Reading Tench & Yeomans, Corporate Social Responsibility pp.96-111.
Corporate Social Responsibility & Community Relations Why care about the community and wider society There are big debates whether CSR is part of altruistic philantropy or just a cunning business ploy to increase profits. Whichever school of thought you are adhereing to, it makes good sense to engage in CSR
Johnson & Johnsons’s chief executive officer James Burke demonstrated that companies with a reputation for ethics and responsibility grew at a rate of 11,3% between 1959 and 1990, while less ethical companies only grew by 6,3% (Labich 1992) Many authors have shown that CSR contributes to a good corporate image and reputation
CSR’s importance for the organisation Peach’s pond model (1987) Level 1:basic Pay taxes Observe law Deal fairly Level 2: organisational minimise neg effects Act in the spirit of the law Level 3: societal Responsibility for a healthy society Help remove/alleviate society’s ills Impact of a business on its environ- ment
Others, e.g. say that the first responsibilities are ECONOMIC, to be profitable which is the foundation on which everything is built, then can we move to legal, ethical and philanthropic obligations (Carroll 1991) This is a step however, from economists of the past (Milton Friedman) who said that the only responsibilities of a company is to make money! (1970)
CSR - levels Today many successful & profitable companies spend large amounts of money and time on fulfilling their social responsibilities, whatever their reasons behind it. Many quote CSR as providing a competitive advantage Today we have an emergence of standards in the field to encourage good practice
Standards and guidelines Dow Jones Sustainability Index FTSE 4 Good Index Business in the Community’s CSR Index Global Reporting Initiative’s Reporting guidelines
BITC Business in the community PerCent standard, this is awarded as a voluntary benchmark to companies donating at least 1% of pre- tax profits In 2004, 152 companies reported through the 1 per cent standard, with 116 achieving it. Among top givers (in absolute terms) are GlaxoSmith Kline (£114,290,400), BP (£50,123,223) Royal Bank of Scotland (£40,100,000)
CSR versus Philanthropy It is important to make a distinction A simple def. of Philanthropy is “corporations performig charitable actions” It is a short-term one way relationship, unpredictable for the receiver
Community relations - tactics Tactics have to be in line with the composition of the local communities Research needs to be done to find out what kind of people live in those communities Then tactics can be developed that suit both the communities and the organisation’s objectives
Tactics Grants to local groups (e.g. parent & toddler group, increasing literacy in the community, that can be of benefit to the orgnisations to, reducing crime, etc Equipment (donating used or new equipment for projects, raffle prizes, sponsorship)
Free training (e.g. keeping accounts for non-profit organisations, computer skills to unemployed) Projects (e.g. maintaining local parks, wildlife projects etc by providing manpower or money) Use of facilities (e.g. letting canteen or sports hall etc)
Visitor centres (to educate community, showing that there is nothing to hide - e.g. Sellafield, sometimes this is even self-financing such as Whisky Distillery tours, Cadbury’s world etc This can act as creating jobs and tourist attractions which are an added bonus to local communities
Environmental projects (cleaning up parks or rivers, reducing pollution etc. Open days (good for staff & community, often popular with kids ) Public speaking (providing professionals for specific courses, etc)
Example: Patagonia outdoor clothing P. have found interesting ways to couple their products’ function & the brand’s environmental values
Patagonia Business insights: Turnover: $240 million Core service: Manufacture of high quality outdoor and adventure sport clothing Employees: 1,200 Mission: Build the best product, cause no unnecessary harm and use business to inspire and implement solutions to the environmental crisis
Inspired by adventures climbing in Yosemite and the Patagonian Fitz Roy mountains, Patagonia was founded by Yvon Chouinard in 1973. The company came to Europe in 1987 with a store in Chamonix, the birthplace of modern mountaineering. Patagonia makes clear links between their products and the environment that the products help people enjoy, and they say their company mission statement gives them purpose and urgency.
Patagonia’s strategy “Since we began making clothing, we have seen popular rock routes become irrevocably scarred by pitons; the fouling of local rivers and the decimation of native fish populations. We have seen the places we loved best ruined by unchecked and irresponsible development. We realised that we had to begin giving back to Mother Nature before the wilderness we loved so much was taken away altogether.”
Patagonia’s strategy The companies response to this has been to pledge at least 1% of sales (or 10% pretax profits, whichever is greater) to the protection and restoration of the natural environment. In 2005, this meant donations of US$2.1 million dollars, bringing the total since 1984 to over US$20 million.
“Big, wild & connected” A campaign that champions environmental causes world-wide In Europe, the company champions environmental causes relevant to Europe, such as: reducing truck pollution in the Alps; restoring salmon and other sea-run fish to the Loire and its tributaries; and campaigning to overturn the current ban on the sale of traditional (non-GMO) vegetable seeds.
AVIVA - CSR programme “For Aviva, corporate social responsibility (CSR) means the management of our relations with our customers, workforce, suppliers and the community as well as the management of our performance in respect of the environment, human rights, health and safety, all under- pinned by the adherence to rigorous standards of business conduct.
AVIVA CSR Aviva believes that CSR builds value for the business and all its stakeholders. In particular, we believe that it motivates our staff and that it is important to growing numbers of our customers and shareholders. We also believe that you cannot operate within a community - be it global or local - without taking account of its major challenges and playing your part in meeting those challenges”
What do they do concretely? In 2005 Aviva invested over £5.7 million in community initiatives worldwide, exceeding 2004 total by over £1 million. (0.014% is given to CSR) This investment includes over 24,000 hours volunteered across the group during 2005.
Aviva’s activities Crime prevention (e.g. Neighbourhood apprentice scheme & Friday night football scheme) Youth development and education (education centres in Turkey & India for underprivileged kids) Disaster relief Promoting health & social welfare (Free medical checks in 10 Polish cities) Staff volunteering (for various activities -staff driven)