Business in the Community – Definition:
Business in the Community defines corporate responsibility as the management of a company’s positive impact on society and the environment through its operations, products or services and through its interaction with key stakeholders such as employees, customers, investors and suppliers.

(PRESENTED BY LARRY FILE, BRAND COMMUNICATIONS MANAGER)

Phil Morgan, Head of External and Public Affairs for the Civil Engineering Contractors Association, and author of the CECA Corporate Responsibility Toolkit:

Phil Writes: Corporate Responsibility (CR) is about companies meeting their business objectives in a way that society finds acceptable (or ‘responsible’). There is nothing new about it and in many ways, it coincides with good management. Good managers understand the interdependence that exists between business and society and balance short term pressures on business decisions with wider aspirations held by their stakeholder communities and the long term value that building relationships can deliver.

Pictures from Cornwall 100 Club funded group: Kidzone

'We understand that our success comes from behaving responsibly and earning the trust of our customers, suppliers and stakeholders. There are many complex issues that we have to face on a daily basis, from reducing our environmental impact to ensuring consistent standards across our markets.'
Tesco PLC

'Medical innovation is at the core of our business but our responsibilities and potential impact go far beyond the medicines we discover and develop. Engaging with our stakeholders is central to the way we address society’s evolving needs.'
Pfizer

'To be leaders in the construction of a sustainable future.'
Galliford Try

The current financial crisis, triggered by short term decision making in the financial sector, is highlighting the value that a responsible approach to business decisions has for our economy as a whole. It is ironic that the start of the downturn was greeted with, among other things, a prediction that business would pull back from CR investment. As an idea to save whatever money could be saved, this might have short term logic but there are strong arguments against it.

CR is not an add-on or a luxury. As practice has grown more sophisticated, it has encompassed the management of risk in all areas of non-financial performance. Andrew Wilson of Corporate Citizenship wrote last year that the question should be reframed. Rather than ask “can CR survive the recession?” ask “can good corporate governance survive the recession?” (or employee engagement, energy efficiency or building trusted relationships with suppliers and customers). In fact you could say if a company can withdraw from CR when times get tough they were not properly engaged in the first place.

CR leads businesses to a set of rules or codes that help them handle social issues that arise from their activity. For many it goes beyond this and leads to the creation of a set of values.

If you accept that CR and good management coincide, a commitment to it should be made for better or worse. You cannot maintain credibility if you roll back on a promise to act with integrity when times are hard. Regardless of the money you save, the true cost will be trust. Trust, as we know, is a key component in brand management; brand differentiation is a key benefit of CR.

'The Kier Group recognises that its short and long-term economic development can and should be achieved only through a responsible approach to social, environmental and ethical issues.'
Kier Group PLC

Take a famous example, Marks and Spencer: As well as a CR programme called ‘Plan A’, covering 100 commitments in areas including climate change, waste, sustainable materials, being a fair partner and the health of its stakeholder community, M&S still has a reputation for solid service and for being a good employer. The benefits are apparent and they were recently voted top brand among ‘Westminster decision makers’ in the first PoliticsHome/PR Week reputation poll. How credible would the M&S brand be if they revised even one of these commitments? How easy would it be for them to rebuild that trust?

'We've always taken our responsibilities to customers, employees, partners, suppliers and local communities seriously. Doing business in a responsible way underpins our values - Quality, Service, Innovation and Trust.'
Marks and Spencer

It won’t save a company single-handedly, but those with an embedded culture of CR stand a better chance of survival. In February, AT Kearney reported companies with the strongest commitment to sustainability outperformed the norm on stock markets by 15% in the six months between May and November 2008. They identified the common characteristics among the high performing companies as a focus on long-term strategy not just short-term gains, strong corporate governance, sound risk-management practices and a history of investment in green innovations.

Beyond Giving: CSR is about how your firm impacts on society at CORE BUSINESS FUNCTION LEVEL – production, construction, procurement, employment, finance, governance, logistics... Basically – excellence in CR is where it is built in rather than bolted on.

For those companies who took CR on as a means adding value and embracing innovation, it should pay dividends in terms of motivating employees to find cost effective and sustainable solutions to problems such as rising energy prices. A construction contractor I spoke to about their approach to CR said that a challenge to site managers to help reduce the carbon footprint of their projects led to the development of a prototype CO2-neutral site cabin.

When the wolf is at the door, a responsible approach to consulting the workforce on options including redundancies, salary cuts, shorter hours or other mechanisms that may protect the core business is likely to have a less negative impact on reputation than laying people off by text message, to use a recent extreme example. That’s just common sense. More to the point, as Professor David Grayson of Cranfield University suggested in an interview last year, responsible businesses will not defer hard decisions, but they will look creatively at ways to minimize the negative social impacts of the recession.

Management of non financial performance and risk: CR provides a new way of measuring performance by measuring and managing areas such as health and safety. In this context, each area carries risk – risk of contravening regulations, risk of H&S accidents and incidents. CR offers a means to manage that risk.

But the fact is, we are not seeing a wholesale retreat from CR. There is almost CR race going on in the confectionary world with Mars making a commitment to have all their cocoa sourced sustainably by 2020, following Cadbury who made a commitment to make Dairy Milk Fair Trade. This is not just a gimmick. Major confectioners are addressing a decline in cocoa production through a fairer deal for farming families in the developing world. According to the FT, Walmart are reducing packing because it not only saves money on materials, it also means they can fit more in a delivery truck. M&S thought Plan A would cost £200m in fact, the commitments are bringing efficiencies and it may turn out to be cost neutral.

People who predicted the recession would be the death of CR were wide of the mark but one thing the recession has done is further erode faith in business to do the right thing. As Michael Skapinker recently wrote in the FT, CR can “..help to cut costs or sustain supplies... allow customers to continue to regard themselves as ethical during difficult times [and] help the companies to improve their public reputations at a time when business is widely held to be responsible for the downturn.” Sensible managers will not heed the naysayers. Now is the time to take CR even more seriously.

22ND JANUARY 2010 YTKO OFFICES TRURO