George Cox, director general of the Institute of Directors, says there are real benefits to integrating corporate social responsibility with core business activities
Corporate social responsibility (CSR) is a relatively recent term, but the concept is not. For years companies have recognised that their activities have a wider impact on society than can be measured by financial performance.
But what is new is the dramatic increase in the power of business to shape the world: economically, culturally and politically. Technological developments, increased economic activity and globalisation have created a situation where the behaviour of business has an impact on lives worldwide.
On the one hand, these have caused wide-scale pollution. On the other, huge opportunities for business to improve people’s quality of life have come about.
However, the question that needs to be addressed is: where do commercial considerations end and wider obligations come into play and is it possible to combine both roles?
The overriding duty of a company’s board of directors is to the shareholders, and this normally takes the form of delivering profit. But business also generates wealth for society. If we want better standards of living, better schools and healthcare, business has to generate the funds.
So first and foremost, any business has to be financially viable and commercially successful. If it isn’t, its attitude to CSR is irrelevant. But financial success and CSR are not mutually exclusive. I think the two go hand-in-hand.
It is good business practice to align your company with CSR – increasingly customers want to deal with companies that they trust and respect; employees want to work for
organisations with which they can identify; and shareholders want to invest in companies that minimise risk.
But it goes even deeper than that. In a rapidly changing world, many things such as systems, processes,
organisational structures, products, and markets, once thought of as being permanent, are proving temporary.
What endure are values, reputation, brand, image, and culture. It is within these enduring characteristics of today’s organisations that we need to entrench CSR. It is not easy to do. An ethical dimension to a problem doesn’t make for a straightforward choice between right and wrong. Often, working out the right action involves balancing many
considerations, not least those of the shareholders.
This can be made easier if all the staff understand what CSR means to the business. CSR is not simply a boardroom issue. It may start there, but it has to permeate the whole culture of the enterprise. An ethical company is not one with a top-down ethical philosophy – it is one where the attitude and behaviour of staff at all levels reflects that philosophy.
Incorporating CSR into business activities
Few companies make CSR a separate item on the board agenda. If they did, one would question whether they understood the issue. Like ethics, CSR is something that needs to run through every decision, whether this concerns the workforce, products, markets, or quality.
It is a way of thinking and behaving, not a separate programme or campaign. For this reason, I believe it is normally inappropriate for one director to have a CSR remit – the issues should be factored into all decisions.
Moreover, the issues and their relative importance will vary with the size and nature of the business. An energy company or manufacturer will be concerned about environmental pollution, a local firm of accountants less so; a global business will be concerned with trading and employment conditions worldwide, a local enterprise less so. What applies throughout is recognition of a wider responsibility and the incorporation of integrity into all the company’s dealings.
Incorporating CSR into business activities is essential. A company that makes a profit without considering the concerns of investors, staff, and communities will be less likely to play a part in the new business landscape.
For those that do take on CSR, there will be a huge role to play in dealing with the issues that economic activity and technological advances continue to create.