What’s CSR Got To Do With IT? #2

Last week I started this series of blogs in the lead up to the itSMF Australia National Conference being held on  23-25 August at the New Melbourne Convention and Exhibition Centre.

My keynote presentation at this years conference is entitled:

What’s CSR Got To Do With IT?

IT Service Management and Corporate Social Responsibility

You can access the full conference programme at the itSMFA website here.

This is post #2.

So having outlined in the previous post why there is a definite link between CSR and IT, let’s explore what CSR is and why it is so high on the CEO agenda.

According to CSR Network:

Corporate social responsibility (CSR) is about how businesses align their values and behaviour with the expectations and needs of stakeholders – not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR describes a company’s commitment to be accountable to its stakeholders.

CSR demands that businesses manage the economic, social and environmental impacts of their operations to maximise the benefits and minimise the downsides.

Key CSR issues include governance, environmental management, stakeholder engagement, labour standards, employee and community relations, social equity, responsible sourcing and human rights.

CSR is not only about fulfilling a duty to society; it should also bring competitive advantage. Through an effective CSR programme, companies can:

  • improve access to capital
  • sharpen decision-making and reduce risk
  • enhance brand image
  • uncover previously hidden commercial opportunities, including new markets
  • reduce costs
  • attract, retain and motivate employees

Why is CSR High on the CEO Agenda?

There are many drivers and triggers for organisations to engage in CSR. A joint research project undertaken by Green Capital and CSR Sydney (Green Capital & CSR Sydney, 2008) across Australian organisations revealed that the top ten drivers for CSR where:

  1. Company culture/values
  2. Reputation
  3. Brand image
  4. Attracting and retaining employees
  5. Profitability
  6. Securing long term viability in the market place
  7. Competitive advantage
  8. Improving energy efficiency
  9. Risk management
  10. Customer demand

All of those were above the response to public awareness on climate change (ranked 11), compliance with legislation and standards (ranked 14) and reducing the cost of emitting – green house gas (GHG) (ranked 18). Therefore, where CSR was once primarily focused on regulatory compliance and philantropy, CSR is now seen as the organisations ability to differentiate its brand, products and services; enter new markets; and attract and retain top talent.

Company Culture & CSR

CSR is the way in which an organisation can put into action and demonstrate its corporate culture – attitudes, values, beliefs, norms and customs. Organisations that can show that their values are embedded into the way in which they operate can reap enhanced brand value and reputation and good relations with society as well as their stakeholders (customers, employees, regulatory authorities and suppliers).

Reputation & Competitive Advantage

The State of CSR In Australia Report 2008 showed that organisations that have strong corporate social responsibility management capabilities are more likely to reduce risk and conflict with stakeholders, and improve reputation and competitive advantage (ACCSR, 2009).

CSR has been referred to as your “calling card” when hoping to break into new markets.

Brand Image

Organisations and CEOs in nearly every industry will embrace CSR, not only because it’s the right thing to do, but also because it strengthens their brands.

The greatest asset of any organisation is its brand and its perceived value among its customers.

Customers are concerned how an organisation manufacturers its product and whether it is managing for continued sustainability through attention to economic, environmental, and social performance. If not, a brand’s reputation can decline, and with it, a corresponding decrease in future sales and profits.

War On Talent

Increased pressure on bottom-line results, growing competition and globalization, mean business have been under pressure to increase productivity, streamline operations, contain costs and deliver maximum shareholder value and profit. Therefore companies must recruit and retain the best and brightest employees.

There is growing evidence that a company’s CSR activities comprise an increasingly important way to attract and retain good employees from all generations. It is not only important to young professionals but to employees of all levels of experience and age (MBR, 2009).

Employees want to be a part of an organisation that cares about more than just the bottom-line. They want to be a part of an organisation that demonstrates value by engagement and contribution to the community.

Risk Management

Managing  risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks

Profitability and Long Term Viability

Successful organisations are practicing CSR in a manner that generates significant return to their business. CSR is an investment that brings financial returns. According to IBM, 68% of global organisations are utilising CSR as an opportunity and platform for growth (IBM, 2008). Business executives are seeing CSR as a sustainable growth strategy.

CSR is no longer just a concern about non-compliance to laws and regulations and the subsequent cost of litigation and loss of reputation. Of the organisations surveyed by IBM, not only did over two-thirds say they were focusing on CSR to create new revenue streams but over half (54%) believe that their companies CSR activities are already giving them an advantage over their competitors.

All of the drivers already mentioned including the adherence to legislation will increase financial performance of the organisation and therefore is at the heart of the CEO agenda. Increased employee engagement and productivity, turning environmental and societal risks into business opportunities, management of reputation, effective management of risk, increased competitiveness and market position, operational efficiency, improved investor relationships and increased access to capital and licence to operate are all financial drivers for CSR.

In my next blog I will explore what this means to the CIO.

Karen Ferris is a Director of Macanta Consulting.

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