Corporate Social Responsibility

Corporate Social Responsibility
by Raine Marcus

A few short years ago, oil giant Shell sparked a major controversy when it decided to sink the Brent Spar oil rig in the North Atlantic, rather than dismantle and remove it. The world was quick to condemn, as it did when the same company took part in the plunder of the Niger Delta in Nigeria for oil. Nine protesters were subsequently executed by Nigeria's military regime.

The apparent disregard by Shell and other companies for the environment and their cynical support for undemocratic regimes was followed by a fall in the number of new recruits. Potential employees of graduate status had no desire to work for unethical companies. In a bid to tackle the issue, Shell put together a presentation: "Brent Spar - No Hiding Place", which was used in the ensuing years as a recruitment tool. Potential employees were asked to provide alternative solutions to the Brent Spar embarrassment. Oil companies were the obvious nemesis of green campaigners, but banks including Barclays', HSBC and Nat West were also black list. These banks were recently cited as actively supporting apartheid in the 70s and 80s. The banks have denied such claims. Today's employees still want to work for ethical, environmentally friendly companies - and in turn, companies have since learned their lessons, and done everything possible to change public perception. Nowadays, not many companies can beat Shell when it comes to Corporate Social Responsibility.

The recent WorldCom, Enron and other scandals, which plagued the corporate world, and have left even President George W Bush vowing to put the world right, have left customers and shareholders with a feeling of distrust of everything corporate. But is practicing CSR sufficient, is it just a form of lip service, or is it simply a means to promote the company as an ethical entity? Are motives purely altruistic, or are companies intent on capitalizing on the ensuing spin?

CSR campaigns are today built into companies' marketing budgets, and just as PR agencies act as external advisers, there is now a plethora of CSR consultants reaping their rewards from firms eager to show they are ethical.

I once handled the PR overseas for giant General Electric, a conglomerate with CSR high on its agenda, thanks to former chairman and corporate guru Jack Welch's philosophy to encourage employees to donate monthly hours to helping the community. An important part our brief, alongside the publicity of company achievements, was to publicize and get media coverage for GE's Elfun fund, the integral CSR arm. Not that Jack Welch's intentions were not honourable, but the question begging to be asked is whether the company's Corporate Communications division could just as easily do without the spin.

In the UK, more and more companies are giving their employees the opportunity to devote hours, at company expense, to designated charities. CSR features prominently on websites, not as an integrated part of corporate culture, but as a separate section, as if separate from the company's core philosophy. One company which does not have a separate CSR section on its website is Body Shop. Even when Anita Roddick founded the company, ethics and care for the environment were part of the Body Shop raison d'etre, and still are today.

The Guardian Media Group also incorporates social responsibility and accountability into its core values, which is echoed by the company website, announcements by the CEO and everything which the company undertakes.

In 1999, the United Nations Development Programme teamed up with global Internet networking leader Cisco to "raise public awareness and fight poverty"- according to r the "NetAid" website. The NetAid project included a concert by major musical artists, which was broadcast simultaneously via the Internet from stages in New Jersey, Wembley, and Geneva. While the UNDP officially provides grant assistance to improve living conditions in poverty stricken countries, Cisco announced that it was aiming to "increase understanding of the challenge of poverty elimination." This was the high tech hey day, with companies oblivious of the eventual slump to come some two years later. Many such companies took a proactive approach to helping their communities, if not the world.

To their chagrin, even gaming firms in the UK are now being asked to contribute from their profits to help the victims of gambling addiction, and to make the public aware of the dangers of betting.

CSR is a clever way for companies to get their hands dirty, helping world poverty, hunger, egalitarianism, and the environment. As well as the Enron and WorldCom scandals, September 11 also left the corporate world reeling, as the US mourned nearly 3,000 victims under the World Trade Centre rubble. The world had entered a new age, where human lives were deemed paramount.

Given the current atmosphere, it seems ironic that ethical unit trusts have fallen 21% in the past year, compared to the 16.6% for the average unit trust, according to Standard & Poor's statistics. Two areas, which nearly all ethical funds avoid, are tobacco and arms. However, as the stock market has plummeted, these two sectors are reported as among the best performers. Tobacco companies are regarded as a safe haven during market collapses, since their profit flows are usually safe and predictable. Following September 11, defence companies have enjoyed higher arms spending, and are reportedly recording steady profits.

While multinationals and traded companies practise CSR, especially since they are under more scrutiny than ever before, small and medium sized firms (SMEs) usually don't have the time or energy to send employee volunteers to help the poor. They are too busy building the company, raising funds, trying to sell their products and services and survive in a competitive world, to lose sleep over saving it. A colleague of mine, a former investment bank employee, launched a company some four years ago, before being acquired by a US company 18 months later. She and her partner were busy trying to keep their heads above water, and although both aware of CSR, did not implement it. "The way we see it," she said, "is that when we were acquired, we invested money and resources back into the economy and created jobs. We didn't have the time to give back to the community. If I did the same again, though, I would probably try and give more to charities. It's often hard to tell if the big companies are genuine in their social responsibility efforts. But if an SME makes that effort, they have to be genuine."

Perhaps the biggest UK organization trying to persuade SMEs to take up CSR is Business in the Community, but it may not give such smaller firms sufficient, compelling reasons to do so. The multinationals know that if they aren't good to people and the environment, customers won't buy, investors won't invest and employees won't work for them. What incentive do SMEs have?

One cannot help but wonder if the ambitious heads of small to medium size firms were told that they would fetch a higher selling price for the company if they were seen as a good, ethical companies.

In third world, and even some European countries, corruption is a corporate way of life. Get close to the government, set up a slush fund for local influencers and your company will have a better chance of success. Should companies try and combat this inherent part of local culture? How would they do it? Changing whole national cultures is an insurmountable task, and if a company does not succumb to local customs, it may never stand a chance.

But corruption has many faces. Is there really such a great difference between taking potential customers out to a lavish dinner or the FA Cup Final and slipping someone a brown envelope stuffed with banknotes? It's all a matter of local culture and customs, and there's no doubt that corruption is not about to be eradicated from the world's economies. But unequivocal management policies and procedures could certain reduce the need for greasing palms in emerging countries.

Social responsibility should be implicit in every company's core values, and not stand out as a separate division. Workers will not only be more productive if they volunteer to help those less fortunate, but will also respect their employers. While corporate perfection does not exist, if a company projects integrity and finds new ways to gain trust, it will stand a better chance of weathering market instability, and regaining the confidence of an increasingly cynical public. In future the true winners should be those that have a "story of compassion", not gained simply by donating money to charities, but by actively engaging with those charities, and trying to break down barriers between communities.