When Mike Kelly tells his staff their projects are rubbish, believe it or not it’s probably a compliment. As head of the corporate social responsibility (CSR) project at KPMG, this softly spoken, affable man is on a mission to disprove sceptical critics that having a social conscience is compatible with the workings of a major global business.
He certainly has his work cut out if the results of a recent MORI survey are anything to go by. Asked if they thought large companies ‘are doing all they can to be responsible’, just 15% of respondents said, on the whole, ‘yes’. Seven out of ten had significant doubts and an emphatic 9% said ‘no’.
Then there’s the widespread scepticism that too many companies are using pledges of CSR as little more than a PR tool. When KPMG started handing out firm-branded sports-capped water bottles to staff, the firm was determined to show there was far more to it than an exercise in brain washing and PR.
One year on, the Big Four firm claims that its ‘virtually zero’ investment has saved £90,000 in waste plastic cups alone. At the same time, the switch to renewable energy for all of KPMG’s buildings in the UK slashed 10% of the company’s electricity bill in a year – amounting to another £200,000.
Kelly, the man responsible for spearheading many of the environmental policies at the firm, would be the first to admit that environmental issues have moved on significantly since he was taken on by KPMG in December 1999 to lead environmental management.
‘The board did a risk review and worked out that if they didn’t focus on environmental issues, it could have negative consequences,’ says Kelly. Today the issue of environmental disclosure has moved up a notch to the extent that clients, Kelly says, expect you to have an environmental policy or they won’t work with you. Increasingly employees expect it as well.
Research shows that graduates increasingly value prospective employers who take CSR seriously, as the ability to combine social conscience with a career moves up job seekers’ wish list. Staff recruitment and retention is enough of a business driver alone, but there are also hard business reasons for embracing CSR. If you want to be a supplier to the government, for example, and don’t have CSR policies in place, you may as well forget it. ‘You can’t get on a tender list unless you have a policy, and now they’re asking what you have in place,’ Kelly explains.
Employee commitment to green issues is growing. The firm’s staff suggestion competition – launched to encourage staff to submit suggestions of ways to ‘improve the environmental focus of the firm’ – was a resounding success. ‘We had about 500 serious entries. We said the winning ideas would be implemented by the firm and we are committed to running the competition again. At that time there were two of us in my team. In hindsight it was too ambitious,’ Kelly admits.
The competition is still running – although today it’s open to clients and suppliers as well as staff, and there are now not one but six winners every year. The Bag for Life scheme, the latest plan to be introduced, is estimated to save more than five million litres of oil every year in plastic bag production. And, as with all Kelly’s programmes, it’s wonderfully simple.
These days there’s an extra incentive for staff to get involved in Kelly’s environmental vision. Those with winning ideas can participate in the firm’s Earthwatch scheme. They receive an extra two weeks holiday to go to an exotic place and do scientific research. The firm also offers grants of £450 to help participants finance their projects.
Kelly believes it is possible to combine ‘worthy’ with ‘fun’. He points to KPMG’s employee volunteering scheme, which offers staff half a day’s extra paid leave a month to work on voluntary projects – as a case in point. Today around one in five of KPMG employees are involved, suggesting that staff do get something, if not simply CV points, for putting their money where their mouth is.
‘Volunteering helps individuals to develop other skills. If you volunteer as a charity trustee, you get to present to the board. To volunteer can make you a much more rounded person.’
But feel-good factors aside, the firm is not entirely altruistic in its objectives. KPMG employs 30 people to provide CSR services to clients, and practising what they preach is core to gaining credibility in an area set to explode as the introduction of the mandatory operating and financial review looms.
The OFR dictates that companies have processes in place to assess their social, environmental, ethical and community risks and where necessary report on them. Indeed, the Department of Trade and Industry estimates that the OFR will generate consultancy fees of around £25m across the UK’s 1,200 largest companies alone, ‘although obviously a lot more than these 1,200 will produce an OFR,’ Kelly says.
Momentum is gaining too. A level of controlled panic is setting in across corporate Britain as the full implications of the OFR start to sink in. Any company accounts that start after 1 April 2005 must comply. ‘The traditional approach of throwing lots of people and money at the problem just won’t work,’ Kelly warns.
For those organisations looking to put some of Kelly’s theories into practice, his advice is simple. ‘The starting point has got to be the board. Although it will be delivered by the ground force, it can’t just be for the CEO. And it has to be for the long term. Once you start doing CSR reports, you can’t stop.’
A project to slash the amount of paper being used by the firm is already paying dividends. The office that uses the least paper gets to donate half the savings to a charity of its choice. ‘That helped us get buy in. The debate has moved on to “what are the technical issues stopping us using more recycled paper”. Four years ago our paper consumption was going up. Last year we had a 10% reduction and this year we’re forecasting a 15% reduction. We’re down nine million sheets on four years ago.’
But not all of Kelly’s brainwaves go to plan. ‘We decided the firm would stop sending out Christmas cards – we were spending £50,000 a year sending them out – and make a donation to charity instead, but we found some staff were rushing down to WH Smith to stock up.’
Plan B was to invite schools around the world to design themed cards. Illustrator Quentin Blake judged the entries and winning cards were sent out as e-cards by the firm.
Kelly has built a reputation for himself as a pioneer in environmental risk accounting and reporting. Prior to joining KPMG, he spent seven years as a senior programme manager for the United Nations environment programme. And his efforts are certainly paying off. This year KPMG was ranked 37 in the Top 100 Corporate Responsibility Index published by charity Business In the Community – way ahead of rivals Deloitte (61) and PwC (63).
Kelly admits that he does get frustrated sometimes balancing business needs with the objectives of CSR. ‘It can take so long to do things,’ he admits. ‘But now it really is a part of the culture of the firm. It’s about team working. It’s no longer just about me, me, me.’
IS YOUR FIRM A PSYCHOPATH? Callous, manipulative, showing blatant disregard for the well-being of others, unable to feel guilt and/or remorse.
If you were to conduct a psychological profile of corporations today, most wouldn’t fare too well.
In fact, according to The Corporation, an extraordinary and provocative documentary from Jennifer Abbott and Mark Achbar, most of them would, technically speaking, qualify as psychopaths.
But as honesty and integrity move up the stakeholder agenda, and forthcoming OFR legislation marks just one element in the government’s plan for a step change in corporate reporting – being socially responsible is not just for the brown-rice and sandals brigade – it’s a must for every modern company.
There is growing concern among stakeholders – employees, customers and local communities, to name but three – about the impact of business practices on the bigger picture.
Attempts by companies to meet their CSR responsibilities do not impact on investment decisions for a large proportion of investors, however.
A Mori survey published this week found that 41% of investors and 53% of financial analysts do not incorporate CSR into their investment decisions.
But, as the survey highlights, attitudes and priorities are begining to change.
Despite concerns that increasing transparency will result in an increased burden on business, 45% of investors and 41% of analysts support the government’s proposed OFR reforms. Never before has there been so much interest among investors and analysts in non-business activities.
This, combined with Joe Public’s increasing desire to do the right thing, and it can only be a matter of time before corporate social responsibility is fundamental to a business’s long-term survival.
The Corporation is out on DVD on 5 March.