How poignant that a former BP chief executive should come out so strongly in favour of ethical business. It could be a personal epiphany of course – a moment of introspection following a hugely successful career built on the corporate pursuit of profit at the expense of the planet. But Lord Browne’s new book, ‘Connect’, suggests it is more than that.
It is one of a burgeoning pipeline of texts from senior figures, urging today’s CEOs to reconsider their company’s role in society while simultaneously killing off Corporate Social Responsibility. This seems counter-intuitive, but his assertion is correct: it’s time to scrap the tick-box CSR department. That doesn’t mean we should do away with CSR altogether – but it is time for businesses to show they really mean it. No more ‘green sheen’.
The relationship between companies and the general public has not recovered since the latest economic crash. Add to that a litany of high-profile corporate scandals and it could be argued that this time, it never will. Recent research showed trust in business to do the right thing is so low that most people wouldn’t care if three quarters of all brands disappeared for good. Indeed, many sustainable business commentators now suggest that companies unable to operate ethically and transparently are unlikely to exist in 10 years’ time. These are damning indictments not lost on the world’s biggest companies.
The challenge for today’s boardroom is that ‘10 years’ time’ is tomorrow’s problem. Yes, the movement towards increasingly ethical purchase behaviour is evident but it is slow-paced – after all, the continued success of ‘value’ brands proves that for many consumers, price and convenience still trump principles.
Restructuring from the inside-out to act with absolute authenticity also requires major investment – employee welfare, supply chain sourcing, operational processes, sales and marketing all need to be overhauled. Combine these considerations with the market’s voracious appetite for quarterly reporting and short-term rewards and Lord Browne’s expectation of ‘business to co-operate with society’ seems out of reach.
And that’s the reason some CSR departments prevail – they’re a sticking plaster to defer wholesale change away from pursuit of profit at all costs. To suggest their contribution is of no consequence is unfair, of course. Despite their billing, some of these bolt-on CSR teams have created programmes of real value for the communities they serve and, equally importantly, they have also started to provide clear evidence that what is good for society can also be good for business. But their impact – CSR’s impact – will be limited if companies continue to treat this as an isolated nice-to-have.?
Lord Browne asserts that people do not begrudge rewards for those who create something for themselves. Nor, it seems, do they have a problem with large corporate profits as long as they are made fairly and shared appropriately with those in the society they exist to serve. Boards are starting to take note.
They are also starting to hear disquiet from within. Employees increasingly rail against having to leave their personal values at home each day and none more so than millennials – any company’s future talent. They want to volunteer in their local communities. They want to choose where and when and to do so on company time. They want to know their employer’s values are aligned to their own. And critically, if these do not match up, staff are increasingly prepared to go and work for a competitor where they do, even if it means for less pay. That is a big deal for famous brands that rely on hiring the world’s best talent to deliver sustained shareholder value.
How does an interested consumer or colleague know if a company is really telling the truth? Talk is cheap after all, and extraordinary examples of corporate wrongdoing beneath a veneer of corporate responsibility continue to dominate the headlines. Again, that is where reports and one-off CSR schemes are holding us back. It’s time for companies to show, not tell. Do the right things, embed socially responsible practices across the business, and credibility will follow over time.
The poster-boys of responsible business - Ben & Jerrys, Patagonia, Natura, etc - have been run in that way for many years. But behind the scenes, household names like IKEA and Kingfisher have also been addressing CSR as a mentality across the business, not a one-off. Unilever has helped lead the way, too. When announcing its Sustainable Living plan, CEO Paul Polman boldly told investors: ‘if you buy into this long-term value-creation model… then come and invest with us. If you don't buy into this, I respect you as a human being, but don't put your money in our company.’
M&S has also been reaping the benefits: its pioneering Plan A, launched in 2007, has fundamentally changed the way the business operates. By 2012, the company was citing Plan A as key to its rising brand value – and financially, the company reported net benefits of some £160 million in 2014/15 alone.
Clearly then, there is value behind CSR – the delivery mechanism is the issue. Siloed CSR teams and annual CSR reports were an attempt to thrust social responsibility upon businesses that were unconvinced by the benefits. Fortunately, these changes among consumers and employees are making those benefits increasingly apparent.
It will be some time, though, before we see a fully-fledged economic system that places equal value on people, planet and profit. The first step we can take is to abolish the need for a siloed, and often isolated CSR team. Even though some central support may be necessary, your whole business should be carrying out that function.
In the digital age where curious customers and staff have a world of information at their fingertips, and the means to spread word quickly, companies simply cannot spin their way to a positive image – they will get found out. Ultimately, it’s up to senior business figures to foster a genuine, responsible mindset at the heart of the business, instead of ticking the box with an annual CSR report.
Nick Davies is the founder of Neighbourly.