Chartered Management Institute: In my opinion

Tom Flood, chief executive of environmental volunteering charity BTCV and a CMI Companion, argues that corporate social responsibility is more critical than ever.

by Tom Flood
Last Updated: 09 Oct 2013

The recession has posed many challenges, not least for business leaders. Blame has been laid at their doors and consumers are losing trust in business. And yet there are positives emerging from the downturn era. Boards and managers are reflecting on what value means and the returns that can be made from developing corporate social responsibility strategies. The bottom line has become bound up with reputation, responsibility and trust.

Whether you choose to view CSR as a luxury add-on or an integral part of your business, it's worth noting it was only a few decades ago that many rejected the very idea of corporate responsibility. Shareholder value reigned supreme and Milton Friedman described CSR as a 'fundamentally subversive doctrine'.

The initial reasoning from pioneers in CSR (like the percent club in the 1980s, who donated half a percent of pre-tax profits to community causes) was that CSR was not purely philanthropic, but was also a way of expanding consumer markets.

There's little doubt that, then as now, a solid CSR programme gives businesses the edge and is vital to their long-term health and growth.

Business in the Community has published research showing that FTSE 350 companies which consistently managed and measured their corporate responsibility outperformed their FTSE 350 peers on total shareholder return from 2002 to 2007 by between 3.3% and 7.7% a year. BitC's latest research has also shown these companies recovered more quickly during the downturn.

This is not to say that senior managers won't have a fight on their hands when it comes to defending CSR strategy against cutbacks. It's not enough that CSR is inherently 'good' - it must deliver benefit and be clearly visible. Indeed, CSR was recently described by McKinsey Quarterly as 'a creative opportunity to fundamentally strengthen business while contributing to society at the same time'. Managers must create a business case and a narrative to get the company on board with CSR. Some benefits will be tangible - such as increased revenue from access to a new market. Others will be less tangible - for example, boosting employee morale.

Quality CSR stems from an acknowledgement of its dual objectives - benefiting business and society. As the CEO of a UK NGO, I see CSR brought to life through BTCV's Employee Action Day programme, where businesses promote their values through the positive action of their staff. Employees work with local people to complete tasks that are beneficial to both.

The economic and political times are tough not only for businesses. Charities and social enterprises are also finding themselves buffeted by the winds of change. Moreover, public trust, so unique to our sector, is beginning to be challenged. The public wants to know what charitable monies are being spent on and donors are after a 'social return on investment'. We could also term this 'CSR' - charities' social responsibility.

Martin Brookes of New Philanthropy Capital, a consultancy and think tank which helps charities achieve more impact, expresses this when he points out that it's not enough for charities to be doing good. Positive outcomes must be proven and independently validated. The most successful charities have become evidence-based organisations. In the same way, worthwhile corporate social responsibility is not merely tokenistic - its benefits for business and for society are evident.

In Anthony Seldon's thought-provoking book Trust: How we lost it and how to get it back, we see that trust is not simply held by institutions but is also conveyed through communication.

Companies must build and maintain trust - both employees' and customers' - in order to emerge from the recession stronger, more competitive and with good reputations. For corporate responsibility and charities looking to prove their effectiveness, strong PR is fundamental.

Your worth has to be evident in every aspect of your organisation's communication. Organisations failing to promote their values in their communication risk being left behind.

So both businesses and charities share the objectives of building trust and demonstrating worth. In this period of uncertainty, there has never been a greater need for carefully considered and deliverable PR and communication plans. The role of CEOs is critical. Confidence comes from the top and any leader of an organisation, no matter how large or small, must lead in a way that inspires confidence and ambition. Embedding organisational values in key messages and reaching out to wider audiences is paramount.

Now that the pursuit of profit is no longer the only priority, a strong commitment to CSR should create value for business and for society. For businesses and for charities, communication must move beyond superficial reputational work to a deeper reflection and articulation of value.

CV

Tom Flood has been chief executive of the BTCV Group (formerly the British Trust for Conservation Volunteers) since 2001. He was previously marketing director at 3M UK plc. He is a trustee of Acevo and chair of its special interest group on sustainable development. Flood received a CBE in the 2004 Queen's Birthday honours list. BTCV won Charity of the Year 2010 in the Charity Times Awards

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