Leo Martin is a director and founder of GoodCorporation, the corporate responsibility standard and is the principal character in the BBC’s series, Good Company, Bad Company and author of the BBC Learning Book: From Principles to Profits; in this the first of a new series ‘CSR and beyond’ Martin dispels the myths and sets out the ideals.
Dolphins, forests and babies feature in enough corporate responsibility reports by large companies that you could be forgiven for thinking that these are central to corporate social responsibility (CSR). They are not. Real CSR is about day-to-day fairness towards all stakeholders including employees, customers, suppliers, community, the environment and even shareholders. It is about working in a fair and reputable way to make and sustain long-term profits.
So why is there such a gap between the glossy CSR report and these real issues? Well the truth is that CSR is still in its infancy and confusion remains about its definition. Some reports are about what the company does after work, rather than at work. But this approach to reporting is changing as more companies realise that community projects are only a small part of the CSR mix. Nonetheless, the glossy reports are the first steps towards addressing stakeholder issues and they reveal what companies think they should be doing about them.
While CSR may appear to be a new buzzword, the principles of responsible business behaviour are as old as business itself. What is new is that companies increasingly recognise best practice and they are trying to measure, improve and report publicly about their business behaviour.
A few years ago these activities were confined to a few odd organisations like co-operatives and mutual building societies. But business attitudes to CSR have changed; high profile corporate scandals have hit so hard, that even the least interested companies acknowledge that there is something more to responsible business than chairmen supporting their partners’ favourite charities.
CSR has also generated a dialogue between business and society as whole. How do we think businesses should behave? What is responsible behaviour and what is not? Because our expectations of business have changed, legislation has emerged to try and force companies to be more responsible. In many areas of business life, however, legislation simply cannot deliver what society wants: legislation can take business just so far towards embedding responsible behaviour. Unless organisations actually choose to behave responsibly the increased regulation may be of relatively little benefit for society.
The highway code is a good comparison. The law forbids motorists from driving too fast and sets clear limits. The reality is that these limits are crude ways to encourage the behaviour that we all want to see. However if car and lorry drivers slow down when they see children playing near the kerb or when they see a cyclist needing some extra space, this is out of a sense of responsibility and consideration for others. It is hard to make good law that encourages this type of behaviour. Instead we need to promote considerate behaviour and reward it when we see it and punish it when we do not.
For businesses a blinkered response is no longer an option. Responsible business behaviour, or the lack of it, is increasingly reported in all media from national newspapers to bloggers and such information is beyond the control of corporate Investors or Public Relations departments. Employees, customers, protest groups and the media are learning how to recognise, reward (or punish) good (or bad) business’ behaviour.
Many companies recognise that they have to move beyond the glossy reports and demonstrate accountability not only towards their shareholders but to all stakeholders. The challenge is thinking through how to interact with each stakeholder group, how to seek and listen to feedback, take it on-board and improve ways of working. As members of society we are all responsible for encouraging and cajoling them to develop fair and transparent day-to-day practices. Therein lies the future of business and of building credible and long-lasting relationships between companies and stakeholders.
