News Analysis: Belief in CSR work begins at the top

The CEO of Diageo insists that commitment to social responsibility, and the degree to which it is embedded in company culture, must start with business leaders

Astute business leaders should not treat reputation as a ‘tick-box hygiene factor', or something only of concern to the marketing team. It is a driver of long-term growth.

The pursuit of profit and an unshakeable commitment to social responsibility are complementary elements in driving reputation and business success. Responsibility can help to support success, and profitability is an enabler of responsible behaviour.

This is my conclusion based on nearly 16 years as a CEO, first at Pillsbury and for the past six years at Diageo. Our brands, such as Johnnie Walker, Smirnoff and Guinness, are powerful, and underpin our corporate reputation. We therefore spend a great deal of time and effort in building and protecting that corporate reputation and those of individual brands. A crucial element is acting responsibly and with integrity in every aspect of business behaviour.

Many managers believe their duty begins and ends with the needs of investors. Yet, ironically, investors - and potential investors - are sometimes the least committed to a company and the least active in supporting its stance on social responsibility.

But society's expectations have changed, and the standards by which we are judged have changed with them. Financial success is no longer the only index of whether a company is regarded as a leader in its field.

Many stakeholders
Sustainable performance, as well as a company's reputation, are now built upon much broader foundations. Other stakeholders have to be considered. Our investors want us to be successful and profitable, but to be so in a sustainable way - driving long-term value for them and mitigating risk. Our consumers want us to make great products - marketed responsibly - that help them to celebrate the big events in their lives.

Finally, our staff want to work for a company of which they feel proud, and which allows them to realise their full potential.

Meanwhile, government, regulators and NGOs want Diageo to be a constructive partner to them - seeking  solutions rather than presenting obstacles. And commercial partners, including our customers, want to work with a company that acts fairly, and with transparency, in its dealings.

The communities in which we operate and manufacture expect us to be a good neighbour. And media, as stakeholder and conduit, want the company to be open with them. They see themselves as having a role in policing the good conduct of our business.

Yes, there is a tension at the heart of business reputation between commercial self-interest and a desire to engage constructively with stakeholders. Dealing effectively with that balance is a tough call for any business.

The answer lies in having an even-handed approach to engagement. A desire to engage with all interested parties is not the same as allowing business strategy to be dictated by the proclivities of those parties. A business that cares about its reputation does not have to be a soft touch.

The crucial factor here is behaviour. A responsible company behaves well and contributes to society, so many people are happy with, and trust, the company. The result is tangible.

Steady commitment
The degree to which CSR is embedded within a corporation's DNA comes from the top of the organisation - and is delivered via a considered strategic approach, not tactical flash-bangs.

Companies committed to social responsibility never over-hype. The speed of delivery of their commitment is steady rather than a sprint - the latter being a sure indicator of panic. And they have to be prepared to put their money where their mouth is - because a measure of genuine commitment is the amount of cash spent.

That means more than making tokenistic corporate donations or publishing a glossy CSR report.

Trust in this process is fostered through leadership and innovation. A company that goes the extra mile, rather than doing the minimum required, is more likely to attract admiration and respect. For instance, Diageo recently developed a Marketing Code. It is an exacting and enforced set of standards for all staff involved in marketing, sales and promotion - including the agencies we use.

The policy was resisted initially by those who felt it was a restraint on their creative powers and ability to compete with other companies: the code prohibits, for example, the use of sexual references in advertising and in-bar ‘two for one' promotions.

While listening to those concerns, my senior management team held firm - because we believe that if we are going to claim to be a responsible company, the way in which we market our brands is fundamental. The code is now fully embedded and is the guide by which we work. If anything, it has made our people think more creatively about how they market our products.

Diageo is a long way from being perfect, but a genuine aspiration and intention is there, and with that we are starting to build important relationships of trust. For me, that is the real key to managing reputation.

Paul Walsh has been CEO of Diageo since September 2000. He is speaking at next week's Reputation Conference at Henley Management College.

‘Managing Reputation…': the conference programme

‘Managing Reputation Inside and Outside: From Research to Practice' is the third Reputation Conference held by the John Madejski Centre for Reputation. Convened at Henley Management College on 12 October, it is run in association with PRWeek and the US Institute for Public Relations.

In addition to Paul Walsh, conference speakers include:

Peter Debreceny, chairman of the US Institute for Public Relations and vice-president of corporate relations at Allstate Insurance Company;
Andraea Dawson-Shepherd, corporate communications director at Cadbury Schweppes;
Stephen Pain, group corporate affairs director at Aviva.
 
For further information go to henleymc.ac.uk or call Nuno da Camara, research fellow, The John Madejski Centre for Reputation T 01491 418 746.

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