Corporate Social Responsibility…magic or myth

 

April 27th, 2012

Author: Darryl Judd, COO, Logistics Executive

 

“It was President John Kennedy who said, “A rising tide lifts all boats.” but is Corporate Social Responsibility all it’s cracked up to be?" ~ writes Darryl Judd, COO for Logistics Executive Group.

 

It has been bandied around as yet another corporate “feel good” that is “trending” at the moment.  Corporate Social Responsibility (CSR) is fast becoming an industry in itself, interspersed in corporate frameworks globally, and infused universally in standard business practices.  Human Resources units are lavishing large budgets on CSR initiatives in the quest for their holy grail, which is envisioning an engaged employee workforce but does this work?  Is CSR good for business on a wider framework?

 

The Logistics Executive Employment Market Survey 2012 explored these questions and the perception of CSR in the market place.    The survey found that whilst CSR was a focus for 74.2% of organizations, the respondents in leadership roles revealed that there were barriers to the wider adoption of CSR in the following areas: Cost, Unclear Benefits and lack of Senior Management Support.  This suggests that there is still some confusion at executive level about the commercial benefits of CSR initiatives.

 

Defenders claim that CSR increases the virtue of the company and employee brand.  For example Human Resources professionals argue that CSR enhances employee engagement and the employee brand.  It therefore increases employee retention and enhances talent acquisition strategies.

 

The counter argument however is that most companies have yet to put clear measures in place that can articulate these benefits and the link to CSR.  The reality is that shareholders are more likely to lean on executives to deliver clear metrics relating to profits rather than these soft targets. 

 

The truth is that without hard metrics, CSR becomes largely ineffective.  According to political scientist Brendan Nyan, it could be argue that CSR is an easily manipulated medium.  “Much of what passes for CSR is just stroking the egos of senior management. Having the corporation make contributions to causes favored by senior management is, from their point of view, the best kind of charity, because they get to spend other people's money rather than their own. (They still get all the glory, of course, at those nice Man of the Year dinners and at the country club bar.) That's not in the interest of the corporation, it's just a form of non-monetary compensation. And doing it is a breach of their fiduciary duty to shareholders, every bit as objectionable as using the corporate jet for their own pleasure trips”.

 

Of course there is the risk - or some more cynically would say scandal avoidance - side of CSR.  Consumer activists have used their new-found media clout to bully corporates into action against social injustice.  Business leaders have become painfully aware that consumers don’t just buy goods these days.  No, these days they like to “interact” with their favorite brands.  They are educated, market savvy and demanding.  They belong to a modern global workforce that has toppled governments with Facebook during the spring uprisings and brought major Corporates shamed over poor business practices.

 

The only way forward for CSR it would seem is through a better understanding of this concept.  Companies need to carefully prepare the way before implementing their CSR programs.  Executive decision makers need to be better educated on what a true CSR program involves.  Employee involvement needs to be a driver of the concept from the outset and companies acting as the enablers. Clearly defined processes and transparent metrics put in place.  The concept of “social accounting/auditing” practices need to be implemented so that CSR responsibilities can be linked to outcomes in meeting the agendas of their corporate and community stakeholders.  Transparency, accountability and ownership by all stakeholders are the underlying principles here and the key to success.

 

It isn’t surprising therefore that Executives are a bit resistance to embark on a CSR program considering that they invest their company profits on a process that they have little control over – as this is largely handed over to their staff – and are often being dictated to on who and how they can do business by consumer activists.  It is therefore worth asking, what can CSR offer if it is done well?

 

Wejuan Yao, Director for China of Verite last year at the Supply CHIaNA 2011 Business Summit in Shanghai gave an impassioned presentation on “Trends in China Labor Relations and the Implications on Supply Chain CSR Issues”. 

 

 

Wenjuan is an example of modern China.  She personifies in many ways the human challenges faced by a workforce in an emerging economy.  Her recent assignments have seen her consulting to foreign company’s who are trying to manage their corporate image by ensuring the labor conditions of their Chinese suppliers meet requirements.  Workers’ conditions are highly topical all over the world and have become a subject of open debate, even in China.  Wenjuan provided a new perspective and a voice to what was already a nervous murmur at the Conference from many large corporates in attendance.  That is, the dramatic improvements in the Chinese economy that have led to the emergence of a new kind of Chinese worker who is educated and a lot more aware and demanding than previously. 

 

This is an issue about dealing with change more than anything.  In Wenjung’s words “China’s economy, the international community, as well as all factories have been benefiting from the unlimited and well-disciplined cheap labor supplies in China over the past 30 year and we are now facing the turning point. When the tide goes down, the competition for survival will become fierce. Meeting CSR requirements may – finally -- become a real competitive advantage for them in the near future.”

 

In this case, Wenjung is acting as the conduit, she is using CSR policy to build a bridge, which is creating a new era in China’s economic history by and bringing cohesion through a process of radical change in employment conditions. 

 

Of course we don’t all belong to large corporate entities.  Successfully implemented CSR can also be found in smaller entities that have the advantage of easier to access staff and more egalitarian teams.  “There are some basic commonsense rules that can be applied to all companies from small to large who wish to ensure their CSR meets the rigors and changing demands of the market place” according to Kim Winter, CEO of Logistics Executive.  Of course Kim would know all about this subject as he is not only the founder of Logistics Executive but also the co-founder and CEO of Oasis Africa, a leading charity organization which supports the orphaned children of the Kibera slums in Africa.  At Logistics Executive there is a strong voluntary involvement by staff.  “Often it’s the giving facet of the CSR experience that is the most personally rewarding,” says Kim.  “It can act as a culturally defining facet for your staff.   It gives all of us a sense of purpose and great pride to tell our story,” he continues.  The extent of Logistics Executive’s commitment to Oasis Africa also acts as a brand differentiator with charity fundraising initiatives and events offering a fun and rewarding part of their client experience.

 

In simple terms if Corporate Responsibility is implemented effectively it acts as a business enabler that can serve two main purposes:

 

1. Risk Avoidance strategy - To prevent the company from making errors of judgment in their supply chain that will expose them to undue risk.  These risks may include sourcing from disreputable suppliers who employing workers under poor conditions or who are not using environmentally sound practices.  This is part of the corporate risk management strategy, a defensive approach to protect the company’s reputation.

 

1. Employer and Corporate Brand enhancer - An active community initiative that is based on philanthropy and aligns with the corporate brand.  This promotes the customer’s experience of your brand and ties in with their values but it is only effective if employees drive it.

 

Wenjuan brought it all together for everyone in her presentation, by quoting President John Kennedy who said,  “A rising tide lifts all boats.”  This resonates more than ever today as global market growth and new technologies keep proving that we are all in this together.

 

 

Oasis Africa Australia www.oasisafrica.net is a not for profit Australia Government registered and audited humanitarian organization established in 2005 to support a small group of homeless orphaned children found in East Africa’s largest slum, Kibera, located in Nairobi Kenya. 

 

Kibera slum is home to over 1,000,000 people with 50,000 orphans and vulnerable children, has little or no infrastructure, electricity, running water or sewerage facilities, security is poor with no formal policing, government hospitals or clinics, disease is rampant with prevalence of AIDS being more than double the already high average for Sub Saharan Africa. Oasis Africa was originally initiated to provide schooling access to 50 children and currently provides ongoing education (primary and secondary), education, food and security to over 1000 young people based on the premise that education offers a genuine road to freedom from poverty.

 

Logistics Executive’s involvement in this project is aligned to its corporate social responsibility mandate and since this time it has maintained sustainable engagement through fundraising events involving many international supply chain and logistics partners that share similar CSR values. The project continues to build a self-help model where the local community takes increasing responsibility for the end to end supply chain upon which the school operates.

 

Oasis Africa Australia’s low cost operating model is based on a platform of skilled logistics and supply chain industry volunteers contributing time to run the organization efficiently and engage with industry partners who engage in fundraising events and onsite project development and initiation activity in Kibera. Well-planned, high activity and output supporter trips are made to Kenya annually in coordination with resource requirement and deployment plans generated by the local community.

 

 

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