Corporate Social Responsibility; love it or hate it, increasing pressure from business stakeholders, input costs and government is forcing this relative new comer within business strategy quickly up the priority list. But having good intentions for CSR is not always enough. Jane Gray finds out how and why to formalise a CSR plan.
Back in the days of carefree gas guzzling and economic boom, Corporate Social Responsibility was viewed by many as a ‘nice to have’ but, frankly, only necessary for companies in the public eye. It was perceived simply as a protection against serious brand damage or shareholder revolt if heinous social and environmental transgressions were uncovered.
Today draws a very different picture. In the UK increasing pressure from government, both European and national, in the form of regulation for the disposal of goods, carbon emissions and more, is a spur for CSR action. However, in conversation with UK manufacturing representatives,TM discovered that the real incentives for taking CSR seriously are coming from elsewhere.
Expectations from stakeholders, particularly customers or investors came out as a key element in most initiatives. Concern over matching these expectations is even beginning to gain a level pegging with more immediately tangible cost benefits from energy efficiency.
Paul Newton is VP corporate finance at global chemicals firm Croda but he is also chair of the company’s global steering committee for CSR. “CSR is desperately important to us,” he says. “We pride ourselves on being a sustainable chemicals company.
It is something which sets us apart in an industry which, historically, has had a lot of bad press about its attitude to environment and community.” Commenting on the rising importance of CSR for Croda, Mr Newton continues: “It’s not just because of regulation. Our investors are taking a lot of interest now. They want to know about more than just the traditional financial data, they want to see that we understand the real meaning of sustainability; that we are thinking about how the world will look in years to come and whatour business needs to do to prepare for that.” Representatives from Coca Cola Enterprises (CCE) agree. CCE released an update on the most recent achievements of its Corporate Responsibility and Sustainability (CRS) strategy on July 22. Joe Franses head of Corporate Responsibility and Sustainability at CCE UK told TM: “We absolutely recognise the business benefits to our CSR programme. It has brought operational efficiencies in our plants, but it has also allowed us to progress with employee engagement and there is a big piece around the opportunities it has given us to mange growing customer expectations in this arena.”
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Both these internally and externally facing benefits to CSR initiatives will appeal to business leaders. Operational efficiencies, always a point for improvement, have become more urgent as energy prices have climbed and stakeholder engagement is receiving more attention as unpredictable markets make customer retention critical.
But as the importance of the issues CSR helps to address become more pressing, so too does theneed to formalise good intentions. Newton explains why the creation of a formal strategy with corporate documentation and reporting structures has been important to Croda. “The demand for information is compelling,” he says. “Our big consumer facing customers, in particular, are asking for evidence of our CSR efforts so that they can be sure of the integrity of their own CSR claims.” In other words those at the top of the supply chain are determined not to be compromised by those they rely on within it.Newton goes on to say that this means a more rigorous approach to data capture. An awareness of this has influenced Croda’s choice of a new financial reporting system. “The new system was bought with sustainability reporting in mind,” he says.
It is clear that taking all the necessary steps to create a meaningful CRS strategy which can track benefits will be time consuming and requires resources. As Franses says, the CCE strategy “did not come into being overnight. It required time and commitment from all senior management at CCE.
Each business area has a steering group which must ensure it adheres to carefully formulated governance rules. At board level a senior advisory council meets four times a year to discuss progress on targets and set new goals and this council reports directly to the CEO.” In short, the CRS programme is not taken lightly.
Help!
This level of commitment can be a challenge to summon up. Newton admitted that finding the right focus has been difficult for Croda and there is still more to do. The company is currently looking at the way it engages with suppliers as well as how it filters through the increasing demands being made on its CSR agenda to prioritise actions.
Croda employs 3400 people across 34 countries and turned over more than £1bn in 2010. If a company of that size finds the process of developing a manageable CSR strategy difficult, what are the hopes for even the most well intentioned SME?
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