Corporate social responsibility is not about spending
Apr 09, 2009
CORPORATE Social Responsibility (CSR) has of late become popular among firms and has benefited many communities and individuals. However, it has also become one of the most misused terms in contemporary corporate nomenclature.
EXECUTIVE TALK
By Jimmy Kiberu
CORPORATE Social Responsibility (CSR) has of late become popular among firms and has benefited many communities and individuals. However, it has also become one of the most misused terms in contemporary corporate nomenclature.
Not only has it become a misnomer, it has also become a ‘silver-bullet’ for some organisations to white-wash their shortcomings through unsustainable acts of philanthropy and populism. These corporate acts of generosity are falsely starting to emerge as real CSR, while responsible up-stream management of genuine CSR activity that shapes down-stream initiatives is abandoned on account of being tedious due to its longer gestation and fewer photo moments.
There is a dire need to re-think and re-focus CSR among firms to realise that it is not optional, but an obligation to society.
CSR is a key component of long-term business sustainability.
The Canadian Business for Social Responsibility defines CSR as “a company’s commitment to operating in an economically, socially and environmentally sustainable manner while recognising the interests of its stakeholders, including investors, customers, employees, business partners, local communities, the environment and society at large.â€
CSR benefits the bottom line. Organisations that invest in CSR can benefit from: Increased ability to attract and retain high calibre employees whilst elevating staff morale, enhanced brand and image reputation and increased sales and customer loyalty from its reputation as consumers base their purchasing decisions on an organisation’s social and environmental track record.
They also benefit from reduced operating costs, positive publicity and an enhanced public image from an organisation’s good works.
Global financial institutions are also making it a condition to apply social and environmental indicators to access capital, which is embedded in contracts.
In other words, CSR is becoming a key performance indicator in making decisions by international financial institutions.
There is a rise in societal expectations of companies by stakeholders other than shareholders.
This is more pertinent because of the 20 biggest economies in the world, at least seven of these happen to be multinational corporations.
The same discipline required in managing stakeholder value is applicable today as that used previously for managing shareholder value.
All this is geared at maintaining the elusive “licence to operate.†This “licence†is the good will that no organisation can afford to squander. It is vital for business sustainability.
Many firms grapple daily trying to implement sophisticated CSR programmes and campaigns in their workplace. Many times, these corporations forget that charity begins at home.
The best ambassadors to role-model an organisation’s CSR are its work force.
It is them that play a most influential role in securing third party endorsement. An organisation can only ignore this reality at its own peril.
According to a 2006 Globescan survey of socially responsible companies, the top eight factors cited by respondents as reasons a company is not considered socially responsible were; harming the environment, failure to act in community’s interest, treating employees poorly and providing poor quality products or services. Others were untrustworthy brands, poor working conditions, overpriced products or services, and failure to support charities or community. Judging from these responses, environmental protection is back on the CSR agenda big-time.
Likewise, care and treatment of employees is highly regarded. Human rights issues have also gone up in rating. They are mirrored in the way an organisation applies them in the workplace through labour standards and environmental protection.
Multinational corporations are adopting human rights and environmental issues. These issues are reflected in prominent global treaties to which many governments are signatories.
Corporations that fail to act responsibly can therefore be held accountable when they violate these global standards that regulate among others, environmental and human rights protocols for the sake of profiteering.
It is the duty of any responsible firm to embed them in their ‘corporate DNA’ and to create the necessary awareness internally while developing credible measures of implementation. This can provide a rich menu for any organisation’s internal CSR. This responsibility should be extended to cover its supply chain.
As competition and consumer awareness increases, the decision to purchase products and services may ultimately hinge on whether a given manufacturer is socially and environmentally responsible.
Reputable firms are inherently aware of this trend and will stop at nothing to ensure they eliminate any potential sources of reputation loss to the organisation’s products or services. They have established an internal governance regime to manage their CSR more sustainably. Their CSR committees are chaired by the highest authority, usually the board chairman or the chief executive officer.
These CSR committees meet regularly and among their responsibilities is to scan the operating environment and identify or pre-empty any sources of potential reputation risks.
“When you cause the firm to lose money, I will be understanding.
“When you cause the organisation to lose reputation, I will be ruthless,†is how billionaire and philanthropist, Warren Buffet, sums up the importance of reputation to an organisation.
Ultimately, CSR is more about how you make your money rather than how you spend it.
By maintaining a ‘licence to operate’ you build a solid platform for business sustainability.
The author is a public relations specialist and director of programmes at the Public Relations Association of Uganda
By Jimmy Kiberu
CORPORATE Social Responsibility (CSR) has of late become popular among firms and has benefited many communities and individuals. However, it has also become one of the most misused terms in contemporary corporate nomenclature.
Not only has it become a misnomer, it has also become a ‘silver-bullet’ for some organisations to white-wash their shortcomings through unsustainable acts of philanthropy and populism. These corporate acts of generosity are falsely starting to emerge as real CSR, while responsible up-stream management of genuine CSR activity that shapes down-stream initiatives is abandoned on account of being tedious due to its longer gestation and fewer photo moments.
There is a dire need to re-think and re-focus CSR among firms to realise that it is not optional, but an obligation to society.
CSR is a key component of long-term business sustainability.
The Canadian Business for Social Responsibility defines CSR as “a company’s commitment to operating in an economically, socially and environmentally sustainable manner while recognising the interests of its stakeholders, including investors, customers, employees, business partners, local communities, the environment and society at large.â€
CSR benefits the bottom line. Organisations that invest in CSR can benefit from: Increased ability to attract and retain high calibre employees whilst elevating staff morale, enhanced brand and image reputation and increased sales and customer loyalty from its reputation as consumers base their purchasing decisions on an organisation’s social and environmental track record.
They also benefit from reduced operating costs, positive publicity and an enhanced public image from an organisation’s good works.
Global financial institutions are also making it a condition to apply social and environmental indicators to access capital, which is embedded in contracts.
In other words, CSR is becoming a key performance indicator in making decisions by international financial institutions.
There is a rise in societal expectations of companies by stakeholders other than shareholders.
This is more pertinent because of the 20 biggest economies in the world, at least seven of these happen to be multinational corporations.
The same discipline required in managing stakeholder value is applicable today as that used previously for managing shareholder value.
All this is geared at maintaining the elusive “licence to operate.†This “licence†is the good will that no organisation can afford to squander. It is vital for business sustainability.
Many firms grapple daily trying to implement sophisticated CSR programmes and campaigns in their workplace. Many times, these corporations forget that charity begins at home.
The best ambassadors to role-model an organisation’s CSR are its work force.
It is them that play a most influential role in securing third party endorsement. An organisation can only ignore this reality at its own peril.
According to a 2006 Globescan survey of socially responsible companies, the top eight factors cited by respondents as reasons a company is not considered socially responsible were; harming the environment, failure to act in community’s interest, treating employees poorly and providing poor quality products or services. Others were untrustworthy brands, poor working conditions, overpriced products or services, and failure to support charities or community. Judging from these responses, environmental protection is back on the CSR agenda big-time.
Likewise, care and treatment of employees is highly regarded. Human rights issues have also gone up in rating. They are mirrored in the way an organisation applies them in the workplace through labour standards and environmental protection.
Multinational corporations are adopting human rights and environmental issues. These issues are reflected in prominent global treaties to which many governments are signatories.
Corporations that fail to act responsibly can therefore be held accountable when they violate these global standards that regulate among others, environmental and human rights protocols for the sake of profiteering.
It is the duty of any responsible firm to embed them in their ‘corporate DNA’ and to create the necessary awareness internally while developing credible measures of implementation. This can provide a rich menu for any organisation’s internal CSR. This responsibility should be extended to cover its supply chain.
As competition and consumer awareness increases, the decision to purchase products and services may ultimately hinge on whether a given manufacturer is socially and environmentally responsible.
Reputable firms are inherently aware of this trend and will stop at nothing to ensure they eliminate any potential sources of reputation loss to the organisation’s products or services. They have established an internal governance regime to manage their CSR more sustainably. Their CSR committees are chaired by the highest authority, usually the board chairman or the chief executive officer.
These CSR committees meet regularly and among their responsibilities is to scan the operating environment and identify or pre-empty any sources of potential reputation risks.
“When you cause the firm to lose money, I will be understanding.
“When you cause the organisation to lose reputation, I will be ruthless,†is how billionaire and philanthropist, Warren Buffet, sums up the importance of reputation to an organisation.
Ultimately, CSR is more about how you make your money rather than how you spend it.
By maintaining a ‘licence to operate’ you build a solid platform for business sustainability.
The author is a public relations specialist and director of programmes at the Public Relations Association of Uganda