ARTICLE FOR THE MELBOURNE AGE – David Grayson
DELIVERING RESPONSIBLE BUSINESS
If you are running a business nowadays, then almost certainly, you will feel that there are higher expectations on you. Some of your customers are probably now asking questions about your environmental and social impacts: are you sourcing sustainably, applying fair-trade principles? At least some of your employees are probably expecting not just decent pay and conditions and interesting work with opportunities to learn and advance, but also that organisational values match their personal values. Some institutional investors – if you have them – will now be asking whether you have a strategy on Climate Change and to reduce CO2 emissions. This is not typically because these investors have become tree-huggers- simply they understand the risks to the long-term value of their investments, if such issues are ignored. Some of us call all this Corporate Responsibility or Responsible Business.
More businesses are now recognising that this need not just be about risk minimisation – but can also be about opportunity maximisation. Such businesses are recognising that genuine commitments to operate ethically and sustainably can be a source of competitive advantage.
It will be much easier for businesses to stick to their commitment to responsibility and sustainability if they are consciously looking for opportunities and not just minimising risks. Such an approach is much more in the spirit of entrepreneurial, can-do enterprise. Certainly, corporate responsibility cannot be treated as a bolt-on to business operations – it has to be built-in to business purpose and strategy.
How does business integrate Corporate Responsibility? Top leadership in the business has to believe and walk the talk. Staff and other stakeholders need to hear their leaders explain regularly what Responsibility and Sustainability means for the business and why it is important. It is surprising how even in companies committed to Corporate Responsibility; staff often say they have never heard their bosses talk about this. Preferably, this should be explicitly linked to the stated values of the business. Intelligent companies use their Values as criteria in the recruitment of staff – does a potential recruit share our values? They incorporate values into induction and on-going staff training; in appraisals and for determining compensation and promotions. The values are the criteria against which the business takes tough decision.
Corporate Responsibility requires effective board governance. Some companies have a board committee for Corporate Responsibility and Sustainability. Some have a lead non-executive director in charge. Some have a mixed committee of executives and non-executives. Whatever the precise structure, it is important that the company regularly addresses what are the most significant Responsibility and Sustainability issues for it – and discuss these at the most senior levels. A mining company will have some very different priorities in terms of environmental and social impacts versus a bank or an insurance company.
Any business – large or small – needs a process for getting each part of the business, each business function, to understand their significant environmental and social impacts. Many large businesses have Corporate Responsibility or Sustainability departments. If you do, these should not be treated as the dumping ground for anything to do with Responsible Business. Rather they should be treated as an internal consultancy, advising and prodding different parts of the business. Corporate Responsibility has to be everybody’s business – not hived off to a “good works” department!
In particular, this means effectively engaging stakeholders – people who are affected by or can affect the business. One really interesting development nowadays is where a business works with a community or voluntary organisation to develop new products and services. Learning how to work with stakeholders needs to becomes a core management skill. Another growing aspect of Responsible Business is transparency and accountability which means a business being able to measure and then report their environmental and social impacts – in an increasingly varied range of different formats – from websites and blogs, to putting environmental or health information on packaging and leaflets for consumers.
The heightened expectations for business are going to go away. On the contrary, they are likely to grow. Those of us who believe in the crucial importance and positive impact of business, should not regret this or respond defensively. Rather, Corporate Responsibility should be a source of competitive advantage.
David Grayson is the director of the new Doughty Centre for Corporate Responsibility at the Cranfield School of Management in the UK.