Investing in Corporate Social Responsibility: A Guide to Best Practice, Business Planning & the UK’s Leading Companies

Excerpt:

CORPORATE SOCIAL RESPONSIBILITY: THE END OF THE BEGINNING

Companies, governments and activists are facing a growing challenge in how to respond to the development of Corporate Social Responsibility (CSR). CSR has grown rapidly, and relatively smoothly, over the last 20 years as increasing numbers of companies take up the banner of CSR in attempts to make their operations more ethical. Governments clearly value the role that these businesses can play in the development of society, whilst the activist community can point to the growing importance of the CSR as a clear victory for the pressure they have exerted on the activities of companies.

Put simplistically, companies introduced CSR programmes and reports in order to counter the damage inflicted on them – both on their sales and reputation – by attacks from activist groups who placed a spotlight on the behaviour of these firms. Aided by the rise of the 24-hour news media, activists have been able to create an environment in which corporate wrongdoing has been given a high profile. Such stories make for compelling news but very often, good news CSR stories, of companies performing valuable roles in society, are not given such prominence as they do not make such exciting news. It is now no longer appropriate for companies merely to make a profit, the way in which the profit is generated is under scrutiny as activists drill down into a business’ market behaviour, trade policies, employment relations, sourcing of raw materials, human rights, and for many, the most important, a company’s environmental credentials. If a company was being exploitative in any of these areas then the activists would place pressure on them, through the media and other activities, making the issue public in order to force a change in behaviour. This analysis pays no attention to the very good work which businesses have done in the past and their contributions to society. One only has to look at the activity Joseph Rowntree and others, and the way in which they developed their workforces, as examples of these earlier contributions. Much of this, however, did not necessarily relate to the core business of the company but was instead a charitable or paternalistic ‘giving back’ to society.

It was in the 1980s that a network of companies came together to establish Business in the Community (BiTC) and later launched the Per Cent club whose members donate 1 per cent of pre tax profits to the community. BiTC is a very widely respected and influential force within business and in the whole area of CSR.

However, a major problem remains with what Corporate Social Responsibility actually means. The Department for Trade and Industry (DTI) sponsored Corporate Responsibility group defined it as “the management of an organisation’s total impact upon its immediate stakeholders and upon the society within which it operates. … it is about the integrity with which a company governs itself, fulfils its mission, lives by its values, engages with its stakeholders, measures its impacts and reports on its activities”. The BiTC provides a system of benchmarking and a full checklist of areas at which companies need to fulfil in order to be corporately socially responsible. However, there are many other measures, some local, some national, and others international and even global. Some countries have introduced legislation forcing companies to fulfil certain criteria whereas others are taking a more laissez-faire approach. Many companies issue CSR reports detailing their good work. Again, the form that these reports take varies enormously – from simple statements of intent through to full colour glossy brochures roughly approaching the size of “War and Peace”.

Much of this confusion has, in turn, led to a huge suspicion amongst the general public about CSR, its role and what it really means. In essence, the public does not believe that the companies do what they say they do and much CSR is deemed to be driven by the PR needs of the business. The activists have the upper hand, they can attack companies and people believe their attacks. Companies can respond but people do not believe their responses. The dilemma for companies is that if they do not produce clear CSR statements then the activists will attack. However, if they do produce CSR reports then the activists can attack these also. A CSR report will benchmark a company’s position so they must keep improving on this. If they do not then they are open to attack. If a company says that it behaves in a certain way then it must act in this way. If it does not, then it will be attacked. A further problem for companies is that very often they have tried to cover too much in their CSR activity reports – spreading themselves too thinly.

Companies are, therefore, increasingly wary about CSR – they realise that it can be good for the business, its sales, employee morale and reputation but have to balance this against damage to its reputation from activist attacks, confusion over the form of CSR and little clarity over what it really should entail. Governments wish to be seen to encourage CSR activity but many do not wish to introduce legislation and have no clear idea about what form this legislation would take. Activists wishing to ensure that companies adhere to the highest standards, are in danger of turning companies off any CSR activity altogether if they continue to attack too vociferously. All three are, therefore, facing a challenge.

Kogan Page, 2004

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Investing in Corporate Social Responsibility: A Guide to Best Practice, Busniess Planning and the UK’s Leading Companies: A Guide to Best Practice, Business Planning and the UK’s Leading Companies