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Jamie Lawrence

Wagestream

Insights Director

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The role of CSR in driving business performance

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Nicky is a CSR professional with 20 years’ experience in managing and directing corporate social responsibility in global companies. She runs her own CSR consultancy, Nicky Amos CSR Services Ltd. She spent ten years as Head of Corporate Responsibility for The Body Shop.

Successful business leaders are unlikely to disagree with the proposition that corporate responsibility is a necessary part of doing business in the 21st century. In fact, there are frequent reminders – from heads of government, policy makers, civil society leaders and chief executives – that the role of business is not simply to create wealth but to ensure sustainable wealth creation which, in essence, means respecting society and the resources on which business success depends. Nevertheless, while an increasing number of companies seek to manage their business operations, products and services in a more sustainable manner, many companies have yet to understand the role that corporate responsibility (or ‘CSR’) can play in helping to deliver business objectives and goals.

Unlike established business functions such as HR, Finance and Procurement, the role of corporate responsibility is not pre-determined. That is, it does not come with its own job description and neither should it. If we were to look at the FTSE 100 companies, we would find multiple variants on what corporate responsibility looks like in terms of its purpose, structure and scope. The same would apply to a cross-section of SMEs. In some companies, corporate responsibility assumes a discreet role, perhaps as a part of a risk management approach (i.e. ensuring compliance with relevant mandatory or voluntary regulations, standards and norms), or it may exist to focus a company’s philanthropic or employee volunteering efforts.

In other, more progressive, companies, corporate responsibility is beginning to influence the way that they think, behave and organise themselves in pursuit of business opportunity as well as wider societal goals such as helping to alleviate poverty, to promote health or to mitigate the impact of climate change. While the examples outlined above present stark contrasts in how corporate responsibility manifests in business, the reality is that the majority of companies seek to find a balance between managing risk and maximising business and/or societal opportunity.

So how should a company embark on a corporate responsibility agenda? Some companies find it helpful to set a ‘corporate responsibility compass’ to enable them to navigate its course in a way that directly supports strategic business aims. Below are some pointers to help companies chart such a journey:-

1. Find your ‘magnetic north’
2. Determine your destination point(s)
3. Galvanize resources
4. Plan your journey
5. Chart your progress
6. Recalibrate your compass

1. Find your magnetic north.
The journey begins with companies asking themselves what purpose corporate responsibility should play in supporting the business aims. For example, does the company aspire to become an employer of choice? Is there a plan to grow or resize the business in a way that does not damage the company’s reputation? Is there a need to reduce overhead without impairing productivity? Is the company seeking to expand into new territories or seek out alternative supply chains? Does the company plan to break into new markets or secure sector leadership through product or service innovation?

By understanding the business aims it is possible to identify the role that corporate responsibility should play in helping to manage related risks and opportunities. Indeed companies which regard corporate responsibility simply as a bolt-on will find that it delivers little or no tangible business benefit.

2. Determine your destination point(s).
Many experienced practitioners describe corporate responsibility as a marathon rather than a sprint, requiring pace, endurance and resilience in order to achieve the ultimate outcome. Companies which seek to achieve only short-term gain from their corporate responsibility efforts will overlook its role in helping to ensure sustained business success.

The corporate responsibility compass needs to be set to deliver tangible outcomes within a time-frame that is aligned with the company’s line of sight – be this one year, five years or 20 years hence. Setting the markers – points on the journey – as interim objectives and targets will help the corporate responsibility agenda to stay on course.

3. Galvanize resources.
While there can be clear benefit to having defined corporate responsibility resources (such as a head of sustainability or a CSR team), the most important condition is that the corporate responsibility mantle is assumed by everyone in the organisation. There are countless examples of CSR managers exerting little or no influence within the company, either because the corporate responsibility agenda is not genuinely owned by the leadership team, or because the leadership team believes that corporate responsibility should exist in a vacuum (i.e. that it should not interfere with the business aims), or because it is assumed that by appointing a corporate responsibility role discharges other managers of responsibility for the company’s actions. Successful companies rely on employees – individually and collectively – to align themselves behind the company’s vision, principles and aims, and it is the beliefs and actions of people that make companies responsible, not the corporate entities themselves.

Corporate responsibility works best when there is a top-down and a bottom-up approach. As such, business leaders and functional heads need to demonstrate a unified approach. For employees to embrace the corporate responsibility agenda, they need to: feel inspired to act or to think differently; understand what success will look like; be given permission to innovative, experiment and enquire; be encouraged to speak out and share opinions; and be equipped with the tools and resources to help achieve the business aims in a responsible manner.

4. Plan your journey.
To help you prepare the journey, first understand what behaviours, actions and processes currently exist that will have a bearing on the corporate responsibility agenda. Are there existing policies or guidelines which determine corporate behaviour? Is there a governance system in place with defined responsibilities and clear lines of decision-making? Does the company operate a performance management system to measure social or environmental performance alongside financial performance? Is the company appropriately skilled to drive a corporate responsibility agenda?

Having established a start point, companies can determine how to inspire action. Aiming to achieve a small number of simple actions is more successful than creating complex plans which can either overwhelm or distract people from business priorities. It is important also to set the tone for corporate responsibility; use a language that is intrinsically part of the company’s culture and avoid adopting alien CSR jargon that, in itself, can present a barrier to progress.

5. Chart your progress.
The leadership team and employees will look for assurance that the corporate responsibility agenda is delivering meaningful business outcomes. Aim to present corporate responsibility performance within the context of business (i.e. financial) performance – for example by showing how energy-saving initiatives have led to cost savings, or by linking measures of employee satisfaction with productivity or turnover rates.

To better understand the underlying factors affecting performance, consider breaking down performance by department, function or site. This, in itself, can motivate individual managers and teams to drive performance improvements.

6. Recalibrate your compass.
While the compass will ensure that the corporate responsibility agenda stays on course, it is important to periodically take stock of the progress made and consider whether there is a need to recalibrate the compass to focus on a particular area of risk or opportunity, or to respond to changes in internal or external factors. This should diminish the risk of complacency setting in and ensure that the corporate responsibility agenda remains vital to supporting the delivery of business and wider societal aims.

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Jamie Lawrence

Insights Director

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