterans Program.
Pro-Bono Services Clear a Path Typically, when an attorney does legal pro-bono, they must work through a local nonprofit legal services group - which means that they don’t have the funds to manage details like case histories and multiple court dates. So Merck partnered with their local legal services nonprofit and funded Merck lawyers to work with veterans on their legal issues. Providing these services helps vets clear their records, take care of debt and change their credit scores, just for starters - all of which clears the path to employment.
With Merck, each case that has been resolved has helped veterans continue their progress and regain their independence. Sometimes simple legal advice is all that is needed to help a veteran solve what seem to be intractable barriers to self-sufficiency.
For example, AJ. Overwhelmed with large debts to the IRS and a creditor, AJ thought she had no choice but to file bankruptcy, despite the adverse effects a bankruptcy would have on her aspirations to operate her own business. A Merck attorney assisted AJ in learning about establishing a voluntary payment plan with the IRS once she is employed full-time that would prevent garnishment and other collection efforts by the IRS. The attorney also advised AJ about options on handling the creditor debt. With this information, AJ decided that she did not need to file a bankruptcy.
Or, for another example, a veteran we’ll call Joe, whose driver’s license was revoked by the State of New Jersey 20 years ago. When the Merck attorney contacted the New Jersey DMV, he discovered there was no reason for the license revocation other than that New York State had revoked the veteran’s license in 1990 and New Jersey had followed suit. With several phone calls and a letter, the attorney was able to reinstate the veteran’s license. For two decades, the veteran’s employment opportunities and other major aspects of his life and livelihood had been hampered by the inability to drive. Now, with a fresh start, he planned to explore new job opportunities and purchase a used vehicle with funds he had saved in the Hope for Veterans Program.
The Movement of Skills-Based Volunteering The high unemployment rate amongst returning vets is a national concern, but many people don’t understand all of the impediments that stand between vets and jobs. The issues that veterans face are multi-faceted, so when companies bring their unique skills to the table they can improve the employment prospects for vets in surprising ways.
The power of pro-bono services on all causes is why A Billion + Change was formed. The organization has mobilized more than 100 leading companies to commit to more than $1.7 billion and at least 11.5 million hours of time and talent dedicated to building nonprofit capacity, with the goal of inspiring the largest commitment of corporate pro-bono service in history.
A Billion + Change hopes that one day skills-based volunteering will be the 'new normal' in every workplace. Given how companies like Merck are changing the lives of veterans through pro bono services, I look forward to this new normal being a commonplace fact of corporate life.
The Metropolitan Corporate Counsel® PECIAL SECTIO S Pro Bono N Doing Well By Doing Good – A Microsoft Hallmark
The Editor interviews David A. Heiner, Editor: Please describe Microsoft Vice President and Deputy General Corporation’s legal department and Counsel of Microsoft Corporation. your role.
Heiner: Microsoft’s Legal and Corpo- rate Affairs (LCA) department is closely engaged on the full range of subjects that are shaping the development of the HIGHLIGHTS technology industry: privacy, data pro- tection, security, software piracy, intel- Corporations lectual property, antitrust, standards, CBS Corporation’s Pro Bono corporate social responsibility and Program: A Priority And An more. We have more than 1,000 people Asset Interview: Louis J. in the department, a little less than half Briskman and Laurie Nicole of whom are lawyers. We have people Robinson CBS CORPORATION stationed in 51 countries so that we can Page 1 address our clients’ needs on a world- Law Firms wide basis. I lead two groups within LCA. Our Jones Day: Pro Bono Without Corporate Standards Group consists of Borders Interview: Laura Tuell lawyers and standards professionals Parcher JONES DAY* Page 50 located in more than a dozen countries At Proskauer, Pro Bono As A who assist in Microsoft’s contributions Practice In The Truest Sense to standard-setting organizations. Our Interview: Scott Harshbarger Antitrust Group focuses on client coun- and Stacey O’Haire Fahey seling and interactions with antitrust PROSKAUER* Page 51 enforcement agencies worldwide. Medical-Legal Partnership: A Promising Direction For Pro Editor: Please talk about Microsoft’s Bono Interview: Steven H. commitment to corporate social responsibility (CSR), and to pro bono Schulman AKIN GUMP STRAUSS David A. Heiner HAUER & FELD LLP* and Lori in particular. What is the company’s Chumbler WALMART Page 52 overall philosophy regarding CSR? tation and other legal problems. tims of domestic violence in divorce and Pro Bono Partnerships We face the same challenge that a lot child custody proceedings, including lit- Betweenouse And Out- Heiner: Microsoft believes that the of corporate law departments face in igated proceedings. LCA lawyers also gan mission of large organizations must this area – many pro bono matters are provide one-on-one consultation at extend beyond profit. Microsoft is a GIBBONS P.C. Page 53 litigation oriented, and non-litigators neighborhood legal clinics concerning a leader in philanthropy, corporate gover- Organizations often feel that they don’t have sufficient range of matters. This is a good way for nance and human rights, among other skills to take on these matters. But with non-litigators to get involved. Lawyers Alliance And Via- things. Earlier this spring, Corporate the right support from the law depart- LCA employees are more often com Team Up To Help Non- Responsibility Magazine listed ment and sponsoring organizations, engaged in community service work profits Elizabeth M. Microsoft in the number three spot on non-litigators can often do a fine job on other than providing pro bono legal ser- Guggenheimer LAWYERS its prestigious annual list of 100 Best these matters. Some of the standards vices. For example, LCA employees ALLIANCE FOR NEW YORK Page Corporate Citizens. lawyers on my team, for example, have serve as a “buddy” for international 54 In its CSR work, Microsoft is recently taken on an immigration case, development law organizations in focused on the “opportunity divide” MFY Continues To Seek Jus- and they are off to a good start. Tunisia and Haiti. As a buddy they act as tice For New York’s Most among young people. That is the grow- a resource for and assist local law orga- ing gap between those who are prosper- Underserved Populations Editor: Can you describe some cur- nizations in creating programs that ben- Interview: Jeanette Zelhof ing and the tens of millions of young efit the local legal profession and the people who are not because they lack rent pro bono projects in which your MFY LEGAL SERVICES, INC. attorneys are involved (local, national rule of law. In various countries LCA Page 55 the education, skills or resources they employees assist young entrepreneurs need to be successful in a rapidly chang- or international)? Mobilizing The Next Genera- by providing training on intellectual pri- ing economy. We are bringing our tech- vacy and anti-corruption. For many in tion Of Lawyers Committed Heiner: Together with the ABA, nology, people and other resources to LCA, this is great way to advance a To Equal Justice Interview: Microsoft has created a Seattle affiliate bear to help close the opportunity gap. cause they care about in another country David Stern EQUAL JUSTICE of KIND called Volunteer Advocates for WORKS Page 56 without having to travel to distant coun- Editor: What is the legal depart- Immigrant Justice (VAIJ). Microsoft tries. Closer to home, LCA employees Pro Bono Partnership: 15 ment’s level of participation in pro lawyers and paralegals have handled devoted well over 10,000 hours last year Years Of Service To Nonprof- bono? more than 100 of these cases in recent to a range of community service pro- its Interview: Richard S. years with great support from VAIJ. jects. Hobish PRO BONO PARTNERSHIP, Heiner: We strongly encourage This is a particular interest of mine. I INC. Page 57 employees to take on pro bono projects obtained asylum for an immigrant from Editor: Can technology enhance and many do. At a department-wide Eritrea who had been tortured there and access to justice or generally increase Some Of The Above Partner level, we cofounded (with Angelina an immigrant from Kenya who feared the effectiveness of pro bono pro- With Corporate Counsel By Jolie) an organization focused on secur- persecution because of his membership grams? Providing Us With Financial ing legal rights for immigrant children in a particular social group. I’m cur- And Editorial Support. called Kids in Need of Defense (KIND). rently working on another asylum case Heiner: We believe that technology can KIND partners with about 60 law firms for an immigrant from Peru. play an important role in promoting * Supporting Law Firms and law departments to provide pro Lawyers on my team and others in bono legal services to kids facing depor- LCA are also active in representing vic- Please turn to page 69 July/August 2012 The Metropolitan Corporate Counsel Page 69
David A. Heiner working with law enforcement. The mission of Microsoft’s Digital Crimes Continued from page 49 Unit is to bring technology to bear to help destroy the way cybercriminals access to justice. Just as in the for-profit operate. In recent years, Microsoft has world, technology can help connect peo- worked closely with law enforcement to ple and ideas and enable lawyers to pro- help disrupt dangerous “botnets” such as vide services more efficiently. Technol- Waledac, Rustock, and Kelihos. We’ve ogy can also help people to represent also established global partnerships to themselves by enabling them to access rescue malware-infected computer own- legal resources efficiently. Microsoft is a ers from the grip of these botnets. Our strong supporter of Pro Bono Net, a PhotoDNA technology, which I men- nationwide nonprofit that is dedicated to tioned earlier, has been instrumental in harnessing the power of technology to helping to reduce child pornography on promote access to justice. Among other the Internet. things, Pro Bono Net offers technology solutions that power a wide range of Editor: We understand you serve on legal aid websites and solutions to the board of directors of Pro Bono enable video conferencing between vol- Net. Please talk about this commit- unteer lawyers and clients who may be ment, from both the corporation’s hundreds of miles away. Here in Seattle, and your personal perspectives. Microsoft is working with the North- west Justice Project to develop an online Heiner: In the 1990s Microsoft Win- platform for collaboration and content dows demonstrated the great efficiency management based on Microsoft’s of “platform software” – software that SharePoint Server 2010 and Office 365. makes its capabilities available for use by other products. The Windows operat- Editor: Please give some examples of ing system enabled hundreds of com- how Microsoft technology has helped puter manufacturers to build PCs and needy individuals and communities. laptops and millions of software devel- opers to build innovative applications. Heiner: Microsoft is directly engaged in Microsoft works closely with Pro Bono the fight against child exploitation Net because it is working to bring that through its PhotoDNA technology and same kind of platform efficiency to the its partnership with the International and provision of legal services. A core group National Centers for Missing and of Pro Bono Net developers has built a Exploited Children. PhotoDNA is tech- platform that dozens of legal aid organi- nology developed by Microsoft zations use to run their websites – Research and Dartmouth University to enabling them to easily connect with the help law enforcement track photos of volunteers and the communities they victimized children – even if the photos serve. Other Pro Bono Net technology have been altered in various ways. solutions enable self-represented liti- Through collaborative, educational and gants to assemble the documents they technological efforts, Microsoft has need to support their cases, to find legal developed partnerships with law resources, and to connect with lawyers enforcement agencies around the world remotely. and organizations like the National Cen- I find this work especially appealing ter for Missing and Exploited Children because it is highly leveraged: when Pro (NCMEC), the International Center for Bono Net improves its website platform, Missing and Exploited Children all of the legal aid organizations that use (ICMEC) and DNA Foundation to help it can immediately benefit from the new protect children against technology- capabilities. More broadly, we know that facilitated crimes. the legal needs of those who cannot Microsoft has a long history of part- afford a lawyer are not close to being nering with governments, intergovern- met in our society, and there is little mental organizations, such as the United prospect of substantially increased gov- Nations, and non-government organiza- ernment funding to meet this need. So tions to help communities with disaster we have to find innovative ways to prevention, preparedness, response and stretch the limited funding that is avail- recovery. The Microsoft Disaster able, and the efficiencies that technology Response program, for example, is a can provide are one way to do that. corporate citizenship effort dedicated to improving the response capabilities of Editor: Is there a factual basis for lead disaster response organizations, stating that companies engaged in customers and partners responding to CSR attain a higher measure of finan- natural disasters. cial success? Microsoft has donated its Sharepoint product to Pro Bono Net, which used it Heiner: Microsoft is pursuing corporate as a platform for a Web service it offers social responsibility initiatives because to law firms called Pro Bono Manager we believe that is the right thing to do. (PBM). PBM helps match volunteer There are just too many problems in the lawyers with clients in need of assis- world. Governments and nonprofits can- tance and helps law firms to closely not do it all. We have to tap the track and manage pro bono hours. resources of large organizations too. But we also believe that CSR is good for Editor: Please talk about Microsoft’s business. Through our CSR efforts we CSR efforts that align with law nurture vital relationships with stake- enforcement. holders outside the company and attract and retain top talent – the most impor- Heiner: We’ve set up an organization tant resource by far for an intellectual within LCA that is solely focused on property company. Please email the interviewee at [email protected] with questions about this interview NY Daily Record
Pro Bono Spotlight: Allstate Foundation supports domestic violence survivors by Linda Kostin Published: April 10th, 2012
Domestic violence is a complex problem that blights communities worldwide. Once victims have achieved a measure of safety by escaping the immediate threat of physical harm, there remains the daunting task of moving forward with their lives.
Research shows that nearly 1 in 4 women experience domestic violence during their lifetime, and that lacking financial knowledge and resources are among the main factors that keep victims in relationships with their abusers.
“That’s why The Allstate Foundation is taking action. With the expertise that comes from being the corporate foundation of a financial services company, our Domestic Violence Program helps provide survivors with the financial knowledge, skills and Linda J. Kostin resources that they need to help get safe, stay safe and thrive,” Allison McMahon, Allstate Foundation’s Corporate Relations Regional Division manager, said recently.
Thanks to the Allstate Foundation, domestic violence survivors are in good hands — here in Rochester and beyond.
Once again, the Allstate Foundation has selected Volunteer Legal Services Project of Monroe County’s Nicki’s Hope Legal Clinic as a recipient of a generous $25,000 grant through Allstate’s Economics Against Abuse Program.
“The goal of Nicki’s Hope is to increase safety and economic self-sufficiency while reducing domestic violence. The Allstate Foundation applauds that goal as it is our hope to help domestic violence survivors prepare for bright, hopeful futures filled with economic autonomy and opportunity. Through the work of Nicki’s Hope, lives are saved and dreams are realized,” McMahon said.
In order to reach as many survivors as possible locally, Mary Beth Conway, VLSP’s staff family law attorney, provides Nicki’s Hope Legal Clinic at Alternatives for Battered Women.
“In fiscal year 2010-2011, our shelter’s annual occupancy rate rose to 98 percent, up from 96 percent the previous year,” said Janet Chaize, ABW’s Transitional Support Services program coordinator. According to Chaize, 243 women and 167 children were housed, for a total of 410 Allstate Foundation residents. During the same period, the ABW hotline responded to a total of 4,688 calls.
“ABW refers clients to VLSP almost every day. Mary Beth (Conway) is the perfect combination of being really nurturing towards our clients, but not sugar-coating her advice to them. In some cases, there is a loss that is not going to be compensated. It’s hard to hear, but our clients need to know the truth,” Chaize said recently.
ABW presented Conway with the 2010 Stop the Hurt Award in recognition of the value that Nicki’s Hope Legal Clinic provides to ABW and its clients. In addition to her work with shelter residents, Conway provides trainings for ABW staff twice yearly.
According to Chaize, identity theft has become a major problem for victims of domestic violence. For example, at recent Nicki’s Hope Legal Clinic, an ABW shelter resident whose abusive ex-boyfriend stole her identity and opened bank accounts in her name received advice about the steps she could take to resolve the situation.
Chaize shared some written comments from recent Nicki’s Hope Legal Clinic attendees. One comment reads, “I’m so grateful for this clinic. I was very much helped by the volunteer attorney discussing my rights with my former landlord.”
In addition to local survivors of domestic violence, domestic violence survivors across the nation receive help they need to move forward thanks to Allstate. “Over 200 Allstate agency owners and personal financial representatives have joined the Allstate Against Abuse Team, raising their hands to volunteer, teach financial literacy courses and spread the word about domestic violence,” McMahon said.
“Since Allstate’s Economics Against Abuse Program’s inception in 2005, the foundation has invested over $30 million toward ending domestic violence through financial empowerment. In 2011 alone, the program gave nearly $5 million to the cause,” McMahon added.
According to McMahon, the program has reached over 90,000 survivors with life-changing financial empowerment services including financial literacy, job training and asset-building programs. Nearly 700 domestic violence service providers representing 1,149 organizations in 34 states are using the Allstate Foundation’s Moving Ahead Through Financial Management curriculum in their programs.
“Allstate Foundation has committed to empowering 500,000 domestic violence survivors by 2015,” McMahon said recently.
In addition to providing funding for programs such as Nicki’s Hope Legal Clinic, Allstate encourages its employees to volunteer in their communities. “It is the policy of the Allstate Law Department to strongly encourage all of its members to participate, on a strictly voluntary basis, in pro bono activities. Allstate has joined the Corporate Pro Bono Challenge and is committed to using its best efforts to support and participate in pro bono service,” McMahon said.
Allstate encourages pro bono for several reasons. “Pro bono helps fulfill Allstate’s commitment to the communities in which it operates, as well as helping to meet every lawyer’s professional responsibility to provide legal services to those in need. In addition, pro bono provides an opportunity for attorneys to further develop analytical skills, powers of persuasion and good judgment,” McMahon said.
One hundred percent of Allstate’s Rochester attorneys volunteer with VLSP. Paul Richardson is a member of VLSP’s board of directors. Thomas Durkin has accepted several complex pro bono family law referrals. Together with several of his friends, Durkin donated a “Bon Vivant” gourmet dinner prepared and served at his home as a silent auction item for VLSP’s 2011 Art of Lawyering fundraiser.
VLSP thanks the Allstate Foundation and the members of the legal community who stepped up last month to help low-income clients struggling with a wide range of issues including bankruptcies, foreclosures, wills, tax, name changes, unemployment insurance benefits denials, grandparent/non-parent child custody disputes, and divorces.
CORPORATE PRO BONO HONORS THE FORD MOTOR COMPANY, DYKEMA GOSSETT PLLC, LEGAL AID AND DEFENDER ASSOCIATION, INC., AND MICHIGAN COMMUNITY RESOURCES FOR INNOVATIVE COMMUNITY PARTNERSHIP
FOR IMMEDIATE RELEASE November 7, 2012
Contact: David C. Lipscomb Phone: 202.729.6985 E-mail: [email protected]
Washington, D.C. – November 7 – Corporate Pro Bono (CPBO) announced today that it has selected the Ford Motor Company Office of the General Counsel, Dykema Gossett PLLC, Legal Aid and Defender Association, Inc. (LAD), and Michigan Community Resources (MCR) to receive the CPBO Pro Bono Partner Award for their innovative partnerships to serve the legal needs of individuals and families and local nonprofits. The award, given by CPBO, the global partnership project of the Pro Bono Institute (PBI) and the Association of Corporate Counsel (ACC), will be presented at the 2012 PBI Annual Dinner on November 15 in New York.
Looking to revamp its pro bono program in 2009, Ford partnered with its fellow awardees to create two new pro bono projects to directly serve community needs and that align its pro bono program with Ford’s corporate social responsibility initiatives: the Food Stamp Clinic and the Nonprofit Survival Series Clinics. “These unique partnerships epitomize using pro bono to help close the justice gap at the local level,” PBI President and CEO Esther F. Lardent said. “We commend these organizations for working together to better serve communities that are in need.”
The Food Stamp Clinic, developed with LAD, was designed to identify individuals and families that are either eligible to receive food stamps and don’t or are not receiving the amount to which they are entitled. In Detroit, more than one-third of the population lives in poverty, making it one of the poorest large cities in America, yet its citizens were underutilizing the food stamp program. With Ford’s help, the partnership has helped hundreds of clinic participants and has identified tens of thousands of dollars in benefits.
The successes of the clinics are due to the dedication of the partners and the Food Stamp Clinic’s inventive practices. For instance, clinics are held at schools to make them easily accessible to the community, and the Michigan Department of Human Services sends representatives to help participants secure benefits. Ford and LAD have also brought in Spanish-speaking volunteers from the Ford Hispanic Network and Wayne State Law School to serve the large Spanish-speaking population. Ford also works with the Ford Fund to offer hot breakfast and other incentives to encourage members of the community to participate.
To address another pressing need, Ford, Dykema, and MCR developed the Nonprofit Survival Series Clinics to help ensure local nonprofits can continue to serve their constituents. At the clinics, Ford attorneys consult with community-based nonprofit organizations to identify legal issues that threaten their viability and ability to operate. At the beginning of each clinic, Dykema attorneys provide training to Ford volunteers on common issues that nonprofits face, particularly recession-related financial pressures and declining resources. More than 40 percent of the attorneys in Ford’s Office of the General Counsel have participated since the first clinic in 2009, and the program continues to expand in response to community need with the launch of a Contract Review Clinic.
“At Ford, we have a strategic goal to provide opportunities for our attorneys to perform meaningful pro bono service,” said David Leitch, general counsel and group vice president of Ford Motor Company. “It’s important to support the communities in which we build and sell vehicles. This award recognizes the hard work of our Ford team and builds the momentum for our pro bono work for 2013.”
Peter Kellett, Dykema chairman and CEO, noted, “Through this innovative program, Dykema was able to provide invaluable assistance to Michigan nonprofits—organizations serving those most in need, who themselves were profoundly affected by the economic downturn. By offering legal strategies and business counsel, Dykema attorneys not only helped strengthen the financial wellbeing of these nonprofits, but fulfilled our longstanding belief that pro bono service is a privilege not just a responsibility.”
The CPBO Pro Bono Partner Award recognizes the unique role partnerships between and among in- house legal departments, law firms, and public interest groups play in increasing access to justice.
“The fact that more than 40 percent of the lawyers in the Ford Motor Company’s Office of General Counsel participated in the clinic just one year after the program commenced speaks volumes to Ford’s dedication and level of commitment,” stated Veta T. Richardson, president and CEO of the Association of Corporate Counsel. “Ford’s leadership and service to the community sets a high standard for all organizations. Most importantly, Ford’s program demonstrates that good corporate citizenship is possible even during times of economic downturns.”
For more information about the award winners, visit the 2012 PBI Annual Dinner webpage.
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About Ford Motor Company Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 172,000 employees and 65 plants worldwide, the company’s automotive brands include Ford and Lincoln. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford and its products worldwide, please visit http://corporate.ford.com.
About Dykema Dykema serves business entities worldwide on a wide range of complex legal issues. Dykema lawyers and other professionals in 11 U.S. offices work in close partnership with clients – from start-ups to Fortune 100 companies – to deliver outstanding results, unparalleled service and exceptional value in every engagement. To learn more, visit www.dykema.com and follow Dykema on Twitter http://twitter.com/Dykema.
About Legal Aid and Defender Association, Inc. LAD is the largest provider of free civil legal services to low-income residents of Michigan. It serves metropolitan Detroit through its offices in Macomb, Oakland and Wayne counties. It also represents criminal defendants in Wayne County and the U.S. District Court for the Eastern District of Michigan. Including brief consultations and comprehensive legal services, the public law firm handles some 15,000 legal matters yearly.
“We work with clients in a comprehensive manner, so that as we solve their legal problems, we help solve other problems as well,” Deierdre L. Weir, president and CEO of LAD, said. “We help people rebuild their lives and help families stay together.”
Anyone seeking legal services can call (877) 964-4700 or visit www.ladadetroit.org.
About Michigan Community Resources Michigan Community Resources supports and empowers Michigan nonprofit community organizations serving low-income communities by providing pro bono legal, educational, technical and community outreach services. The result is stronger organizations and revitalized low-income communities. Key programs include the pro bono referral program, SAFE mini-grants, Vacant Property Education Series, and more. Since 1998, it has served over 750 nonprofit community organizations, leveraged over $12 million in pro bono legal assistance through its pro bono referral program, and provided vacant property related technical assistance on over 200 matters.
About Corporate Pro Bono Corporate Pro Bono, the global partnership project of the Pro Bono Institute and the Association of Corporate Counsel (ACC), is designed to substantially increase the amount of pro bono work performed by in-house counsel and to enhance the pro bono culture of in-house legal departments through technical assistance to the in-house community, targeted research and publications, online information and services, and outreach and educational programming. Corporate Pro Bono also works closely with ACC chapters to focus their resources and agendas on pro bono service.
About the Pro Bono Institute Established in 1996, PBI is a global nonprofit organization with a mandate to explore and identify new approaches to the poor and disadvantaged unable to secure legal assistance to address critical problems. PBI identifies and develops innovative programs and undertakes rigorous evaluations to ensure that these new approaches are workable and effective.
About the Association of Corporate Counsel The Association of Corporate Counsel (ACC) is a global bar association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other private-sector organizations through information, education, networking opportunities and advocacyinitiatives. The association, which is celebrating its 30th anniversary, has more than 30,000 members in more than 75 countries, employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in- house counsel, for in-house counsel.® For more information, visit www.acc.com and follow ACC on Twitter http://twitter.com/ACCinhouse
How Allstate Helped Create a National Network Against Domestic Abuse Hanna Felleke May 31, 2012
Recently I interviewed the Vice President of Public Social Responsibility at Allstate, Vicky Dinges (pictured below). We talked about why domestic violence is a cornerstone of the Allstate Foundation and how this issue is a reflection of Allstate's core mission.
BCLC: Why is domestic violence an important issue to Allstate?
Vicky Dinges: For the Good Hands people, addressing domestic violence reflects the core mission of Allstate: to protect people from life’s uncertainties and prepare them for the future. Since 1952, The Allstate Foundation has offered a helping hand to some of our nation’s most vulnerable individuals, families, and communities.
Research shows that lack of financial knowledge and resources is one of the biggest reasons domestic violence survivors remain in abusive relationships.
Our decision to focus on domestic violence in 2005 resulted from significant research on compelling social issues for a property insurance and financial services company. Research consistently shows that lack of financial knowledge and resources is one of the biggest reasons domestic violence survivors remain in or return to abusive relationships. As the corporate foundation of a financial services company, we knew we could make a difference by providing financial empowerment services to survivors of abuse. In addition, our Foundation’s trustees wanted to tackle a social issue few others had the courage to address.
The statistics are compelling:
Every hour, nearly 150 women are abused by a partner. An average of three women die each day due to domestic violence. Domestic violence affects 1 in 4 women during their lives. Nearly 75 percent of Americans know someone who has been abused.
We knew we could make a difference by providing financial empowerment to survivors of abuse.
Most victims of domestic violence are mothers, sisters, daughters, neighbors and friends. They often have families with young children who must witness violence at times and in ways no child should have to endure. “Economic abuse” is frequently the weapon of choice used against domestic violence victims. Abusers will often use tactics that derail their victim’s ability to find or keep work, control the victim’s earnings, or ruin the victim’s credit – all leading to women often having to make the tough choice between staying in an abusive relationship or facing homelessness and poverty.
We knew that as a company committed to helping people fulfill their hopes and dreams, Allstate had the unique ability to help break the cycle of domestic violence. Every day, Allstate agency owners and personal financial representatives use their knowledge and skills to help families manage their finances and prepare for the future. We knew we could use that expertise to help domestic violence survivors break free and stay free from violence. We felt Allstate has credibility as an expert in financial services with a safe and family-friendly brand identity that would make survivors comfortable.
Allstate had the unique ability to help break the cycle of domestic violence.
BCLC: Since the inception of the domestic violence program at the Foundation, what are some significant findings and milestones of the program?
Dinges: One of our first findings was that we couldn’t do this important work alone. Although we had done a lot of research about domestic violence, it would be arrogant to think we knew everything. Fortunately, we developed a partnership early on with the National Network to End Domestic Violence. Since 2005,NNEDV has been our primary national partner. NNEDV team members have served as trusted colleagues, counselors and even critics at times (which is important and very helpful).
With NNEDV, we developed and distributed The Allstate Foundation Moving Ahead through Financial Management curriculum, which is one of the only national, comprehensive resources tailored to help teach domestic violence survivors about tasks ranging from opening a bank account to fixing credit, buying a home and even estate planning. The curriculum is also available at the Click to Empower website.
We asked the Rutgers University School of Social Work to study the effectiveness of the curriculum as a strategy to empower survivors and change lives. While the research is ongoing, preliminary results indicate that survivors using the curriculum reported a significant increase in economic self-sufficiency: 94 percent of participants were no longer living with their abusive partner, and 86 percent were still using the Moving Ahead resources after six months. We’re confident that results of the longitudinal survey, expected in 2014, will significantly affect the type of services offered to survivors.
With NNEDV, we developed one of the only national, comprehensive resources to teach domestic violence survivors about opening a bank account, fixing credit, buying a home and even estate planning.
Originally, we were so focused on providing financial empowerment services for domestic violence survivors that we didn’t realize many domestic violence service providers (known as advocates) weren’t necessarily equipped to teach financial education. So, The Allstate Foundation has hosted seven annual symposiums to teach advocates how to educate survivors about life-saving financial skills.
In 2009, working with social-impact measurement experts, we developed a comprehensive way to measure key aspects of our work, including annual figures on the following: how many survivors we informed, engaged and empowered to take action; agency owners, personal financial representatives and employees involved in our programs; opinion leaders reached with information about public policy issues affecting survivors; media outreach results; and other key performance metrics. The figures we collect each year help us document our impact and inform future strategies and tactics.
Last year, our Allstate Against Abuse Team grew to 200 members. AAAT is a growing network of Allstate agency owners, personal financial representatives and employees who have volunteered to address domestic violence in their communities. Many teach financial empowerment workshops. Some serve on governing boards for domestic violence organizations; others simply share messages tied to our program on their personal and professional social networks. We’ve learned that our Allstate colleagues have a lot of passion for serving their community. Their commitment to the issue is truly inspirational. Last year, our Allstate Against Abuse Team grew to 200 members.
BCLC: What are some of the challenges you face?
Dinges: In the last 40 years, the domestic violence prevention movement focused on crisis intervention to achieve safety for survivors. Of course, crisis intervention is critical to ensure the short-term safety of a survivor, but it doesn’t always provide a long-term escape from violence. In a way, through our focus on financial empowerment of survivors, The Allstate Foundation introduced a new service delivery model, which can be very challenging.
Also challenging is the fact that domestic violence is often considered a “private” issue that people don’t want to discuss or don’t know how to discuss. They often don’t know that talking about it could save the life of someone they love. That’s why one of our goals has been to increase public awareness about domestic violence.
We’ve conducted several campaigns designed to get people talking about domestic violence both online and off. Through traditional and social media, the Foundation has engaged millions of people in open conversations about domestic violence and financial abuse while providing grants and resources to organizations working directly with survivors as part of the programs.
In 2011, we launched a successful campaign around PurplePurse.com– a website that looks like an online fashion magazine, but is actually a great resource with tips and tools to start talking about domestic violence. With tweet-up events at nine YWCAs across the country, more than 1,000 bloggers and reporters talking about the issue with their readers, and a sustained campaign on Facebook and Twitter, millions of people were exposed to this important conversation in just one month.
In 2011, we launched a website that looks like an online fashion magazine but is actually a great resource with tips and tools to start talking about domestic violence.
While we’re proud of our Purple Purse program, we know it is important to work with others to raise awareness of domestic violence. One particularly powerful new program the Foundation helps fund is NO MORE, the first collaborative effort by several national funders and virtually every major domestic violence and sexual assault organization in the nation, all working together toward a futurein which there is no more domestic violence or sexual assault. Like the peace sign, the yellow “support our troops” ribbon, the red AIDS ribbon or the pink breast cancer ribbon, the goal is to use a new symbol to help spark a national dialogue and move the issues of domestic violence and sexual assault higher on the public’s agenda.
BCLC: What has the impact of your program been in local communities?
Dinges: We’ve been told that the work of the Foundation over the last seven years has been game-changing, and that the domestic violence service network in America is stronger today because of our leadership.
Since our program began in 2005, we’ve invested about $30 million in national, state and local domestic violence organizations and activities that have affected communities in many ways. Our funding has helped more than 100,000 survivors take steps toward financial independence through services like financial education, matched savings programs, job training and microenterprise services. The Allstate Foundation has trained more than 3,000 advocates in 900 local programs in 33 states, so even more survivors can be financially empowered in the future.
We’ve been told that the domestic violence service network in America is stronger today because of our leadership.
Most importantly, the Foundation is changing the conversation about domestic violence and the nature of services provided to survivors. In the past, talk about domestic violence has focused on healing physical cuts and bruises. Today, the focus is on providing services that help one of our nation’s most vulnerable populations – abused women, often with children – achieve their hopes and dreams through financial empowerment.
One of these survivors is Kay, a mother of two who felt trapped in an abusive relationship surrounded by violence and substance abuse. After attending one of the Foundation’s domestic violence programs, she gained the strength to take charge of her life. By learning financial literacy skills like budgeting and investing, she was able to save up to enter a nursing program, get a job at a nursing facility and leave the toxic relationship. Today, Kay and her daughters are living happily in a three-bedroom home with a large backyard, far away from their abusive past. Kay tells her story in many Foundation-led meetings and summits, empowering other women to break free from violence and lead a safe and fulfilling life. InsideCounsel
Intel Builds Momentum with Pro Bono Work The company's legal department uses skills-based volunteering to make a difference.
BY CATHLEEN FLAHARDY June 1, 2011
It was the mid-2000s and Intel Corp. executives—consistent with the company’s goal to help its communities—decided to implement a skills-based volunteer program companywide. This meant Intel employees would take the skills they use every day at work and put them to use to help those in need. The idea was perfect for the legal department, which was already looking to get an official pro bono program off the ground.
In 2006, under the direction of GC Bruce Sewell, the department formed a pro bono committee of 13 lawyers and four nonlawyers including two co-chairs. The program is spread across Intel’s four major U.S. sites—Santa Clara, Calif.; Chandler, Ariz.; Folsom, Calif.; and Hillsboro, Ore. By early 2007, pro bono volunteers got to work.
For Larry Bennett, patent attorney, and Eva Almirantearena, senior litigation counsel—co-chairs of the program—working at the Santa Clara Housing Clinic was their first project with the program. Run by the Legal Aid Society of San Mateo County, the Housing Clinic takes place once a week and gives people in the community an opportunity to seek help from a lawyer on any housing-related matter, such as evictions. “The situations are usually dire and immediate,” explains Almirantearena. “And in a short period of time, you really feel like you’re able to do something for them.”
The clinic-type work the company does is usually instant, on-the-spot assistance with matters. However, some lawyers get involved in longer projects that require an ongoing commitment to one client. Bennett, for example, took on a case involving a disabled boy who wasn’t receiving the support he should have been getting from his school system. “One interesting thing about these types of cases is you kind of become part of the family,” he explains. “And that’s very rewarding.”
Intel’s pro bono work isn’t specific to lawyers. Julie Dunkle, Intel’s headquarters education manager, for instance, is a former special education teacher and is able to bring a different point of view to the team. “I know about testing, about how a school district works and understand their budget restraints,” she explains. “It’s a great complement to the team.”
While it’s impossible to report every project the team has taken on in the past few years, the diversity of its work is laudable. With internal top-down support (today, deputy GC Suzan Miller oversees the program) and the help of its partners, both non-profits and law firms, Intel’s pro bono work is well-respected in the legal community, and it has been recognized through various awards almost every year since its inception.
“Now, we’re continuing that momentum,” Almirantearena says. “It’s part of the department now. People know about it and want to be a part of it.”
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Pro Bono As We See It
July 5, 2011
CPBO Spotlight On: Verizon Communications CPBO ChallengeSM Signatory Verizon Communications Inc. officially launched its pro bono program in late 2009. Already, the department has exceptionally high pro bono participation rates with attorneys and staff participating in offices across the United States. So far in 2011, nearly half of Verizon’s attorneys are participating. Under the program, the company’s more than 700 attorneys and staff are encouraged to volunteer a minimum of 25 hours per year. The department is fortunate to be under the leadership of a true pro bono devotee, Executive Vice President and General Counsel Randal Milch. The program is chaired by John Frantz, Verizon’s vice president and associate general counsel for complex litigation.
To complement the company’s larger corporate social responsibility efforts, the legal department has decided to focus its pro bono work on the following areas: education, domestic violence, and support for returning veterans.
Education One hallmark of Verizon’s program is its clear and consistent support from the company’s senior leadership. Verizon’s first approved pro bono project was to provide legal representation to a school for disadvantaged kids in Washington, D.C. This project, staffed by John Thorne, senior vice president & deputy general counsel, involves providing ongoing legal advice to the Bishop John T. Walker School for Boys. This advice spans such areas as real estate, construction contracts, employment issues, loan agreements, and governance.
In 2010, Verizon and its pro bono partner law firm DLA Piper* worked together to staff special education enrollment centers in the Chelsea and Harlem communities of New York. Students assigned to special education programs often encounter significant challenges in obtaining an education in the New York City public school system – some parents are sent back and forth between schools and enrollment centers without their problems being resolved; some students are kept out of school because they must wait for proper placements or special education services after the school year starts; and some students with disabilities do not receive the special transportation they need to get to school.
Verizon volunteers met with parents experiencing difficulty resolving their children’s special education placement needs. Specifically, volunteers interviewed parents to better understand their experience obtaining school placement for their children, recorded parents’ experiences, and provided informational materials to parents on their children’s legal rights and resources for assistance.
Verizon also has extensive Street Law Corporate Diversity Pipeline Programs in New Jersey, Virginia, and Illinois.
Domestic Violence Providing assistance to victims of domestic violence is a second core initiative of Verizon’s philanthropic efforts. Verizon volunteers have assisted immigrant victims of domestic violence with filing immigration papers; helped domestic violence victims secure protective orders in court; and provided corporate and business law advice to organizations, such as non-profits and shelters, serving victims of domestic violence. In particular, attorneys have worked with Legal Services of New Jersey to successfully represent victims of domestic violence in restraining order proceedings. In addition, a team of attorneys and paralegals have been working with a client who was abused by her husband and whose immigration status is in question to secure the safety of her children, obtain employment authorization, find a job, and apply for legal residency.
Recently, Verizon and DLA Piper teamed up for an innovative U-Visa clinic at My Sisters’ Place in White Plains, New York. Verizon and DLA Piper attorneys met with seven clients at the clinic to help them prepare their U-Visa applications. Verizon Spanish-speaking legal personnel assisted with notarized translations of birth certificates and marriage licenses. During the clinic, the attorneys helped the clients to document the violence they had experienced. Some of the women escaped politically oppressive countries and lived in fear of military violence. Many of them and their children had suffered severe physical and emotional abuse in their domestic situations.
Support for Veterans Verizon’s attorneys and legal staff are extensively involved in serving returning veterans, representing seven disabled veterans in matters before the Department of Veterans Affairs. In addition, Verizon and DLA Piper launched a new program this year to support disabled veterans who are eligible to receive Combat-Related Special Compensation from the Department of Defense. This program is being conducted in partnership with the National Veterans Legal Service Program. After detailed training from NVLSP, Verizon and DLA Piper attorneys and legal staff have taken on more than 40 clients to help them through the process, which involves gathering evidence and submitting an application and supporting affidavit.
The Verizon legal department believes that helping returning veterans goes beyond assisting with their service-related legal issues. While on tour in Iraq, two combat Marines dreamed of making it big as filmmakers, which culminated in a budding film production enterprise. Upon deciding to start a company together, the two Marines encountered a series of legal challenges. For example, the new business partners needed to determine how best to set up a joint venture that would allow it to strengthen their business partnership and still allow for creative freedom for individual projects. Also, questions regarding what type of business entity best fit their company’s needs and purpose arose.
With years of experience in corporate formation and tax structuring, a team of Verizon and DLA Piper attorneys worked with the two veterans to formalize their business relationship in the most tax efficient and creatively-conducive manner.
Altogether, more than 50 Verizon attorneys and legal staff are involved in representing returning veterans.
Onsite Pro Bono Clinics In addition to these projects, Verizon has co-hosted two Clinics in a BoxSM with CPBO and has plans to host several more in the coming year. During the Clinics, Verizon attorneys receive training from expert lawyers on legal issues that commonly affect nonprofit organizations. Teams of Verizon attorneys then use their new knowledge to meet with a local nonprofit client and conduct a legal check-up of the organization. The missions of many of the client organizations involve education, victims of domestic violence, and veterans.
*denotes a Signatory to the Law Firm Pro Bono Challenge®
Pro Bono As We See It
December 22, 2011
Guest Blog: BNY Mellon’s Pro Bono Program The Bank of New York Mellon recently launched its pro bono program. Learn more about it below.
Why Global Pro Bono at BNY Mellon? When Jane Sherburne, BNY Mellon’s general counsel, asked me to chair a new Global Pro Bono Program 10 months ago, I didn’t hesitate. Jane has been a significant supporter of pro bono service, noting that it reflects BNY Mellon’s commitment to making our communities better places to live and work, and is fundamental to our team-oriented business culture and core values: trust, teamwork, client focus and outperformance.
For perspective, in 2010, BNY Mellon and its employees around the globe donated nearly $35 million to causes they care about most, plus another 43,000 hours of volunteer service. Adding professional legal services to the mix of our powerful and uplifting community commitment was simply irresistible. The Global Pro Bono Program directly supports our Corporate Social Responsibility (CSR), philanthropy and employee engagement and volunteering initiatives.
Fostering Camaraderie I asked Jane about her personal philosophy and while most pro bono players may start small, she felt that as a global organization, we couldn’t just target one place, country, or theme. Jane also recognized the esprit de corps and camaraderie that would result from the opportunity to bring our legal teams together in this manner.
“Pro bono opens up a world of opportunity for our people to get involved in new challenges, helps our lawyers fulfill their professional obligations, and affects the lives of people in meaningful and lasting ways,” Jane said.
With her full support, we launched BNY Mellon’s Global Pro Bono Program this month in six cities and three countries: New York, Jersey City, Pittsburgh, Boston, London, and Hong Kong.
The BNY Mellon Pro Bono Team
Careful Project Structuring, Online Resources Building Blocks for Team Success Currently, we have 19 attorneys and non-attorneys on the pro bono team. With sage counsel from Corporate Pro Bono and Eve Runyon, we have plunged simultaneously into several tracks, establishing subcommittees, themes and projects; interviewing and selecting legal service organizations and law firm partnerships; creating timelines, project notification processes and tracking mechanisms; and researching licensing and insurance. Among the most important shared resources and tools for this dynamic team is a dedicated intranet microsite. Our pro bono intranet site and Wiki pages contain policies, procedures, FAQs, matter opening and closing forms, instruction pages and chat pages. Everything is online and in one easily accessible spot. We’ve established regional coordinators and national theme coordinators who will also notify our attorneys and non attorneys of upcoming projects.
Expanding BNY Mellon’s Volunteering Footprint, Earning a Charitable Gift Match By adopting BNY Mellon’s CSR and philanthropy theme, “Community Partnership,” we’re expanding our company’s volunteering footprint, while also receiving “dollars for do-ers” or matching donations wherever possible. Our efforts are focused on something we call “Powering Potential.” These projects address urgent basic needs such as food, shelter, clothing, and disaster relief. A second area of support within the Powering Potential framework addresses workforce development to help troubled youths, veterans, women, minorities and small businesses.
Pro Bono Program Welcomes External Partners, Communities Benefit We have gathered close to 12 different legal service organizations and law firm partners to join the initiative. Together, we will work in clinics. We’ll help disabled veterans and focus on financial literacy for low-income women and children. We’re also looking at the pro bono support our volunteers can direct to microfinance, or to help low income families navigate through the school systems, and more.
Members of the community have already obtained free legal service following our first successful pilot clinic, held pre-launch. And, we’re already approaching 30 pro bono volunteers! This momentum proves that getting involved in Community Partnership is a great way of continuing to do what’s right.
Deborah H. Kaye is Managing Director and Senior Managing Counsel at The Bank of New York Mellon.
Pro Bono As We See It
January 24, 2011
The Intersection of Pro Bono and Corporate Social Responsibility Tomorrow CPBO will travel to Dallas to host an onsite pro bono clinic (otherwise known as Clinic-in- a-Box℠) in partnership with TXU Energy and Vinson & Elkins LLP*. The TXU Clinic is an example of the growing trend among legal departments choosing to work with the company’s nonprofit or corporate social responsibility (CSR) arm. In the past, legal departments partnered with an outside public interest group or legal services organization to recruit nonprofit clients for participation in the Clinic-in-a-Box℠ program. Now TXU, along with other legal departments, including Fidelity Investments and The Gap**, are expanding their options and are partnering with the company’s foundation to recruit nonprofits, giving company lawyers the opportunity to serve clients with whom the company already has an established relationship.
This trend highlights a growing interest among legal departments in undertaking pro bono projects that tie into the company’s CSR efforts. Pro bono that complements a company’s CSR program enables attorneys to feel more connected to the larger company. In addition, having a unified, company-wide message with regards to community involvement increases awareness and strengthens the impact of good works on communities served. Increasingly, legal departments are recognizing that pro bono service adds value and breadth to a company’s CSR profile.
*denotes a Signatory to the Law Firm Pro Bono Challenge® ** denotes a Signatory to the Corporate Pro Bono ChallengeSM
GAP LEGAL DEPARTMENT SERVES FOUNDATION GRANTEES
As part of its growing commitment to pro bono service, the legal department at The Gap, Inc., in partnership with The Gap Foundation, Corporate Pro Bono, and Morrison & Foerster LLP (a Signatory to the Law Firm Pro Bono Challenge®), hosted a CPBO Clinic in a BoxSM program on February 1, 2010. Thirty-six members of the Gap legal department, both lawyers and support staff, provided assistance to a number of California-based nonprofit organizations supported by The Gap Foundation.
The Gap, Inc. hosted the program at its offices in San Francisco. Michelle Banks, Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer for The Gap, Inc., welcomed the clinic volunteers and nonprofit representatives, thanking her legal team for its continued dedication to pro bono legal service and commending the nonprofit organizations for the great work they do within the San Francisco community. Lucien Chan, Senior Manager for Global Community Partnerships and Strategy for The Gap Foundation, also expressed his gratitude to The Gap legal department for helping the Foundation enlarge the assistance it provides its grantees and for expanding the capacity of the nonprofit organizations supported by the Foundation.
Split into two sessions, the clinic lasted four hours. Lawyers from Morrison & Foerster – Derek Boswell, Aaron Rubin, James Boddy, Karen Guo, Joseph Fletcher, and Peter Romo – led the first session by conducting a training program for which The Gap volunteers received CLE credit.
Counsel at Morrison & Foerster also developed comprehensive training materials for the volunteers and nonprofit clients. These materials will prove invaluable for those volunteers who wish to continue working with the nonprofit they assisted during the clinic and for those nonprofits interested in learning more about the applicable law.
During the second session of the clinic, Gap volunteers met with representatives from the nonprofits to provide pro bono legal advice. The volunteers went through a checklist of legal issues, developed by CPBO and tailored to California law by Morrison & Foerster, designed to assess the legal health of the organizations. Volunteers were able to spot issues of concern and provide guidance to the nonprofits when needed. Many of the nonprofits learned of key legal matters that require attention, and a number of the volunteers will continue to provide ongoing pro bono services to the clients they served at the clinic.
The Gap Foundation's mission is to fund and manage projects that improve the lives of children living in need and distress. The nonprofit organizations that participated in the clinic are focused on organizing youth sports and healthy activities, helping students finish high school and becoming the first in their families to graduate from college, and providing affordable, high-quality, early- childhood education.
Developed by Corporate Pro Bono A global partnership project of the Pro Bono Institute and the Association of Corporate Counsel www.cpbo.org Copyright, Pro Bono Institute 2010, All Rights Reserved 1025 Connecticut Avenue, N.W., Suite 205 ● Washington, DC 20036 (202) 729.6699 Phone ● (202) 296.0303 Fax [email protected] ● www.cpbo.org InsideCounsel
Gap Inc.: Pro Bono Leader
BY CATHLEEN FLAHARDY March 18, 2010 •
Henry Fong and Michelle Banks
"Do What's Right." It's one of the tenets on which Gap Inc. functions. And because this philosophy was so ingrained into the company's culture, it was easy for Michelle Banks to get her legal department's pro bono program off the ground when she took over as GC of the clothing retailer three years ago.
"It was personal for me," Banks says. "I have a passion for pro bono work." Banks' enthusiasm, support from the company and the motivation of Henry Fong, Gap's senior corporate counsel and the program's architect, brought the program to fruition.
Banks and Fong wanted it to be in line with the mission of The Gap Foundation, the company's philanthropic organization, which supports youth programs. And they wanted to ensure the skills the legal department had to offer were used to their fullest. "We wanted our volunteers to bring to the community their expensive, highly sought-after skills that would normally be very difficult for these people to get access to," Fong explains.
Fong had two requirements for the program: First, it should be easy for legal department members to qualify to volunteer without additional training; second, it should be team-oriented. "We wanted our volunteers to be resources banding together to serve communities, but we also wanted to have fun working together in the legal department," Fong says.
One of the first projects the program took on was serving as "in-house counsel" to Youth Uprising and Breakthrough Collaborative--two community non-profits dedicated to supporting at-risk children. In another recent project, Gap's legal department volunteers joined forces with the Pro Bono Institute to hold a "One-Day Clinic in a Box." The Foundation invited a number of non-profits, and teams of Gap lawyers and nonlawyers sat down with each of the non-profit representatives for a legal health check to make sure they're working in compliance with applicable laws.
"We have law firms that have volunteered to support us--to the extent we get overwhelmed," Banks says. Orrick, Herrington & Sutcliffe is serving as back up for Gap's Breakthrough Collaborative and Youth Uprising work, and Morrison Foerster is supporting the Clinic in a Box project. "Having outside law firms to partner with is really key to these programs' success," Banks adds.
Aside from the traditional pro bono work, the Gap legal team also is actively involved in two other community projects: Food for the Bar, for which they collect food for local pantries and provide volunteer time, and the Law Academy, through which they mentor at-risk teens who are interested in law.
"We have expensive skills readily available at our fingertips," Banks says. "There is an ethical obligation to give back to the community with those skills." InsideCounsel
GE Plays a Key Role in the Pro Bono Partnership
BY MARY SWANTON October 1, 2010 •
In 1997, pro bono legal work wasn't on the radar screen of most general counsel. But Ben Heineman Jr., then-general counsel of General Electric, believed the skills of in-house counsel should be put to work to benefit the community. He encouraged now-retired GE Corporate Counsel Bob Healing to conceptualize a program that would bring much-needed legal assistance to non-profit organizations in Westchester County, N.Y., and Fairfield County, Conn. The result was the Pro Bono Partnership, which now involves 175 legal departments and law firms located in a broad swath of New York, Connecticut and New Jersey.
The Partnership staff reaches out to leaders of non-profit organizations, assesses their legal needs and identifies a volunteer attorney to help them. Mark Nordstrom, who heads GE's labor and employment practice and coordinates pro bono activity worldwide, says the model gives transactional lawyers a place at the pro bono table.
"They are not used to going to court, but they are very capable in terms of writing personnel policies, or looking at an IP situation or combining two chapters of the United Way into one to save money," he says.
Nordstrom, who sits on the Partnership board along with Heineman and current GE General Counsel Brackett Denniston III, cites the example of Bridge House, a Bridgeport, Conn.-based non-profit serving people with psychiatric disabilities.
"It's three people running an organization that serves 200 people," he says. "If someone claims discrimination, they are totally at a loss. They either have to hire counsel, which can run into hundreds of thousands of dollars, or they can use a volunteer like myself. In 50 hours I can take a huge amount of stress off their minds so they can serve the clients who need their expertise. You only have to see this once or twice and you get it."
The Partnership's success spurred GE to take the leading role in setting up an affiliated organization in Atlanta, where the corporation's energy business is based, and it is exploring replicating the model in other cities. Nordstrom also promotes GE attorney involvement in a wide range of organizations including KIND, the pro bono immigration services organization founded by Microsoft's legal department; Dress for Success; and Special Olympics. A new focus is on developing opportunities for GE's 350 attorneys overseas, a challenge in places where laws restrict pro bono work.
But the commitment to the Partnership continues, with GE providing the services of about three dozen attorneys to handle matters each year.
"Without GE, this organization would not exist," says Richard Hobish, executive director of the Pro Bono Partnership. "They are not only the largest corporate contributor, they also have given us so much credibility and helped us with outreach to so many other companies. The feeling here is that if we need to get something done, we know we can count on GE." Verizon Launches Pro Bono Program
BY LAUREN WILLIAMSON MAY 1, 2010
A year ago, John Frantz, vice president and associate general counsel at Verizon, never would have guessed he'd now be spearheading a pro bono program that involves nearly a third of the company's legal staff. But all it took was one question to set the ball in motion.
"I asked Randy [Milch, Verizon's GC], 'Would you like me to negotiate malpractice insurance for pro bono work?'" says Frantz, who wanted Verizon to be prepared should the legal department decide to do pro bono work. Inspired by the thought, Milch asked Frantz if he would develop a pro bono program for Verizon's domestic legal staff.
From that conversation sprung a program targeting three areas: legal support for veterans and victims of domestic violence, and education at low-income schools. The initiative kicked off in November 2009, and at press time, 100 legal staffers had participated in pro bono work, with another 100 having been trained.
Frantz reached out to DLA Piper, which has a robust pro bono program and, fortuitously, has offices in nearly all of Verizon's 21 locations. With additional assistance from the Pro Bono Institute, Frantz got Verizon's program up and running in less than six months.
"[The program] provides an opportunity to work in an area that's not part of their day in, day out practice," says DLA Piper Pro Bono Partner Lisa Dewey, who represents the firm in its partnership with Verizon. "The attorneys get to do something they're really passionate about."
When assisting victims of domestic violence, for example, a Verizon attorney might pair with a woman who has a restraining order against a partner and represent her in litigation. Because a case like that typically takes about a week, attorneys can easily participate during a lull in their regular work cycle.
Attorneys can also get permission to work on their own pro bono projects. John Thorne, senior vice president and deputy general counsel at Verizon, has provided legal support to The Bishop John T. Walker School for Boys, a startup elementary school in Washington, D.C., that opened its doors in September 2008. From the start, Thorne has provided a full range of legal services to the school.
In-house lawyers have an advantage when it comes to doing pro bono work for a non-profit because they're used to working on long-term projects, he says.
"Outside lawyers get well-defined, pre-chewed projects," he says. "In-house lawyers can anticipate what's going to happen well before it becomes a problem. They're used to thinking in practical business terms."
Walmart Announces Pro Bono Legal Services Program
Walmart and the Walmart Foundation Donate $115,000 to Arkansas Legal Aid Organizations
BENTONVILLE, Ark., Nov. 22, 2010 /PRNewswire/ -- The Walmart legal department announced plans to undertake an in-house pro bono program in which its attorneys, paralegals, and support staff will participate in legal aid projects in the Arkansas community. In doing so, Walmart has become the 100th signatory to the national Corporate Pro Bono Challenge(SM), a voluntary benchmark developed and administered by Corporate Pro Bono (CPBO), a partnership project of the Pro Bono Institute (PBI) and the Association of Corporate Counsel (ACC), designed to encourage and promote pro bono service with in-house lawyers and legal departments.
In addition, the Walmart legal department and the Walmart Foundation today announced a $115,000 donation to Legal Aid of Arkansas and the Arkansas Access to Justice Commission. The grant will help the Commission continue its efforts to address key issues raised by low-income clients, including family law, consumer practice, financial, housing, and employment matters.
"Our pro bono effort is a natural extension of our company's overall belief in being a good corporate citizen," said Jeff Gearhart, executive vice president and general counsel of Walmart. "Helping to ensure that access to legal services is a reality for all of our citizens, regardless of their ability to pay, is consistent with Walmart's commitment to making a difference in the communities that we serve."
"We are delighted to have Walmart sign on as the 100th Signatory to the Corporate Pro Bono Challenge," said Esther Lardent, president and CEO of PBI. "As one of the largest companies in the world, Walmart's commitment to pro bono, including the hiring of a dedicated pro bono staff lawyer, sets a high bar for the corporate community."
Among the state's legal aid champions, many believe that Walmart's program will have a domino effect on other Arkansas corporations.
Jim Julian, president of the Arkansas Bar Association added, "I cannot overstate the significance of the pro bono commitment that Walmart has made at a corporate level. This commitment will result in the provision of services worth hundreds of thousands of dollars to Arkansans needing help with civil legal issues. In addition, Walmart's leadership in implementing such a program will serve as a model to other corporate legal departments and law firms in the state that are looking to increase their pro bono involvement."
"Walmart has once again demonstrated its commitment to empowering low-income Arkansans through the mobilization of both the financial and human resources needed to ensure that all citizens of our state have access to civil legal help," said Justice Annabelle Imber Tuck, chair of the Arkansas Access to Justice Commission. "Financial support and pro bono involvement are both necessary if we are to close the justice gap in Arkansas, and we are tremendously grateful for Walmart's leadership on both fronts."
The $115,000 award from the Walmart Foundation will assist Legal Aid of Arkansas in funding its Medical-Legal Partnership with Mid-Delta Health Systems, which serves patients in six of Arkansas' poorest counties, located in the Mississippi River Delta area.
About Philanthropy at Walmart
Walmart and the Walmart Foundation are proud to support the charitable causes that are important to customers and associates in their own neighborhoods. The Walmart Foundation funds initiatives focused on education, workforce development, economic opportunity, environmental sustainability, and health and wellness. From Feb. 1, 2009 through Jan. 31, 2010, Walmart and the Walmart Foundation gave more than $512 million in cash and in-kind gifts globally, $467 million of which was donated in the U.S. To learn more, visit www.walmartfoundation.org.
About The Arkansas Access to Justice Commission
The Arkansas Access to Justice Commission works to provide equal access to justice in civil cases to all Arkansans. The Commission's major projects include educating the public about poverty in Arkansas, recruiting pro bono attorneys, supporting courts and self-represented individuals and soliciting contributions for legal aid. Contributions to the Arkansas Access to Justice Commission are divided between the state's two legal aid organizations according to their poverty populations. Lawyers serving the public good.
Merck and Lowenstein Sandler: Partners in VLJ's Pro Bono Bankruptcy Program Tuesday, November 30, 2010
Organization: Volunteer Lawyers for Justice
One of New Jersey's largest law firms, Lowenstein Sandler PC, has joined the efforts of Merck and Volunteer Lawyers for Justice to help victims of the recession navigate the bankruptcy process. For the past two years, members of Merck's legal department have volunteered to handle Chapter 7 bankruptcy filings for clients who couldn't afford private attorneys and had turned to VLJ for help. Merck lawyers and administrative staff have thus far helped 42 participants in VLJ's bankruptcy program. Funding to operate the program has been provided by the Merck Company Foundation, and the Foundation plans to fund the effort again next year. And John Todaro, a Merck staff attorney, won the State Bar Association's Pro Bono Award this year for devoting hours of service to designing and operating the project. At Merck's invitation, Lowenstein Sandler enlisted in October, bringing the skills of lawyers with vast bankruptcy experience and the administrative support of a 255-lawyer firm. They will meet clients, help prepare petitions and shepherd cases to completion at hearings before the U.S. Bankruptcy Trustees. The goal is to clean up a backlog of 53 existing cases and then expand into work for a growing potential pool of candidates for assistance, says Jordyn Baumgarten, VLJ's Director of Pro Bono Services. At the outset, five Lowenstein Sandler lawyers will each handle a case, but the firm eventually will commit the time and resources of up to a dozen attorneys. "We asked for volunteers in the firm and we had more than we dreamed of," says Kenneth Rosen, who leads Lowenstein Sandler's Financial Reorganization & Creditors' Rights Group". Most of the Merck lawyers in the project are intellectual property attorneys who took the time to learn bankruptcy procedures. "They have done an excellent job", says Lowenstein Sandler bankruptcy partner Mary Seymour. Besides adding more lawyers to the effort, Lowenstein Sandler will apply its knowledge of bankruptcy case administration and help refine the program, Seymour says. ABOUT THE PROGRAM - UNITED STATES
In the United States, Goldman Sachs10,000 Small
Businesses is a $500 million investment to help small businesses create jobs and economic opportunity by providing them with greater access to business education, financial capital, and business support services.
Small businesses have generated 64 percent of net new jobs over the past 15 years. They represent 99.7 percent of all employer firms, hire 40 percent of high tech workers, and produce 13 times more patents per employee than large patenting firms.*
Goldman Sachs 10,000 Small Businesses is designed to tap into that economic power by providing entrepreneurs across the country with access to business education, financial capital and business support services to help small businesses grow and create jobs.
The program is currently operating in Chicago, Cleveland, Houston, Long Beach, Los Angeles, New Orleans, New York and Salt Lake City. It will continue to expand on a city-by-city basis.
NEWS AND EVENTS
10,000 SMALL BUSINESSES GRADUATES ITS FIRST CLASS IN NEW ORLEANS New Orleans Mayor Mitch Landrieu today addressed the inaugural graduation of 30 New Orleans small business owners from the Goldman Sachs 10,000 Small Businesses program at a ceremony at Delgado Community College.
“Goldman Sachs' 10,000 Small Businesses is an innovative program that gives our local business owners the practical education and financial tools they need to make their businesses and our community thrive," said Mayor Landrieu. For the last several months, through Delgado Community College, the business owners studied accounting, human resources, negotiation and marketing. One-one-one mentoring, accounting workshops and pro bono legal advice from Goldman Sachs professionals were part of the program.
The 10,000 Small Business graduates represent a wide range of industries, ranging from construction, pest control, retail stores, medical services, event planning, equipment rental, and courier services, to valet parking businesses and more. More than half of the graduates have increased sales or hired employees with several more having immediate plans to hire.
The graduation featured speeches by New Orleans Mayor Mitch Landrieu, co-chairs of the 10,000 Small Businesses Advisory Council Warren Buffett and Michael Porter and Goldman Sachs CEO Lloyd Blankfein.
New Orleans is the third location of the 10,000 Small Businesses initiative in the United States. Delgado Community College partnered with HOPE Enterprise Corporation and the Urban League of Greater New Orleans in this initiative, which will expand the pipeline of talent in New Orleans to help drive job creation. The program, launched in November 2010, committed $20 million in capital in greater New Orleans to HOPE.