JOHN SCHNEIDER, MASSINC VICE PRESIDENT (MODERATOR): Welcome to RealTalk. This is our eleventh program. We are going to spend time with panelists and you talking about this interesting concept of corporate social responsibility and its meaning to customers, employees and citizens. MassINC started the program two years ago with One In Three Boston to do a series of public policy programs for young adults and emerging leaders. MassINC does a lot of research, has a magazine Commonwealth and produces a lot of CSPAN-type programs offered early in the morning. We wanted a series for young professionals and we couldn’t do it at 8 o’clock in the morning and it needed to have some kind of alcohol element and it needed to be sort of lively. The programs have evolved and we have found a home here at Jury’s Hotel.
ALAN MACDONALD, MASS BUSINESS ROUNDTABLE: It’s a pleasure to be here. The roundtable is a 27-year-old group of business leaders. We have 75 members. The idea is to get managerial experience and judgment on public policy issues. We look at education and transportation and public investment of monies. We have developed resources to help public policy leaders and we have seen the public view that business is interested in business and not the community. We know businesses are interested in the community. That’s where they draw employees and customers. Why wouldn’t people who live and work here be just as interested in the health of their communities as those in public life? The conversation tonight is about how that takes place. You might get an idea or two that will blossom over time and make a tremendous difference.
SCHNEIDER: In June, corporate leaders met at Putnam and talked about this issue. I attended this event and was struck by the discussion of corporate social responsibility as a recruiting tool. I want to thank the New Community Fund and our friends at State Street Bank. We have a panel but think of this as a talk show. It’s informal. We will go ‘til 8 o’clock and then have a reception. We have a great mix of experts from the public and private sectors. The basic question is what is corporate social responsibility and what does it mean to you?
RICHARD PEARL, STATE STREET CORPORATION COMMUNITY AFFAIRS: I have really been involved in this issue for four years. The definition of corporate social responsibility changes every year. It’s broader than the traditional way that banks or corporations thought about community involvement. It’s more than philanthropy and volunteerism. Those are still important components, the most visible components. But in the last three or four years corporate social responsibility at State Street means how do you impact a community on ESG issues. It’s environmental, social and governance issues. On governance, Enron in Houston was the largest philanthropic interest in that community, a major donor to the arts and education. But Enron is no longer. How a company operates and is transparent is important to customers, businesses, stockholders and employees. A lot of what we do has resonance with employees, particularly those who are new to the company. The median age of our employees is 26 or 27. My daughter is a freshman at college and I have a daughter who is a sophomore in high school. They have a public service requirement. I did not have that. The S is social. E is environmental. It’s how you impact those areas of your community. Another buzzword is sustainability. We want to make sure State Street is around for another 214 years. The air we breathe and the water we drink has got to be such that people want to live here. State Street has thought of itself as responsive and community-oriented. We have done a lot with community investments and our foundation. I came on to manage the foundation’s report and we thought to hold yourself up, it no longer held water to just talk about your grants.
SONIA SHARIGIAN, PUTNAM INVESTMENTS – COMMUNITY RELATIONS: I am honored to be here. For me personally at Putnam, the ability to volunteer during the workday is key. At Putnam we recognize that employees are our biggest asset. One of the things we do is encourage employees to work as volunteers and decision makers. They have a stake in corporate philanthropy, which is determined through corporate surveys. People feel like they have an ownership and that’s really important. I kind of stumbled upon this but see that more and more people are focusing on the work-life balance and looking for ways to get involved. If a company supports them, they are more likely to go there and work. Young people are looking for opportunities to make a difference.
LISA GUYON, BUILDING IMPACT EXECUTIVE DIRECTOR: There is a different definition based on the size and leadership of the company. A resource is the Center for Corporate Citizenship at Boston College. They have the themes of minimizing harm, maximizing benefits and being responsive to stakeholders. It’s called lots of different things based on the companies you interact with. It’s called community involvement and corporate citizenship and social and financial impact and strategies. I am in the community involvement area. I look for where commerce meets community and that’s a great starting point for companies. I typically work with companies looking for ways to make it happen. There’s some really cool stuff that happens in that area. Building Impact is a non-profit. We started at Paradigm Properties, a small company that was growing. They own and manage office buildings. They have strong leadership and values as a new company. You don’t always find that. They use it as a hiring tool. They couldn’t write big checks but what they had were buildings full of companies dealing with the same issues. We engaged them in community activities and donation drives. We took a progressive step towards engaging companies. For Paradigm, it was a business strategy too of building relationships with tenants. That was the incubation of Building Impact. We started to have a lot of involvement. In 2003, we were established as a non-profit, and we work with multiple landlords now and are in 26 office buildings.
PATRICE KEEGAN, BOSTONCARES EXECUTIVE DIRECTOR: My definition is similar to Rick’s. It’s a way of balancing business practices in a way that is sensitive to stakeholders, whether it’s families, the environment, government. Corporate philanthropy is a teeny tiny piece. We interact around the corporate volunteering piece. We have multiple programs. We will work with 30 or 40 companies this year. What is interesting to me is there has been so much conversation since 9-11 about companies less willing to invest in corporate philanthropy. There was some pullback but our Hands at Work program has grown from three to 40 companies. There are plenty of companies out there that want to make a difference. Sometimes when there is a crisis, that’s when people call. Companies are getting scooped up by outside interests, but those are not our companies. The New Economy in Boston has yet to define what corporate social responsibility means in Boston today. We are forming a compact of 100 chairmen and CEO’s who are committed to corporate volunteering. Home Depot is involved. There is massive, massive potential. I am a numbers geek. It’s important to measure but it’s hard. I work with the Indicators Project at the Boston Foundation. My final point is when the last Indicators report came out – go to tbf.org – there is a whole cluster called civic health and a new cluster on volunteering. There is discussion of the next wave of civic leadership. It’s happening already. We are all involved in work and casual volunteering. It is the pipeline for the new civic leadership.
SCHNEIDER: Rick, in terms of creating a culture for corporate social responsibility, where does that originate? The CEO? Can it be more organic? Is it from someone going to a conference?
PEARL: If we were all to start a big corporation today, it would be ingrained from the beginning of what we do, given what we know about the future of the planet. The population has exploded. Resources are limited. How does that balance out? For State Street, we were fortunate 30 years ago to have William Edgerly on board. He created from scratch a plan. He instilled that ethos of a large corporation being ingrained in the community as a partner and realizing that a corporation is only as strong and vibrant as the people who work there. The foundation was formed in ’77 and has taken off from there. When the word is out there that a corporation holds this ethos, you attract a certain employee. Word spreads very quickly. It’s a component of attracting talented employees.
SCHNEIDER: You mentioned recruiting employees. Sonia, you valued the opportunity to work on corporate social responsibility projects. How is it a recruiting tool?
SHARIGIAN: For us, senior management supports volunteering during the workday. We send groups of employees out to the food bank or Habitat for Humanity. It breaks down barriers. People are wearing comfortable clothes. They can see eye to eye. It’s established some loyalty within the company. Our HR department mentions community involvement during interviews as something Putnam offers. It’s a big part of quarterly orientation. We go over the programs and it sets off a nice tone from the initial time you walk in the door.
SCHNEIDER: Lots of smaller companies don’t have these programs. They are emerging. If I were starting a company, I would be so concerned just about surviving. Reaching those companies that are not as active, how do you do that?
GUYON: I have worked for companies where the leadership comes from the top, the values are created from inception and are almost mandatory. We are working with lots of companies now who have no leadership from the top in terms of community involvement. We find the do-gooders within the company. We create a bottom-up approach. We create a buzz and create activities that make sense to the leadership. One person in a company can make a tremendous difference, but they need a support network and a structure and platform. There is a network of non-profits out there that are starting to collaborate and provide different types of support. BostonCares supports those organizations.
SCHNEIDER: A small company might work with you Lisa and then go to you Patrice for a program.
GUYON: We are talking about a new generation of workers coming up through the workforce and we have community service and service learning and volunteering in the summer – it’s part of how we grew up. You just have to give them a launching pad. Companies don’t want to lose these people. They will make the effort to keep people who are not one-dimensional profiteers.
KEEGAN: They find us when someone from human resources reaches out to us, or someone from marketing. Often, it’s someone who is a rank-and-file employee who is a Boston Cares member. Sometimes people hear from us from events like this. Often the people most interested in starting a program are the decision makers and sometimes there’s a certain amount of sales talk that has to go on. What you have at State Street and Putnam and Fidelity is extremely powerful. Check out volunteersolutions.org. Organizations like Boston Cares have a deep network. What we have is a web of possible opportunities we can package and then work with the companies on recruitment. It’s an infrastructure resource, a competency that we bring to the table. I say to companies, If you can handle it on your own, do it. But we are happy to do it, to add value.
GUYON: We want every company to have their own competency to be engaged.
AUDIENCE QUESTION: I am a doctoral student at the Kennedy School. How much corporate social responsibility is actually profitable for companies? If the answer is most of it, why is it so new?
PEARL,: Business as usual is good for a lot of businesses. I was at a conference on Friday at the New York Stock Exchange. They gave a presentation to financiers. A lot of companies would do things the same way. But why are there not more hybrid vehicles? Toyota took the chance and their market share is better than Ford’s. The ones in the forefront of the thinking – the Europeans are all over this. There are product designs for example that take into account that resources are more limited.
SCHNEIDER: Europeans do a better job than we do on packaging, particularly in Germany. There is a state role with the European union in terms of corporate social responsibility.
PEARL: State Street decided to report three years ago on corporate social responsibility, reporting on environmental impacts, governance, economic impacts. There are five nations in Europe that require domiciled, publicly traded companies to report. I asked an SEC representative whether they foresaw a day when the U.S. would require this. This was after he defined materiality as the thing they analyzed, materiality defined as what investors find important. If you are an oil company, I would think environmental issues are part of that assessment. If you make shoes or clothing, then social policies in shipping. He tap-danced around it and said no, there’s been pressure. That may be the politically correct thing for him to do, given his position. But let’s be honest. Sarbanes-Oxley was not on people’s radar screens ten years ago and that has helped a lot.
AUDIENCE QUESTION: I work for the federal government. Today was the kickoff of the combined federal campaign. Employees can take pre-tax income and donate it. Does that exist in the private sector? If profits were negatively affected by corporate social responsibility, would companies still do it?
SHARIGIAN: I am not sure of our policy on pre-tax income. If we suffered some profitability loss, we would still reach out and do what we do. I don’t think that would go away. For us it’s a matter of what we gain is so much more than what we lose.
PEARL: Doing away with the feel-good aspects of it, it is good for business. We are immersed in it at State Street. Companies are doing it because there is a customer case for it. You don’t do these things unless there is an impetus. In Quincy, we renovated a data center, put in reflective lighting. The one-year savings on theat are in the hundreds of thousands of dollars. Do the math. It adds up. That is a bottom line thing any CFO will sign off on. A sense of pride in where you work is quantifiable, if people are staying and you are not spending on advertising for new employees. At the end of the day, there is a strong case for this. Are people going to do differently when the stock price goes down? I don’t know. There are things you do because it’s the best thing for the company. The horse has left the barn really.
SCHNEIDER: At Starbucks, they have a brochure on corporate social responsibility. Are you seeing that in other businesses?
GUYON: A step back first. Landlords pay us a fee to bring this program to buildings. They see the value of this thing. And trust me, landlords pay for nothing. It’s here to stay. Locally, a handful of progressive small businesses have tied profitability to corporate social responsibility. Wainwright Bank is one of them. Their tag line is banking on values. There is Dancing Bear Bakery. They have the Sweet Home project. Ipswich Software is another. We see a trend among small companies. It’s harder for them to measure the business impact. It’s really gut instinct and it has value. Getting to a place where you can measure it, it’s a huge cultivation process. At Paradigm, it’s part of the marketing tool.
AUDIENCE QUESTION: How important is it to promote the good work publicly?
KEEGAN: It varies from company to company. Some companies want no publicity and some companies would love to get a press kit out. It’s important in general to promote good work. If there is good work going on, I want it to get into the press. Everybody wins. I worked at Codman Square Health Center for many years. They got good exposure. There was some tension around the publicity and whether it should be a goal. It should be. It was said we don’t do it to be known. But community service serves a community agenda. Publicity should not be the motivator though.
PEARL: If you don’t have a media budget but employees know what you are doing, that word of mouth and interaction is important. If you interact with people and are positive about your company, that is as effective as most hits in media. We will partake in media exposure. The most effective way is to make sure it’s the non-profit partner who is the story and not State Street. No paper is going to say Putnam sent 50 volunteers but if it’s about the Food Bank. We look for a reflective publicity. Non-profits need the exposure because they are doing good work. Exposure for them is terrific. It gets people interested, perhaps more donations and volunteers.
AUDIENCE QUESTION: Do you see a tension within corporate social responsibility between the grant making and philanthropic sides and the business side?
SCHNEIDER: There is the concept of doing the right things for employees.
KEEGAN: Our corporate friends may be more insightful. The money spent is infinitesimal compared to the overall corporate social responsibility.
PEARL: The idea is that eventually the goal would be that you no longer talk about corporate social responsibility, that practices that are good for business just become part of doing business. I don’t think the philanthropy piece will go away. It may be more of a U.S.-based thing. I don’t see a tension at this point. There are still needs. You can be strategic about philanthropy to address the employment issue. At State Street, we have an insatiable need for information technology. You support programs that teach kids who want to learn these skills so they can come in and do the job.
GUYON: This is where commerce meets community. Corporations are getting smart about the way they invest in non-profits and the connection between healthy businesses and healthy communities is real.
AUDIENCE QUESTION: With the recent University of Maryland report on political and civic engagement in young Americans being down by two thirds, are you seeing yourself holding up the civic engagement. Do you find that even around here you guys are pushing the line?
KEEGAN: The place we see the most stories of civic action is around our volunteer programs. We created a whole Civic Academy. You hear about studies like that but it’s absolutely contrary to what we are seeing. I have also learned that regardless of age, people are looking for the same things – quality experiences. A lot of corporate volunteering that we do is not with an eye towards deeper civic engagement, but it’s gratifying when it does.
AUDIENCE QUESTION: I am a management consultant in health care. I spent my career doing volunteerism and encouraging it. I am part of the choir. I am focused on methods. Everything has to be measured. What are the numbers you measure, the drivers?
PEARL: It’s a great question. We have been negotiating with folks to do that for several years now. There are questions you can ask when you make a grant, about reporting back on improvements or things they have done with grant monies. Organizations put a formula together to compute what the volunteer’s time is worth to the organization. That’s a way to put a dollar equivalent. It’s an area that is the missing component though. I don’t think the ways we are measuring it are quite there yet.
SHARIGIAN: We measure through employee participation. In 2005, 900 employees participated. We had 370 employees at the food bank’s annual gala.
SCHNEIDER: You have employees interested in hunger. Are there political choices?
SHARIGIAN: People are exposed to that. They get a sense of all the different people. You know who you are working for. It’s not just sorting boxes. You really come back with a different perspective. A goal at Putnam is to make grants over a three-year period . In a year we say, let’s see your progress and we make sure they are on track. They can focus on developing their program and making sure they are working right.
KEEGAN: One challenge at Boston Cares is we send volunteers to 120 schools and non-profits to help with things like reading. It’s hard to say 20 percent of children are at grade level for reading. But we can make the case that we have better volunteers. The projects are team oriented and we measure the quality of the volunteer experience in a computer-generated survey. We are proving that our volunteers are taking the next steps and getting friends involved and taking leadership roles. We ask, do you vote? Ninety-four percent of our volunteers do vote. We ask if they make donations. Ninety-four percent say yes. Many say they give to organizations they have met. There is a multiplier effect. It doesn’t come naturally to people because people don’t want to boast about what they have done. When people do it, its really rich and powerful. It’s not really that hard to do.
