CSR: No kidding
4 Aug 08
Never mind the formulaic corporate social responsibility annual statement. Taking it seriously can do wonders for PR and staff morale, writes Richard Goslan – not to mention the environment and the community
by Richard Goslan
As silver wedding anniversary gifts go, it’s not your run-of-the-mill choice. But then again, David Hardie is not your run-of-the-mill lawyer.
Hardie, a partner with Dundas & Wilson, decided that instead of splashing out on a traditional anniversary present, he would take his wife to Peru, where through the Vine Trust charity, they would visit the medical boats that ferry essential supplies to indigenous tribes along the Amazon.
The trip would change the then-50 year old’s perspective on life and work. “The bit that tugged at my heart-strings particularly was a visit to a night shelter for street kids in Lima. With my few words of Spanish I was able to speak to some of them,” says Hardie.
“They live in rags in the sewers and their next meal usually comes from either theft or selling sexual favours. Their time horizon is only about where their next meal is coming from.
“I tried to identify their hopes and aspirations, which didn’t amount to anything more than finding food. The thing that lived with me was the fact that this was their life – just projecting forward to their next meal.
“It was an unusual silver wedding anniversary gift, but it was insightful. It certainly had a deep impact on my wife and me.”
On his return to Scotland, Hardie thought about the Lima street kids and wondered what more he could do to bring his professional skills to bear in the world of charity.
Then he was approached by Inspiring Scotland, a new “venture philanthropy” organisation which takes the principles of venture capital – long-term investment and tailored development support – and applies them to addressing social issues through the voluntary sector.
The initiative has been developed by the Lloyds TSB Foundation for Scotland and investors include trusts, foundations, businesses, individuals, charities and the Scottish Government.
The first project up and running is the 14:19 fund, aimed at improving the lives of people aged 14 to 19 in Scotland who may be having difficulties making the transition to adulthood.
Hardie now divides his time between Dundas & Wilson and Inspiring Scotland, where he likens his role as head of venture philanthropy to that of a fund manager, but working in social rather than financial investments.
He hopes that Inspiring Scotland’s business-like approach to charity will be able to take advantage of the increasing awareness of corporate social responsibility (CSR) in order to fund its activities.
“I’m now working with corporates to help them achieve their CSR goals,” he says.
“Those responsible for running companies or those responsible for running professional services organisations should be taking into account wider stakeholder interest, whether these be the community or environment or other factors.
“Philanthropic self-interest is not a bad thing. There are very sound business reasons for an organisation to be philanthropic, so why not? You can achieve business aims and a huge amount of personal satisfaction by doing things beyond the four walls of your business.
“That is also the expectation that young people have – yes, they work hard, but actually they want to have a more rounded existence, to be part of an organisation which is a good corporate citizen, which gives a huge sense of fulfilment.”
As you would expect from the main supporter of the Inspiring Scotland scheme, as chief executive of Lloyds TSB Scotland, Susan Rice is firmly behind the bank’s CSR-related activities. She has been a long-term believer in the benefits of CSR not just to the community, but to the company’s staff and even its bottom line.
“CSR has tremendous potential to motivate and retain staff,”says Rice.
“A bank, for example, has thousands of staff, but most of them have a desire to do well for others
When staff see themselves working for a company which carries the same set of values, then that can make the staff member proud to work for the organisation and interested in getting others to come and work for us.
“The most responsible CSR activities are the ones which you can maintain consistency on. If you find ways to achieve a positive social effect, where you’re also bringing some of your commercial good sense to the table, there may be some commercial benefits, so that is a win-win situation.
“For example, Lloyds TSB Scotland has invested in Bridges Community Ventures Fund, which invests in companies which hire in low-income communities. If you were investing in a typical venture capital fund, you might look for returns of about 20 per cent. We devised this programme expecting between 8 and 13 per cent. But after five years we’re getting returns of between 18 and 19 per cent. So we’ve found that by taking a commercial approach to funding something that otherwise wouldn’t have happened, the return was a whole lot better than expected. That’s a commercial and sustainable approach, and that’s the best you can do.”
CSR can also play an important role in building teamwork between staff members, boosting morale or even helping desk-bound workers look after their health and fitness.
David Claxton, a partner at Deloitte who heads the firm’s financial services practice in Scotland and Northern Ireland, took part in the Rob Roy Challenge, a gruelling team-building charity event sponsored by investment management company Martin Currie.
“Deloitte has a wider community investment programme, but doing something like this allows us to play our part and it helps internally through team building – and through keeping fit,” says Claxton.
“But it’s more about making our own contribution and spending some time actually helping with the fundraising for something which looks after some very good charities.”
Dave Nicholson, an assistant relationship manager at the Royal Bank of Scotland, is training for the Bluesky Challenge, a fundraising endurance event involving mountain biking, kayaking, orienteering and river crossings to be held at Drumlanrig Castle in September. The money raised will go to the Prince’s Trust.
“Our team is made up of a combination of sporty and non-sporty people,” says Nicholson. “It’s not like we have an adventure racing team, so we’re picking up ordinary people doing extraordinary things, which brings a tremendous benefit to team-building.”
The physical challenges should be easy enough for a man who, at 52, ran the 95-mile West Highland Way in less than 24 hours. But the team needs skills other than just a high level of fitness.
“There is a lot of logistics and brain power required, so even if you’re not fast of foot, you can certainly contribute on the brain side,” Nicholson says.
“But I’m also of the belief that companies can benefit from these kinds of events because there are a lot of disciplines in the sporting world which can rub off on the business environment, for example focus, discipline, dedication and team-building within individual units.”
Nicholson and his RBS team will be up against entrants from TSG, a North of England IT services company with offices throughout the UK. Neil Harding is a sales account manager in the company’s Edinburgh office, and is taking part in the Bluesky Challenge for the first time.
“I was a smoker until two years ago, so I’ve put on a bit of weight since I quit and this was a good incentive to get fit,” he says.
“As a company, we try to support charities, and from a business point of view, it’s a chance to raise our profile, it’s a good marketing opportunity, it’s a chance to network with other companies, raise some money – and get fit!”
Sandy Knox, tax partner with BDO Stoy Hayward, took inspiration from an encounter with entrepreneur and philanthropist Mick Jackson to encourage his firm to give something back.
Jackson is the founder of the online outdoor equipment retailer WildDay.com, whose life was changed by a near death experience while climbing K2 in 2001. Jackson carried his injured sherpa for four days off the mountain, believing he was going to die himself. When he reached help, he pledged to do whatever he could to help make a difference in the developing world.
To do that, he set up the WildHeart Foundation. One of its first projects is WildHearts in Action, which sells office supplies and gives all the profits to help fund start-up enterprises in the developing world – what Jackson calls “a hand-up, not a hand-out”.
Sandy Knox was impressed by Jackson’s story and by his plans for using the money he is raising.
“WildHeart seemed to be offering people the chance in a much more structured way with microfinance to do good and to be self-sufficient and independent within their own communities,” says Knox.
“There would be much more self-determination and self-esteem growing on the back of the sort of microfinancial help that Mick was talking about, rather than organisations and administrators with a wad of money saying, ‘This is how it’s going to be spent’.
“BDO agreed to do Mick’s accounts for a minimal fee –it was worthy of our time and our support.”
The variety of activities which fall under the all-encompassing label of CSR shows that it is not an easy subject to get to grips with. Even its definition is open to interpretation, but in the most general sense it is underpinned by a belief in businesses making a commitment to behave ethically, take responsibility for the impact of their activities on everyone associated with the company, and work in as environmentally-friendly a way as possible.
Genuine CSR activities should also go beyond the minimum statutory requirements, with companies voluntarily taking measures to improve the quality of life for staff, their families, the local community and society at large.
David Grayson is professor of corporate responsibility at Cranfield University School of Management’s Doughty Centre. He says for CSR to be a successful and sustainable part of any business, it has to become a core part of the strategy.
“You’ve got to embed corporate responsibility with your business purpose and strategy,” he says. “If it’s a bolt on then the benefits you’ll get will be peripheral and limited.
“When it is done well, it will help you attract and retain the most talented people and I think it enhances business and corporate reputation. Depending on the activity, it may help you cut costs – for example reducing waste to landfill lowers charges; cutting down on excess packaging can reduce production costs.
“In the best instances, a genuine commitment to embedding responsible business can give you new marketplace insights which can lead to new products and services – what I call corporate social opportunity.”
One of the leading proponents of corporate social responsibility in the UK is Business in the Community (BiTC), a membership organisation for companies committed to CSR.
Companies which sign up have three membership commitments: to seek to integrate social responsibility into the core of their business; to collaborate with other businesses to help tackle social issues; and to inspire others to do more by telling them about the success that they have had.
BiTC development director Mallen Baker has seen the growth of CSR as a force in business, which he believes will weather any economic downturn. “CSR has come a long way and is now about core business issues,” he says. “Of course community involvement is part of that but just writing a cheque is the lowest form of community involvement you can get. Cash is always important but you expect more engagement, more relationship building.
“If CSR is about doing a little bit for charity on the side, then for sure it’ll be the first thing to go [in an economic downturn], because it’s non-essential for the company’s survival. But having relationships about the future of energy and how you structure your supply chain to be more sustainable and how you deal with human rights in the supply chain … any company who thinks that goes on the back burner right now is crazy.”
Michael Littlechild is a former partner at KPMG, who left to set up the Good Corporation, which carries out independent assessments for clients of how well they are implementing their principles of responsible business management.
He sees the need for an even greater focus on the core issues of CSR at this time, and a reflection on why the global economy is in such a state. “I wouldn’t have set up this business if I thought CSR was some kind of fad which was only going to be there for the good times,” he says.
“I think it will be even stronger, because if you think about some of the origins of the credit crunch with the sub-prime mortgages in the US, you could argue that financial institutions there were too enthusiastic to talk people who couldn’t afford mortgages into taking on those liabilities.
“That was not honest salesmanship, it was about talking people into doing something they couldn’t afford, and to me that is very much part of CSR – it’s every bit as important to be responsible towards your customer as it is towards anybody else. But I don’t think financial services are particularly good at it… I think there’s still a long way to go before they are honest with their customers about all their products.”
BiTC’s Mallen Baker looks beyond the economic slump to key environmental and social issues as reasons why CSR needs not just to survive, but to take on an even more important role within business.
“If companies don’t engage with the causes and effects of climate change, rising energy prices, the end-game for fossil fuels and sharpening poverty across the world, then they’re in deep trouble,” he says.
“The time when a business could be a little island of prosperity in the middle of a sea of deprivation is long gone.”
Not everyone agrees that it’s the job of business to involve itself in these matters, however.
Rob Gray, professor of social and environmental accounting at St Andrews University’s School of Management, describes himself as a passionate adherent of CSR, but is sceptical about the claims lots of businesses make.
“Business has become the most powerful voice in many ways, and by adopting this agenda it’s stopping governments and NGOs and others from getting involved,” he says. “CSR is a panacea, it’s a gloss, it’s a whitewash, over things that business should be getting on and doing.
“What I’d like to see is a more sensible and thoughtful discussion about what are the limits of management discretion – what sorts of things can you expect business to do. At the same time we need to have a conversation about what proper social accountability would look like. It would be wrong to hold that conversation without business, but you can’t let business hold it entirely.”
Michael Solomon’s organisation, SEE (Social Environmental and Ethical) Potential is devoted to stimulating the adoption of socially and environmentally sustainable business practice, by building trust in business through transparency and accountability and empowering people to buy from, work for and invest in businesses according to their values.
He doubts how genuine a commitment many companies have to CSR.
“On the one hand CSR can be a very good thing where companies commit to best social, environmental and ethical practice, but on the other hand other companies are just using it as a PR exercise to present themselves in a certain image, to appeal to certain consumers or to disguise some unethical or irresponsible behaviour elsewhere in their business by focusing attention on this scheme or that scheme,” says Solomon.
“You don’t need to be perfect, issues are always changing and are complex, there’s no point in trying to set measures or targets. We’re not advocating that a business tries to persuade its stakeholders that it’s perfect.
“We just want companies to tell it like it is – be transparent, accountable, show that you can justify the practices and policies that you have and show that they are fair and reasonable in the context of what you do as a business.”
Perhaps CSR’s best hope lies with people such as Dundas & Wilson’s David Hardie, who are motivated to bring their professional skills to bear in a positive way for the community.
“As professionals we tend to spend our lives narrowing our focus, becoming more and more specialist, so it’s nice to step back and take a broader, different perspective, and apply the skills you’ve acquired over the years in a different arena,” he says.”
“At a stage when your children are starting to leave the nest, it’s a time to reflect and perhaps change your own priorities. Maybe my peers and contemporaries start to feel to that there’s more to life than ploughing away at the job, and if you can make a difference, that’s worth doing.”