The Band Aid generation has grown up, and is demanding that the corporate world pay more than lip service to ethical issues. Enlightened employers are beginning to understand that there are real business benefits in taking CSR seriously.
This year’s re-recording of the trail-blazing Band Aid single ‘Do they know its Christmas?’ has once again pushed the world’s social imbalances to the forefront of people’s minds.
Bob Geldof’s successful efforts in 1984 to cajole a bunch of British pop stars to record a single, free of charge, to raise money for others less well-off, tapped into the psyche of a generation hankering for change.
That generation has grown up. They are now consumers, investors, and employees and are continuing to demand policies from the world of business that help improve society for all.
But where the pop world went wrong is through a lack of continuity. Unless charity giving and aiding become sustainable – whether from popstars or business – it runs the risk of failing in its purpose.
So do the varied reasons (from genuine altruism to – whisper it – profile raising) that persuaded pop stars such as U2’s Bono and Duran Duran to join forces apply equally to companies that integrate corporate social responsibility policies into their businesses?
In part, yes. But what might have begun as lip service to social and environmental causes has now become best practice among the world’s leading businesses. Executives have woken up to the fact that corporate social responsibility (CSR) actually makes good business sense.
CSR is no longer just an appendage to financial reporting but an issue increasingly driven by the marketplace. Business can no longer afford to be socially irresponsible. Reputation is everything.
The ignominious collapse of Andersen in 2002 reinforced how a link to a disreputable company can lead to a firm’s demise.
PricewaterhouseCoopers’ decision last year to pull out of Myanmar – a nation heavily criticised for its human rights abuses – is a good example of how pressure from staff, clients and other stakeholders can convince a firm to act.
‘There was a time when CSR was an add-on. Now there’s no choice, it’s driven by the marketplace,’ says a spokesman for Business in the Community (BITC), a charitable organisation that works with business to improve their positive social impact.
The argument many accountancy firms deploy is that they have little environmental impact on society. Up against companies like Shell and Rio Tinto that may be true – but collectively every business and individual has an impact, however large or small.
So is corporate Britain simply complying with best practice to mitigate reputational damage or do they understand the spirit of social responsibility?
Mallon Baker, development director at BITC, says that any business that applies a CSR agenda without understanding the business benefits is failing to see the purpose of corporate social responsibility.
‘It sounds counter intuitive – but pure altruism that has no business sense is something for individuals, not business. There’s no case for alleged CSR that doesn’t support business performance,’ says Baker.
So while social responsibility doesn’t necessarily have to provide immediate cost savings, many policy changes do.
Of the CSR activities carried out at Deloitte, Richard Stone, partner responsible for CSR, says: ‘We don’t view these initiatives as cost-saving exercises. If a business has active community programmes then it will ultimately help the business.’
For several years now Deloitte has run a programme called Skills for Industry. The programme takes a number of teenagers who show more interest in vocational skills than academia, and helps them develop skills that industry needs. By partnering with a number of companies, the firm is able to offer the recruits work placements.
‘From our perspective it’s about helping young people reach their potential. We have targeted sectors where there’s a skills shortage or problem with staff retention,’ says Stone.
As the war for talent becomes a reality, a new study from political think-tank Demos is urging companies to recognise the role CSR has to play in staff retention and recruitment, because potential recruits increasingly look to align their working lives with personal values and lifestyle aspirations.
Research consistently shows that commitment to CSR regularly features in the top three priorities of graduates for potential employers. With employment costs escalating and a dearth of qualified accountants in the UK, the onus is on firms to take a long-term view and ensure their staff are happy with their workplace as well as their job.
Besides the community projects that most of the largest accountancy firms and businesses now consistently carry out, there is a lot more they can do. But for a firm to be successful CSR has to be led from above, experts agree.
This is one area where KPMG certainly stands out from its competitors. Mike Rake, UK senior partner and chairman of KPMG International, has made CSR a priority at the firm for years now. Indeed its CSR credentials helped win it the Big Four firm of the year award at the Accountancy Age Awards this year.
The firm purchases more than 90% of its electricity from renewable sources, so avoiding greenhouse gas emissions, and uses recycled paper internally. It soon plans to use recycled paper for external documentation as well.
KPMG also monitors its water consumption. Its facilities team carries out a full water audit covering personal hygiene and toilet facilities, catering, air conditioning and irrigation of the grounds. By using its own bottled water rather than mineral water, the firm has reduced the impact of the method of water extraction, reduced transportation of bottled water and greenhouse gas emissions.
When you consider that globally, a third to a half of the world’s population will be living in water-stressed areas over the next 20-30 years, every drop counts. Neil Sherlock, partner responsible for CSR at KPMG, says: ‘These things seem simple but they make a big impact.’
Nineteen years ago PwC began staging a post-Christmas pantomime in the canteen of one of its London offices. Now the show is held at a West End theatre and 7,000 kids get to see it for free.
The pantomime is also broadcast to 10 children’s hospitals, while staff that take part get the chance to expand their skills and boost their confidence.
Another example of combining good business sense, technology and a social conscience is the increasingly common practice among firms to send out electronic Christmas cards instead of paper ones.
Nicky Major at Ernst & Young, explains: ‘We were spending £20,000 a year on cards and if people don’t appreciate them then it’s a waste of money. For a few years now we have been giving the money we would have spent on cards to the homeless charity Crisis. In exchange Crisis produce an e-card that we can send out which also explains what the cause is all about.’
KPMG goes a step further. As well as sending out only e-cards, it has linked up with the Woodland Trust to recycle all personal Christmas cards staff receive. Last year KPMG’s post-room collected 700 kilos of Christmas cards for recycling – which amounts to around 50,000 cards.
This is another example where there are no direct cost savings but a clear strategy of benefiting a charity and boosting its profile.
Baker argues: ‘If you are doing things that don’t make good commercial sense, then it doesn’t make sense to do it as the company won’t be sustainable. As soon as times get tough, it’s the first policy that’s stopped. That could be more damaging. There is a business case for all of this – but it’s also enlightened self-interest.’
Social responsibility hits home harder at times of family gatherings but what companies need to remember is that corporate social responsibility is not just for Christmas.
It has to be sustainable or both society and business will lose out.
HOW TO IMPROVE YOUR ORGANISATION’S ETHICAL CREDENTIALS