What is Corporate Responsibility?
Corporate responsibility says that companies are not just profit making machines. They have wider responsibilities. They must treat employees with respect, limit damage to the environment and act with integrity towards their customers and the community.
In practice corporate responsibility is about managing the economic, social and environmental value the company adds or takes away from society as a whole.
It is more than taking stock and managing impacts, it is also about turning business on its head so that environmental soundness becomes a competitive edge; a well treated workforce means enhanced productivity; social responsibility means profit.
The follow diagram is one example of how corporate responsibility can be represented.
Why is it Important?
40% of humanity live on less than £1 a day and lack basics like clean water and food (Millennium Report, United Nations, 2000).
Only 25% of the public agree that companies communicate honestly about their social and environmental performance (Globescan, Global CSR Monitor, 2003)
A fifth of the entire Amazon was chopped down in 2004 – 6% more than the previous 12 months (BBC News, 19 May 2005).
Only 9% of companies clearly position disability as part of their CSR strategy (Employers’ Forum on Disability, Global Inclusion Benchmark, 2003)
Ethical boycotts by consumers are costing big brands £3.2 billion a year. (Co-operative Bank, Ethical Purchasing Index, 2004)
What is Driving Corporate Responsibility?
Today over 140 companies in the FTSE 250 report on social and environmental performance. With the introduction of the Operating and Financial Review (OFR) in April 2005, more companies will be considering how to manage and report their non-financial risks and opportunities (most of which would be included under the umbrella of corporate responsibility).
What are the Characteristics of a Responsible Company?
Responsible companies inspire trust in all of their stakeholders. They engage customers, involve and motivate their staff, communicate openly about their performance and work in partnership with others to help manage negative impacts. Companies that manage their social and environmental impacts effectively can increase efficiency and enhance reputation, all increasing profit and shareholder value.
Corporate Responsibility and Sustainability:
are they the same?
The debate continues and there is no definitive answer. But many believe that there is a difference. For example, a company may operate in compliance with legal environmental standards and regulations, even reducing its environmental burden year-on-year. But it may still produce products, pollution or waste that is beyond the capacity of the environment to handle. In this situation it may be perceived to be in accordance with corporate responsibility principles but not in accordance with sustainable development principles. Others perceive corporate responsibility to be a company’s response to sustainable development – how it incorporates social and environmental values and ethical principles into the way it does business.
Of course Entec want to help companies move towards sustainable development. But we believe that taking any step, be it using the term corporate responsibly, CSR, corporate citizenship or sustainable development, is a step in the right direction.
Links for More Information
ACCA –awards for sustainability reporting
Business
in the Community – companies that count, who are the leaders?
FTSE4Good – criteria used by the City for good practice
Accounting
Standards Board – Guidance for producing an OFR
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