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Corporate Social Responsibility

What is it?

Thirty years ago, Corporate Social Responsibility (CSR) could easily have been dismissed as a consultancy-led fad or a do-gooding side show, but it looks increasingly like the idea of companies meaning, at least seeming, to be good is here to stay. The lobby of Marks & Spencer’s head office in London is not untypical of the current climate with big corporates. A giant electronic ticker describes progress against what they call ‘Plan A’ – a set of 100 worthy targets that they are committed to achieve over the next five years – help give a better education to 15,000 children in Uganda, save 55,000 tonnes of carbon every year, recycle 48m clothes hangers, convert 20m garment to Fairtrade cotton, the list goes on and to help achieve it every store has a dedicated ‘Plan A’ champion.

M&S is only one of many businesses world-wide keen to promote their good behaviour through their websites, their annual reports, their product marketing and their staff recruitment activity. The pressure from legislators has also increased – the 2006 Companies Act, for example, requires public Companies to report on social and environmental maters and the Economist reports the number of global executives ranking the issue as rating a ‘high’ or ‘very high’ priority rising from 30% three years ago to just under 70% in three years from now. ‘Doing well by doing good’ has become the expected and normal way that large organisations are behaving and, as ever, what is common practice in larger businesses is increasingly being taken up by smaller ones.

Why do it?

The Economist identifies three layers to CSR:

• It is in the tradition of corporate philanthropy. 1% of most organisations profits end up in charitable donations and have done for years. CSR simply means that these donations have a higher profile, greater publicity and, crucially, greater employee involvement than they have done before.
• It manages risk. Oil Companies through tanker spillages, drugs Companies through a lack of investment in Aids drugs and clothes retailers through child labour scandals have all experienced the corrosive effects of not doing something about social issues and Enron and other scandals have demonstrated the draconian legislation that follows a lack of self-regulation in the business world. Getting your CSR in early is cheaper than getting caught doing wrong later.
• It can drive competitive advantage. No less an authority than Michael Porter, writing in Harvard Business Review, has argued that a successfully embedded CSR strategy can be a source of competitive advantage for a business. Why? Because your consumers and (increasingly) your staff demand it of you. Attraction, retention and motivation of your staff will all be enhanced by doing something about doing good.

In another survey, the Economist Intelligence Unit identified business benefits from CSR as defined by global managers as follows:

What issues to support?

Much depends on who you are doing business with and what their expectations are - any small supplier to global businesses with their own CSR agenda may not have too much choice around the ethical standards which are suddenly required of them. It also depends on what takes your, and your employees, fancy.

Broadly speaking, CSR initiatives fall into three categories:

The environment – source locally and reduce your carbon footprint, use sustainable materials, use energy efficient fuel sources, reduce waste. There can be financial benefits here from an enlightened car or use of public transport policy. All the research shows this as the ‘hot topic’ for UK businesses, consumers and employees at the moment

Supporting third world economies – donate to charities working in needy parts of the world, support payroll giving from your employees, work only with organisations in the third world who are ethically robust, allow career breaks with e.g. VSO.

Supporting local communities – work with local businesses, work with local charities, provide sponsorship for local initiatives and events, use work experience for local schools, release staff to support e.g. reading in local primary schools.

How to do it?

• Think about it – what do you want, what might your staff want, what might your customers want? Ask these groups and consider your initiatives with care – worse than doing nothing is promising and not delivering.
• Write a strategy and publish it.
• Allocate the resources to get it done and make sure it has the level of internal priority that will deliver on your aims – don’t just give the money to charity, find a way to engage everyone in the process.
• Get the marketers and your staff involved but make sure that no one can accuse you of cynical publicity seeking.
• Co-ordinate your strategy with your other business activities – review every aspect of your business against the aims you’ve set out and make a plan to achieve them- M&S pledging to reduce waste means that they have to something about plastic bags, not just coat hangers.
• Make review of the policy part of your normal business cycle.

Having a thought through CSR approach will not make your business a success but not having one may well get in the way of success, if not now, then in the near future. Milton Freidman famously said in 1970 that ‘the social responsibility of a business is to increase it’s profits’. It is still true that the creation and distribution of wealth is the best social value that a business can perform, but as the social burden on organisations increases through legislation on everything from employment to health it might also be that increasing profits will be harder to achieve in the future without meeting the expectations of your customers and your staff for a concerted effort to do some good.