CSR: Has big business developed a conscience?
Corporate social responsibility (CSR) had little meaning before the 1950s. But in the decade of social and political change (1960s), people began to demand more from their governments and business.
Today, CSR is considered by many as the key relationship which binds a company to the community. One of the first things you’ll notice logging onto the corporate website of any large multinational company, is a statement about the company’s participation in a charity event, commitment to sustainability, or perhaps how it plans to cut its carbon emissions. It used to be that companies existed for one reason and one reason only, to make a profit. If they didn’t exist to make money, why would anyone go into business? However, in today’s complex corporate environment, companies who focus only on the bottom line, risk being undermined by competitors who take a more socially responsible approach to generating profits.
Corporate social responsibility is a complex field which can take on a multitude of different forms, but is best defined as a form of corporate self-regulation integrated into a firm’s business operations. There exists approximately four main approaches to CSR; philanthropic, community based development, creating shared value, and an incorporation of the CSR strategy directly into the business structure of the organisation. Each of these, if implemented ethically, and within the spirit of the community, can have numerous social and business benefits for companies, including the achievement of various internal and external objectives.
“Our approach is very much about creating a shared ethos among the team that builds participation, motivation and most importantly, makes a tangible difference to the organisations we support,” says Frank Uwe-Ungerer, country manager of DHL Express UAE. “With around 800 employees in the UAE, we recognise that people are our greatest asset,” he says.
DHL has initiated a number of volunteer activities amongst its staff throughout the world, establishing Global Volunteer Day as an opportunity to encourage its employees to contribute. Held between the 1st and 10th of September, the day sees 60,000 DHL employees, along with their business partners and customers, participate in over 600 programmes in 120 countries and territories.
In the UAE this year, DHL volunteers took up paint brushes and rollers to repaint and decorate five classrooms at the Al Noor Training Centre for Children with Special Needs, helping to provide a better learning environment for the centre’s 300 children.
“The team has adopted the centre as its dedicated charity as part of its ongoing ‘Spirit of Yellow’, corporate social responsibility programme, which launched internally during Ramadan this year with an employee art competition,” says Uwe-Ungerer. “The activity encouraged employees to express their passion for working at DHL through the many different mediums in art including; drawing, painting, and photography. Six artworks were chosen and printed on mugs, t-shirts and postcards, and are now being sold internally to raise money for the centre,” he adds.
Whilst DHL’s CSR strategy could more typically be deemed as a community based development approach, international 3PL, CEVA Logistics’ approach would be better described as an incorporation of a CSR strategy directly into its business structure. “CEVA demonstrates commitment to CSR by taking a practical business approach,” says CEVA regional sales and marketing director, Warren Angus.
“We develop sustainable solutions that deliver strategic business opportunities for our customers, while benefiting society and the environment,” he says. Throughout the world CEVA manages environmental programs to reduce the impact of its activities in co-operation with customers and suppliers. In the construction of new facilities, CEVA requires environmentally high standards from its suppliers, especially in terms of eco-friendly solutions.
“The warehouses are usually built to technical specifications,” claims Angus. “Things such as photovoltaic panels for the production of energy, solar panels to produce hot water, low consumption lighting systems with light and movement sensors, and tanks for collecting rainwater which is recycled, are just some of the systems we have installed,” he says.
In terms of the benefits this CSR strategy has brought, Angus points to the environmental savings its facilities have delivered. “In the last three years, CEVA has been heavily committed to carrying out a strategy based on eco-friendly facilities in Southern Europe, Africa and the Middle East,” he comments. “These buildings allow us to produce around 20,000 Mega Watts of photovoltaic energy every hour, producing total savings of 11 million kilograms of CO2 every year.”
International manufacturer of technologies for safety, security, and energy, Honeywell, also has a number of CSR strategies, ranging from philanthropic approaches such as humanitarian aid, to more community based development initiatives such as its habitat and conservation, family safety and security, and housing and shelter programmes. Do the right work and do it right now, are the principles that guide the actions of Honeywell’s Humanitarian Relief Fund (HHRF).
Since the fund’s creation in 2005, Honeywell has supported relief efforts worldwide, working in partnership with key organisations like Operation USA and Rebuilding Together. Funded in part by donations from Honeywell employees, the HHRF strives to address both the immediate and long-term needs of communities affected by natural disasters around the world.
“We have been involved in a wide array of relief efforts including; the Indonesian tsunami, Hurricanes; Rita, Ike, Gustav and Katrina, the Sichuan earthquake, and the Haiti earthquake,” the company revealed to Logistics Middle East in an issued statement.
“It is a very successful programme which has seen thousands of people saved from disaster.” On top of the humanitarian relief efforts, Honeywell has also invested in programmes for schools including the Habitat and Conservation, and Family and Security initiatives. Habitat and Conservation, which is run in partnership with environmental organisations, provides students and educators with learning opportunities and new teaching tools to promote green science in school.
“Energy, water, waste management and air quality are among the most prominent issues around the world today,” Honeywell claims. “As individuals, we can help protect the environment for future generations. As educators, we have a unique opportunity to help children become tomorrow’s environmental stewards,” the firm states.
Kuwait logistics firm Agility, covers humanitarian, community volunteer, and environmental platforms as part of its CSR policy. Tremendous expansion which saw the firm grow to the eighth largest logistics company in the world in a short period of time, instilling a self-awareness of the firm’s growing footprint.
“With a significant footprint, we thought as a company we needed to step up and fulfill our social responsibilities as well as our commercial ones,” says Agility’s Mariam Al-Foudery, SVP, marketing, communications, and corporate and social responsibility.
“We think of CSR as a strategic initiative – we analyse what we can do to leverage our core capacity as a company in order to make a difference to the world in which we live.”
Given Agility’s significant infrastructure and resources at its disposal, the firm is well equipped to respond to global disasters. And as with any natural disaster, it’s the disruption to major infrastructure which often poses some significant challenges.
“When there is natural disaster of some kind, logistics becomes very challenging because you have disruption of roads and airports and at the same time you have a large amount of relief supplies that you need to get into affected areas very quickly,” claims Al-Foudery. “Over the past six years we have responded to 22 natural disasters around the world – the natural disaster programme was really the starting point of our CSR strategies,” she says.
Following the commencement of the natural disaster programme, Agility realised that employees also wanted involvement in some capacity. “As a company we recognised that our employees wanted to get involved and didn’t want to wait for an international disaster to give back, so we set up an initiative called the community volunteer programme which is a scheme where the company makes grants at a corporate level to any employee anywhere in the world who wants to do a social project in his or her community,” she says. “The result is you get a wide range of projects reflecting the diversity,” she adds.
In regards to tracking a programmes success, Agility tracks each differently. “In terms of disaster response we look at the number of people that the relief supplies we transport reach,” says Al-Foudery. “With regards to the community volunteer programme, we track the number of people reached with services or volunteer activities provided by our employees. Typically 15 per cent of our workers volunteer each year. In the last six years we have reached over 500,000 people with some form of service activity,” she adds.
Given the financial costs to which companies are exposed, why do firms bother with a CSR strategy? In today’s world where nothing comes for free, it appears unusual why companies would invest significant amounts of money helping others with no expectation of direct remuneration. Though a direct financial return on investment is always difficult to quantify, the associated benefits are needless to say worthwhile.
When it comes to employees, a well-structured CSR strategy can be a useful tool to attract and retain staff. And in a competitive marketplace where companies jostle for identity, CSR can be a useful tool to differentiate a brand. But whilst CSR seemingly benefits both company and community, there has been some criticism. Largely, disapproval revolves around whether the company implementing, for instance an environmental programme, is just using the policy to deflect attention from otherwise unsustainable practices.
Queries over the credibility and experience of companies in the area which they assist, remains another concern, especially in the areas of humanitarian relief. Even from within a business, there are those that are skeptical about the benefits of CSR. Often believed to expose a firm to too much financial risk, detractors believe it can place an unnecessary monetary burden on the company’s budget.
Further, when a company is owned by shareholders, those shareholders sometimes view the use of profits as theft of their rightful property. This viewpoint is an interesting perception opening up the notion that if CSR is seen purely from a financial perspective – does a company’s return on investment need to be justifiable?
According to Agility’s Mariam Al-Foudery, CSR must be justifiable, especially in the beginning. “I think this is the case with any company as it requires a lot of resources − you need to be able to justify the business case,” she says. “For us the business case comes down to employee engagement.”
Though Al-Foudery believes that the investment must be justifiable, it’s not just a case of pitching the financial benefits associated with a particular CSR programme to the company’s board. “I don’t go into a budget meeting to have a discussion on the benefits for a CSR programme − it’s understood that this is something that is really important for the company and how it understands its own identity internally,” she says.
CEVA’s Warren Angus agrees. “CSR must be justifiable,” he says. “It should make a measurable or quantifiable positive impact on the value of our services, the performance of our customer’s supply chain or on the environment we share,” he adds.
While CSR can offer direct business benefits, DHL’s Uwe-Ungerer believes it needs to be about more than just the bottom line. “At the end of the day, we are a service company,” he comments. “We want to give our employees a great place to work. We want for them to feel satisfied and rewarded in their roles,” he adds.
With the perceived benefits expressed by each company, CSR appears an initiative which looks set to continue for the foreseeable future. “We are committed to building on our existing corporate responsibility programmes,” says Uwe-Ungerer. Angus agrees. “CSR will gain a greater part of the budget as end-of-the-line consumers become more and more aware of the impact of their purchases.”