Stephen Howard comments on 'The hot air of CSR'

On Tuesday 3 February, Stefan Stern commented in the Financial Times that “now the recession’s here we can forget all that nonsense about corporate social responsibility (CSR) and get back to trying to make some money”. I’d suggest that Stern’s article is as inflated as the balloon he suggests CSR has become.

Ultimately how you do business does count.  In these uncertain times, companies and the wider community need leadership with integrity - and frankly you cannot legislate to create this kind of culture.

Corporate responsibility is about how companies run their business not how much money they give to charity. Business in the Community has always advocated that wealth creation is an essential element of being a responsible business.  Where the challenge has to be is in how companies make their money.

Longer term sustainability

The recession and the debacle in the financial services sector has highlighted a number of areas where more focus is required. 

Such areas include the overall governance structure, the reward and remuneration systems, how strategic decisions are made and how the short-term pressures need to be balanced with the longer term sustainability.

How these important issues are addressed will be at the centre of a great deal of debate within business and, through our 850 members, Business in the Community plans to be at the heart of it.

These failures do not undermine the basic belief of my own organisation which is that responsible businesses add far more to society than companies take out.

Our recent research with MORI showed that companies consistently participating in the BITC Corporate Responsibility Index outperformed the FTSE 350 on total shareholder return between 2002 – 2007 by between 3.3% and 7.7% per year.

At an individual programme level we have a plethora of examples of businesses driving return on investment through voluntary corporate responsibility, from Speedy Hire’s ‘Safety From the Ground Up’ campaign that delivered sales growth of 29% in a stagnant market to GlaxoSmithKline’s Team Resilience programme, which delivered the company a £2.4m saving.

How you do business counts

Ultimately how you do business does count.  In these uncertain times, companies and the wider community need leadership with integrity - and frankly you cannot legislate to create this kind of culture. Business leaders now need to lead and to bring their peers with them – regardless of whether there is renewed pressure for more legislation.

Creating the right environment in which to do business obviously needs a sound regulatory framework but it also needs vision and commitment by business leaders on the role of business.  I believe as many major corporations look into the abyss the senior management teams are also recalling why they got into business in the first place - and it wasn’t just to make money.

Bridging the gulf in trust  

What the current economic and financial crisis shows is that businesses need to accept responsibility for failures and to begin to re-engage stakeholders so that the gulf in trust between business and society can be bridged – actions are now called for, not just words.