Defining CSR
A Whitehall paper on corporate social responsibility sums up current thinking among the business community. SMEs need to be confident about explaining their efforts while big business can ensure fairer supply chains.
Discussions about CSR tend to focus on the relationship between companies, society and the environment: the so-called triple bottom line. Government generally has no direct involvement but it can influence CSR policy as a regulator and by providing public endorsement.
The UK Department for Business, Innovation and Skills’ policy work in this area over the last year provides some insight into how the idea is currently defined, what businesses are doing and the potential areas for improvement.
The department defines CSR as the “responsibility of an organisation for the impacts of its decisions and activities on society and the environment through transparent and ethical behaviour above and beyond its statutory requirements.” It notes that the term corporate responsibility is becoming more common i.e. encompassing a wider range of activities than the social aspect.
Corporate responsibility ties in with the Big Society concept, explained in a book by Tory MP Jesse Norman. He proposes a leaner state with ‘linking institutions’ – which could include responsible businesses – filling the gap as government pulls back.
Norman notes that the early Labour movement encouraged businesses to provide for their workforces. State intervention became Labour’s dominant approach after the Second World War and continued under successive governments. This created the NHS and universal secondary education but the state’s current size has, in Norman’s view, stifled personal initiative.
His message is particularly relevant in Northern Ireland, where 30 per cent of the workforce is state-employed and 65 per cent of money circulating in the economy comes from government. New ways to encourage initiative and responsibility are therefore required.
In keeping with this approach, the Department for Business, Innovation and Skills is working on a broad framework for corporate responsibility. In its call for views last year, the department recognised that signing up to documents does not, in itself, make a business more responsible but it does show that a company wants to be identified with corporate responsibility.
Action
The Government encourages companies to sign up to international examples of best practice such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the ISO:26000 standard.
From October, companies listed on the London Stock Exchange have been obliged to report on their non-financial impact on the environment and society. Voluntary reporting, for companies of any size, can be an important way of engaging stakeholders and identifying risks, particularly in supply chains. Ministers are proposing a simple set of metrics so that comparisons between companies are easier to make.
Responsible supply chain management can involve clear statements setting out buyers’ expectations of suppliers and what suppliers can expect in return. Long-term partnerships are, by definition, more responsible than the exploitation of smaller businesses for short-term gain.
CSR is not the preserve of big business. Many small and medium-sized enterprises “do enormous good for the environment and communities around them” but a high proportion of these “do not publicise the good contributions they make” and may miss out on the added benefit to their reputation. Government is encouraging an increasing number of larger firms to mentor smaller ones on making the most of corporate responsibility.
Business and the pursuit of profit “is a force for good in society by strengthening our economy and local communities.” Going back to first principles, businesses create jobs, improve skills and provide desirable goods and services. Over and above this, they can improve the quality of life and well-being of employees, protect the environment and invest in a wide range of community activities.
Corporate philanthropy is a good starting point but businesses can go further by providing education and skills programmes, promoting arts and culture, and releasing employees for volunteering.
Profession
Based on feedback from corporate responsibility managers in large firms, the Government sees the scope for promoting corporate responsibility “as a profession” similar to human resources. Professionals in this area could encourage formal learning, conduct consultations, coach and mentor others, and provide technical assistance.
On a final note, the document notes that purchasing decisions of consumers are “increasingly influenced by ethical considerations and the reputation of the business or brand of the product or service they are buying.” Corporate responsibility can therefore give firms a competitive advantage as well as being beneficial in its own right.
Jo Swinson, Parliamentary Under-Secretary of State for Consumer Affairs, holds the corporate responsibility portfolio. “We want to make the UK the best place in the world to conduct responsible business,” she has stated. “Encouraging corporate responsibility will help to build a stronger economy and fairer society. We’re keen to hear views on how we can better promote responsible business to unlock the benefits of ethical, social and environmental business practices.”
‘The Big Society: The Anatomy of the New Politics’ by Jesse Norman is published by the University of Buckingham Press.
