MARKET FOCUS: Corporate Social Responsibility - Conscientiousobjectives

With CSR already making such a positive impact on the world stage, the whole PR industry will be hoping that Badler is right. This could be just the chance to prove that PR is about changing the truth, not hiding it.

With CSR already making such a positive impact on the world stage, the whole PR industry will be hoping that Badler is right. This could be just the chance to prove that PR is about changing the truth, not hiding it.

CORPORATIONS AND THE GLOBAL COMPACT

Human Rights

BASF, one of the world's leading chemical producers, is part of an initiative, along with 15 other companies, to acknowledge the legacy of forced labor during World War II. Funds from the initiative are paid into a Federal German Foundation that provides compensation to forced laborers and other victims of the Nazi regime.

BP Amoco, the global energy producer, has collaborated with the US State Department, the UK Foreign Office, and human-rights NGOs to develop a set of guidelines - the Voluntary Principles on Security and Human Rights.

Rio Tinto, a British and Australian mining company, has set guidelines for its senior management on the implementation of human-rights policy.

The company also consulted with US and UK governments on measures to balance security concerns in its mining operations while also observing human-rights protections.

LM Ericsson, the telecommunications company of Sweden, has launched a disaster-response program to provide and maintain mobile communications equipment and expertise for humanitarian relief operations.

Labor

Deloitte Touche Tohmatsu, one of the world's largest professional services firms, continues to pursue its Black Economic Empowerment strategy in South Africa through its scholarship program, diversity workshops, and a "Partner Pairing

initiative to link black professionals with mentors from DTT's senior management.

The Volvo Car Corporation is making diversity a major theme of its Global Compact support. Volvo is working with the UN High Commissioner for Human Rights on a project addressing discrimination in the workplace in preparation for the Durban World Conference against racism.

The Royal Dutch/Shell Group has set the abolishment of child labor as its goal. Shell companies in 112 countries have procedures in place to prevent the use of child labor. In Brazil, Shell has been awarded the title of "Child Friendly Company

for its effort to discourage the use of child labor in the production of sugar-cane alcohol.

Nike, the American sporting goods company, continues its leadership role in the Global Alliance for Workers and Communities, an initiative among private sector brands, foundations, international organizations, and universities to enhance the lives of workers in the global supply chain. Recent activity has focused on assessing and developing programs in Thailand, Vietnam, and Indonesia.

Environment

Aracruz Celulose of Brazil, the world's leading producer of eucalyptus pulp for the paper industry, is working with local farmers to replenish forests and harvest new eucalyptus plantations.

The Esquel Group, the world's leading cotton-shirt manufacturer, has invested in water treatment plants in Gaoming, China. It has replaced a previously inadequate system with modern, high-capacity plants that process 29,000 tons of wastewater per day.

The Martha Tilaar Group, an Indonesian cosmetics company, is working with local groups to replenish the supply of medicinal plants used in its formulas and products. It is also working with the Bogor Botanical Garden in West Java to preserve rare plants and flora that may have medicinal properties.

Unilever, the food and consumer products company, is helping restore a dying river estuary in the Phillipines. The Pasig River campaign is one of several initiatives encompassed by Unilever's global Water Sustainability Initiative.

Aluminum Bahrain was recently selected as the company that most effectively applies environmental principles among the regional members of the Gulf Cooperation Council.

British Telecommunications (BT) has reduced its CO2 climate change emissions by 1 million tons per year. BT's record in this area is described in its 2001 Social and Environment report.

Credit Suisse First Boston, the global financial services firm, has created a new investment banking practice focusing on industries to enhance energy efficiency and resource protection. The CSFB Energy Technology Team is working with companies that focus on emissions reduction, carbon sequestration, renewable resource power, intelligent energy delivery systems, and other new technologies.

DuPont, the global chemical manufacturer, is working through its Taiwan affiliate to raise safety standards for the transportation of dangerous goods.

Group Suez of France is evaluating the impact of private-public partnerships in support of sustainable development among poor populations. It also contributes to a program that provides training kits for cities in developing countries to establish environmental management systems suitable for certification by the United Nations Environment Program and its partners.

SOURCE: The Global Compact

Note: photos are for illustrative purposes only.

If PR is to truly benefit from the impetus of corporate social responsibility, it must be committed to effecting change, not covering up the truth, says Jonah Bloom.

Like a rock band making that big leap from cult following to global iconic status, corporate social responsibility (CSR) seems to have hit the business mainstream in the last 12 months.

The concept, though not the terminology, is as old as business itself, but until recently CSR - at least as reported by the media - was seen largely as the prevail of "alternative

businesses for whom it provided a key point of difference to their competitors. Think Ben & Jerry's and The Body Shop, or more recently, BP and Reebok. But it has now grown beyond the vanguard.

Just a month ago, McDonald's, the corporate leviathan that so often seems to symbolize the unforgiving march of capitalism, put out its first social responsibility report. The document, all 46 pages of it, may not make it the favorite takeaway joint of the average human rights advocate, nor turn the golden arches green in the eyes of every environmentalist, but it does demonstrate a disarmingly honest and open approach. CEO Jack Greenberg reveals in the report that he has learned a great deal from a dialogue with non-governmental organizations (NGOs). "We are not perfect,

he admits. "Our hope is that this report will demonstrate that we are backing up our words with substantive actions."

Nike, similarly abused by NGOs and the media for its business practices, has received favorable coverage in the last year for the changes it has made to its sweatshops in the developing world. Early this year, British American Tobacco started holding CSR forums to engage its critics.

Procter & Gamble, which owns The Folgers Coffee Company and Millstone Coffee, entered into an alliance with international nonprofit TechnoServe to help small-scale coffee growers in Latin America. In April, Ford India's VP of external affairs handed over its CSR report to the chief minister of Tamil Nadu. And Avon initiated one of the largest ever public-private partnerships with the National Cancer Institute, launched with a whopping $50 million donation aimed at funding research into breast cancer.

At the same time, more coordinated initiatives, such as UN Secretary-General Kofi Annan's Global Compact, gained considerable momentum. Just last month, Novartis, the world's eighth-largest pharmaceutical producer, became one of the first major corporations of its type to pledge support for the Compact, a set of nine principles designed to unite the power of the markets with human rights and environmental ideas. Since its conception in 1999, business leaders in more than 20 countries have attended presentations on the Compact.

Importantly too, an international corporate sustainability reporting institution, the Global Reporting Initiative (GRI), was formally inaugurated last month in New York. Co-created by the Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Program (UNEP), the GRI is designed to disseminate a generally accepted framework for corporations to report on their economic, social, and environmental performance. More than 110 corporate giants have already undertaken sustainability reporting using GRI guidelines, including Bristol-Myers Squibb, Canon, Electrolux, Ford, GM, Nike, Nokia, Shell, and South African Breweries.

Even the media - sometimes accused of sloth in picking up on CSR movement - seems to have overcome its traditional recalcitrance. Book publisher Jossey-Bass/A. Wiley Company, has just agreed on a six-figure deal with Business 2.0 cofounder David Batstone, who plans to write a book called Saving The Corporate Soul, already being tapped a business bestseller for the 2003 season. There was generous reporting of Amnesty International's bestowing of its Corporate Leadership Award upon Robert Dunn, the CEO of Business for Social Responsibility and formerly VP of corporate affairs at Levi Strauss & Co. And The Financial Times took great pleasure in discovering a socially sensitive underbelly to the infamously politically incorrect CEO of ExxonMobil, Lee Raymond.

Why now?

A recent Ketchum report, conducted in conjunction with John Elkington of Sustainability, one of the founding fathers of the CSR movement, says that there have been waves of media interest in these issues, and that we are currently experiencing the "third wave.

But it also suggests that editors and journalists still find it tough to communicate such complex issues in a sound-bite culture, tending to cover dramatic events such as anti-globalization protests or destruction of genetically-modified crops, but not the broader agenda. As a Greenpeace campaigner, Chris Rose, observes in the report: "This is like covering economies by only reporting bank robberies."

Nevertheless media interest in the US is undoubtedly on the rise. There are many possible reasons for this heightened awareness, but almost all commentators point to the impact of September 11 in changing the American media and public's agenda. "September 11 has shaken the CSR movement,

reported Sustainability and Ketchum. Carol Cone, CEO of Cone Communications, a Boston-based social issues PR firm, went further, following her agency's annual investigation into public attitudes towards corporate citizenship.

The 2001 Cone Roper Corporate Citizenship Study, conducted in November 2001, found 79% of Americans feel companies have a responsibility to support causes, up from 65% in March of the same year. Perhaps even more telling, 81% said they were likely to switch brands, when price and quality are equal, to support a cause - that figure was up from 54% before September 11. "The atmosphere since September 11 has accelerated and intensified a trend that our research has documented since 1993," says Cone. "Americans are promising increased support for companies that share their values and take action."

She also points to the positive impact a socially responsible approach can have on employee motivation in the wake of such tragic events. "Many Americans reevaluated their priorities in life, including the nature of their work,

says Cone. "By empowering staffers with volunteerism opportunities and other ways to impact social issues, companies can provide employees with 'purposeful work' and strengthen their organizations at the same time."

The Enron meltdown, along with the Andersen and Global Crossing debacles, have played their part too, thinks Susan Williams, the Jossey-Bass senior editor who acquired Batstone's Saving The Corporate Soul. She points out that the furor over corporate irresponsibility and malevolence is at an all-time high, and that people are looking for a new kind of just and responsible approach from their companies.

Others who have been tracking CSR issues for longer see the changed behavior of many corporations - and increasing awareness of the media and public - as the effect of more gradual, but equally powerful forces. John Paluszek, senior counsel at Ketchum and a 35-year student of corporate responsibility, pressure groups, public affairs, and issues management, says, "Of course September 11 was important, but you have to go way back into the evolution of the capitalist system to understand how we got here today,

he says.

"If you're looking at the most recent events,

he continues, "since the Seattle protests against the World Trade Organization (in 1999), it is the proliferation of NGOs and their ability to disseminate ideas to the consumer through the internet that has really created a movement towards a more democratic capitalism. Organizations such as the Prince of Wales' Business in the Community and the Global Compact have given the movement added credence and demonstrations have fueled media interest and created a real urgency. In Europe, the environmental issues have probably played the biggest part. In the US, however, the real incendiary issue has been the bad practices in some companies' sweatshops and the improvements they've achieved through working with NGOs. That has been a real trigger for action in the US."

Positive effect on business

The success of businesses that have adopted socially and environmentally responsible stances has also been a key to CSR's recognition, says Jordana Friedman, a director of Burson-Marsteller's corporate practice. Friedman now implements CSR strategy for Burson clients, having spent more than a decade in the non-governmental sector for human rights, conflict prevention, and sustainable development organizations. "The fact that CSR has been a real differentiator for organizations like The Body Shop, BP, or Rio Tinto, and the fact that they've gone above and beyond what might have been expected of them, has set a real bandwagon in motion,

she says.

"Other McDonald's are looking at their success and saying, 'We need to whip ourselves into shape.' Nike, Exxon, and Shell are realizing they can only rise above the criticism if they do the right thing. They are worried by the efficiency and organization of the NGOs, and at the same time realize that they can benefit and learn from those NGOs who are increasingly willing to work with them."

Nike VP of corporate communications, Kirk Stewart, notes that it is not just the success of corporations with good CSR records that may hold sway in the C-suite, but also the success of ethical investment funds. The site www.moneywisdom.com notes that the Citizens Mutual Fund of 300 Ethical Companies has beaten the S&P Index every year since its inception in 1995.

Its 45% return in 1998 beat the S&P Index by more than 16%. And, in case that should be seen as a fluke, the site also points out that the top eight ethical funds have all yielded one-year returns better than the S&P Index Funds. Such performance does not go unnoticed by investors, and investors do not go unnoticed by CEOs and CFOs.

Underlining the website's thinking is a new academic study by DePaul University professor Curtis C. Verschoor. He looked at the performance of Business Ethics magazine's 100 Best Citizens - a list that appeared in the April issue of the Minneapolis-based publication - and concluded that these socially and environmentally aware companies performed "significantly better

financially than the remaining businesses on the S&P 500.

Where does PR fit in?

The increased interest and investment in CSR has not been missed by the leading PR agencies. Many have identified CSR as a major growth area for their businesses, and an opportunity to operate at the highest levels, counseling board members and even CEOs, rather than just focusing on more junior employees.

Friedman describes CSR as a "rapidly growing practice

at Burson-Marsteller, which this year hired Lord Peter Melchett, Greenpeace UK's former executive director, to consult for its London CSR practice, and told PRWeek UK that it plans a "major hiring spree.

Ketchum also staffed up in this area, and Paluszek refers to an increase in revenue in this area in the last 12 months - quite an achievement in an otherwise tough year.

Similarly, Edelman hired Jonathan Wootliff, former communications director of Greenpeace, to be managing director of what it calls its global stakeholder relations practice. Wootliff has already attracted a number of clients on both sides of the Atlantic and describes the CSR field as "a fantastic vein to be tapped.

Edelman is currently working on a sustainability audit for a civil engineering firm, working out how one of its projects is being conducted in terms of emissions, accidents, and pollutants. It is also mapping the thoughts of a group of stakeholders for a global energy company, and is trying to help an Indonesian pulp manufacturer change its business to be more socially and environmentally responsible. Other agencies, such as Hill & Knowlton, Fleishman-Hillard, and Weber Shandwick Worldwide, are also tackling an increasing amount of this sort of work.

All these agencies see CSR and PR not only as a natural fit for one another, but almost as one and the same. "This is classic, substantive issues management,

says Friedman.

"We are being issues management experts first, and communicating the stories second, which is really where PR should be anyway. We bring to the table an exceptional combination of our expertise in having dialogue with NGOs, policy makers, and social investment funds."

Wootliff agrees: "We, as PR people, are usually given the task of talking to civil society - to the various publics. We are all about public affairs and about engaging NGOs in dialogue to help effect change at the corporate level. My sympathies may lie to some extent with the NGOs, but that is no bad thing as I have to retain credibility with them the same way that a media relations pro has to have credibility with journalists. We are only useful to our clients if these NGOs will listen to us."

And therein lies a continuing obstacle for PR agencies wishing to get involved in CSR. As was illustrated by the badly managed media outcry that followed the recruitment of Melchett to Burson's ranks, the perception remains that PR companies are meant to cover up corporate misdemeanors, rather than to effect change within the corporation. "There is a very distinct problem that we are seen as spin doctors, not advocates of change,

says Paluszek.

Friedman has encountered the same issue. "The challenge is that so many people are suspicious of PR agencies,

she says. "They are looking for an exercise in greenwashing. The educated clients know that is not what we're about, but the media likes to portray us as twisting the truth."

The agencies' CSR experts worry that this perception could allow less-natural CSR bedfellows like accountancy firms or lawyers - who tend to approach the issue from an auditing or legal standpoint - to move into this territory. PricewaterhouseCoopers, for example, has made considerable play of its expertise in environmental audits, climate change programs, social impact assessments, and corporate governance frameworks. "We face very real competition from the auditors, particularly those with management consultancy divisions,

says Paluszek. "That's why we must put together teams with expertise in auditing as well as in relationships."

A function of corporate comms

A report late last year from global trade body ICCO also found that HR departments were competing with communications departments for the leadership position on CSR issues. The report found "PR's role in CSR to be massively undervalued.

Talking about the findings, Jim Surguy, managing director of UK agency advisory firm Results Business Consulting, commented, "CSR should be dealt with at board level. In many cases, the PR community does not have access to that level."

But Nike's Stewart, who now has five years' experience heading a very high-profile CSR program, brushes such concerns aside. "Of course you need a teamwork approach,

he says. "How can you manage the substance of the change you are trying to implement without having everyone on board?

Your communications department is monitoring the criticism, listening to the stakeholders, talking with the stakeholders, and helping the CSR team to devise a strategy for change. The CSR team is implementing that change, partly with the help of internal communications people. The two are totally intertwined and cannot be separated. How can you manage communications without substance, or vice versa?

Stewart adds that agencies definitely have a role to play in supporting the corporations' efforts, but does feel that outreach efforts have to come from the company itself.

Jack Bergen, SVP of marketing and communications at Siemens, is even more adamant about the importance of PR in the CSR process. "We are the eyes and ears of an organization,

he says. "The best way to be socially responsible is to have your eyes and ears trained on all the stakeholders, to know what they want and need from the company. These are classic public affairs issues and the idea that they would be handled by anyone else would show a lack of understanding."

Additionally, while Bergen recognizes that organizations like Nike have benefited from marrying an office devoted to CSR to their communications department, he feels that isolating the issue within a new department like this is a big risk.

"If it's a special entity called a CSR department,

explains Bergen, "it risks being the first thing cut when CSR is no longer in vogue, even though good stakeholder management will always be crucial to a company's reputation.

He finds it equally untenable to house CSR in the human resources department. "It might make sense when labor is the key issue, but what about when the issues change? How is HR going to see that, and how is it going to bring any insight to another issue?"

Unisys VP of corporate communications, Dick Badler, is equally unequivocal.

"CSR work, whatever it might be, will always fall under the heading of good reputation management,

he says. "It is part of the good corporate citizenship that communicators aim to engender every day. Whomever has responsibility for the company's reputation will have responsibility for CSR work."

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