Sustainable development… sustainability… corporate social responsibility (CSR) are terms that are banded about every day. Yet, how many of us truly understand what they mean on a practical level? As consumers, we are bombarded with information, often conflicting, that can make it difficult to know what constitutes sustainable or unsustainable behaviour. As organisations we struggle to understand what defines a responsible company: who’s responsible and to whom? What are the costs? Is there a business case? What actions should be taken?
Furthermore, it is clear that there is mounting pressure from many elements of society for companies to take greater responsibility, in all areas in which they exert influence. In today’s global, technology-enabled business environment, this presents new and complex challenges. Companies must balance long-term goals with short-term market expectations, financial performance with environmental stewardship and sensitivity to cultural values, competitive advantage with corporate accountability and transparency – often in an atmosphere of public cynicism and a lack of clear government framework.
Make no mistake, CSR is at the heart of a proactive risk management strategy. Also, a broadly implemented and sustained commitment reduces exposure to reputation, financial liability, political and security risks, and supply chain vulnerability.
At the same time, more and more companies are using CSR programmes to create value through:
- cost savings driven by technical innovation, improved productivity;
- enhancement of the company profile;
- strategic advantage gained from more proactive information collection and management;
- favourable investor profile.
Most companies have ongoing programmes that fall wholly or partially within CSR objectives. However, since CSR issues cut across the organisational structures and reporting lines, a holistic management framework is a critical success factor.
CSR initiative
The underlying principles of successful CSR initiatives include:
- Broad-based support and involvement: Support from senior executives is critical, but meaningful input and active involvement from local operations should drive CSR.
- Not a box-ticking exercise: There is a growing list of certifications, assurances, and quality management programmes that can support CSR programmes. However, effective CSR is always underpinned by ongoing communication, continuous learning, and a shared corporate understanding of ‘what is the right thing to do’.
- Allowance for local customisation: Companies that operate in a global environment must strike a practical balance between an appropriate level of global consistency, and allow for local interpretation of CSR priority issues, indicators and targets.
- Stakeholder engagement: Effective CSR programmes will include active, ongoing involvement from ‘communities of interest’ – both internal to the company and external. Decisions on who should be involved need to be made at the initial stages of programme design, and must be revisited on a regular basis as issues develop.
- Adequate attention to change management and training requirements: Everyone involved or affected needs to understand what will be done, why, and how it will benefit their organisation (and of course, themselves!). Initial resistance to change, is best addressed by training programmes that should be developed as part of the programme implementation, and form part of a continuous learning curve.
- Reporting – commitment to disclosure and transparency: A company that makes a commitment to a CSR programme is committing to widespread disclosure of CSR performance. This means reporting the good with the bad. Schemes such as the Global Reporting Initiative provide guidance on triple line reporting.
When beginning a CSR programme it is essential to consider the organisation’s environmental impact, since reducing environmental effects will ultimately reduce social impacts and financial liabilities.
Environmental dimension
Experience has taught us that environmental impacts – real or perceived – are among the most visible and socially sensitive aspects of a company’s operations. It’s here that an organisation may face its biggest challenge, particularly in light of changing legislation, and increased consumer awareness and consciences. Therefore, the general approach to CSR should begin with the consideration of all environmental issues and priorities and works through related social aspects and financial implications. In all areas of a CSR strategy, a company should seek the best advice and expertise available. This is absolutely essential as far as the environmental dimension is concerned. In doing so, it will help to identify areas where the company can reduce existing environmental impacts and lower costs. Also, an independent resource can collapse implementation times, as well as provide training and support as the programme rolls out. However, choosing a partner to support the CSR programme can be a little like finding a needle in a haystack. Many of the large consultancies may appear to be a good starting point. But be warned, the ‘usual suspects’, in this case the big management consultants, tend to take a superficial business-based look, and therefore, cannot provide the depth of understanding and environmental experience necessary to have a positive impact on a social and financial basis. Fortunately, there are a number of consultancies like Golder Associates, that can offer all the benefits of hands-on experience gained from solving big environmental problems, using science, engineering, and technology.
Third party expertise will prove essential when defining key environmental parameters, since they can assess and consider risk and the company’s level of direct responsibility, alongside its ability to control. This approach will start at the operational level, then works upstream and downstream along the supply chain. Also there are opportunities to improve environmental performance through consideration of an overall site approach, rather than one solely driven by meeting media-specific compliance targets (e.g. air, ground and surface water). This can be scaled up to property portfolios – thereby improving consistency, educational value, and information management.
Social dimension
The potential areas of social impact may include employees and their families, local communities, citizens’ groups, consumers, shareholders, governments and many others. In dealing with social issues, an approach of ‘enlightened self interest’ is the best way forward and will help to evolve a ‘win-win’ situation for all concerned. Underpinning a successful social programme will be:
- clear direction on corporate ethics and behaviour;
- development of stakeholder partnerships;
- representation of local stakeholder groups;
- communication channels and discussion forums that encourage dialogue.
Financial dimension
A holistic CSR approach means that the emphasis in this area is all about risk management, both on a site-specific and ‘portfolio’ basis. In this way, the company’s financial managers and auditors work closely with the external CSR partner to ensure that all material issues relating to environmental and social issues are properly reflected in financial statements and reports. This in turn will help to identify opportunities for cost savings and value creation through technology innovation, new products, and new revenue streams.
Make no mistake; CSR is a huge topic for any organisation to get to grips with, which is why it is best to seek expert help and resources from the start. Some organisations will find that they already operate whole or partial programmes and in these cases, there should be an ongoing commitment to make sure that the programme is fully integrated and effective throughout. Thus, by ‘doing the right thing’ it is possible to limit risk and increase business opportunity.