Demonstrate Commitment

Looking after society and the environment is part of the process of a business looking after itself. Support your brand through CSR and effective reporting, urges Simon Lake

Not everyone has bought into corporate social responsibility (CSR) yet. The scepticism it provokes is partly due to confusion about what the term means. But there is also a good deal of cynicism about why organisations want to present themselves as being socially responsible.

CSR needs to be understood as clearly distinct from philanthropy or corporate giving. Many organisations have pointed to their philanthropic actions and corporate donations as demonstrating their corporate social responsibility. But, however worthy, these activities are not directly connected with a company's operations and the way in which it conducts its business. They do not contribute to fulfiling its overall strategy.

CSR initiatives, by contrast, demonstrate an organisation taking on board its environmental and social impacts, and recognising how failing to limit the negative or enhance the positive will damage the organisation. By undertaking such initiatives, an organisation is acknowledging that it does not exist outside society; that how it operates contributes to the sustainability of society, and that if society is not sustained, the organisation's existence is threatened.

An oil company is often used as an example of this form of thinking. Imagine an oil company failing to prevent or adequately deal with an oil spillage. The environment and surrounding communities would clearly be affected. The subsequent impact on the oil company – bans on future excavations, consumer boycotts, employees choosing to work elsewhere – could limit its ability to continue to operate in the future. The same thinking could be applied to a drinks company using supplies of fresh water without consideration, or to a furniture manufacturing company using up resources of wood without effectively sustaining the forests. How can they continue to operate if they fail to deal with these issues?

However, environmental considerations are just one end of the spectrum. The various ways in which a company impacts on society are more extensive. Kingfisher's 2001 plan for corporate social responsibility distinguishes itself in addressing this very issue. It clearly outlines the many situations in which the organisation encounters issues of a social or environmental nature throughout the different phases of its operations.

It lists, among many other issues, manufacturing processes, product packaging and recycling, distribution, employee rights and benefits, customer information and community relationships. It makes the point that, because of the increasingly transparent and concerned society in which we live, and the increasing pressures to create a sustainable world, addressing such issues is not an optional extra. All of them will affect the way in which the company does business in the future, so failing to address them presents a risk to the company.

Viewing CSR from the perspective of risk management allows it to be seen less as a public relations exercise than as a fundamental acceptance that the way in which a business operates now affects whether it will be able to operate at all in the future.

Looking after society and the environment is part of the process of a business looking after itself.

It would be incorrect, however, to present CSR as completely unconnected to the way in which organisations manage their corporate reputation and brands. Few would question that having strong brands and a good reputation are crucial to the effectiveness and success of a company. It is equally hard to deny that failing to live up to your social and environmental responsibilities can damage both. Therefore, while you are managing potential risks by operating with consideration for societies and environments, you are at the same time managing the reputational risk to your company.

Given that the CSR, PR and brand management are so closely connected, and that audiences today are more inclined to question what they are told, how do you ensure that pressure groups, employees, investors, journalists, suppliers and customers trust that your initiatives have been undertaken for positive and strategic reasons?

Does what you are saying, and what you are doing have substance, rather than being initiated solely for the purpose of generating self-serving PR? If there is a whiff of the latter, any positive response that a business hopes to gain will be quickly undermined.

Successfully incorporating CSR into an organisation is a process not dissimilar to the process through which a successful corporate brand develops. You may have brand values, a core purpose and strong visual identity, but unless you align your organisation behind these things and engage your audiences with them, they become empty and of no significant value. It is the actions you take that enact your core values and purpose and that make the brand a tangible asset. In the same way, CSR has to be about actions. Initiatives should be driven by the board, embedded in business practices, and ultimately become an intrinsic part of the way in which the business operates. Paying lip service is not enough.

It is also important to recognise that CSR initiatives should not be treated as a separate entity to the corporate brand and the core purpose that defines it. The first CSR report produced by Cadbury Schweppes includes a diagram to demonstrate the way in which CSR management processes are embedded within the organisation. Consequently, they work in support of Cadbury Schweppes' core purpose and values – 'working together to create brands people love' – and so their corporate brand.

There are a number of ways in which businesses can report on their CSR actions that will help to give their statements substance, and so credibility. Listed below are some guidelines. No doubt they will evolve as what constitutes best practice in CSR becomes clearer.

Guidelines