Susie Howells explores whether Corporate Social Responsibility (CSR) is a genuine attempt for business to embed social value or a fluffy way of diverting public interest away from poor governance and unethical business practice.
It’s in the news every day, whether it’s systemic inequality (gender pay gap, lack of equal opportunity and pay), absence of safeguarding to protect vulnerable people (charity sector, Haiti), food and supply chain scandals (chlorinated chicken, horsemeat), environmental damage (oil and gas, safety of nuclear facilities), financial misappropriation (Paradise Papers), air quality (falsificationof vehicle emissions tests), pollution (marine plastics and the ‘Blue Planet’ effect); or human rights abuses (employment rights, modern slavery in food production and harvesting).
And when things go wrong, or people are found out, where is the ability to put things right quickly or to make sure there is no repetition? It’s taken five years to see prosecutions from the Rana Plaza factory collapse in 2012, with families affected still waiting for compensation.
This is the tip of the iceberg and you’ll find countless examples of organisations and individuals playing the system for their own benefit, continuing to profit at the expense of society and the environment.
The one thing they all have in common is poor governance, together with a lack of accountability that allows situations to develop without challenge – until the inevitable PR disaster. In the long run it’s much easier to get things right in the first place than to face prosecution, costly compensation, and loss of public and consumer confidence.
Where CSR comes in…
Corporate Social Responsibility has developed over the past 20 years as organisations recognise the importance of reflecting society’s values in the way they do business. Its longer history stems from the co-operative movement in the UK, with its focus on social equity; and industrial philanthropists like Joseph Rowntree, with progressive ideas on employee safety and welfare.
It has been picked up by organisations to describe a more responsible approach to business, sometimes used as short-hand for charitable donations or PR-led community initiatives. It’s had varying degree of success and impact, with a wide interpretation ranging from the superficial to the exemplary, and there is a tendency towards ad-hoc and reactive initiatives, which can be costly and resource intensive, but have little value.
With such a range of interpretation, there’s a need for an objective approach, with a commonly-understood language, which could be more helpful than a subjective description that may not stand up to scrutiny. The European Commission defines CSR as “The responsibility of enterprises for their impacts on society”. Businesses “…should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders“.
Social and environmental values – alongside profitability
This is a move away from the traditional business model focusing on economic growth as the only measure of success, towards a more sustainable business model that also takes account of the environment in which it operates and the people upon which it depends, including employees, community interests and other stakeholders.
This means assurance that business decisions, actions and activities do not harm people or the environment.Moving forward, it’s about how an organisation fits in with and benefits society, contributing to wider local, national and global economic, social and environmental goals.
It’s not just philanthropy
Although community volunteering and charity support can be an integral part of CSR, it doesn’t mean this will compensate for poor business practice or being unaware of the impact of decisions made in day-to-day business. True CSR is much broader and covers:
- human rights
- labour practices
- the environment
- fair operating processes
- consumer issues; and
- community involvement and development.
The international guidance on Social Responsibility ISO 26000 describes these issues, together with an organisational governance framework with key principles including accountability; transparency; ethical behaviour; respect for stakeholder interests; respect for the rule of law; respect for international norms of behaviour and respect for human rights.
Organisational governance is a critical element of CSR. This is how an organisation demonstrates its corporate responsibility, with:
- Clear responsibility for decision-making;
- Fair, transparent processes
- Consideration of direct and indirect impacts of business; and
- Ensuring that there are mechanisms in place to put things right when things go wrong.
Other sources providing social responsibility context include the UN’s Sustainable Development Goals, (17 globally agreed goals to address social and environmental inequality by 2030); the UN Global Compact (10 principles, with link to implementation of the SDGs) and the Global Reporting Initiative (GRI – GR4 – transparency in public reporting in sustainability).
There is plenty of guidance to help businesses adopt a decent, recognised approach to CSR, and there are benefits of doing this well in terms of public trust, recognition and reputation; as well as commercial benefits, including financial savings and competitive advantage. Evidence from the European Commission suggests that a strategic approach to CSR is “…increasingly important to the competitiveness of enterprises. It can bring benefits in terms of risk management, cost savings, access to capital, customer relationships, human resource management, and innovation capacity.”
The UK Social Value Act in 2013 requires people who commission public services to secure wider social, economic and environmental benefits in contracts, and it’s now mandatory for businesses with more than 500 employees to report publicly on non-financial performance, including environmental, social and employee-related aspects, human rights, anti-corruption and bribery issues, and the diversity of their board. [Directive 2014/95/EU].
Make it a part of core business
CSR only works when it’s part of core business strategy, running right through the organisation and reflected in its leadership, vision, values, mission, policies, structures, systems, training, programmes, stakeholder relationships and communication. In this way it shapes the way decisions are made, without becoming an additional burden. This demands a common understanding across all functions, and it’s worth incorporating CSR in leadership development and training to achieve this.
A good starting point is consideration of business risks and opportunities, underpinned by a systematic review of activities. Think about internal risks and opportunities (what goes on in your business), as well as external risks (what goes on in the world that might affect the business or its supply chain, such as resource availability, conflict and climate change). Materiality is important, which means having an objective way of prioritising and managing CSR issues, based on risk, scale of impact and stakeholder engagement.
Language is critical when you’re reporting progress. People seem to use different language when they talk about CSR: “Saving the planet”, “Creating a better world for our children”, “Doing my bit”; with vague terms that can’t be substantiated, which immediately side-lines important issues that could have a real business impact. Use normal, accessible language and terminology to suit your audience, as you would with any other aspect of business.
The concise version
CSR is a sound business proposition to manage corporate risks and opportunities, leading to longer-term business sustainability in its broader sense. It is possible to mainstream CSR in business, and this requires a good understanding of activities, risks and opportunities against an externally validated mechanism to achieve the greatest credibility and progress.
It’s much easier and cheaper to get things right first time than to go back and repair damage, either practical or reputational.
Community support and charity donations can be helpful, but it’s more important to integrate these activities into a more comprehensive programme which prioritises managing the impacts of core business well.
Your approach could be aspirational and inspirational: look at what you could possibly achieve as well as what you should be doing. A great way to do this is to build up skills, knowledge and expertise across all functions and not rely solely on one specialist.
It is a journey and will have its ups and downs, you may not get things right straight away, but it’s important to address shortcomings and learn from them.
If you’re interested in finding out more, Greenmetrics will be running half-day workshops during 2018 covering aspects of CSR and how to make it work for your business. We can also design structured leadership sessions, bespoke training and consultancy packages to suit your organisation, helping you to shape an authentic CSR approach that has real impact.
Give me a call to discuss on 07775 671706 – I’d love to hear from you.
© Susie Howells, February 2018