Article by Wendy Campbell

What About Corporate Social Responsibility?

by Wendy Campbell
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How do we keep big business, corporations and even not-for profit organisations honest, accountable and ethical in an increasingly low trust world? Wendy Campbell of Shenton Park who is Managing Director of The Glastonbury Company and a specialist in corporate social responsibility believes the problem often starts at the top.

Is corporate social responsibility (CSR) a myth or reality? And does it matter? Should the general community be concerned how business leaders act and behave?

Well, a recent example highlights why this emerging area of management science impacts on the whole community. Recently the following question was put to a group of fellow directors: “What About Corporate Social Responsibility?”

“Should we waste shareholders money on donations?” was the immediate response, followed by a short discussion on which charities were most worthy of support. The conclusion was that there should be no legal responsibility for Corporate Social Responsibility. Given the extent of current corporate compliance laws this was a fair opinion.

Interestingly, the Australian Standard AS 8003-2003 (Published by Standards Australia) defines Corporate Social Responsibility as:
“A mechanism for entities to voluntarily integrate social and environmental concerns into their operations and their interaction with stakeholders, which are over and above the entities’ legal responsibilities.”

The standard goes on to recommend that commitment, including business commitment, to Corporate Social Responsibility should be written and “actively communicated” to all employees and other stakeholders at all levels of business operations, starting with the board and chief executive officer/senior management.

The concept of using Corporate Social Responsibility as a boardroom strategy to differentiate a business in the marketplace is an interesting concept. But how is it put into practice? An example is this years Australian Institute of Company Directors Outback Forum held by Rio Tinto Iron Ore in Dampier. The mining giant has gone way beyond the legislative requirements for its infrastructure development.

As well as complying with the law, the companys approach is voluntarily based on forming strong relationships with the indigenous people and working with them to improve their well-being as a result of Rios economic activity. The care and preservation of the nearby rock art, for the future generations of indigenous people is part of this approach. Education programs and scholarships for young indigenous people, apprenticeships, traineeships and direct employment opportunities must result in the local community being an active supporter of Rio Tintos activities.

Local Rio Tinto executives believe that it makes good business sense to champion and adhere to ethical sustainable development principles because shareholders increasingly expect that companies have a strong track record of corporate social and environmental responsibility.

Flying home from Dampier, I thought about the current argument regarding Corporate Social Responsibility implementation – should it be voluntary or regulated? If Rio Tinto Iron Ore can achieve the significant outcomes they have without regulation, perhaps voluntary is the way to go.

It would be interesting to ask Rio Tinto shareholders.

This is just one example of whats happening within big business.

Here are five ways to check if your organisation is practicing CSR in a way that ensures superior reputation in the marketplace:

Do your CSR strategies focus on creating upside potential? Does your organisation enjoy an unusually low level of staff turnover? Does your company earn most of its income from repeat business? Is your company applauded by community groups for the way in which they are part of your strategic decision-making? Are your opinions sought on best practice in CSR? Are your company’s shareholders confident in your economic performance?