View From The Top - The Road to Damascus

When David Varney talks to Kate Nicholas about corporate responsibility, he displays the zeal of a convert

David Varney doesn't like the term Corporate Social Responsibility.

He prefers to talk about Corporate Responsibility (CR). You can see why: CSR has become such a PC buzzword, whereas in this post-Enron era CR just seems to make good business sense. But Varney doesn't just talk about it; as chairman of Business in the Community and of mobile service operator mm02 he has proved time and again that he practices what he preaches.

Varney's road to Damascus was a fairly long one. His conversion began in 1991 as MD of Shell UK when he found himself embroiled in the Brent Spar fiasco: 'We got it so wrong and I could see that we needed to ask ourselves some fundamental questions. For me the moment that was really important around Brent Spar was the thinking through how you preserve reputation, how you ensure that values are really translated into action.'

Corporate impact on the community

Varney then succeeded Cedric Brown at British Gas, a company which he says with masterful understatement 'had its challenging moments'. 'We had employees in Transco who wouldn't admit in the pub they worked for British Gas because they would just get a lot of abuse about fat cats.

So we had to think through how you get people to be proud of what they do. You can't manufacture that, you have to engage and that led me to revisit some of the things I had seen in Shell and to get involved in the community.'

But it was the link to core business practices that really convinced Varney. Looking at British Gas's community programmes he found that they were having a positive impact on management practices - a project that involved personnel staff in mentoring local schoolchildren with reading difficulties helped personnel staff to develop supervisory skills.

In August 2001, Varney was appointed to his current role as chairman of mm02, the demerged mobile communications services arm of BT. Then in 2002 he took his interest in CR to its logical conclusion when he succeeded Peter Davies as chairman of Business in the Community, the 20-year-old business-led charity whose 700 members are committed to improving corporate impact on society.

As BITC chairman, Varney has placed enormous emphasis on the need to better communicate not only the benefits of membership but the benefits of corporate responsibility: 'We needed to communicate better and measure better, in particular with regard to the impact on business and impact on society. What we have been able to do is to get a much bigger consensus about the impact that we want to help companies to have - I think we have raised the profile of BITC and we are helping businesses to tackle the incredibly difficult challenge of how we reverse the erosion of trust in the corporate sectors.'

The task is not easy. In the first place firms have to recognise there is a problem: 'With Brent Spar, Shell didn't see it coming and weren't aware. People made it undiscussable that they were blind to the fact that they were blind. If you put these things together, any corporation can easily screw itself up.'

What both the BITC and community involvement in general can offer, according to Varney, is an opening up of availability of information that can often lead to better decisions and, on occasions, open up new markets. At mm02, for example, a discussion with Asian employees about diversity policies flagged up the company's lack of Asian customers. A community sponsorship programme and set of Bollywood ring tones later and the company's share of the market has increased dramatically. 'Often you see your business and your brand through different eyes and you make different sets of decisions,' says Varney. 'Do I call that corporate responsibility, or running a good business? I think I call that running a good business.'

This focus on CR's link to business effectiveness seems to underpin both Varney's and BITC's antipathy to regulation as a means of driving responsible behaviour. The BITC's line is that its role isn't to bludgeon business into action, and only last month it came under fire for its condemnation of increased legislation in the run up to MP Andy King's private members' bill aimed at improving the regulation of companies overseas. 'Regulation is a pretty crude instrument - it basically sets a minimum standard, although I think we are more in the inspiration movement,' says Varney. 'I think one of the bigger challenges is whether the public sector can deliver a set of performances in organisational responsibility that is inspiring for the rest of the corporate community. It is also suprising that the business schools had done such a poor job on the ethical and moral problems of leadership.'

While Varney may be less than convinced about regulation, he is passionate about the value of benchmarking: 'We live in an age of incredible transparency and an age that disdains spin. And therefore benchmarking offers the transparency.'

During his time at BITC, he and CEO Julia Cleverdon have been instrumental in launching its Corporate Responsibility Index. The second index to launch in March has attracted 149 companies, an increase of 14 per cent on 2003.

'There are two sorts of people: those who are coming in, being benchmarked and showing results, and the second group who are shadowing the index by filling out all the forms but don't want to go through a formal process.

Our objective is to convert the second group into the first group, but we will do that over time.'

Mm02, not surprisingly, came within the top 20 per cent in the CR Index last year, as well as being included in the Dow Jones Sustainability and FTSE4Good indices. Despite cynicism in some quarters about the mass of glossy social reports landing on fund managers' desks, mm02 also launched its first CR report in 2003.

'After the corporate shocks of the last couple of years I don't think it is surprising that companies are trying to find ways of communicating what they do (in terms of CR). That is what the political system is demanding and there are also pushes from investors for greater transparency. So corporates are in a bit of a bind.'

While he is dismissive of CR as spin, he believes that communications plays a central role. At mm02, head of corporate communications Richard Poston is deputy head of the Corporate Responsibility Advisory Council formed and led by Varney, and has influenced policy-making throughout the company.

In the UK, director of PA Richard Brown also has direct responsibility for the company's CR/community involvement along with his counterparts in mm02 offices in Germany, Ireland and the Isle of Man.

Among the issues the council has had to grapple with include the perceived risks to health and environment, access to adult content and theft of mobile phones: 'These are all the main business issues; they aren't risks dreamt up by some CR department. So I find it a bit odd when people ask why are you concentrating on corporate responsibility? It's because it's what our customers want.'

Mobile industry code of regulation

While perhaps not the most fraught in terms of potential pitfalls, the mobile sector has CR issues to grapple with; the continued concern about the safety of mobile base stations and the risks posed to children by camera phones and mobile internet access. Mm02 has invested heavily in research and was recently involved in drawing up a joint industry code of self-regulation of content on mobiles. It has also released a number of child protection leaflets with links to the NSPCC. But the challenge has only just begun: 'In the next couple of years we will see phones that can shoot and distribute video streaming capacity. It used to be said to stage a coup, the first place you took control of was the local TV station, so that you could broadcast to the population. So what do you do when every member of the population has a local TV station on their mobile phone?'

Mm02 has now launched a programme - Can do in the Community - to find ways mobile technology can benefit society. While Varney accepts a consensus needs to be reached of what is acceptable, he believes the industry is taking the correct view of what the long-term liabilities are: 'Here we are with licences for 25 years. We know that if we don't deal with it now it will be a huge cost down the road to pay for what we failed to do.'

However, he is still convinced that corporate leaders in all sectors still need to better communicate corporate values and actions. 'We were not selected to take on these companies for our media friendly characteristics but we are going to have to be media savvy and that is a real challenge.'

In July, Varney will stand down as chairman of mm02, and it remains to be seen whether the exemplary commitment to CR is deeply enough embedded in the company to survive his departure. In the meantime, Varney is unsure where he will next carry his missionary zeal: 'I didn't know I was going to go into mobiles when I left British Gas, I am confident something will turn up. God knows what, but there is a plan up there somewhere.'

1968: Joins the Shell Refining Company as a personnel assistant

1991: Appointed managing director of Shell UK

1996: Appointed chief executive designate of the proposed British Gas

plc

1997: Chief executive of British Gas Group

2001: Chairman of mobile services operator mm02

2002: Chairman of Business in the Community

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