Type the phrase ‘corporate social responsibility’ (CSR) into Google, and you will get enough information for several lifetimes’ worth of reading. If words were translated into action, we could eradicate global poverty and reverse the greenhouse effect, and still have time to score Brownie points with the chief executive by volunteering for a sponsored skydive supporting their favourite charity.
Despite the lack of action, many organisations do want to embrace CSR, especially if their customers are deserting them, or they have problems with recruitment and retention. But how do you actually do it?
At last, help is at hand. This month, the DTI minister responsible for CSR, Stephen Timms, launched a CSR Academy, an online manual for CSR virgins, or those who just want to improve their technique. The website gives employers a chance to graduate as fully competent, responsible corporate citizens by providing a competency framework, case studies and networking opportunities, and a reference source with links to a vast range of international codes and standards to suit every industry and business need.
The academy is the latest initiative in the Government’s efforts to persuade organisations to adopt CSR voluntarily.
It was first recommended in April 2003 when the DTI published the report, Changing Manager Mindsets, and since last September, a steering group of corporate leaders, CSR experts and the Chartered Institute of Personnel and Development (CIPD) have put together the competencies framework for the CSR academy launched this month. The CIPD is one of the leading partners of the new academy, signalling that the Government sees HR as an important lever for implementing CSR in UK organisations.
The academy’s aim is to ‘mainstream’ CSR into organisations so that it stops being an add-on and becomes integrated into companies’ business decisions.
The Government sees the UK as a world leader in CSR, and Timms set out the strategy in March this year in a “draft international strategic framework”. This strategy commits the Government to the voluntary route to CSR, rejects a one-size-fits-all approach, and aligns UK policy with a multi-partner approach across the globe. This includes a commitment to targets set by the 2002 World Summit on Sustainable Development and the United Nations (UN) Millennium Development Goals, which cover issues such as climate change, corruption and health.
What contribution will the new academy make to companies meeting the standards set by global organisations such as the UN? If organisations are unable to make the step change required, how will the gap be bridged? And how involved should HR practitioners get in CSR at a time when the profession is under increasing pressure to show what value it is adding to the bottom line?
The evidence to date shows that companies are at a very early phase in shifting towards CSR. Considerable progress has been made in the past two years. Some 139 companies took part in this year’s second CSR Index, organised by business charity Business in the Community. And FTSE4Good, which publishes criteria to encourage the disclosure of human rights and environmental policies and codes of practice, reported this year that 47 companies had ‘moved to meet new human rights criteria’, and 266 had ‘responded to improve environmental practices’.
But this is a drop in the ocean. The number of UK-based multinationals who have signed up for the UN Global Compact, which commits members to aim for CSR targets, is low. A report in September 2003, Directions: Trends in CSR Reporting, published by CSR consultancy Context and communications firm SalterBaxter, found that only 132 of the UK’s top 250 companies reported on their environmental performance in 2003.
Step in the right direction
If there is a long way to go, most experts on CSR agree at least that the new academy’s competency-based approach is a step in the right direction.
Head of corporate social responsibility of the FTSE Group, Jayn Harding, says that companies have been waiting for an authoritative resource that explains how to approach CSR. “This is good for managers – the recognition of CSR at a very authoritative level,” says Harding.
“The competencies will provide a roadmap of excellence, something that we haven’t had yet. It’s going to help to provide solutions. The problem has been where do people go for help. It doesn’t tell managers what to do, but how to do it.”
The academy should address some of the shortcomings of CSR approaches to date, such as the tendency for organisations to focus on parts of the business rather than the system as a whole, the confusion caused by the proliferation of initiatives, and the tendency to reduce CSR to a box-ticking process.
Director of the Centre for Corporate Reputation at Henley Management College, Kevin Money, says it will help managers to stop seeing CSR as an add-on or traditional corporate philanthropy. “I like the idea they’re taking a competency approach, because it means that managers can look at the way they’re making decisions, and it will happen at lots of different levels in the organisation,” he says. “They’re trying to change the organisation from the inside out.”
Money says the academy should help the important process whereby progressive companies change the norms of company behaviour, and exert peer pressure on those who lag behind.
Tony Hoskins, chief executive of CSR consultancy, The Virtuous Circle, co-authored a report on CSR this year with the Work Foundation, Achieving High Performance – CSR at the heart of business. Hoskins says the emphasis on learning and competencies will help to give HR a stake in the process.
“Developing a CSR competency framework is an important indicator for HR professionals that those individuals managing the CSR process require higher skills than may have been supposed, especially by those who thought CSR is merely a box-ticking exercise,” he says.
Director of the Institute of Business Ethics, Philippa Foster-Back, supports the non-prescriptive and voluntary approach, saying that regulation would reduce companies to the lowest common denominator. Her only concern is that the development of competencies specific to CSR might prevent it permeating through organisations.
“It has to be imbued through all the disciplines in the company,” she says. “It is about getting CSR on to the curriculum of mainstream teaching of MBA courses, making it part of the DNA of doing business,” she says.
Although the academy is a milestone in the promotion of CSR, some commentators believe its impact will be limited because it provides no measures to demonstrate the impact of CSR initiatives.
In the CIPD’s 2002 guide, Corporate Social Responsibility and HR’s Role, it advises against the use of performance indicators and in favour of a focus on the CSR process. Others, however, believe that without some measurements, it is impossible to assess the benefits of CSR programmes.
“The DTI approach is quite good at helping people to understand what CSR is and how they’ll implement it, but it misses out on how you can demonstrate it to others,” says Money.
Henley Management School is developing a model where stakeholders report on companies. “Currently, the CSR report lands on the PR desk, but I’d like to see a survey of a company’s suppliers, employees, customers and investors, so that I can build a picture of whether they are treating stakeholders in a decent way,” says Money.
Accounting for CSR in company reports could be one way that corporate responsibility supports the HR agenda. Companies that embrace CSR are already producing reports on their environmental records. The Government’s Operational Finance Review, which could make it mandatory to report on social and HR issues in company reports, is likely to increase the pressure for companies to report on people management or human capital performance, and to adopt practices such as triple bottom-line reporting, which discloses a company’s social, environmental and corporate reputations. The academy’s competency framework could bring CSR and HR closer together.
HR can take a leading role
More generally, HR has a major opportunity to take a leading role in CSR and vindicate the CIPD’s claim in its 2002 CSR guide that: “The HR function is clearly a credible candidate in many organisations for leading on CSR.”
Paul Bateman, HR director, Boots, agrees: “If CSR is to be embedded in any business, best practice has to be implemented across the business in a concerted programme, with clear accountabilities and action plans in support of defined objectives and goals. Since there is so much overlap between the emerging CSR agenda and the established role of HR, it’s natural for HR to provide leadership,” he says. “The academy will identify and promulgate this best practice across industries and sizes of business, and this ought to create interest and action among HR professionals.”
The institute has made a strong case for HR involvement in CSR, based on its management of the psychological contract, which is seen as a useful framework for building trust and fairness, and for managing risk. HR’s remit for organisational development and culture change also positions the profession as a key player in CSR. Issues such as employer brand, diversity, high-performance working and staff consultation all have strong links with CSR.
Hopkins, of Virtuous Circle, sees the potential for HR to be involved in drawing up codes of ethics, and playing a part in obtaining suppliers and procurement. “Perhaps CSR will help to reinvigorate the importance of HR as part of a company’s strategic and operational decision making,” he suggests.
But to what extent can the academy and the Government’s CSR strategy as a whole, tackle the issues which CSR is designed to address? What CSR fails to tackle is the urgency and the sheer scale of the problems facing the world.
A report published this year by corporate responsibility consultancy Sustainability and The UN Global Compact, called Gearing up – From corporate responsibility to good governance and scalable solutions, cites an authoritative estimate that, “… at best – collective global efforts towards goals such as the MDGs (millennium development goals), are 30-40 per cent of the effort necessary to achieve them.”
To give just one illustration of the failure to keep pace with the problems, absolute carbon dioxide emissions have increased 8.9 per cent since 1990 compared with the 60 per cent reduction the Intergovern-mental Panel on Climate Change has called for by the middle of the century. The sustainability report concludes: “In effect, the current approach to CR [corporate responsibility] may be reaching its system limits.”
Environmental pressure groups are calling for a globally-binding convention on CSR. Sustainability, on the other hand, favours a combination of voluntary CSR and multi-partner collective international effort. It offers as a positive example the EITI (Extractive Industries Transparency Initiative), launched by the UK Government at the 2002 World Summit on Sustainable Development (WSSD), which aims to make it easier for civil society in countries where oil and gas industries operate to hold such governments accountable for how revenues from these industries are managed and distributed.
So CSR does have an important role in promoting sustainable development, even if it is not sufficient in itself. The new academy is a significant contribution to CSR, and HR has a lot to gain by getting involved. After all, the stakes couldn’t be higher. A project commissioned by the US defence ministry, the Pentagon, on the implications of abrupt climate change concluded: “… disruption and conflict will be endemic [and] … once again, warfare would define human life.”
White Paper on modernising company law announces Companies Act to improve corporate governance
Business in the Community launches CSR Index
DTI report Changing Manager Mindsets recommends a CSR academy
CSR minister Stephen Timms appoints steering group to launch CSR academy
July 2004 CSR Academy launched
Main website for the CSR Academy www.csr.gov.uk
For information of the UN Global Compact www.unglobalcompact.org
Department of Trade and Industry www.dti.gov.uk