Ten minute tutorial – corporate social responsibility

Not
really sure what all this talk about corporate social responsibility means? Kath
Burke offers this essential guide.

What
is it?

Good
question. As the ‘Gaia’ of business, corporate social responsibility (CSR)
seems to have attained all the holistic mystery of a Hollywood new-age religion.
And since there are almost as many definitions of CSR as there are companies
who say they’re doing it, the European Commission’s take seems as good as any.
Brussels bureaucrats define CSR as “a concept whereby companies decide
voluntarily to contribute to a better society and a cleaner environment”.

CSR
has also been described as business’ contribution to sustainable development
(meeting the needs of today without compromising the needs of future
generations). The idea is the business has a duty to its wider community ­–
beyond staying within the law and satisfying stakeholders.

The
story so far

The
term CSR was coined in the 1950s in the US, although the concepts are age old.
The Co-operative Bank, Ben & Jerry’s and Body Shop have made their name on
CSR-style ethical principles before the term was coined.

According
to Business In The Community’s definition, CSR covers:


Workplace issues (such as training and equal opportunities)
– Human rights
– The business’ impact on the community
– Reputation, branding and marketing
– Ethical investment
– Environment
– Ethics and corporate governance.

This
has led to a myriad of CSR-related terms with which you should pepper your
speech if you want to sound in the know. You can use the term ‘Triple bottom
line’ to convey the idea that a company’s overall performance should consist of
its contribution to environmental quality and social capital as well as the financial
bottom line. A related idea, ‘corporate citizenship’, is about managing all
relationships between a company and its local, national and global host
communities.

“In
a sense CSR formalises what the best companies have been doing anyway,” says
Philip Goldenberg, a partner at city law firm SJ Berwin.  

The
promise

CSR
promises to improve profitability and enhance creativity. Consumers are become
increasingly picky about the ethical values of the brands they buy, so the
logic goes. CSR should help reduce staff costs and raise shareholder value
because people prefer to work for ethical employers. And shareholder value
should rise as investors indulge in ‘ethical screening’ – whereby they include
or exclude shares from their portfolio on ethical, social or environmental
grounds.

One
consumer in five claim they would pay more for products that are socially and
environmentally responsible, according to MORI research carried out in 2000 for
the business network CSR Europe. Seven in 10 European consumers say that a
company’s commitment to social responsibility is important when buying a
product or service, found the poll of 12,000 consumers across 12 European
countries.

Case
studies from Business in the Community and Harvard Business School back up the
idea that responsible, ethical employers find it easier to attract and retain
quality staff. So CSR should help lower recruitment costs and staff turnover.

Pros
and cons

It
is difficult to distinguish between CSR and good business practice, but perhaps
one upside of CSR’s holistic approach is that it encourages businesses to
safeguard their corporate reputation for the future. Responsible business
practice could help protect a company from consumer boycotts such as those
suffered by Shell, Nestlé and Esso.

It
also encourages greater emphasis on people issues, which is good news for HR
managers. Anne Watts, BITC’s diversity and workplace director on secondment
from HSBC, claims that CSR can help employers attract and retain graduate
high-flyers.

“People
are making much more educated life choices about what they want from an
employer and how they’re going to be treated,” she says. “And there’s
increasing evidence from employee surveys that a well motivated workforce is
linked to satisfied customers.”

On
the downside, CSR could be the victim of its own popularity. Campaign group
Friends of the Earth sees some companies’ interest in CSR as a cynical PR
exercise it describes as “greenwashing” – self-styled ethical brands could
suffer a backlash from their own CSR spin.

Legislation
is another danger as the EU gears up for a directive forcing organisations to
report on their environmental, diversity and community relations record.

Corporate
governance expert Goldenberg of SJ Berwin suspects that business may have
promoted CSR too well to EC bureaucrats and environmentalists who may try to
legislate for it.

“CSR
is simply formalising good business practice,” he says. “The danger is that
various non-governmental organisations have leapt on the CSR band wagon,
thinking ‘Yippee, we can tell companies what to do.’ ”

Who’s
on board?

More
to the point, who’s not? Everyone from big business to the UK government, the
EC and environmental groups seems to be on side.

Business
In The Community is the key player in the UK. Set up in 1982 to promote
corporate community involvement, BITC claims it was on the CSR campaign trail
well before the term was coined. The network has 700 corporate members
including 80 from the FTSE 100.

The
Department for Trade and Industry has a CSR minister and there’s an all-party
parliamentary group for CSR. Even fast food giant McDonald’s, which has taken
its fair share of flak on ethical grounds, unveiled its inaugural Social
Responsibility report in April 2002.

Verdict

Used
sensibly, CSR is a good idea, but don’t get too carried away. It has to make
good business sense and be woven into the corporate strategy.

Key
players

Business
in the Community
CSR Europe
The EC

The
HR contribution

HR’s
role in a responsible workplace seems to consist of good HR management,
including encouraging staff to get involved in schools and the community. The
following areas are all included in CSR: workforce diversity; managing staff
absence and turnover, pay and conditions; employee satisfaction and low
grievances levels; sensitive downsizing and restructuring; and a good health
and safety record.

Essential
reading

No
Scruples? Managing to be Responsible in a Turbulent World
(2002), R Cowe.
Spiropress. ISBN 1904298060
Good Business; Your World Needs You (2002), S Hilton, G Gibbon, Texere
ISBN 1587991187
Corporate Social Responsibility: Partners for Progress (2001), OECD,
OECD Washington Center

Websites

www.bitc.org.uk
Business In The Community
www.csreurope.org CSR Europe
www.article13.com
From the CSR consultancy of the same name
www.worldcsr.com
CSR web portal

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