CB BureauCorporate social responsibility as an affirmation of a
company’s good intention and goodwill is largely accepted by now. CSR is not
just a ‘can do’ option; it is a strategic imperative now, and will become an
even stronger imperative as the days pass by. As more companies realize the
importance of addressing social and environmental concerns along with
transparent stakeholder engagement, CSR will receive the importance it
deserves.
In a report, ‘2009 Greening of Corporate America; The
pathway to sustainability – from strategy to action’, Siemens and McGraw-Hill
Construction establish that corporations across the United States are
continuing to accelerate sustainability efforts and increase efficiencies as
part of their overall business plans. The percentage of firms at the highest
levels of engagement has doubled over the past three years – rising from 18 per
cent to 37 per cent.
Among the findings of the report:
* Companies have
remained committed to sustainability, despite the recession. Overall, 57 per
cent of those polled believe sustainability practices are either unaffected or
aided by the down economy.
* Three out of
four firms view sustainability as consistent with their profit missions. They
expect that green practices tied to core business strategies will reduce energy
costs (75%), retain and attract customers (70%), provide market differentiation
(64%), and serve the financial performance of the company (58%).
* Energy savings
remains the most important driver towards sustainability.
Writing in Landor, Scott Osman sums it up: ‘The
financial crisis will accelerate the shift from value to values, as consumers
look beyond products to see purchases as a statement about themselves and the
companies they support. Corporate social values, already an influence on buying
decisions, will come to the forefront. People will continue to make careful
choices for their dollars and time, seeking out brands that share and uphold
their values.’
Osman further states: ‘The worth of products and services
will increase through the goodwill generated when consumers feel their
purchases have positive social impact. Firms with deep, consistent alignment
between brand and brand purpose will see the greatest tangible benefit from
their investments in social good. These returns will justify and encourage
additional contributions, creating a virtuous cycle.’
So far as sustainability is concerned, there is no shortage
of challenging issues for companies in defining their policies and programmes
in areas ranging from climate change to human rights, to workplace diversity
and to community involvement.
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Here are some thoughts on business sustainability
directions one may expect to continue into the current year:
Supply chain
Companies are evaluating their procurement, sourcing and
supplier management from a new perspective. Practitioners will continue to
couple supply chain best practices with business sustainability strategies.
Creating alignment across the value chain can improve operational efficiency
and consistency, reduce cost, and add value. Implementation of supplier
performance metrics to ensure continuous alignment with sustainability targets
will be adopted across industries.
CSR reporting
Investors and other stakeholders are encouraging companies
to report publicly on the financial implications to their business. Companies
will be under pressure, not just from governments and shareholders but from
civic-minded employees as well, to authentically and transparently report on
corporate sustainability plans. John Elkington, author of the Global Reporting
Initiative’s The Transparent Economy, says: ‘Sustainability reporting is
playing a crucial role in the process of rebuilding trust in businesses,
financial institutions and governments, following the financial meltdown. As a
result, new forms of “integrated reporting” (combining sustainability and
financial reporting) are evolving rapidly.’
CSR reporting increasingly is moving beyond companies’ own
data to also include information on suppliers. While this has long been
expected from apparel firms and others sourcing from overseas factories on
labour standards issues, now environmental reporting is moving into the supply
chain hierarchy. Providers of both products and services more often need to
share information on their own environmental performance with existing clients
and in competitive bids for new business.
For the record, the number of CSR or sustainability reports
has risen each year since 1992, coming in at around 3,500 in 2009, according to
CorporateRegister.com.
Leadership
Sustainability continues to be a top business consideration,
as stakeholders as well as customers learn to expect it from businesses within
their realm of interest and consumption. Business leaders have an opportunity
to increase profitability through instilling eco awareness and sustainable
practices within their operations, and through consistently and proactively
responding to changing market expectations. In addition to revenue opportunities,
forward-thinking business leaders recognize that sustainable practices are in
sync with the interests of the growing numbers of green-aware customers. Also,
climate change is pushing businesses to lower carbon emissions, while rising
energy costs have to be dealt with eco-efficiency changes.
Climate change and
the role of businesses
Notwithstanding the failure of the world’s governments to
reach a meaningful agreement last year in Copenhagen, many companies, from
utilities to high-tech firms, will certainly continue to identify new and
innovative ways to cut emissions and work with NGOs and other stakeholders to
mitigate the impact of climate change. Moving to address climate change also
holds many benefits for companies, from improving their brand equity to
bottom-line savings from improved efficiency.
Human rights:
Tracking local impact
What is emerging as a key challenge for companies is
tracking the impact of their practices and operations on local communities.
More firms are undertaking ‘human rights impact assessments’ in order to better
understand how to deal with their most important issues.
A World Bank report describes two principal types of
development partnerships between the private sector and communities: a ‘social
investment’ model wherein company funding is applied to investments or
programmes that seek to improve the general welfare of the community, and an
‘economic linkages’ model that associates development initiatives more closely
with the business drivers of the private sector and includes job training,
direct employment, technical skills training, microfinance, capital formation,
or developing new supply bases and creating supply chain linkages.
An economic
linkages approach implies integration of community engagement strategies into
the core business activity of the company and development of consolidated
markets so that communities become embedded in corporate supply chains. This
approach may provide the most promising outlook for CDD practitioners working
to build sustainable and effective links between communities and the private
sector.
Strategic
philanthropy
More companies are re-focusing their giving in the
communities in which they operate – looking for ways to align their support
with activities likely to reveal the impact of that corporate giving. At the
same time, there is increasing pressure both within companies and among key
stakeholders to be able to measure the impact of philanthropic efforts.
Earth-friendliness
An increasing number of consumers are professing their
awareness of green issues as well as sense of responsibility to earth’s
depleting natural reserves. It is an infectious movement and is bound to find
more and more followers. Increasingly, eco-friendly products are finding
favour, as they become the hallmark of the discerning buyer. Indeed, it is
fashionable to be a champion of the earth and human rights. Consumers will want
it all, products that deliver a sustainable benefit, at fair prices, from
companies that behave in an environmentally responsible way. According to Russ
Meyer, writing in Landor
, not only will shoppers continue to shun excessive
packaging, a trend we saw emerge in 2008, they will also be looking for simple,
comprehensive and understandable package labelling.
Scott Osman predicts that firms will go deeper and narrower
in their focus on the specific areas where they can accomplish the most.
Environmental and humanitarian groups will collaborate with companies sharing
their aims, giving and getting more value from these connections. More brands
will establish long-term, and in some cases exclusive, relationships with
social enterprises.
Companies that have been quietly making long-term social
investments will become more vocal in expressing brand purpose to both internal
and external audiences. Those firms without a clear social commitment will
undergo a corporate rites of passage as they seek to identify the core values
that distinguish them.