The Importance of CSR

Its all about the bottom line. There are few people, whether in the private or public sector, who havent heard that phrase. Because the bottom line refers to the last line of a financial statement profit or loss it has traditionally been the ultimate measure of short and long-term organizational decisions, referring to the economics of costs and revenue. While economics is still important, the increased complexity of global markets and sophistication of consumers, as well as the increased importance of environmental and social impacts, have changed the way successful organizations look at what positively impacts their bottom line. Today, organizations that want to achieve long-term success must consider what is known as the Triple Bottom Line: Economic, Environmental and Social. This Triple Bottom Line is also known as the 3Ps: Profit, Planet and People. Corporate Social Responsibility (CSR), as a strategic practice, is key to organizational success because it is one of the few practices that can positively impact all three elements of the Triple Bottom Line, contributing to a healthy bottom line and long-term sustainability. Because CSR can influence economic, environmental and social factors in a variety of ways, there is no one size fits all approach. An effective CSR strategy must consider alignment with the organizations business strategy, commercial added value, and sustainability of impact. The benefits of an effective CSR approach to an organization can include:

Stronger performance and profitability Improved relations with the investment community and access to capital Enhanced employee relations and company culture Risk management and access to social opportunities Stronger relationships with communities and legal regulators

Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors. Key areas of concern are environmental protection and the wellbeing of employees, the community and civil society in general, both now and in the future. The concept of CSR is underpinned by the idea that corporations can no longer act as isolated economic entities operating in detachment from broader society. Traditional views about competitiveness, survival and profitability are being swept away. Some of the drivers pushing business towards CSR include: 1. The shrinking role of government In the past, governments have relied on legislation and regulation to deliver social and environmental objectives in the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives instead. 2. Demands for greater disclosure There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations. 3. Increased customer interest There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. In a recent survey by Environics International, more than one in five consumers reported having either rewarded or punished companies based on their perceived social performance. 4. Growing investor pressure Investors are changing the way they assess companies' performance, and are making decisions based on criteria that include ethical concerns. The Social Investment Forum reports that in the US in 1999, there was more than $2 trillion worth of assets invested in portfolios that used screens linked to the environment and social responsibility. A separate survey by Environics International revealed that more than a quarter of share-owning Americans took into account ethical considerations when buying and selling stocks. (More on socially responsible investment can be found in the 'Banking and investment' section of the site.) 5. Competitive labour markets Employees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and operating practices match their own principles. In order to hire and retain skilled employees, companies are being forced to improve working conditions. 6. Supplier relations As stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner. Some are introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation.

Some of the positive outcomes that can arise when businesses adopt a policy of social responsibility include: 1. Company benefits:

Improved financial performance; Lower operating costs; Enhanced brand image and reputation; Increased sales and customer loyalty; Greater productivity and quality; More ability to attract and retain employees; Reduced regulatory oversight; Access to capital; Workforce diversity; Product safety and decreased liability.

2. Benefits to the community and the general public:

Charitable contributions; Employee volunteer programmes; Corporate involvement in community education, employment and homelessness programmes; Product safety and quality.

3. Environmental benefits:

Greater material recyclability; Better product durability and functionality; Greater use of renewable resources; Integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards, and eco-labelling.

Nevertheless, many companies continue to overlook CSR in the supply chain - for example by importing and retailing timber that has been illegally harvested. While governments can impose embargos and penalties on offending companies, the organizations themselves can make a commitment to sustainability by being more discerning in their choice of suppliers. The concept of corporate social responsibility is now firmly rooted on the global business agenda. But in order to move from theory to concrete action, many obstacles need to be overcome. A key challenge facing business is the need for more reliable indicators of progress in the field of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can help to make a business appear more trustworthy, and push up the standards of other organizations at the same time. The Global Reporting Initiative is an international, multi-stakeholder effort to create a common framework for voluntary reporting of the economic, environmental, and social impact of organizationlevel activity. Its mission is to improve the comparability and credibility of sustainability reporting worldwide. There is increasing recognition of the importance of public-private partnerships in CSR. Private enterprise is beginning to reach out to other members of civil society such as non-governmental organizations, the United Nations, and national and regional governments.

An example of such a partnership is the 'Global Compact'. Launched in 1999 by the United Nations, the Global Compact is a coalition of large businesses, trade unions and environmental and human rights groups, brought together to share a dialogue on corporate social responsibility. The 'Working with NGOs' section offers some insights into the way businesses and lobby groups are working together to mutual benefit. Management training plays an important role in implementation of CSR strategies, and there is a growing number of conferences and courses available on the subject. Organizations that provide such training include Global Responsibility, Business for Social Responsibility and the Corporate Social Responsibility Forum.

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Six Reasons Companies Should Embrace CSR

James Epstein-Reeves, None

8 comments, 2 called-out Comment Now Follow Comments

Corporate social responsibility (CSR) is not going to solve the worlds problems. That said, CSR is a way for companies to benefit themselves while also benefiting society. When I define CSR to the uninitiated, I typically get three reactions. Some say, Isnt that a bunch of greenwashing? Others use a non-so-nice word to describe male bovine excrement instead of greenwashing. Still others say my definition sounds like an inspiring call to action to soothe the ills of capitalism. Then there are those who say CSR is like a begrudging call to Woodstock to sing Kumbaya something only hippies could dream up. So whats a CSR professional supposed to do when faced with such a varied response? Typically, I step on top of my soapbox to declare the six business reasons why companies should embrace corporate social responsibility. Companies that get it are the ones that are using CSR (or sustainability as I prefer to call it) as a way to push the following business processes into the organization:
1. Innovation I know, I know, its an over-used term. Just typing the word into Amazon will
bring up nearly 150,000 items. But in the context of CSR, innovation is a huge benefit to a company and society. For example, I recently watched avideo of a brief talk by Geoff McDonald who is the Unilever Global VP for HR, Marketing, Communications and Sustainability. Using the lens of sustainability as McDonald described it, Unilever was able to innovate new products such as a hair conditioner that uses less water. Without sustainability, the companys research and development efforts possibly wouldnt have led to such a product.

2. Cost savings One of the easiest places for a company to start engaging in sustainability is to use it as a way to cut costs. Whether its using less packaging or less energy, these savings add up quickly. For example, General Mills is on a path to reduce its energy savings by 20% by 2015. According to its 2011 CSR report, after installing energy monitoring meters on several pieces of equipment at its Covington, Ga. plant, the company saved $600,000. 3. Brand differentiation In the past, brand differentiation was one of the primary reasons companies embraced CSR. Companies such as Timberland were able to find their voice and incorporate the companys values into their business model. However, as CSR has become more commonplace, using it to differentiate your brand is getting harder to do. For example, the Cola Wars is one of the longest running rivalries in business. Coke and Pepsi are constantly looking to grab as much market share as they can from each other. Yet they are both adopting similar, although slightly different, approaches to CSR. Both Pepsi and Coke are pursuing strategies of zero net water usage. Both companies offer water bottles made from sustainable packaging as well. In the end, although neither company is necessarily going to see strong differentiation benefits, I see the diminishing returns on brand differentiation as a sign that CSR is taking hold and is not just a fad. 4. Long-term thinking The only reason were doing sustainability is to drive the growth of Unilever, McDonald said in the video mentioned above. Indeed, CSR is an effort to look at the companys long-term interest and ensuring that the companys future is well sustainable. Hence, thats why I prefer the term sustainability to CSR. It is a shift from worrying about the next fiscal quarters financial results to the impact business decisions today have on financial (and social) results ten years from now. 5. Customer engagement Whats the point of doing CSR if no one knows about it? For the past few years, Walmart has established itself as a leader on environmental efforts. Yes, you read that correctly, Walmart is a leader in environmentalism. In 2008, Walmart ran an ad campaign designed to raise awareness about the environment and the product choices consumers could make. Using CSR can help you engage with your customers in new ways. Since the message is about something good, it can often be an easier way to talk to your customers. This is an underused tool for business-to-business company communication. 6. Employee engagement Along similar lines, if your own employees dont know whats going on within your organization, youre missing an opportunity. Companies like Sara Lee created a cross-functional, global Sustainability Working Team to help create a strategy for sustainability. At a more grass roots level, theSolo Cup Company created the Sustainability Action Network to activate employees in community service focused on the companys CSR priorities.

To be clear, these are the reasons why most companies should enact CSR. In truth, companies often become involved in CSR for different reasons, which Ill write about in future posts. This isnt to say that CSR is the panacea to the worlds problems. But it certainly does start to move the needle toward an economy that is much closer to one where I would like to conduct business.

While different organisations have derived different meanings for the term corporate social responsibility, however there continues to be much in common between all the strategies adopted by companies for CSR programmes. While it is commonly argued that Pakistan is a country that is still lacking in CSR practices among companies there have been certain organisations that have taken the lead and must be lauded for their efforts in contributing to the society and people of Pakistan. Corporate Social Responsibility can be understood as the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Unilever CSR initiatives One company that has been exemplary in its CSR initiatives is Unilever and I say this not because of any personal biases against any other companies but because their CSR programme titled the Unilever Sustainable Living Plan has covered a wide domain of areas that has considerably impacted the society and the underprivileged people. According to the Sustainable Living Plan, the company has outlined a number of goals to be achieved by the year 2020. These are: Small Actions. Big Difference n Halve the environmental footprint of our products n Help more than 1 billion people take action to improve their health and well-being n Source 100% of our agricultural raw materials sustainably n Unilever Pakistans Sustainable Living Plan focuses on the following: 1. Reduce the Environmental Impact of our products through reduction of greenhouse gases, optimisation of water usage and waste management 2. Enhancing Livelihoods by rural programmes and creating opportunities through enhanced distribution and empowerment through education 3. Improving Health& Hygiene by helping more than 68 million people take action to improve their health and well being through our personal care products. Nutrition enhancement to reduce salt and calories in our food brands 4. Promoting Sustainable Workplaces by improving employees lifestyles, encouraging diversity and creating an environmentally friendly office. Through this programme they have reached 6.2 million people in the year 2010. In their health and hygiene programme, they have managed to reach approximately 5.2 million people, under their nutrition programme 82,608 meals were provided to the world food programme, under their environment initiatives they managed to reduce carbon footprint through Unilever Head Office Initiatives by 16 per cent. They also took part in flood rehabilitation programmes by contributing Rs2.43m towards flood relief and rehabilitation work. PSO CSR initiatives Another company that has taken leaps as far as corporate social responsibility is concerned is PSO. The company engaged in a plethora of initiatives encompassing Education, Healthcare, Community building, Women empowerment, Special children welfare, Sports development and Relief Activities. The company has led from the front in its CSR campaign by financially supporting several national educational institutes in order to enable the outreach of education to the underprivileged across the country. With the help of the heritage foundation, PSO has also helped build two schools in the earthquake affected region of Mansehra, whereas five more such schools are still in the pipeline. With regards to healthcare, PSO has partnered with various institutions in the health sector to facilitate the underprivileged in having access to healthcare facilities. The company has provided

financial assistance to institutes such as the cardio Vascular Diseases, Karachi. Further an annual donation is also given to the Marie Adelaide Leprosy center. PSO has also helped a number of hospitals to acquire ambulances and state of the art medical equipment among other similar CSR initiatives. According to the PSO website under their community building platform they have made efforts in the domain of Women empowerment, special children welfare, sports development and relief activities. Women Empowerment PSO has been supporting Behbud Association, a national NGO working in the field of reproductive health, community development, education, vocational training, to uplift the underprivileged sections of society. Moreover, PSO also assists Rashid Memorial Welfare Organization which carries out Education, Health, and Vocational Training for females and orphans and takes poverty alleviation measures. By providing financial assistance to this organisation, PSO aids the substantive development of a large proportion of rural population. Special Children Welfare PSO has generously supported Institute for Special Children Quetta, the only institute of its kind in Balochistan to upgrade its equipment to facilitate imparting of education to the special children. Moreover, the company financially assists Pakistan National Institute for the deaf children of rural areas, Kamoke, district Gujranwala. The major objectives of this institute were to uplift the living conditions of the neglected special children by imparting education and vocational skills. So far several hundred students have benefited from this institute. PSO extends financial support to this institute to overcome the maintenance, transportation expenses of this institute and to construct Skill Development Training Center. On the same lines of helping the special children of the society the company has provided financial assistance to Munir Arshad Memorial Trust that has been working for the poor children of rural areas on modern lines. It aims to develop personality and character qualities inner discipline and control. PSO is also associated with Family Education Services Foundation, a non-profit, educational, volunteer organization working in Karachi. They have established Deaf Reach, a school for the Deaf in Karachi as well as two vocational training centers for Deaf students; one in Karachi which has been running for the past ten years, and another in Lahore which was opened six years ago. PSO appreciated the commendable community services of Family Education Services Foundation by adopting some students and providing their monthly expenditure and also by facilitating them in providing free pick and drop service to needy students by providing free diesel. Sports Development PSO has always been at the forefront of promoting various sports at all levels. In such an endeavor, we sponsored the PSO-CNS International Squash Championship 2007, which is a world-class squash event. It was held at the Roshan Khan / Jehangir Khan Squash Complex. International and National players of world ranking participated in this event. Further more, we were the tournament sponsors of Asian Football Confederation (AFC) held in September 2007 that was arranged by Pakistan Football Federation (PFF). League champions from AFCs eight emerging countries participated in this tournament. Recently we sponsored the national Skiing Tournament. Relief Activities Amongst other economic contributions, we also take pride in our immediate response to any

situation. While it may be impossible to prevent disaster and misfortune from happening, it is possible to provide relief. Infact, we feel it is our duty to do so. The 2007 Cyclone that lashed Pakistans southern coast crippled life in the affected areas specially in Bolochistan. About a million were made homeless by the rain-water and floods. Worst affected areas are Turbat, Gwadar , Pasni, NaseerAbad, Jafferabad, Jhal Magsi, Bolan and Sibi. PSO as a good corporate citizen as always was on the forefront. On July 13, 2007 two convoys comprising three truckloads for Turbat and two truckloads for Pasni left the company headquarters. They were carrying 3,000 food packets, 500 kitchen utensils, 650 tarpaulin sheets and 30,000 bottles of mineral water. Earlier on July 9, 2007 PSO had dispatched a similar batch of food packets and mineral water to Greshia, 35 km from Khuzdar. This was the first relief to reach this devastated village. Similarly in previous natural calamities, PSO staff was involved in the relief operations from day one ensuring uninterrupted and smooth fuel supplies to the defence forces aviation fleet operated by Navy, Air Force and Army at Pasni and Turbat airports. Company donated Rs5 million to the Presidents Disaster Relief Fund to help the victims. Siemens Flag-bearer of Corporate Social Responsibilty Corporate social responsibility is one of the most significant gauges one can use to measure the worth of any company, and its contribution towards the nation. Siemens Pakistan, has been one of the leading companies in Pakistan with regards to just about any economic faade and certainly if one pulls out the corporate social responsibility yardstick. Siemens is a firm believer is sustainability and for the company sustainability implies that they should act responsibly on the behalf of future generations for the fulfillment of economic, environmental and social progress. Siemens takes this responsibility as an employer, a contractor, an investor and provider of innovative technology solutions. And of course as an integrated technology company, the company wants to promote as many opportunities of sustainable development as possible. Compliance is another facet that can be peddled as the cornerstone of responsibility conduct. Corporate responsibility can fully realise all of its prospects if everyone complies with external and internal company rules and regulations. Decision making and actions should always be in synchrony with moral principles and values. And Siemens has rightfully claimed that it measures itself by this abovementioned standard. Siemens compliance programme is what towers above and showcases the depth and fortitude of a truly formidable company. And then there is the factor of diversity another feather in the cap of Siemens. The companys success is a corollary of a multitude of ideas ones that ensure that the product is a diverse ensemble of competence and compliance. And Siemens oozes with such dependability and integration of diversity. The company realises its social responsibility and ensures that no discrimination prevails be it owing to race, religion, colour or any sort of backgrounds whatsoever. Siemens provides that quintessential environment that enhances productivity with responsibility. The company considers responsibility as a strategic, management-driven assignment and binds the business, environment and citizenship activities and this in turn creates sustained tangible and intangible value for the company and also for the myriad of stakeholders. And also this is done within the realms of ethics and morality. Even though there has been an indubitable economic and financial turmoil in Pakistan, Siemens has ensured that it maintains a top-drawer standard and cements their high level of commitment for projects that run the entire gamut from health, education, culture and sports. Siemens values the corporate social responsibility, and makes sure that it is a well thought out process that encompasses sustainable projects with long term benefits. The Agha Khan Hospitals new emergency center and the workshop for the disabled are noteworthy examples. As Siemens touts so brilliantly; that they are vying to make Pakistan a wise, healthy and enjoyable place and fair play to the company. - See more at:

http://www.pakistantoday.com.pk/2012/01/15/news/profit/corporate-social-responsibility-inpakistan/#sthash.eJwbqizO.dpuf