Is corporate responsibility the key to rebuilding trust?

LONDON: 14 OCTOBER 2010

The need for organisations to demonstrate heightened levels of responsibility – ranging from environmental sustainability to constructive engagement in the communities in which they operate – is becoming an increasingly essential ingredient in business success.

That was the message from the keynote speakers at the latest Fujitsu Executive Discussion Evening in London: Bill Eyres, head of corporate responsibility and sustainability at mobile phone provider O2; PR and advertising guru Lord Tim Bell, chairman of Chime Communications; and Anthony Hilton, financial editor of London’s Evening Standard newspaper.

Although they all had contrasting views on the motivations for corporate social responsibility (CSR), there was a general consensus that, in the current economic and social climate, it is an issue that should be high on the agenda of every business and public sector leader.

The financial crisis created general public mistrust in the banking sector, argued O2’s Eyres, and this has now spread to all corporate organisations. The upshot is that returning to “business as usual”, where enterprises are driven purely by financial gain with no expectation to give back to society, is not an option.

“Running our core businesses responsibly could not be more important,” he told the audience of business and IT leaders from both the private and public sectors. “Social and environmental challenges are accelerating. But we now have an opportunity to remake our businesses to face these challenges of the future.”

This includes embracing sustainability in all its forms, and using the power of brands to drive social change, he suggested. “In a period of social disruption and growing unemployment, businesses can’t be islands cut off from the communities in which we operate,” he said. “There’s a huge range of skills that everybody has in business that we can offer to local communities.”

Citing a leading authority on corporate strategy and competitiveness, Professor Michael Porter from Harvard Business School, he stressed the necessity of creating “shared value” – and not just “shareholder value” – for the businesses of the future to remain strong.

Nothing new in CSR

Speaking at the same event, Lord Bell – whose long career includes heading the Conservative Party’s advertising campaigns for the three general elections won by Margaret Thatcher in 1979, 1983 and 1987 while he was managing director of Saatchi & Saatchi – argued that the concept of corporate responsibility is by no means a novel idea.

“It isn’t something new that’s come along because of some change in the world,” he said. “It’s how you should behave from the very beginning. The reality is that businesses – and people who run businesses – have always had responsibilities: to do their job properly and to make a contribution to the society they live in, as do we all as individuals.”

However, he conceded that there has been a shift in the public demand for greater accountability. “It is true that the need for corporations to behave more responsibly has become more asked-for, more apparent and actually rather more necessary,” he said.

But he was at pains to point out that no business can give back to society unless it is profitable. “It’s not just about good intentions, it’s about being able to do something,” he said. “You need to be a financial success. And secondly you need to be seen to be a force for good. And that force for good is not to do with today or yesterday or current circumstances, it is about it being engrained in everything that you are and everything that you believe in.”

A new kind of capitalism

Veteran business journalist Anthony Hilton argued that current economic models needed to be re-thought in the light of the recent financial crisis – and one way to do that is through building greater sustainability into every enterprise.

“There is a widespread feeling that the system didn’t deliver,” he argued. “Globalisation has created huge rewards over the last 20 or so years, but those rewards have not been evenly spread. They have gone to an extremely narrow section of society.

“This inequality has been disguised, but now the cat’s out of the bag and we’re seeing a backlash,” he continued. “That’s taking the form of people wanting a different division of the spoils.” Therefore, he stated, to regain the trust of the public, modern corporations need to deliver more than shareholder value by putting an additional focus on enhancing equality and fairness in society.

“Not for reasons caused by the recession, but for reasons brought into focus by the recession, the old model doesn’t work any more,” he said. “And the only thing that can replace it is something which appeals to the broad spectrum of society and not just to a narrow element of it.

“The point of sustainability is not to save the planet – although that would be a nice side-effect – but to deliver an economic model into which everyone can buy in,” he summed up.

Videos from the event will appear here shortly.

Survey results: Changing for good?

A pre-event survey of the invited audience of UK business and IT leaders makes it clear that CSR is an increasingly significant issue for large organisations.

The extent of change

74% of respondents said their organisation was currently pursuing policies to develop a more responsible approach.
83% acknowledged that responsible sourcing was an increasingly important issue.
97% agreed that there was a growing expectation among their customers for their organisation to behave more responsibly.

A multitude of priorities

Respondents were asked to rank certain CSR initiatives in order of priority, with the following results:
1 – Fair and responsible management of employees
2 – Customer perceptions
3 – Environmental protection
4 – Fair and responsible management of your supply chain
5 – Local community involvement/development
65% rated fair and responsible management of employees as either first or second in their list of priorities.

A broad range of influencers

Order of priority in which respondents ranked the groups or factors that are having most influence on CSR policy:
1 – The board
2 – Government regulation
3 – Your customers
4 – Your employees
5 – Your shareholders
6 – Your competitors

Measuring the board’s performance

99% of respondents reported that there were already key performance metrics in place to measure the board’s performance against CSR objectives.