Managing CSR

Corporate Social Responsibility, a much bandied about phrase, is becoming a more prominent feature on company business plans these days. But despite its proliferation, the concept is still poorly understood and often badly executed, experts say. Greg Lowe reports.

For some consumers it means little more than cynical social or environmental marketing by big business, while many firms fail to move beyond old school infatuations with corporate philanthropy and donations.

Getting The Point

Industry experts tell Director that both of these perceptions miss the point. They say CSR is a valuable weapon in the modern corporate arsenal with multifarious benefits that can impact a business, its staff and the community and environment it operates in.

But companies should take time to choose the right projects to work on, and walk the tightrope between over-hyping activities and under-reporting good works.

"The prime business case for doing CSR is around brand, reputation and corporate image," says Richard Welford, chairman, CSR Asia, a consultancy. "It's about making sure that your stakeholders perceive you as a well managed, trusted, responsible company.

"The big advantage is in building brand, reputation, and having a loyal customer base – people who trust your brand and your products," he says. "The other side of the coin is the staff. People like to work for companies that they can trust, companies that are doing useful innovative things around CSR. So there's a staff recruitment and retention issue too."

Key Drivers

Recent research from Grant Thornton International shows that staff recruitment/retention is the biggest driver of CSR, followed by cost management, branding, tax relief, saving the planet, investor relations and government pressure.

"Businesses are demonstrating that well-managed corporate responsibility actually supports business objectives, especially amongst large corporates, where improved compliance, reputation and relationships have been shown to increase shareholder value and profitability," the report says. It adds that while tax breaks were fairly low down the list of incentives for encouraging CSR, governments could better use these to force companies to engage in more responsible business practices.

Local Successes

Regionally, Thailand holds third place for its CSR, when compared with Hong Kong, Malaysia and Singapore – with Hong Kong first and Singapore fourth – according to the CSR Asia Business Barometer 2008.

Siam Cement demonstrates Thailand's best CSR, followed by PTTEP, PTT, PTT Aromatics and Refining, and Thai oil. It is also ranked sixth out of the 80 companies surveyed in the report.

"Thailand is doing ok, but is not a leader," says Welford. "We're seeing certain pockets of development there. Siam Cement really has very good CSR. They talk about what they're doing. What is interesting here is they see themselves as more a global or regional player, than a Thai company.

"That's a lesson learned. CSR becomes more important as you get bigger and become less associated with a country. You often need that credibility to get into new markets."

Catching Up

While CSR continues to be driven by multinationals, experts say smaller businesses are now developing their own programmes. Asian firms have been slower off the mark in general, but more are now showing more interest in hardwiring ethical programmes into their businesses.

"In the US, Europe and Australia, CSR is a relatively well-defined concept that engages communities. In Asia, it's still largely in the first stage, which is philanthropic in nature and involves corporate donations," says Langham Hotels International, which operates the Langham Place Eco Resort+Spa Rawi Warin on Koh Lanta. "But Asia is catching up quickly as it engages employees and its guests in activities beyond money raising.

"At Langham, we've been slightly ahead of Asia's curve as an international business as our properties seek to not only engage their staff in CSR activities in the community, but to also be a prominent part of the local community."

CSR That Fits

Brands that build more positive associations with their products, services and operational practices are more easily forgiven when they make mistakes, says CSR Asia. Positioning a company with issues such as tackling climate change or promoting social empowerment provides additional intangible benefits.

Companies are best choosing CSR projects that are aligned with their business, says Welford, for example, an IT company providing access and training for IT-deprived communities.

He cites the sports brand Adidas' programme working work with children who have been in trouble with the police as a key example. The company uses sport as a way to engage children at risk of becoming involved with crime, it works with local law enforcement agencies, provides free equipment, and encourages its staff to volunteer their time.

"You can see clear benefits to the community and for the company in terms of employee buy-in and employee pride in what Adidas is doing," says Welford. "You really can instil a sense of belonging in your staff with CSR."

This underpins the need for a strong internal team to select and manage a successful CSR programme, to both ensure the project delivers and that staff are fully engaged.

Continually going for the big bang and over-hyping a project's impact is more likely to damage a company's image, than build it, says CSR Asia adding that firms that market their activities modestly tend to do best.

Businesses also need to focus more on measuring and communicating their CSR outputs – how the project tangibly benefits the community or issues it targets – than the inputs on money spent or employee hours donated. Though a common pitfall, particularly in Asia, is that many businesses fail to raise awareness about their activities.

Getting The Right Balance

Companies that grasp the holistic benefits CSR has to offer communities, staff and the balance sheet are set to reap the long-term rewards, says Standard Chartered Thailand, which runs a number of CSR programmes working with Hiv/Aids affected people, and the blind, amongst others.

"We are very committed to the cities and countries we operate in. We're motivated by the fact that if these issues are not being tackled now by individuals and companies, they are bound to become the cause of future economic disruption.

"CSR builds our overall sustainability and strengthens our brand through attracting the best people, developing our risk management and by differentiating our brand."