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This is the final article in a series of posts about Corporate Social Responsibility (CSR).

In this article, I would like to focus on the more practical aspects of designing and implementing effective CSR policies and programs.

I have provided some of my own ideas below. However, as I do not have specific personal experience in this area, I feel that the most interesting and valuable part of this discussion would be the professional experience of readers.

Accordingly, I cordially invite you to share any personal experience which you feel may be of particular interest or relevance to other readers.

 
Key principles in designing and implementing CSR policies

Listed below, in no particular order, are seven key principles relating to the effective management of Corporate Social Responsibility:

 
• Apply similar principles to managing CSR as with other aspects of the business.

In order to implement CSR in an effective manner, it must be managed like any other aspect of business. Amongst over things, this involves the setting of key objectives, priorities and performance indicators, the creation of action plans and subsequent performance evaluation.

The principles of effective management apply to all aspects of a company’s operations, including CSR.
 

• Keep it simple.

The entire approach of organizations towards CSR should be kept as straightforward as possible.

A more straightforward approach offers several benefits. First, under a simpler approach, it becomes easier for management and staff to maintain focus on the bigger picture of what the firm is trying to achieve. In addition, a simpler approach also increases the likelihood of staff understanding CSR policy and becoming engaged in CSR effort. Finally, under a simpler approach, CSR is likely to be managed more effectively – fewer complications, fewer opportunities for mistakes.

Simply put, simple is better.

 
• Focus on core principles, not policies and procedures.

Whilst specific policies may be necessary to provide clarity to employees in some circumstances, the focus should be upon core principles rather than detailed policies or procedures.

An organizational focus based primarily around core principles allows employees the flexibility to apply a common sense approach when dealing with situations which may arise, whilst still ensuring actions and practices which are consistent with the key values of the organization as well as the principal objectives of CSR policy.

 
• Set measurable outcomes, goals and objectives.

As with any other area of business, the process of setting goals, objectives and measurable outcomes is essential for the effective management of Corporate Social Responsibility.

These provide focus and direction for CSR effort as well as a mechanism to measure and evaluate organizational performance.

 
• Focus upon specific industry concerns.

All firms should aspire to good corporate citizenship in common areas such as the environment, labor relations and corporate governance.

In addition, all firms should aspire to conduct their business in a manner of honesty and integrity.

Beyond this, however, organizational effort relating to CSR should focus predominately upon areas of specific concern to the industry in which the organization operates.

Manufacturers of alcoholic beverages for example, should focus CSR efforts upon programs to prevent under-age drinking, drink-driving or other forms of alcohol abuse. Timber firms could focus upon forest regeneration. Fast food companies could focus upon health related programs, as well as the minimization of harmful ingredients in their food. And finally, financial institutions could refrain from lending to certain clientele. (such as weapons manufacturers)

By focusing CSR efforts upon areas of specific relevance to their industry, organizations maximize the impact of their CSR effort both from a public relations viewpoint and from the viewpoint of the broader community benefit.

 
• Communicate, involve and engage.

No man is an island in himself, nor does any business operate in isolation.

Companies should seek input from key stakeholder groups throughout the CSR process, particularly during the process of setting goals, objectives and key priorities.

Not only will stakeholder input help the organization to identify and focus upon areas of greatest importance, the process of engagement will also help to strengthen key stakeholder relationships.

In addition, companies should also seek the engagement of employees. As the group which puts company policy into action, employees have considerable influence over the outcome of CSR effort. Where possible, staff should be given to opportunity to provide input into decisions relating to CSR policies and programs. In addition, companies should clearly communicate the reasons behind CSR effort, including the anticipated benefits from the perspective of the community, the organization and, where applicable, employees themselves.

In cases where staff have a clear understanding of the reasons behind CSR policies and programs, and are provided the opportunity to provide input into decision making, they are more likely to apply CSR policy in a diligent manner. They are also more likely to participate actively in specific CSR programs.

 
• Don’t leave it to the PR or legal department.

Many organizations view CSR as primarily a form of public relations, or risk mitigation. Accordingly, organizations may view CSR management primarily as a function for the public relations or legal departments.

Whilst these departments may be well positioned to provide valuable input into CSR management, there are drawbacks in viewing CSR in this manner.

Where CSR is left predominately to the public relations department, the resultant communication may come across as ‘spin doctoring,’ As a result key stakeholders, as well as the general public, may distrust the sincerity of the organization’s efforts, thereby limiting any positive impact upon corporate reputation.

Moreover, delegating CSR to one department misses the point. CSR is more than simply a public relations exercise. It is not simply a task to be delegated to one department and ignored by the rest of the organization.

CSR is fundamentally a way of doing business, and should be a factor in guiding organizational behavior across the entire spectrum of operations.

It should not be left to one department.

 
Over to you

I would like invite all readers to share any thoughts, opinions or specific experiences relating to the above topic which you feel may be of interest or value to other readers.

Please feel free to add your comments by clicking on the ‘comments’ section below.

I have a confession to make – my latest pair of running shoes were made by Nike.

I despise the company’s poor labor practices in emerging economies. Why then, did I purchase the shoes?

Simple – they were a comfortable fit. I live in a foreign country and face extreme difficulty in finding shoes in my size. So, when I find a suitable pair, I buy them. End of story.

Ethics – Not really a big factor in consumer purchases

My experience above highlights what may be an unfortunate reality – ethical considerations may not play a large part in many consumer purchasing decisions.

Consumer surveys suggest strong demand for ethical products, but does this translate into actual purchasing behavior?

The evidence suggests not. In England, The Co-operative bank estimates household expenditure on ‘ethical’ goods and services at just over five per cent of total household expenditure.

(Expenditure on ‘ethical products’ at 32.3 billion pounds, represents just under 5% of total annual expenditure of 600 billion pounds)

The statistics may possibly understate the effect of ethical consumerism. Nevertheless, at least two prominent researchers do not believe the relationship between ethical considerations and purchasing behavior is strong. 

Devinney points out that Fairtrade products rarely account for more than 2% of any market (download relevant article here), and Vogel believes that cases where companies have increased market share through responsible behavior represent “a very small percentage of consumer spending.”

 
Barriers to ethical consumerism

Why doesn’t purchasing behavior match consumers’ stated desire for ethical products?

There are several barriers to ethical consumerism:

 
• Other factors are more pertinent to spending decisions

A range of factors, such as price, product quality and safety, fashion, style and convenience affect purchasing decisions to a greater extent than ethical factors.

Ethical products will perform well in the market only if they are competitive in terms of price, convenience and quality – the key determinants of purchasing decisions.

  
• Lack of awareness

Despite an increase in media attention toward Corporate Social Responsibility, lack of consumer awareness continues to be a barrier to ethical consumerism. Given the volume of purchases made by consumers, it is unrealistic to expect them to possess an in-depth understanding of a broad range of ethical factors associated with the majority of purchases they make.

Accordingly, only those factors which receive significant media attention are likely to affect purchasing decisions.

Moreover, the media can potentially distort consumer perceptions, particularly in cases where reporting fails to adopt a fair and balanced viewpoint.

  
• Feeling of disempowerment

According to a Marks & Spence survey, (refer article here) thirty-eight per cent of respondents did not believe that their own individual purchasing decisions made any significant impact on business and corporate behavior.

The resulting feeling of disempowerment provides a significant barrier to ethical consumerism. Why bother with ethical products if you think your own purchases make no difference? 

 
• Complicated trade-offs

Which is more environmentally friendly from a British standpoint – buying roses from the Netherlands or ones air-freighted from Kenya?

Many Brits would choose the former. However, the carbon footprint of Dutch roses is actually six times as large because they have to be stored in greenhouses. (refer article here)

This highlights another barrier to ethical consumerism – choosing the best products is not always a clear cut issue.

In addition, choosing the most ethical manufacturer or supplier can also be complicated, particularly where companies perform well in some areas but less well in other areas.

 
In fairness to business

Large business is often criticized for not paying sufficient attention to social responsibility. But is this fair?

Surely, companies do have a responsibility to adopt only positive ethical practices. But consumers must stick to their end of the bargain as well. Good corporate citizenship must be rewarded at the checkout, particularly where price and quality are similar.

Only then, can consumers fairly criticize large business.

 
Conclusion

Although many consumers genuinely care about social, environmental and other ethical issues, the effect of these considerations on consumer purchasing behavior is limited due to a range of barriers to socially responsible purchasing.

As a result, ethical consumerism has some impact on corporate behavior, but the effect is limited.

 
Over to you

Do ethical considerations play a large part in your personal buying habits? Should consumers place more emphasis on ethical considerations at the checkout?

Please feel free to add your opinion by clicking on the ‘comments’ section at the head of this post.

This is the seventh post in a series on Corporate Social Responsibility (CSR)

Today I would like to discuss the role of governments in promoting CSR.

One view is that CSR, by definition, is the function of business, not government. Under this view, business, not government, is in the best position to manage CSR in an effective manner. If governments intervene, they will simply mess things up.

I disagree. Governments should, and do, play an active role – particularly in terms of defining expectations, setting positive examples and rewarding ethical conduct. 

 
What should governments do?

In my opinion, the role of governments in promoting responsible business practices can be summarized in seven steps as outlined below:

• Set laws to define minimum standards of behavior.

This is the most basic function of governments in relation to CSR.

Companies have no mandate to decide upon minimum acceptable standards of behavior – governments do. Governments, therefore, not companies, need to define minimum requirements through legislation.

• Develop frameworks for ethical business practice.

This can be done at a national level, at an international level, or both.

At a national level, India’s Ten Point Social Charter provides an excellent example. The UN Global Compact, which stipulates ten core principles relating to human rights, the environment and corruption, provides an international example.

In both of the cases above, compliance with the content of the document is not mandatory. However, both documents clearly outline core principles which companies are expected to follow.

Governments must clearly define the standards required for ethical corporations. Businesses that seek to be responsible must follow these standards.

• Favor ethical companies in procurement.

Government departments, entrusted with the use of taxpayers’ money, should consider the ethical practices of potential suppliers in their procurement decisions.

Only companies with positive ethical practices should be rewarded with taxpayers’ money.

• Set an example.

Governments should aim to conduct the affairs of their own departments in a manner which is beyond reproach.

Leadership is done by example. Governments must therefore demonstrate ethical and responsible conduct by practising it within their own operations.

• Use fiscal policy to encourage and reward ethical behavior.

Tax credits or subsidies can be provided to encourage certain types of ethical behavior. One example may be hiring staff from particularly disadvantaged groups, like those who suffer from physical or mental disability.

Tax credits and subsidies can also be used to promote investment in certain types of technology. Renewable energy is a prime example.

• Work with industry and other stakeholders in the development of voluntary codes of conduct.

Industry and other key stakeholders are usually in the best position understand the particular requirements of their industry. Accordingly, governments should not play an overbearing role in this area.

However, governments have a role to play in ensuring that such codes address the needs of all relevant stakeholders, as well as meeting expectations of the general public.

• Sponsor co-ordination and training.

Many CSR projects operate at an individual company level. Governments can play an active role in fostering and promoting co-operation and coordination of individual projects which operate within the same area.

Governments can also foster learning and development by organizing workshops or other forums to provide opportunities for companies to share their knowledge and experience.

 
Conclusion

Governments should seek a proactive role in promoting sound ethical practices in business.

This should include defining expectations, setting a positive example and rewarding business for sound ethical practices.

 
Over to You:

Your thoughts, opinions, and perspectives in relation to the role of governments in promoting responsible business behavior are most welcome.

Please feel free to express your opinion by clicking on the ‘comments’ section at the head of this post.

Last Friday, I outlined what I believe to be the main benefits of the trend away from simple corporate donations towards community and stakeholder engagement by companies through community business partnerships.

To recap, community business partnerships involve one or more business entities partering with one or more NGOs or community based organizations to produce a desired social outcome. The benefits of such partnerships include but are not limited to:

• greater certainty in terms of funding and resource commitments through longer term commitments from companies;
• the opportunity to bring corporate expertise and resources to social projects;
• greater impact on public relations and employee morale through tangible community outcomes;
• greater corporate accountability through allowing the community to evaluate the impact of CSR projects more effectively;
• greater understanding of dynamics of local target markets; and
• opportunities for employee learning and development outside of their everyday responsibilities;

Today, I would like to focus on potential drawbacks or disadvantages of greater corporate engagement with the community as opposed to mere corporate donations.

Arguments against community business partnerships

The case against corporate participation in business community partnerships appears to be a difficult case to make. There are few apparent drawbacks or disadvantages of the community business partnership approach. Nevertheless, I would like to consider some possible arguments against this approach to CSR:

 
• Management distraction from the ‘core business.’Unlike straightforward corporate donations, community business partnerships involve active participation from the company and its employees.

Accordingly, such projects have the potential to distract management attention its first and foremost priority – the effective management of core business operations. 

 
• Cost.

Community business partnerships entail costs as well as benefits, which can include management and employee time as well as investment in equipment or facilities.

Companies should carefully weigh such costs against the expected benefits of the project in order to ensure that such projects are mutually beneficial for the company and the community.

 
• Reputable charities are experts at social programs, companies are not.

The lads (and ladies) at BMW are experts at making what are indisputably amongst the best automobiles in the world. They are probably not experts at providing essential blood related products services to hospitals and patients.

But staff at the Red Cross are. BMW should focus on making great cars and leaves the business of blood related services to the experts.  However, BMW’s $1 million donation in America alone, along with donations from private citizens and other corporations, (refer donor’s list) provide the critical funding necessary for the delivery of this vital service.

Community business partnerships are most effective in cases where companies have particular expertise or facilities to contribute toward the project concerned. Where this is not the case, straightforward corporate donations, rather than community business partnerships, may be a more effective way to produce desired community outcomes.

  
• Potential to sway projects toward a corporate agenda.

Some in the community may suspect that corporate involvement in community projects may cause such projects to be swayed in such a way that they meet the corporate demands for publicity rather than underlying community needs.

I cannot see much logic behind this viewpoint. Community business partnerships involve business partnering with NPOs and community organizations, neither of which would enter partnerships which did not provide real community outcomes.

NPOs and community organizations are in the business of delivering real positive community outcomes, not assisting companies with public relations.

 
Conclusion

There are many cases in which community business partnerships provide the most effective way for corporations to assist in meeting community needs as well as providing net benefits to the corporation.

In deciding whether and which projects to participate in, business should carefully weigh up the benefits and the costs of participation.

 
Over to you

Are community business partnerships the best way for companies to contribute to society?

Please feel free to provide your thoughts, opinions and viewpoints by clicking on the ‘comments’ section below.

Introduction

The purpose of this post is to discuss the advantages of companies becoming actively involved in social or community projects – as opposed to simply handing out large corporate donations to charities.

The potential drawbacks to this approach toward Corporate Social Responsibility (CSR) will be discussed next Friday.

As with all articles on this site, the purpose of this article is to stimulate interactive debate. Accordingly, please feel free to voice your opinion in relation to this topic by clicking on ‘comments’ above.
 

The Coca Cola Story: A River in Trouble

Major problems face the Matagua River in Guatemala, on which millions depend for their water supply.

These include erosion, pollution, water born disease and seasonal overuse.

But do not fear – The Coca-Cola Company is there to help. In conjunction with WWF and CARE, the company created the Water Fund, an initiative in which the above organizations work with local businesses and communities to devise and implement practical solutions. (Refer Where the River Flows – Partnership in Action) These initiatives include:

• upgrading local irrigation systems;
• installing bottle rinses which use clean, highly ionized air instead of water, at the local Coca-Cola plant;
• providing environmentally friendly stoves to residents, which help to reduce dependence upon firewood and improve the water filtering capability of local forests in relation to runoff: and
• educating local communities about the dangers of using unsanitary water.

This is one of almost seventy projects across forty countries in which Coca-Cola is a participant. It’s part of a commitment which the company made in Beijing to become ‘water neutral.’ (2)

Gone are the old days

In addition, the above project illustrates a trend in terms of corporate philanthropy and corporate social responsibility.

Gone are the old days where companies simply doled out cheques at the end of the year. Nowdays, companies are going further.

Firstly, companies are donating more than straight cash. There is a tendency toward donating employee time and expertise as well as inventory and materials.

But more significantly, companies are seeking to engage communities in which they operate. They are seeking partnerships and alliances with government departments, non-for-profit organizations (NPOs) and community groups.

These are commonly being referred to as community business partnerships, and involve one or more businesses and one or more community organizations working together to achieve specific community outcomes.

Advantages of corporate engagement with the community

Is the movement toward greater business involvement with communities in CSR a beneficial trend?

There are many advantages for both communities and corporations of a more collaborative approach. These will be discussed in this article. The following article in this series will discuss potential drawbacks to this approach.

In my opinion, the advantages of a more collaborative approach toward CSR include, but are not limited to:

 
• Greater predictability in funding.

Under the old system, companies would simply send out large corporate cheques to reputable charities and NPOs at the end of the year.

One problem – in difficult economic times, these cheques may not be so large, but the community need for the service is just as great, if not greater. The upshot is NPOs having to curtail their activities at a time of greater need.

On the other hand, under a community business partnership model, companies make long term funding and resource commitments. Companies feel a greater level of commitment to these projects, and a reduction in participation in the event of difficult economic times, management changes or takeover activity is less likely.

The benefit for communities and NPOs is a greater level of certainty in relation to corporate resource commitments – a key benefit of the community business partnership model.

 
• Corporate expertise.

Companies can bring much more than financial resources to business community partnerships. They often bring facilities and much-needed expertise to the project.

In the previous post in this series, I mentioned TNT’s 48 Hour Emergency Response Team (ERT) – a team dedicated to assisting the World Food Program with logistical arrangements in order to enable a fast relief response to emergency situations. (3) With TNT’s vast resources, global facilities and expertise in transport and logistics management, they are extremely well placed to provide effective and reliable assistance to this critical program.

Unlike straightforward donations, community business partnerships allow for the community to benefit from a company’s resources and expertise – not just its cash.

 
• A tangible impact.

Community business partnerships involve tangible objectives, actions and outcomes.

When promoting their participation in such projects, companies can clearly demonstrate how the project meets specific community needs. Accordingly, these projects are likely to have a significantly greater impact on public relations and employee morale than with straightforward donations.

This is particularly true for projects which are high profile and projects which entail a considerable level of employee involvement.

 
• Greater accountability.

Related to the point above, the tangibility of community business partnerships provides both the company and the community with greater clarity in evaluating the effectiveness of CSR projects.

It can be difficult to evaluate the specific impact of a ten-million dollar donation to a charity. However, it less difficult to evaluate the impact of installing three hundred rainwater structures in India to collect rainfall for community use.

The ability to measure specific outcomes against specific objectives provides for much greater accountability in measuring whether companies are meeting their community responsibilities.

 
• Greater understanding of customer needs

Companies can compile mass amounts of data from copious volumes of customer surveys, but spreadsheets and databases have their limitations in helping the companies to understand the dynamics of their target market.

The most effective way for companies to understand their target markets is to become actively engaged in working alongside local communities. Only through active engagement can companies truly gain an understanding of local cultures and customs, and how best to tailor their products and services to meet the needs of the local target markets.

The subtle dynamics of local target markets cannot be learned by staring at numbers on a screen on the twenty-eighth floor of a city office tower.

 
• A true learning experience.

I alluded to the effect of community business partnerships on employee morale above. I wish to now expand on that point.

The effect of community based projects on human resource management extends well beyond ‘warm and fuzzy’ issues. Community based projects, if well managed, can produce real and substantial business benefits for companies from a human resource management perspective.

Community based projects allow employees to challenge and expand their comfort zones by undertaking a different range of tasks than those in their regular position. They also allow companies to experiment and what type of roles which particular perform well at tasks outside their everyday role.

Companies can use this process in at least three ways. Firstly, CSR projects can be used to broaden and diversify the skill base of their human resources. In addition, this process can help identify, develop and nurture future leaders or managers. Finally, it allows companies to experiment with different teams, foster greater collaboration and it helps to break down internal departmental barriers.

Best of all, as these are external projects, companies can experiment without any risk of an adverse impact upon core operations.

Over to you

What do you think? Are there any other advantages of community business partnerships as opposed to straightforward donations?

Please feel free to add your thoughts, insights and opinions in relation to the above topic by clicking on the ‘comments’ section at the head of this post.