The State of CSR
by Matthew Mower, sourcingfocus.com
With the economy hitting bleak times, corporate social responsibility programmes have taken a back seat while companies take measures to ensure survival. Juxtaposed to this is the coalition government’s vision for the Big Society, which aims to go beyond CSR and put power and responsibility directly into the hands of the people. So it follows that companies that are seen to look out for the people will become more attractive, and gain more business.
Is CSR firmly back on the agenda in 2012? How is it being done? This feature will look at the current state of play regarding CSR in the outsourcing industry, and how companies are looking to accrue positive headlines through socially responsible actions.
Dr Steven McCabe, Director of Research Degree Programmes at Birmingham City Business School believes that that some will still consider price to be the dominant factor in any purchase: “Paying extra to receive something that they can get cheaper elsewhere may seem unnecessary. Indeed, as we all experience the effects of global problems and austerity we all search for a bargain. Therefore, there is an argument that CSR could become an expensive appendage and that the additional costs may make your products and services uncompetitive.”
However, the good publicity that CSR brings can directly lead to business benefits and conversely, adverse public opinion can lead to the opposite. A trajectory study by 23red suggests that 91% say how good a company is and 90% say how it behaves towards its customers and communities, is significant when considering acquiring a product or service. Jane Asscher, Managing Partner and Chairman of 23red stated: “People are rewarding ‘good’ brands with their custom.” She continued: “Leaders in the field such as Unilever, P&G, and M&S continue to garner positive PR as a result of their long-term commitment to their CSR programmes.”
Is this is the case, in the age of social media and whistle blowing, it is difficult to for businesses and their processes to remain impervious to public awareness. Asscher states that: “It is easier by the day for uncomfortable truths to be told. So in the face of this most sensible companies are going with the flow and the city analysts who have argued that CSR is a waste of shareholder’s money are losing credibility.”
Unilever in particular have reiterated their public promise to halve their environmental impact over the next ten years. While providing good publicity for Unilever, it also provides other benefits, as Asscher stated: “It also causes problems for their competitors by giving Governments, NGOs, journalists and citizens a stick to beat them with. This bold declaration will also galvanise the company, its employees, and its suppliers to live up to their very public promise.”
CSR can also help to perpetually provide an affable economic climate for their business to operate in as Dr McCabe believes: “We have a duty to invest in the growth and development of those employed in local economies as well as the emerging ones. If the objective is to increase consumption of our own goods home and abroad this will be undermined if people’s wages are cut and they work for conditions that are unfair and exploitative.”
While the examples above apply in general to B2C organisations, the conclusions can be directly transferred to outsourcing users, specifically in the public sector. Organisations affiliated with legislation such as the ISO 14001, an EU standard for environmental management, can be extremely beneficial. Asscher states: “There are a number of Government procurement departments which request confirmation as to whether or not a potential supplier has ISO 14001, the environmental standard. While it may not be mandatory, if the tendering company thinks their chances will be improved, even marginally, then it would be worthwhile achieving the standard.”
So it seems then that CSR is, and should be, on the present and future agenda for businesses. While for some price will remain the ultimate purchasing factor, CSR is a deciding factor and can distinguish an organisation from its competitors. In terms of procurement, new legislation has meant that, while not always mandatory, CSR can provide firms with a far greater chance of winning contracts. CSR, particularly with widespread participation, creates an economic domino effect in which businesses reap the rewards of their actions by creating advantageous business conditions.