Successful business leaders do CSR

January 31st, 2011 by Deirdre Dudley-Owen

Deirdre Dudley-Owen of Ceras gave the following presentation to the Guernsey Institute of Directors seminar on Corporate Social Responsibility held at the Duke of Richmond Hotel on 28 January 2011.

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“I am going to indulge myself here and set the scene for what we are about to discuss.

Last night I sat on the sofa, one eye on the telly watching the Sporting Awards, sponsored by Sportingbet, while reading about the winner of the Mourant Ozannes ArtPrize 2010.

When I got up I picked up my empty cocoa mug, made with fair-trade cocoa, and noticed it was sitting on a leaflet called @thestates, a document created by de Putron Fund Management about how we do things in Guernsey Plc.

CSR, or more recently called Corporate Sustainability is all around us. But, Corporate Sustainability is not just about community engagement, or managing a company’s waste and energy.

It’s about enhancing your reputation, standing out as an innovator.

It is about differentiating your products and services from those of your competitors and reducing your costs.

CS is about the strategic objectives and the raison d’etre of the company, making and distributing wealth.

Among the un-initiated, CSR is this token gesture to your local community that is soft, warm and well, fluffy and seems to want you to write cheques to sponsor this event, give charity to that event.

Among the better informed, CSR is enlightened self-interest which spans global communities.

Well I am going to dispel some myths about CSR and explain to you what it is and provide more examples of …… WHAT IS IN IT FOR YOU?

(I am going to use the terms CSR, CS and sustainable development interchangeably.)

CSR is the menu tab on leading company’s websites which provides proof, in the form of comprehensive, thorough and well-executed strategies, that they are doing all they can, to do business in a responsible manner.

It is also referred to as corporate citizenship, corporate accountability or simply corporate responsibility.

Terms associated with this agenda are sustainable development, ethics, company values. All these intangibles that cause the hair on the heads of accountants to stand on end … if they have any!!!

The aim of Corporate Sustainability is to balance the three elements of society, the environment and making money.

By society I mean, your employees, the people without whom you could not operate; your shareholders, your customers; and your wider stakeholders.

The environment .. I will split into two elements as it is rather cumbersome– resources which we consume – food, paper, wood, oil cotton, metals, oil, coal, gold,– and the effect this consumption has on biodiversity and the pollution caused by the extraction and consumption of these resources.

In essence CSR fits within the sustainable development strategy of a company, which is development that seeks to balance people, planet and profit.

So what has driven social issues up the agenda?

CSR has always been around, even if the name is quite recent.

The Cadbury family founded their Bournville Factory in 1879 and a founding principle, continued to this day is   ‘fair treatment of employees and philanthropy in the community’.

Fast forward to the early 1990’s where the idea of sustainable development as part of the function of CSR began to emerge in line with the globalisation of organisations and the entangled issues of poverty and climate change.

Another driver has been the access to information and rising consumer interested in who, where and how our products are being produced.. because if Mrs Torode from down the road isn’t making my Guernsey… who is and where is the wool from and why?

For example, Nike were the subject of a media frenzy in 1996 when Life Magazine published a story about the use of child labour in the manufacture of their footballs.

Unilever, Monsanto and Bayer were shamed in 2003 when a report published by an NGO said these companies buy hybrid cotton seeds from farmers who pay children a pittance to work long hours.

Now I use these stories to show how curiosity has piqued our interest as consumers in who is making our products BUT these examples also serve to illustrate the connection between different indirect stakeholders – child labour – stakeholders , media – Stakeholders, viewing public – stakeholders, NGOs  – stakeholders. In our global marketplace… your stakeholders are everywhere.. they do not stop at the local school, or the local sportsfield. What you do can have an affect on someone in deepest, darkest Peru.

Anyway, to go back to Nike, bad publicity dents an organisation’s image. It makes people think twice about buying from that company, this in turn reduces profits, this affects the share price, this affects the shareholder, etc.  So there is wisdom that in order to earn the best return over time, businesses need to nurture their customer relationships and service, and increasingly these days this requires them to demonstrate a wider commitment to the community and the environment.

Now these large, global organisations had and have robust CSR strategies.

These strategies included all the right ingredients, often overlooked by smaller businesses, such as codes of conduct for suppliers, ethical assurance monitoring, ethical trading initiatives, all the steps required to insure against poor labour conditions and child labour. These issues got under the radar because no one was auditing and checking compliance. But at least they had a radar – CSR.

So managing in a socially responsible way – extends way beyond  your immediate staff, your shareholders, your customers, your local community…..

To turn now to the environment

It is assumed that investments made today will deliver economic growth  but this doesn’t take into account global warming, desertification, flooding, deforestation, resource depletion to name but a few… plus there’s the issue of reproduction…. currently there are 6 billion people living on our planet…  …..by 2050 this figure will rise to 9 billion.

Predictions are that by 2030[i] we will need two Earths to continue to absorb CO2 emissions and to keep up with natural resource consumption, that is if we continue the ‘business as usual’ approach.

There is an imbalance here. You don’t have to be too clever to work this out.

So do the small things around your office help like reducing energy consumption, using cleaner technologies like heat source pumps and solar, by consuming less stuff and wasting less, by being more innovative with the way we use our resources. Yes, they do on a micro scale and lots of micros doing the right thing add up to a macro, plus all these measures are good for the bottom line.

We’re already doing that… I hear you say… but after all the  most environmentally damaging business sectors are utilities, oil and gas producers, as well as industrial metals and mining…. Well…. As financiers, let us consider the range of your investments and the range of companies registered in Guernsey..…do any fall into these categories?

What will be the impact on investments of pollution and resource depletion and competition from millions of aspiring middle class BRIC populations?

As environmental damage and resource depletion increases, and governments start applying a “polluter pays” principle, the value of large portfolios will be impacted by higher insurance premiums on companies, taxes, inflated input prices and the price tags for clean-ups.

What will be the impact on you and I as workers and future retirees expecting good returns on our pensions from funds invested in companies exposed to environmental costs?

Did I hear someone mention BP?

Effective CSR will not only look at the organisation’s immediate operation. Effective CSR will seek to meet the challenge of business development in a rapidly changing world. It will look at its supply chain and innovate to reduce waste, it will look at its resource requirements and invest in locally sourced labour and improving local skills, it will look at its partnerships and its investment strategies to assess risk and diversify its investment portfolios. It will use CSR as a vehicle to innovate and create new products and services that differentiate it from its competitors.

A company with intelligent and creative strategic thinkers knows that sustainable profit and corporate social responsibility are not in conflict, they are interdependent.

The idea that the sole job of business is to create a profit for shareholders has proved insufficient to sustain value – and in the end – a bad deal for shareholders. CSR is an integral part of the wealth creation process, it is wider than a philanthropic exercise, delegated to PR and marketing.

Guernsey companies should be engaging in bolder more innovative CSR strategies which give to Guernsey as a community in ways that facilitate Guernsey Plcs own wider Sustainability Agenda – transport, energy sustained use of our financial sector.

If its out there in the public domain, it has to stand up to scrutiny, the language of my profession is environment, social, ethical, and on the whole, this makes good sense and stands up to scrutiny – the leading bodies and words that influence and shape the way I think are the United Nations Environment Programme, the Millenium Development Goals, the Kyoto Protocol, the Montreal Protocol, Climate Change, Carbon Emissions, Sustainable Development – my professional world is on a collision course with yours and the sooner it happens, the better because the future depends on thinking about our sustainable development in the long term, not greed for the few in the short term. I believe that CSR is about divesting companies of some of their profits for the benefit of those who will come after them.”


There are many examples of business where operating in a socially and environmentally responsible way is CORE to their development strategy.

 

  • The Co-operative – with its early introduction of Fairtrade Products, products free of animal testing  and range of ethical Investments
  • BodyShop, household name, based on sound social and environmental principles
  • Green & Black Chocolate –  based on fair labour and Fair Trade
  • MAC – make up range
  • Aveda – hair and body care range

[i] Living Planet Report 2010.

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Deirdre Dudley-Owen is founder of Ceras – Corporate Environmental Risk Advisory Services.

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