Thought Leader: The evolving face of CSR

Firms cannot ignore the rise of CSR, says Giles Gibbons. They must exceed expectation and make a contribution.

Piers Morgan's sacking is an important milestone in CSR's journey from the fringes to the mainstream of the business world. No pundit would have predicted that Trinity Mirror shareholders would be behind Morgan's exit from Canary Wharf - anonymous shareholders who usually tot up profit and loss.

Only this time, it wasn't profit and loss that was the subject of their calculations, but ethics and reputation - a first in the evolving phenomenon of shareholder activism.

BBC business editor Jeff Randall argues that this shareholder-inspired sacking was a turning point. He explains that the hot new thing in the City is CSR, and that given the world of political correctness in which business now operates, we had better get used to it. You might quibble with him over the idea that CSR is a new thing, and you might resent the contention that it's about political correctness - but basically, Randall is right.

We should all get used to the idea that non-financial issues and performance will play an ever-greater role in business as citizens' and consumers' social awareness and concern increases. So what are the implications for the communications profession?

Where is CSR going and what are the issues that will affect the way it is used and communicated by firms?

Questions about the communication of CSR suggest that it's a specific, discrete component of a company's activities requiring separate communication, much as a company would wish to communicate its annual results or the launch of a new product. But a communications-led approach to CSR that doesn't tackle underlying issues of social, ethical and environmental performance can create a dangerous gap between external rhetoric and internal reality.

Many companies still view CSR as essentially a communications exercise, a way of creating a positive reputation. But the way to create a positive reputation is to be a responsible company, and this requires action of two distinct types: action that minimises social, ethical and environmental risks, and action that maximises social, ethical and environmental opportunities. The difference between them is crucial: it's the difference between what to communicate and what to keep private.

Minimising social, ethical and environmental risks is the foundation of a good reputation. In plain English, it means trying to stop doing things that are wrong (and likely to attract criticism). What precisely these things are, of course, is a constantly evolving set of issues, with the benchmark of acceptable standards being raised all the time by a disparate group of journalists, activists and campaigners, as well as socially responsible investment ratings agencies, bureaucrats and legislators. Or, if you prefer, civil society.

Codes of practice

Companies that are serious about CSR tend, rightly, to adopt a collective approach to managing their social, ethical and environmental risks. After all, risk minimisation is another way of saying 'compliance with society's expectations', and these expectations apply to all companies in all sectors.

The best approximation of what society's expectations are is provided by the burgeoning panoply of CSR standards and codes of practice. There is no communications substitute for a rigorous, painstaking examination of company performance against these collective benchmarks, and then making any necessary changes internally - for example, changing policies, management systems and operating processes.

Emerging issues include potential conflicts between companies' public policies and their private lobbying activity (either directly or through trade associations), and an increased focus on the social impacts of core business activities, not just business processes.

The mistake that many firms can make is to believe that it is worth communicating what they're doing to minimise their risks, as if they expect their reputation to be improved by proudly claiming 'We do what you expect us to do'. To gain credit for CSR, firms need to build on the foundations established by minimising their risks and start maximising their opportunities through real social leadership.

Social leadership means exceeding today's expectations and finding ways to harness company resources in order to make a distinct and positive social contribution. Here, a competitive approach is required. There is no code of practice or CSR manual to consult: it's a simple question of creativity. Two key areas are emerging as offering the greatest potential.

True corporate responsibility

First is the use of the innovation process to turn social needs into business opportunities. Unilever, for example, has created products and distribution systems specifically designed to improve the lives of the poorest people in developing countries, while Vodafone is doing the same in South Africa and O2 has created a product that uses mobile technology to help treat asthma.

Second is the use of consumer brands' cultural power as an engine of social change. With governments increasingly accepting their inability to influence the attitudes and behaviours of their citizens, there is a powerful new role companies could play, as MTV has been doing for years with its youth campaigns for AIDS awareness, the environment and human rights.

The fact that this type of social leadership is delivered through the core business, rather than as an add-on extra, removes the need for specific CSR communications, and consequently tells a more credible and inspiring story.

Richard Lambert, former editor of the Financial Times, has said that CSR will have succeeded when there are no internal departments, board members or employees dealing with it - when social, ethical and environmental thinking is embedded in the decision making of every department, board member and employee.

There's a way to go before that happens - but we're certainly moving in the right direction.

KEY ISSUES IN CSR COMMUNICATIONS

- Avoid a potentially dangerous gap emerging between external rhetoric and internal reality. A positive reputation is created by being a responsible company, rather than communicating a CSR policy or initiative. Being a responsible company involves constantly monitoring social expectations and changing behaviour where appropriate, not just communicating current performance more effectively

- Distinguish between those activities and policies that are carried out in order to meet society's expectations (CSR), and those that are carried out in order to exceed society's expectations (corporate social leadership). Leadership should be communicated; responsibility should not. Companies should not expect credit for doing what is expected of them, but consumers, opinion formers and investors will reward companies that demonstrate a desire to go beyond expectations in order to make a positive social contribution

- CSR is risk management, characterised by a collective approach: compliance with best practice, adherence to common standards and social reporting frameworks. Emerging issues include conflicts between companies' public policies and private lobbying positions, and the social impacts of core products and services (not just business processes)

- Corporate social leadership is opportunity maximisation, characterised by a competitive approach: innovation, creativity and the forging of a distinctive reputation. Emerging opportunities include social innovation (turning social needs into business opportunities) and social marketing (using the cultural power of brands to change social attitudes and behaviour)

- The ultimate test of corporate responsibility is the degree to which social, ethical and environmental thinking is embedded within the decision-making process at every level of the organisation - not just policies and codes of conduct, but the hearts and minds of every employee

- The best and most credible way to communicate CSR therefore is through core products, services and campaigns, not as an additional and separate exercise.

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