CSR – Compulsory social responsibility?

Why regulation of corporate social responsibility programmes is inevitable.

By Edward Weeks

Corporate social responsibility (CSR) is the buzz phrase of 2008. However, if you think that you can just pay lip service to a passing fad then think again. Where previously formal CSR policies have been the domain of governments and multinationals, business people at all levels are becoming aware that they ignore their CSR responsibilities at their peril.
CSR manifests itself in many different ways. Businesses need to be aware of their commitments to all their stakeholders – customers, their community, suppliers, employees and, more grandly, the world.
Although participation in CSR activities is voluntary there is movement within many industries and perhaps in society in general, to make the possession of a meaningful CSR policy a pre-requisite for any company or business. To fail to have a policy is increasingly to send out a negative signal.
What does a CSR policy have to cover? You would be forgiven for believing that CSR’s is all about ‘saving the planet’ as this certainly seems to be the area that gets the most coverage and one that the government is increasingly becoming involved in. However it is more than that. Speaking in 2004, Stephen Timms defined CSR as being “about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides”. This is a broad definition.
Businesses are encouraged to act responsibly in monitoring and reducing their impact through effective waste management and reductions in energy usage – by cutting down on the amount of waste paper, by increasing their recycling, by switching to greener energy suppliers or by making staff responsible for switching off lights, computers and other equipment when they leave at the end of the day. These are all elements that can be covered in comprehensive CSR policy and will help any business prepare for the creeping regulations that will enforce the government’s aims if, as is almost inevitable, the pace set on a voluntary basis is too slow.
A business’s performance in this area is likely to be of interest to the public sector who ask searching questions about a firm’s commitment to CSR in pitches and tenders. A real business reason to pay more than lip service, but it appears that this interest in a CSR credentials is dripping down to other, non-public sector clients. Businesses need to be conscious of the weight their commitment to CSR has in developing their ‘brand’. In a competitive market clients want to know what efforts you are making to ‘maximise benefits and minimise downsides’ as they do not want their own brand to be tainted.
But the questions about how committed you are to CSR may not just come from clients. One of the most common reasons why businesses adopt a CSR policy is to attract and retain the highest calibre of employees. Graduates leaving university are often primed to ask questions about the opportunities their prospective employer will offer for them to get involved in community activities, what firms are doing to reduce the impact their existence has on the environment and how serious the firm is about developing and entrenching such a policy.
Even if your employees are not raising CSR as an issue the results show that having such a policy can provide a real sense of well being and opportunities that are greatly valued by staff involved. At Cripps Harries Hall LLP, for example, all staff are allowed a day off a year to devote to community activities.
These activities range from helping a local hospice with their Christmas decorations, to digging a garden at a residential care home. The feedback to these projects has been universally positive – both from the community within which we are based and from our members of staff. The results show not only on the day but in the long term. Staff feel more valued, the business has a chance to put something back in the community and the community benefit and gain a better awareness of the business. A happy side effect of these activities has been to gain new instructions out of the contacts that have been forged. And by making community involvement activities a cornerstone of our CSR policy and providing a framework for such activities we have created happier people who value the firm more.
The business case for adopting and following a broad CSR policy is undeniable. It raises the firm’s profile in the local community (and sometimes further afield) developing trust and links with an important source of potential clients and employees. Even if you do not buy into this virtuous circle you cannot deny the way the wind is blowing. Regulation in this area is inevitable. Those that have a properly thought out and implemented CSR policy in place need not fear such regulation and have an undoubted edge over their competitors.

Edward Weeks is corporate and commercial dispute partner at UK law firm Cripps Harries Hall LLP. He can be contacted at ed.weeks@crippslaw.com