Is CSR doing anything for corporate reputations?

Companies are falling over themselves to implement CSR programmes. But is this really the best way to show ethical credentials? Two experts go head-to-head.

Julia Cleverdon
Julia Cleverdon

YES

JULIA CLEVERDON, CBE is chief executive of Business in the Community and a renowned leader and speaker on corporate social responsibility

Twenty-five years at Business in the Community, working with companies across the world, has taught me corporate social responsibility (CSR) can protect and enhance reputations - but only when it is built into a business's core foundations. I also think that CSR minus HR equals PR, and those businesses that believe this is simply 'lip gloss' run the risk of damaging the integrity of increasingly fragile corporate reputations.

Julia CleverdonResponsible business practice has to be baked into the business, not bolted on to the operation. Quality of management and financial success go hand in hand with creating company reputation, but it is more important than ever that leading companies implement CSR with the same rigour and excellence as with anything they do in their business.

Leadership and inspiration are vital to progress, but the real prize, we believe, is integration and implementation in the guts and bowels of the business. It is interesting to see the number of leading businesses putting an increasing emphasis on the integration of responsible business practice. Marks & Spencer renaming its CSR committee the 'How We Do Business Committee', for instance.

I admire the action undertaken by AstraZeneca's new CEO David Brennan, who discovered from the Federation of Small Business benchmark that its track record of paying small suppliers on time was dismal. As the firm had more than six thousand such suppliers, this could potentially outweigh the benefits of any amount of feel-good community investment programmes.

So the firm set about improving the cash flow of those small suppliers - one of the more important contributions that a business can make to society and a real example of a reputation improver.

Responsible businesses with an eye on their corporate reputations also recognise employees want to work for employers whose values they share. Customers want to buy from brands they trust and suppliers want to supply businesses with integrity.

In early 2007 Edelman PR published the results of its eighth Trust Barometer. This study was conducted in 18 markets, with 3,100 global opinion leaders, and looked at the companies that these opinion leaders trust and why. Responsible business practice was recorded as one of three top factors that influenced views of a company's reputation in 12 out of the 18 countries.

Ensuring CSR is central to how a firm operates means looking at how it sources, develops, manufactures, markets and sells its product and services.

Our new Marketplace campaign has produced a series of Marketplace Responsibility Principles to which our member companies are increasingly signing up.

Companies such as Tata, Camelot, 3M and Foneback have all shown how they won a reputation for integrity, created new and innovative market opportunities and protected vulnerable customers. Waitrose has shown us how working with suppliers to raise social and environmental standards in its supply chain helps manage risks over which it would otherwise have little direct control.

By then communicating this to its customers, the supermarket has won trust and a greater market share.

Marks & Spencer recently topped Management Today's 'Britain's Most Admired Companies' list and has been Business in the Community's company of the year twice. Led by Business in the Community's chairman, Sir Stuart Rose, Marks & Spencer is a prime example of a company with strong corporate values driven from the top and carried out by the employees.

It would be hard to argue 'Plan A' has been anything other than vital to Marks & Spencer's success.

Companies that look at CSR, not just to protect reputations, but to exploit the market opportunities on offer, will benefit from enhanced reputation and a sustainable business in the long term. Those that apply CSR as 'lip gloss' not only miss a trick but leave the door open to considerable reputational challenges.

NO

ANDREW GRIFFIN is managing director of Regester Larkin and author of New Strategies for Reputation Management

Companies must be - and must be seen to be - a force for good in society. But CSR is the wrong way to go about it. Far from helping companies protect and enhance their reputations, CSR programmes sometimes make matters worse.

Trust in companies is decreasing. There are more negative media stories about companies now than ever before: almost everything, from global warming to obesity and binge drinking, can somehow be blamed on the private sector. And yet the companies that are most routinely derided by campaigners, politicians and the media are those multinationals that invest the most time and money in CSR.

So why is CSR failing to improve reputations?

Firstly, CSR has been shaped by governments and NGOs, not companies. The phrase itself suggests that companies are not socially responsible, requiring instead a special programme of activities that promises to make them palatable to the world. It makes being a good business sound like a chore.

Andrew GriffinThe manifestation of this is the ubiquitous, and pointless, CSR report. These reports are produced in their thousands but read by almost nobody except sceptical NGOs, the occasional critical journalist and the growing CSR industry itself. They are not read by the company's real stakeholder: the customer. CSR reports reinforce the role that companies seem to have accepted for themselves: the bad guys, obliged to prove to the responsibility police that they are addressing their own inadequate behaviour.

Secondly, CSR initiatives can backfire. Take the example of obesity. When this 'crisis' first hit the headlines, companies rushed to do 'the right thing' by designing and implementing initiatives on food content, labelling, marketing and advertising. Despite all this, the Government went ahead and banned 'junk' food ads. The industry only had itself to blame. It allowed the obesity issue to be discussed in a one-dimensional way. With its strong 'socially responsible' campaigns but weak public voice, the industry succeeded only in reinforcing an incorrect public opinion that food content is the primary cause of obesity. This made government intervention easier, not harder.

Thirdly, CSR is no alternative to the real driver of reputation: performance. A 2006 survey in the US found that, when asked to name a socially responsible company, consumers named Wal-Mart, McDonald's and Microsoft at the top. And yet these are the brands that are routinely attacked in the name of social responsibility. Perhaps what the people were saying is these are companies they like. They promise something and, by and large, deliver it.

Look too at Marks & Spencer, which is enjoying a reputation revival after years of failure. Was it CSR that turned M&S around? No, it was giving customers what they wanted. Good performance builds credit in the reputation bank far more than CSR does.

Does this mean companies can stop worrying about being 'good'? No, because being good is an integral part of performance. Companies should think about society's concerns and needs as well as their own. They should respect others' opinions. This is what builds trust, and building trust is good for business.

We must realise, however, that being a corporate citizen in this way is not a new concept. Companies such as Cadbury's and Lever Brothers were building excellent reputations by being respected corporate citizens more than 100 years ago. CSR, on the other hand, is a new(ish) concept that describes a set of initiatives, standards and expectations that reflect an anti-corporate agenda.

So companies are asking the right question: how can we improve performance, listen to stakeholders and ensure our contribution to society is a good one? But CSR does not provide the answer.

My advice to companies is to focus on performance, build a culture of corporate citizenship and engage with the audiences that really matter rather than those that shout the loudest. If they do this, they can ditch the unhelpful language and initiatives of CSR with confidence.

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