In recent years, corporate social responsibility (CSR) has become a hot-button topic in boardrooms. What may have once been a niche or overlooked concept has become an essential part of business today.
Corporate Responsibility: The Trend You Can’t Ignore
CSR is the responsibility of an organisation for its decisions affecting society and the environment. Through transparent and ethical behaviour, corporations that practice CSR create sustainable businesses which take into account various stakeholders and comply with laws and regulations.
Although the roots of CSR can be traced back as far as the Industrial Revolution, its emergence as we know it today began in the U.S during the 1960s. In this period, the civil rights movement and a rise in environmental awareness pushed society to place greater expectations upon how corporations should behave.
By the 1970s, CSR became a commonly used term, and in the following decades CSR grew in importance. Today, it is a critical part of a company’s success, with a recent study by MIT Sloan Management and the Boston Consulting Group finding that sustainability has a permanent place on 70% of management agendas.
Tony Juniper is a British campaigner, writer, advisor and environmentalist who has advised large multinational corporations such as Danone (EPA:BN), Interserve (LON:IRV) and Skanska (STO:SKA-B) on CSR and sustainability.
Speaking with The Capital Network’s Lelde Smits in early November, Juniper talked about the importance of CSR, the risks associated with not practicing it and an example of a company doing it well.
Juniper says that with the world changing so rapidly, the days of irresponsible business are coming to an end. Climate change, resource depletion, the degradation of ecosystems and social issues are forcing business to realise that CSR cannot be ignored.
Business to business expectations are changing, government regulations are altering, and, of course, consumers are choosing businesses that are behaving in what they would regard as a good way,” he says.
According to Juniper, organisations should first acknowledge the impacts – both positive and negative – they are having on the world around them. The next step is understanding. Rather than trying to hide the negative effects, Juniper advises that the company understands embraces them and then begins a discussion with stakeholders to discern the way forward.
One major risk facing companies that don’t practice CSR is that they get tripped up by changing regulations. Juniper gives the example of the production of internal combustion engine cars, which many countries are now saying is coming to an end.
“People didn’t expect that, we’re now moving towards electric vehicles and so if you have a supply chain and manufacturing that is built around diesel and petrol engines, that is now a massive business shift that is coming”, he warns. “But it’s down to irresponsible behaviours including companies lying about their emissions. That has led to this massive shift.”
For an example of a company that is doing it right, Juniper points to Unilever, a consumer goods company behind a wide variety of foods and household products. Juniper says Unilever is now going through all its products to effectively half its environmental impact. He praises the multinational for its strategic and sustainable perspective, calling it “leading behaviour” and nothing that others are beginning to follow suit.
Unfortunately, when it comes to CSR, Australia is lagging behind. A recent global survey by KPMG revealed that Australia’s largest 100 businesses by revenue trail the world in acknowledging human rights as a business issue, with less than half recognising the financial risk of climate change.
