The socially responsible corporation

Imagine a immensely lucrative company that underpays workers, cuts corners on health and safety standards, cheats on taxes, bribes officials and poisons the environment. Think of another enterprise, less profitable but paying the right wages and taxes, abiding by consumer-protection standards for its products, shunning corruption, curtailing emissions and conserving resources. Which one is better run and more likely to be around for the owner’s grandchildren to inherit? Which firm would those kids be proud to talk about in class or in Facebook?

More importantly, which one is your business?

Our Friday column covered the basics of corporate social responsibility (CSR) and how firms are not just supporting good causes, but also being more responsible in the conduct of their businesses. Charity does not excuse exploitation, corruption and despoliation in the course of making money. Being a good corporate citizen means, first and foremost, doing no harm, obeying the law, and respecting the rights of man and nature. And if well-funded PR could cover up the excesses in the past, that’s not always possible in the age of blogs, tweets and cybernews.

Hence, the smart money is doing much more than just giving to the local church or basketball team. More and more upright and image-conscious companies are instituting the CSR audit—a systematic and periodic assessment of business operations and resource allocations to boost benefits, enhance ethics, and decrease damage to people and the planet. And the very best enterprises are going all the way to ISO 26000, the International Standards Organization’s guidelines for good global corporate citizenship due to be published later this year.

There are voluminous materials on CSR audit on the Internet. Canada’s InterPraxis Consulting cites at least six core principles for companies taking responsibility for the moral, social and ecological impact of their decisions and activities: respect for international norms of behavior; compliance with the law; recognition of stakeholders’ interests; accountability and transparency; ethical conduct; and respect for fundamental human rights. Other primers give separate mention to environmental responsibilities.

Export Development Canada does an annual CSR audit; it includes quantitative measures and reports on performance in key social responsibility areas, as well as risk assessments of the impact on human rights, the environment and stakeholders (the last called reputation risk). There are also personnel training and internal controls to institutionalize CSR values and actions. Other CSR activities could be the research and development of safer and more sustainable work processes, as well as collaboration with the state and non-government organizations in policy and program advocacy.

Last but definitely not least, there must be well-planned and engaging communications programs to inform employees, shareholders, the business community, the nation and the world about the company’s social responsibility initiatives. Informing key sectors and the public at large about one’s CSR initiatives gives credit where credit is due. Equally important, it also helps build a broad and deep consensus that CSR is central and essential to business activity.

As emphasized last Friday, doing what’s good (including generating profits) and avoiding what harms should constitute the fundamental rationale and primary motive of any enterprise. Moral and social responsibility is not just one more function of corporate activity, along with finance, production, marketing, PR and R&D. It is, in fact, the be-all and end-all of business.

At the same time, good CSR helps boost commercial operations in many ways. It improves shareholder and brand value as it increases customer loyalty and public awareness. It offers opportunities for strategic alliances with entities, including government agencies and civil-society groups, that may prove useful in ventures. CSR cultivates good media ties that can be very helpful in critical times; it also attracts quality talent from top-caliber schools and firms. And there are tax breaks and assistance programs for certain schemes, like jobs for the physically challenged and climate change projects.

As for IS0 26000, according to www.iso.org, the voluntary parameters—which would not be subject to certification—will “assist organizations in addressing their social responsibilities while respecting cultural, societal, environmental and legal differences and economic development conditions.” In addition, they will “provide practical guidance related to operationalizing social responsibility, identifying and engaging with stakeholders, and enhancing credibility of reports and claims made about social responsibility.”

The guidelines will “emphasise performance results and improvement; increase confidence and satisfaction in organizations among their customers and other stakeholders; and be consistent with existing documents, international treaties and conventions, and existing ISO standards” without diminishing the state’s power to address the social responsibility of organizations. Lastly, ISO 26000 shall “promote common terminology and broaden awareness of social responsibility.”

That CSR is the wave of the future cannot be disputed. The In-ternet has made all activities of every company subject to global scrutiny. In both industrial and developing countries, the tenets of good corporate citizenship cannot be divorced from the imperatives for progress, whether they are paying correct taxes, treating workers fairly, or safeguarding the environment.

Meanwhile, climate change, cross-border epidemics, and industrial mishaps like China’s melamine-tainted milk, will bring the world at the company’s doorstep and boardroom more and more, demanding that it takes full responsibility for any problems it causes. And firms that shirk their moral duty will increasingly find the door closed to the biggest consumer and capital markets.

In short, doing good must become the essence of doing business, and the profit motive must bring gains to all. –RICARDO SALUDO, Manila Times

Ricardo Saludo heads the Center for Strategy, Enterprise & Intelligence ( rs@censei.co This e-mail address is being protected from spambots. You need JavaScript enabled to view it ), which packages corporate social responsibility projects and advises businesses on building CSR into their core activities.

opinion@manilatimes.net