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Article Excerpt
According to Bjorn Stigson, president of the World Business Council for Sustainable Development, corporate social responsibility (CSR) generally had a low profile on company agendas 10 years ago (Stigson, 2002). Then came the 2002 World Summit in Johannesburg, with its key message: The private sector has a duty to contribute to the evolution of equitable and sustainable communities and societies.
Stigson adds that this was also when it became apparent that CSR is in a business's self-interest. Few companies can succeed in a society--or indeed, a global economy--that fails. By generating economic growth, creating jobs, behaving with integrity, and paying taxes, businesses can contribute to society's development and play a full role as corporate citizens.
Even then, BT was ahead of the game. It had not waited to act until CSR became fashionable. The company has invested heavily in its particular brand of corporate citizenship since its privatization in 1984 and has positioned social and environmental responsibility as a key part of its corporate strategy since the early 1990s.
This is an ongoing commitment. The company was an original signatory to the UN Global Compact, a challenge issued to business leaders in 1999 by UN Secretary-General Kofi Annan. It aims to bring companies together with UN agencies, labor, and civil society to support universal environmental and social principles.
BT's continuing decision to invest in CSR was not just a matter of philanthropy. One could say that BT opted for "enlightened long-term self-interest"--acting responsibly towards society and the environment, but doing so in ways that also meet the needs of its customers, people, suppliers, individual shareholders, institutional investors, and other stakeholders.
As a major supplier of networked IT services and a key player in the global ICT industry, BT has long-term customer and partner relationships, all of which benefit from its approach to CSR. The company's core set of values includes a commitment to contributing positively to society and a sustainable future. This drives its organizational culture, customer experience, and, ultimately, business success.
BT's experience is that, even if a company is not convinced that it needs to be seen as a good corporate citizen, there is a compelling business argument for adopting CSR. Customers and investors increasingly prefer to do business with companies that are proactive in this area. In BT's case, for example, CSR performance differentiated it from its competitors on contracts worth 1.3 billion ($2.44 billion) in the 2006 financial year.
Clearly, improvements to CSR performance can also generate big savings. Take concern for the environment, for example: BT achieved savings with an environmental component that totalled 98 million [pounds sterling] ($184 million) in the year ending March 31, 2006, bringing the total of such savings since 2002 to 290 million [pounds sterling] ($542 million).
The Three Phases of CSR
Although compelling in their own right, these are just two examples of how CSR can benefit the companies that adopt it, as well as society and the environment. A responsible approach to business reduces costs, mitigates risks, improves a company's reputation, motivates employees, drives innovation, and generally boosts performance. Such benefits are not achieved overnight. For some, it can take many years of sustained focus to reach the highest levels of CSR.
BT's experience suggests that the journey usually involves three phases of activity, as outlined in Exhibit 1:
1. The protector phase
2. The builder phase
3. The innovator phase
The "Protector" Phase
The first or "protector" phase tackles the basics. They ensure a company has addressed the principal risks to its reputation and meets all legal, regulatory, and compliance requirements. Issues such as health and safety, corruption, privacy, ethical procurement, pollution, and discrimination all need to be dealt with effectively and consistently. They also need to be revisited regularly as laws and regulations change.
EXHIBIT 1 The CSR Journey Summary Framework 1st Generation 2nd Generation 3rd Generation Protectors Builders Innovators Health and Safety Flexible working Sustainability Solutions Corruption Diversity Marketplace Diversity Privacy Community investment Strategic Relationships Ethical procurement Customer exclusion Charity support Bid Support Pollution Resource efficiency Discrimination Value Drivers Market Place Innovation Employee Motivation Cost Reduction License to Operate/Reputation Risk Management
The "Builder" Phase
In the "builder" phase, companies move beyond merely what is required by law and begin to build a genuine ethical reputation. By addressing subjects like workforce and supplier diversity, flexible working, community investment, charity support, the efficient use of natural resources, and care for the environment, they build trust among customers, employees, and the wider community.
An example of this kind of activity is the green energy contract BT signed in 2004. BT first set a target to reduce carbon dioxide emissions 14 years ago, and a great deal has been achieved since then; however, the company wanted to go further. To reduce its contribution to climate change, it signed a three-year contract with energy suppliers, nPower, and British Gas that meets nearly all of BT's UK electricity requirements from environmentally friendly sources such as wind, solar, or hydroelectric energy. In January 2007 it renewed the contract until 2010.
At the time of the original deal, this made BT the world's largest purchaser of green energy. More importantly, the contract helped the company lower its C[O.sub.2] emissions by 60 percent from the 1996 level. That is not the end of the story: BT is now using small renewable electricity generation systems at three of its sites and plans to test a new type of micro-wind turbine at two other sites this year.
Looking ahead, the energy efficiency of buildings is becoming an important issue in Europe. The EU energy performance of buildings directive (2002) includes plans to grade buildings according to their energy efficiency, for example. One of its key requirements is for the energy performance of properties with more than 1000[m.sup.2] of total useful floor area to be certified. For properties "occupied by public authorities and by institutions providing public services to a large number of persons," there is a further requirement to display the energy performance certificate in a prominent area.
The potential benefits could be huge. According to a report by the European Insulation Manufacturers Association (EURIMA), a renewed, concerted effort to cut energy use in buildings across the European Union could save about 270 billion euros a year ($339 billion) and lead to C[O.sub.2] emission reductions of 460 million ton per year by 2032.
Customers will quickly be able to see who does--and who does not--take energy efficiency seriously. That is not necessarily bad news. It will also give companies a good story to tell, improving their standing among "green" consumers and investors. Investments in insulation, for example, will not...
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