Doing good do it right

You're keen to implement CSR, but it's a demanding exercise to establish a sound and effective policy that percolates through the entire organisation and shapes everything it does. Mark Vernon and Craig Mackenzie offer 20 top tips to put you on the path of righteousness.

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Last Updated: 09 Oct 2013

MANAGEMENT

1. Make sure the CEO gets it. If he or she doesn't, companies will struggle to pay more than lip-service to corporate social resposibility. In this respect, CSR is no different from any substantial corporate activity. For example, at telecoms company Vodafone, CSR is set as one of six board-level, strategic goals. The company's group executive committee, chaired by CEO Arun Sarin, is responsible for policy and performance.

Incidentally, there is a serious economic argument to be made for CSR: it doesn't just deliver for the environment, it delivers on the bottom line too. Companies as diverse as the retailer Marks & Spencer, the telco BT, the healthcare specialist Novo Nordisk and the bank HSBC have found that being known for ethical integrity is quite as important financially as a strong brand and good management. Moreover, good CSR practice has been shown to reduce attrition rates and absenteeism in the workforce.

2. Formally involve the board in approving CSR policies. For two reasons: first, CSR will not flourish without serious time and money being allocated to it. Second, as James Bennett, sector director for technology at consultants Ernst & Young, puts it: 'Companies need to have a comprehensive strategy to deliver a full CSR programme that looks at all aspects of being a good corporate citizen.' That requires involvement at the highest levels.

While on the subject of the board, companies like pharma GlaxoSmithKline and energy group Shell have set up dedicated board committees of non-execs, to keep the execs on the ball.

3. Get an enthusiast to lead the charge. Make sure you hire someone to lead CSR activity who has real enthusiasm for the subject, and the ability to win the respect of hard-bitten operational staff. Too many companies give the role to failed middle managers, or people too junior to be credible. Don't give the job to a tree-hugger. CSR is not fluffy, it is about sound management and tough issues.

4. Direct centrally, deliver locally. Head-office control of CSR is good, but programmes need to be delivered throughout the whole organisation. The way to do this is to put in place a network of CSR champions and co-ordinators. Similarly, Accenture, the management consultancy firm, advises that while leadership is critical, it should not take the form of a series of diktats delivered by the executive. The talk may be worthy, but without fully engaging the attention and interest of employees, a CSR programme is almost certain to fail.

5. Consider the big picture. It means more than just philanthropy. Charitable giving is fine, but CSR demands more than that. 'As a registered charity, we see a lot of companies looking to implement CSR programmes,' says Mark East, chairman of the board of trustees at Digital Pipeline, a company that refurbishes IT equipment. 'That's all well and good; however, it needs to be more than just a marketing tool. It needs to be strategic and must take into consideration the bigger picture, making sure your programme goes full-circle.'

Also, commercial companies should not feel ashamed at the benefits they gain from the activity, such as increased employee loyalty. 'Commercial organisations, by their very nature, will put more effort into something that will benefit them too,' says Mike Phillipson, management director at PR company Propaganda.

And finally, make sure that any charitable work you do is actually wanted. 'Don't second-guess the need,' says Marcus Jamieson-Pond, CSR manager at City law firm Addleshaw Goddard. 'Talk to the people you want your CSR programme to support - their needs may be different from your expectations.'

ORGANISATION

6. Keep it relevant. Focus on the aspects of CSR that relate to your products and services. This is important for two reasons. First, it's key to ensuring that CSR investments are of strategic advantage for the business. For example, the bank Norwich Union recently realised that some of its portfolio of activities - including sponsoring a Roman festival and a traffic roundabout - were doing nothing much to boost the reputation of a financial services company. It culled them. Explains Thomas Oxley, Norwich Union's CSR manager: 'Remember, your time, budget and messages to customers and colleagues are precious, so don't waste them or you'll be justifiably shot down by cynics, however philanthropic a flower bed in Worthing might feel at the time.'

Second, CSR should not be a matter of individual taste. 'Root CSR in your corporate brand and values, not in your personal interests,' says Anthony Perret, a consultant in PR consultancy Fishburn Hedges' CSR practice. Some companies do not talk of CSR, which they think sounds like an add-on, but prefer instead to talk of responsible business.

7. Link CSR to wider corporate innovation. Developing sophisticated approaches to CSR activities that run parallel to, and largely separate from, wider innovation efforts is inefficient and ineffective. CSR cannot hope to achieve its full potential for the company without such integration.

Consultancy Arthur D Little calls this integration the Sustainability Value Formula: integrity + innovation = sustainable performance. 'Our research has shown that successful innovators achieve on average a six times higher Ebit (earnings before interest and taxes) margin than the underperformers,' explains Richard Clarke, director of Arthur D Little's global sustainability practice.

A related point here is that the right hand of a company may not know what the left hand is doing. 'Find out what is already in place across the entire business that demonstrates how you're behaving responsibly,' says Allison Murray, corporate responsibility manager at mobile phone operator T-Mobile. 'This may not always be obvious and not sit under the more traditional CSR areas such as environment and HR. Dig deeper within your company's operations and you may find some hidden gems.'

8. Do what's right, not what's easiest. Good CSR means working outside your comfort zone. 'Often, companies tend to talk to those with whom they feel comfortable and not the ones that they really need to talk to,' says Ben Vivian, Aggregate Industries' UK CSR adviser. 'So identify the right stakeholders and influencers to engage with. This is a time-consuming but critical area.'

COMMUNICATIONS

9. Talk about it! Make sure you communicate your CSR efforts to the outside world - to customers and the wider community. Don't forget to include strategically significant aspects of CSR in your communications to investors, too. The Carbon Disclosure Project is now backed by 250 investors, with $40trn of assets.

10. Don't hand control to corporate communications. Communication is an important aspect of CSR, but it's far from the whole picture. If you give it to the corp comms, spin will replace substance, to the alarm of savvy stakeholders.

11. Report failures as well as successes. Accidents, controversies and failures must be revealed, as well as the good news. Admit to problems and you are halfway to convincing stakeholders that you are serious, rather than just green-washing.

12. Listen - especially to NGOs, regulators and the media. All contribute to an understanding of the issues that face a business. You won't always like what you hear, but meetings, focus groups and opinion surveys all reveal public impressions of your company. Consult key stakeholders to understand their expectations and perceptions.

13. Talk to staff, too. Communicate openly with employees - particularly if they are CSR doubters. 'Involve your strongest internal sceptics in volunteering or stakeholder dialogues,' says Jayanti Durai, head of corporate responsibility at communications consultancy Munro & Forster. Feedback is also vital if charitable programmes depend on staff time and goodwill. 'Communicating success is fundamental in ensuring that all the hard work of volunteers is recognised,' adds Anita Pace, director of Hull-based telecommunications company KCOM Group.

REPORTING

14. Set targets and publish them - '10% carbon emissions reduction by 2012', for example. But don't be over-optimistic, especially at first. 'To make implementation manageable, businesses ought not to be too ambitious in the targets they set themselves,' says Clare Grayston, a corporate lawyer at Nabarro.

15. Monitor progress. Report your performance against targets. Own up when you fail to meet them. Announce new ones when others are achieved. 'Over time, the expectations of the marketplace and your stakeholders' requirements with regard to CSR will change,' explains Janet Blake, head of CSR for BT Global Services. 'BT's experience suggests that companies should check and, if necessary, refresh the focus for their CSR activities every two years or so.'

16. Use existing benchmarks. If your firm is listed, use external benchmarks like www.ftse4good.com and www.sustainability-index.com to evaluate performance. If your company is not listed, sign up to the Business in the Commmunity Corporate Responsibility Index. Make use of established reporting standards - see www.bitc.org.uk. This improves comparability and report quality.

Similarly, if you are engaged in activities such as carbon offsetting, make sure you understand what you are getting into. 'Doing the right thing in this case means actively understanding the offset markets and the variety of credits available,' explains Richard Zaltzman, MD of offsetting specialist Halo Climate Offsets. 'Choosing projects that fit your business culture and support your CR processes will transform offsetting from a ticked box into a strong CR investment.'

STRATEGY

17. Incentivise senior management. Think seriously about incorporating performance against CSR targets as bonus criteria for senior managers. Companies like National Grid do this, and they say it helps maintain focus.

18. Do something serious about climate change. This is the biggest CSR issue of all. Every part of the economy needs to deliver emissions reductions to achieve the 80%-90% cuts needed. Start by benchmarking your activity against your peers. See www.climategroup.com. and www.caledonian.ac.uk/carbonbenchmarking.

19. Reap the regulatory benefit - More CSR may mean less other regulation. Gordon Brown is on record as saying that companies that show corporate responsibility deserve a lighter regulatory touch.

20. Whatever you do, don't do nothing. It is never too late. 'Many companies - even large enterprises - are in the same boat with regards to starting out in CSR,' explains Dave Curl, CSR champion at mobile phone operator Ericsson. Moreover, late starters have the advantage of being able to learn from others. 'They don't need to reinvent the wheel and come up with things that are different just for the sake of it.'

Doing nothing is a high-risk strategy in any case. The potential damage even from a perceived loss of CSR integrity can be massive. Think Ahold, Enron, Dynegy and Global Crossing. In today's environmentally conscious world, sins of omission are costly, and they can even be fatal. mt

- Dr Craig Mackenzie is head of business ethics at Glasgow Caledonian University's Centre for Ethics in Public Policy and Corporate Governance.

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