Corporate social responsibility: Measuring its value
- 22 October 2012
- From the section Business
No major company strategy is complete these days without a statement on corporate social responsibility (CSR).
In fact, there is now a complete CSR industry.
Companies espouse their desire to invest in communities and care for the environment.
And of course it doesn't do your reputation any harm to be seen to be "doing good" either.
At a fundamental level, CSR involves going beyond looking solely at how to make the most money, to include a wider commitment to building a better society.
This can either be through their actual business practices, or through "extracurricular" activities such as charitable donations, or staff volunteering projects.
According to Mark Wakefield, corporate citizenship manager for IBM UK, the concept itself is not new.
"Fundamentally IBM has been doing this stuff pretty much since its inception, before it was ever conceptualised as CSR," he says.
The group has recognised the value it gets from doing this, both from the employee's perspective - in improving staff engagement and morale, and by being an employer staff can feel good about - and from the perspective of clients, who are increasingly monitoring and checking their suppliers.
But looking after the company's reputation here is not the primary driver, argues Mr Wakefield.
"You have to be authentic otherwise people become very sceptical about who you are and why you're doing it, and that can be very damaging."
Every year IBM runs the Smarter Cities initiative. Cities apply for a grant and in return they get the services of a dedicated team of IBM consultants for three weeks to focus on the challenges that city faces.
Last year they ran a project in Glasgow, looking at ways to address fuel poverty.
At the end they produced a report with 60 recommendations, one of which was that people should automatically be offered the lowest or best tariff depending on their circumstances.
Mr Wakefield points out that this is very topical at the moment, with the new proposals put forward by the UK energy regulator Ofgem last week.
But he also admits that any follow-up work is down to the city themselves, and the end result of such projects is down to what Glasgow City Council, or whoever the local authority is, decides to do.
But he adds: "We want to do more than just write a report. We try to remain involved."
So what's the key to a successful CSR programme?
Klara Kozlov, senior advisory manager at the Charities Aid Foundation (CAF), helps businesses choose their charitable partnerships and develop longer term, more sustainable relationships with charities.
She says schemes have to be of mutual benefit to both the corporate and the charity.
There can be many ways of measuring success, so "it's really important to have some clear goals in mind, and make sure those are shared and delivered for both partners", as well as a clear exit strategy that leaves the charity in a better place.
Charities sometimes say they find it challenging working with business, so having a good cultural fit between the two organisations is also vital, says Ms Kozlov.
At the same time, an increasing number of charities are approaching CAF seeking to develop a better corporate fundraising approach.
"It's not just about money," she says. "[Through partnerships] charities can access the fundraising potential of employees, and skills and assets such as IT and marketing departments. A lot of charities are starting to recognise the importance of that."
But CSR is not without its critics - and the case of US energy giant Enron did little to help the cause.
Enron was well-known for its CSR, and published social and environmental reports on all the good work it was doing.
The trouble is, at the same time it was lying about its profits. When the truth emerged, it led to the company's collapse in 2001 while top executives were jailed for conspiracy and fraud.
Enron became a by-word for corporate irresponsibility, all of its community and environmental work undermined by the fact that it was carried out by a company with dishonest business practices.
And not everyone believes it is the job of big business to address problems in society.
"The business of business is business. The business of civics is for government," says Eamonn Butler, director of the free market economics think-tank, the Adam Smith Institute.
"Businesses in general are highly responsible and they have to sell goods, hire people in their local community, they have to maintain workers. Therefore most companies do recognise the responsibilities they have to the wider public," he says.
"However, what's happened is politicians have intervened and try to make them spend money in particular ways - ways that suit politicians - and you've got governments trying to make business pay for civic programmes the taxpayer should pay for."
IBM's Mark Wakefield dismisses that point of view as "very old-fashioned thinking".
"It's very clear to me and to most people that if you sit back as a citizen and say, 'that's fine, we do what we do and you guys do what you do' then things aren't going to change very much."
He believes all sectors need to work together to address the big issues, such as global warming.
"We need to take collective responsibility," he says. "None of us have total solutions so we need to share knowledge and expertise."