HR has a vital role to play in shifting the current ‘trend’ of CSR from talk
to action, says Kathy Sutton
Is corporate social responsibility (CSR) nothing more than a contorted
mixture of PR puffery and window dressing? Maybe it is a passing fad supported
by an unholy alliance of deranged chief executives who want to change the world
rather than run their business? Some believe it.
Others believe that business is replacing the traditional role of
governments and that CSR should be the new force for good in the global world.
One thing is certain: companies will increasingly need to show how they
integrate social, environmental and ethical concerns into their business
operations in future.
The pressures are here to stay, and the social expectations of today’s
graduates are being matched – at least in the UK – with a changing and evolving
legal framework.
There will be a revolution in the legal framework during the next few years.
The EU Information and Consultation directive will have a profound effect on
how companies doing business in the UK inform and consult with their employees.
It will directly impact the nature of decision-making within a company,
requiring a more open, transparent and inclusive approach. Genuine consultation
with employees could lead to companies leaning much more towards a partnership
approach within the company – a vital ingredient of successful CSR development.
The proposals in the Company Law White Paper support and foster partnership
working in the context of wider CSR development. They bring personnel matters
into the boardroom in a new way. If the proposals go ahead, directors will have
to consider all matters affecting business success, including relationships
with staff and a company’s environmental and community impact.
Larger companies will need to produce an Operating and Financial Review
(OFR) that includes information on so-called soft issues, including employee
relationships, intangible assets, know-how and brands. Directors will need to
consider whether they should include the company’s employment, environmental,
social and community policies in the OFR. They may face court challenges if
they do not.
Much of what is supposed to be new about CSR is simply about good
management, delivering sustained shareholder value by being sensitive to the
society and markets in which a company operates, and paying more than lip
service to the value of staff.
It is a welcome reaction to the trend of placing short-term shareholder
value on a pedestal at the cost of entire businesses, such as Enron and
Andersen. Short-term shareholder value ignores the importance of intangible
assets and the significance of corporate reputation in enhancing a company’s
value.
Hard reality tells us a different story and that is why CSR has risen to the
fore.
At a recent lunch, I was heartened by the central roles HR managers were
playing in their CSR development. But, in general, there is a long way to go.
HR has a vital role to play in shifting the current emphasis from talk to
action. It has to drive change and turn CSR from a self-congratulatory add-on
to the business strategy to being central to the corporate culture.
In return, the profession should gain a more responsive and proactive
management that understands the centrality of people management to business
success.
The CSR industry is growing with an ever-increasing number of advisers
developing an array of benchmarks and standards.
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Now is the time for HR professionals to take advantage of this trend to
boost the status, function and strategic importance of the function within
their organisation.
Kathy Sutton is a consultant and qualified barrister who works on issues
relating to corporate reputation and responsibility, and public policy
