March 2002

CSR: 5 Minutes with the CEO

Evidence is accumulating that Corporate Social Responsibility (CSR) is good for business in the medium to long term. CSR is, recipe simply, about treating your stakeholders in an ethically responsible way. It takes time to put into practice and is not without cost. But there are commercial benefits which justify the time and effort.

CEOs – with a few exceptions – don’t have much time, a problem made worse by the fact that they tend to last in their positions, on average, about 4 years. At a recent CSR conference, sponsored by MHCi, a former CEO said with some humour “the first year is getting to know the job, the fourth year is spent working out how to save your job year and so there are only two years in which a CEO can take on a cynical Board and fight for CSR”. More seriously, he advised CSR professionals to be more commercial – if they are lucky, they will initially have at most 5 minutes to convince a CEO of the merits of a CSR policy. So what should an advocate of CSR say?

There are four main points:

First, what is CSR all about? The definition above, ‘treating stakeholders in an ethically responsible’ way begs, of course, the questions of who are the stakeholders and how to treat them ethically. It is becoming accepted that there are primary stakeholders – management, shareholders, owners, employees, consumers, contractors and secondary stakeholders – environment, government, community etc. Ethics is a bit like beauty, you know it when you see it but find it difficult to define!

Second, what are the key advantages of being socially responsible? The main ones are:

· Reputation is improved among staff and customers

· Productivity is improved through increased innovation and efficiency

· Shareholder value is increased as social investment funds target the company

· The customer base is widened with no risk of losing existing ones

· Motivation and commitment of staff is improved

· Recruitment of young bright people is enhanced

· Personal satisfaction of management is increased

Third, what are the main steps that need to be taken? These steps will, of course, build upon many activities already underway but probably in different departments, divisions and countries. Thus what does business need, at minimum, to do? This is likely to proceed in stages but immediate actions would include:

· Win Board support for their introduction of a CSR policy

· Lead from the front

· Appoint a CSR manager, but keep responsibility shared

· Understand available CSR measures

· Decide upon the key stakeholders

· Take stock of measures already under way

· Decide on whether to produce a social report

· Report adherence to standards, be open

· Contribute to CSR dialogue eg on SA8000, join Institutes eg AccountAbility, GRI, SA8000

Fourth, what are the costs likely to be? These are:

· Increased costs of focus group sessions with stakeholders

· CSR manager and budget

· Training of staff on CSR

· Production, publication and distribution of social report

· Web site section devoted to CSR

At the recent ESCP-EAP European Management Conference in Paris for business students, the role of the CEO in driving the CSR process was highlighted as crucial: as the captain of his/her ship of commerce, what is needed is not an engine to power the ship, nor a rudder to steer but a compass to point the way. CSR is that compass.

[Contributed by Michael Hopkins CEO of MHCi]