Corporate Social Responsibility, as defined by Honoree & AARP CEO Bill Novelli, C'63, ASC'64

Bill Novelli spoke eloquently at 39th Annual Joseph Wharton Award Dinner
about the continuing need for Corporate Social Responsibility, even in tough times,
plus his background and life at Penn

“Corporate Social Responsibility”
Wharton Club of Washington, D.C.
William D. Novelli
Chief Executive Officer, AARP
November 11, 2008

Thank you, John Castellani, for that gracious introduction.  And thank you, Alan Schlaifer, and the Wharton Club of Washington, for this prestigious award.  I also want to recognize Eddie Snyder and Pat Harker, for their outstanding service.

I’m pleased to have with me tonight my son Alex, his wife Alejandra and some of their Penn buddies…and also a number of Wharton and other Penn alumni from AARP.

I first laid eyes on the University of Pennsylvania on a recruiting trip, with some other high school seniors from Pittsburgh.  They had a dinner for us at the university museum.  An alumnus stood up and said, “I hope you boys are accepted and decide to come to Penn.” He said, “I gave my son two choices: he could go to Pennsylvania, or he could go to hell.”

I chose Penn. But not Wharton, so I’m especially grateful that the Wharton Club reached out to a guy from the College.  I did take Wharton courses—in marketing and business ethics.  And I passed by the Wharton School every day.  I’m absolutely sure that contact with Wharton was behind every success I’ve had since.

I started my career at Unilever, in brand management and really learned the basics of business.  Eventually Jack Porter, a Wharton grad, and I started our own company.  Among our many clients, the ones I always enjoyed the most were those engaged in health and social issues.

I’ve always had a deep interest in making a contribution to solving major social problems and creating positive social change.

I have a favorite saying that captures the challenge: “Problems worthy of attack, prove their worth by attacking back.” I’m talking about the big, tough issues that do “attack back,” which is what makes them so hard to solve in the first place.

That’s what brought me to my second career—in public service. Contributing to society—to the public good—is an important goal wherever you are.  Joseph Wharton himself believed that the School had an obligation to teach its students more than to be good business leaders.  He wanted them to be leaders of society.

Today, Dean Tom Robertson speaks of business—and Wharton—as a force for doing good.  Business leaders take their training and skills and apply them to public interest.  The two worlds aren’t exactly the same, but the skills are transferable.

I got into a debate at a Penn dinner one evening with the former CEO of a major company whose main product was cigarettes.  He said that the only responsibility of a corporation was to create wealth for shareholders. As you can imagine, I took issue with that, and I suspect that most people in this room would, as well. Corporate citizenship is an important part of corporate responsibility.

The Economist reported about a year ago that corporate social responsibility is rising sharply in global executives’ priorities, that it has gone mainstream and that more and more corporate leaders are involved.

Hundreds of companies have integrated responsible practices and outcomes into their missions—from procurement to operations to product and services marketing.

Others are going beyond that, and are working hard on influencing social policy, not just from their company’s or industry’s point of view, but as a broader player and contributor.  Examples are developing a comprehensive national energy policy, improving our nation’s schools and health care reform.

Of course there is risk involved in businesses tackling social policy.  They may seem self-serving and they may get tangled up in partisan politics. I can sympathize with that.  At AARP we’re often in policy battles, such as children’s health insurance, pension reform and the recent economic recovery package.  Our national office is located half way between the Capitol and the White House for a reason.

Many of the CEOs running companies engaged in public policy are members of the Business Roundtable.  That’s why BRT and AARP are working closely together in Divided We Fail, along with other business and labor groups.  We’re focused on health care and financial security, and John Castellani and I have become a pretty good team when we go up to the Hill.

There are many good business reasons for companies getting involved in social issues and causes.  First of all, employees appreciate it and younger workers have even come to expect it.  I was at a McKinsey conference where the COO of a major corporation was talking about keeping people motivated when the company’s business isn’t socially relevant.  He said, “We can’t all do what we love, so we have to learn to love what we do.”

But if you have the company involved in social issues, it makes it easier to motivate and keep people who are looking for some love and some public interest and relevance.

It also helps with corporate reputation, and customers look for it.  And corporations, with their expertise in strategy and execution and their focus on results, have a lot to offer in the social arena.  

At the World Economic Forum earlier this year, Bill Gates talked about this. He called on corporations to invest in what he termed “creative capitalism,” or “market-based change.” Gates said this involves applying commercial innovation to drive social change in order to make a profit and improve the lives of those who don’t fully benefit from market forces.

He’s talking about corporate entrepreneurship on a global scale, including the developing world. Phil Darivoff, a Wharton alumnus and managing director at Goldman Sachs, told me about a program in which they invested $100 million. It’s called “10,000 Women,” and the Wharton School is a major partner in this initiative to bring about significant change through improved business education for women in Africa, Asia and Latin America.

But now we’re in a worldwide economic crisis.  Most companies are fighting to weather the storm.  Does this mean they will abandon social initiatives to deal with the harsh realities of survival? 

These are tough times, and President-Elect Obama has called on all America—companies, nonprofits, government, citizens—to work together for the common good.  What’s going to happen to corporate social responsibility now?

I believe that many corporations are going to work hard to continue what they have started.  Businesses that have spent years establishing their credentials in social responsibility are going to figure out how to maintain momentum and not lose what they have created.

At AARP, we’re continuing to partner with corporations and other organizations in solving high-profile social problems.  We need all the help we can get, because after all, “Problems worthy of attack, prove their worth by attacking back.”

Thanks again for this award.