Business and organisations have a privilege
denied to ordinary mortals ± they don't have to
die. This makes them especially responsible
(Charles Hardy).
Perspectives
Social responsibility
and impact on society
Mohamed Zairi
Focusing on community issues
One would have thought that, at a time of
global recession and great mergers, the
business community would be more
concerned with financial, rather than social,
issues. In fact, what is emerging very strongly
is a determination and commitment to
address both environmental and societal
concerns.
Elkington (1999), argues that:
The author
Environmental reporting is now well established,
as of course is financial reporting. But further
challenges lie ahead for companies looking to
evaluate social indicators in such areas as
community, employee and supplier
relationships. The pressure for accountability,
together with the significant expense of
producing the data, will develop powerful
pressures towards the integration of financial,
social and environmental accounting and
reporting . . . Companies ± and their stakeholders
± will have no option but to address this
emerging ``triple bottom line''. They will have to
work harder to assess what really matters to them
and which indicators will be seen by key
stakeholders (including financial analysts) in
assessing the triple bottom line performance of
companies and sectors alike.
Mohamed Zairi is SABIC Chair in best practice
management, Management Centre, University of
Bradford, UK.
Keywords
Social responsibility, Corporate image, Environment
Abstract
Discusses an area which is growing in terms of
significance and proven to impact on business
performance, reputation and corporate image. Discusses
social responsibility from the point of view of
environmental issues and ethical considerations. Useful
examples of models for the effective management of
environmental issues are provided, together with
examples of best practice. Finally, proposes a framework
for auditing this very pertinent area of business
excellence.
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The TQM Magazine
Volume 12 . Number 3 . 2000 . pp. 172±178
# MCB University Press . ISSN 0954-478X
It is widely argued that the business ethos
generally speaking has started to subscribe
to the principle ``show me'' rather than just
``trust me''. Corporate social accountability
and reporting is therefore seen as a key
driver for engaging the wider community
as an important stakeholder in business
activity.
There are conferences and global events
organised to promote this new principle. For
instance, the World Business Council for
Sustainable Development (WBCSD), the
Institute for Social and Ethical Accountability
(ISEA), among many organisations, have
staged conferences to debate the theme of
social accountability and social responsibility.
For instance, ISEA organised an important
conference in January 1999 to address the
following key areas:
.
the concepts and principles behind
organisational social reporting,
accountability and sustainability and the
business drivers for change;
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Social responsibility and impact on society
The TQM Magazine
Volume 12 . Number 3 . 2000 . 172±178
Mohamed Zairi
.
.
.
.
how the social reporting system is linked
with existing financial, environmental and
risk-reputation systems;
the range of issues that can be included in
a social statement and how organisations
can embark on the process of social
reporting;
techniques and methods to establish
social reporting as a powerful audited
system for improved market performance;
and
the value of developing effective
stakeholder dialogue to inform
measurement and reporting strategies.
Focusing on community issues is not,
however, a new concept. Many gurus in the
TQM field have, for instance, stressed the
importance of ``stakeholders''. Dr Edward
Deming, as far back as 1946, had argued that
statistical quality techniques ought not to be
limited to economic applications. Deming
argued on the significance from social
contributions that would emerge, through the
application of quality tools and techniques
(Jacques, 1999).
Deming's views were further stressed by
Juran (1994), who has often urged quality
institutions such as The American Society for
Quality to expand its mandate by placing
more emphasis on rendering service to
society.
Definition and meaning of corporate
social reporting
A useful report on social reporting by
Elkington et al. (1998) describes in a useful
way, the various meanings of corporate social
reporting:
.
In short, this concept covers social,
ethical accounting, auditing and
reporting.
.
A little bit more than just philanthropy.
The report argues that companies like BP
and United Utilities, measure, evaluate
and benchmark their social activities.
Furthermore, they tend to view the
community's perception of them as a
critical factor for their business success.
.
Ethics versus social concerns. The
inter-dependency between the two is
undisputed. Organisations have, first of
all, got to operate with a high code of
ethics so that everything else can follow
on from this.
How to create optimum societal
value-added
The key drivers for adding optimum value to
society and the communities in which specific
business organisations operate is through
having strong commitment to corporate and
social governance, having an open dialogue
with external stakeholders and having the
determination to achieve environmental
sustainability.
Nelson (1998) proposes an approach based
on three elements for building societal value
added. Table I illustrates how this can be
carried out in practice.
Nelson (1998) argues that companies that
have started to make real headway in the area
of societal value-added tend to share four
characteristics:
(1) they rely on value-based transformational
leadership (i.e. sponsor-headed by the
CEO and reflected in the company's
vision/mission and value statements);
(2) cross-boundary learning (a commitment
to learning, innovation and through
networks and global partnerships);
(3) stakeholder linkages (mutual benefits
through various modes of relationships);
and
(4) performance levers (use of a wide range of
financial and non-financial performance
measures, supported by auditing,
verification, reporting and recognition
systems).
Standards of social accountability and
reporting
There are various principles and standards
that the global business community has
started to adhere to on a voluntary basis.
The CERES Principle
A ten point code of conduct on companies'
environmental performance and
accountability. Any organisation that pledges
to endorse the CERES Principles will agree to
monitor and improve its behaviour in the
areas outlined in Table II.
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Mohamed Zairi
Table I Creating societal value-added: a proposed approach
Approach
Example of area of application
1. Efficient and ethical pursuit
of core business activities
Making environmentally and socially responsible decisions
Investing in the responsible sourcing production, distribution by taking into
account access to the poor
Creating local jobs
Paying taxes and royalties
Implementing social human resource policies
Adopting international accepted business standards
Supporting technology co-operation
2. Social investment and
philanthropy
Offering training programs to the community at large
Running employee volunteering schemes for social or cause-related initiatives
Business education projects
Community health projects
Sponsoring community development trusts
Resource mobilisation and civic improvement
3. Contribution to the public
policy debate
Tackling obstacles to private sector development and responsible foreign
investment
Contribution to social and environmental policies and frameworks in areas such
as education, training, local economic development, employment and
environmental management
Supporting progress for good governance, including anti-corruption initiatives
and human rights standards
Other principles and standards
.
principles for global responsibility
(benchmarks for measuring business
performance);
.
the CAUX round table (principles for
business);
.
the business charter for sustainable
development (principles for
environmental management); and
.
social responsibility initiative by the
Foundation for Ethics and Meaning.
society. Our work environment will be safe and
productive and characterised by fair treatment,
teamwork, open communications, personal
accountability and opportunities for growth and
development.
Levi Strauss was given several recognitions
and awards for its commitments to global
socially responsible practices.
One of the organisations that is recognised as
a leading example for its commitment to
corporate responsibility is Levi Strauss & Co.
Operating in over 60 countries, with a
turnover in excess of $7 billion, Levi Strauss
stresses values and social standards.
According to its chairman and CEO, Robert
Haas:
A company's values ± what it stands for, what it
believes in ± are critical to its competitive
success. Indeed, values drive the business.
Levi Strauss's mission statement is:
To sustain responsible commercial success as a
global marketing company of branded apparel.
We must balance goals of superior profitability
and return on investment, leadership market
positions and superior product and services. We
will conduct our business ethically and
demonstrate leadership in satisfying our
responsibilities to our communities and to
Best practice examples in social
responsibility and accountability
Royal Mail and its focus on the
community
As one of the largest employers in the
UK, Royal Mail has made significant
commitment to enhance its performance in
community issues, to encourage and support
employees in various community activities
and to ensure that the whole corporate
organisation acts as a good and responsible
corporate citizen. Royal Mail North East, for
instance, has two key aims in its community
policy:
(1) to support and encourage employees in
their chosen community services; and
(2) to demonstrate to the community that as
a business, Royal Mail North East is
committed to improving its environment
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Table II The CERES Principles
1. Sustainable use of
natural resources
We will make sustainable use of renewable natural resources, such as water, soils
and forests. We will conserve non renewable natural resources through efficient use
and careful planning
2. Protection of the
biosphere
We will reduce and make continual progress toward eliminating the release of any
substance that may cause environmental damage to the air, water or the earth or its
inhabitants. We will safeguard all habitats affected by our operations and will
protect open spaces and wilderness, while preserving biodiversity
3. Reduction and
disposal of wastes
We will reduce and where possible eliminate waste through source reduction and
recycling. All waste will be handled and disposed of through safe and responsible
methods
4. Energy conservation
We will conserve energy and improve efficiency of our internal operations and of the
goods and services we sell. We will make every effort to use environmentally safe
and sustainable energy sources
5. Risk reduction
We will strive to minimise the environmental, health and safety risks to our
employees and the communities in which we operate through safe technologies,
facilities and operating procedures and by being prepared for emergencies
6. Safe products and
services
We will reduce and where possible eliminate the use, manufacture or sale of
products and services that cause environmental damage or health or safety hazards.
We will inform our customers of the environmental impacts of our products or
services and try to correct unsafe use
7. Environmental
restoration
We will promptly and responsibly correct conditions we have caused that endanger
health, safety or the environment. To the extent where this is feasible, we will
redress injuries we have caused to the environment and will restore the environment
8. Informing the public
We will inform in a timely manner everyone who may be affected by conditions
caused by our company that might endanger health, safety or the environment. We
will regularly seek advice and counsel through dialogue with persons in communities:
our facilities. We will not take any action against employees for reporting dangerous
incidents or conditions to management or appropriate authorities
9. Management
commitment
We will implement these principles and sustain a process that ensures the board of
directors and CEO are fully informed about pertinent environmental issues and are
fully responsible for environmental policy. In selecting our board of directors, we will
consider demonstrating environmental commitment as a factor
10. Audits and reports
We will conduct an annual self evaluation of our progress in implementing these
principles. We will support the timely creation of generally accepted environmental
audit procedures. We will annually complete a CERES report which will be made
available to the public
Source: Adapted from Green Money Journal (1996)
and the opportunities available for the
diversity of people that live in it.
The process of getting requested support for
community-based activity is illustrated in
Figure 1.
The request sheets for getting support is
illustrated in Figure 2.
Lever Bros. Ltd
Lever lays down the following principles for
employees to follow in order to effectively
focus on societal value-added:
(1) We recognise that our employment
policy, not least the commitment to
training and personal development and
our emphasise on safety, health and
environment, has a positive impact
on the world outside the working
environment.
(2) We improve the well-being of society at
large both by the generation of
employment in companies which service
and supply us and in our marketing
activities.
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Volume 12 . Number 3 . 2000 . 172±178
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Figure 1 Support for community-based activity process
Figure 2 Community action support request sheets
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Mohamed Zairi
(3) We use a world class expertise base in
human safety to ensure the consumer
safety of our products.
(4) We take great care to minimise the
environmental impact on all our
operations from raw material
procurement, product design,
manufacture and distribution to use and
disposal.
(5) Lever has a long and proud tradition of
involvement with the community. This
originated when William Hesketh Lever
first established Port Sunlight village to
improve the living conditions and wellbeing of his employees.
Some of the specific activities that Lever is
involved in to add value to the community at
large include:
(1) Lever as a source of business/employment. As
Figure 3 illustrates, Lever has
considerable expenditure in generating
opportunities for industrial people and
businesses in the communities where it
has operations. Employment is generated
in many areas including:
.
raw and packaging material suppliers;
.
packaging and process plan
manufacturers;
.
distribution and transport providers;
.
market research and advertising
agencies;
.
design and artwork agencies;
.
mechanical electrical and civil
contracts; and
.
service and support agencies.
(2) Environmental policies and activities:
.
Lever is a founder member of ERRA
(The European Recovery and
Recycling Association); and
.
Lever has recently become a
committed signatory to the AISE
code of good environmental practice
with specific European targets to be
achieved in the next five-year period.
(3) Lever corporate citizenship. There is
involvement in various schemes,
including:
.
the Merseyside Industrial Consumer
Awards (MICA) (offering solutions
to business nominated problems);
.
supply of training/support to the
introduction of Investors in People
schemes in local schools;
.
European summer placement scheme
which provides 10-12 week industrial
placements for students from other
countries in Europe; and
.
factory tours specifically targeted at
schools.
As far as community involvement
programmes are concerned, this is
founded on three principles:
.
the company devotes the equivalent
of at least 1 per cent of its pre-tax
profit to community involvement in
the form of donations, time and
materials (Figure 4);
.
Lever's involvement is targeted and
focused on charitable work,
supporting education, health and
welfare; and
.
Lever encourages direct contact
between employees and the local
community.
Auditing organisational commitment to
environment and social responsibility
The framework shown in the Appendix,
which is based on a distillation of best
practices found to be inherent in world class
organisations can be used as a useful tool
for assessing organisational effectiveness
vis-aÁ-vis practices related to environment
and community-based, socially-oriented
practices. The framework is also a useful
Figure 4 Lever's charitable contributions
Figure 3 Lever's support for business and employment
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Mohamed Zairi
tool for drawing together action plans for
improvement and can provide significant
assistance in steering organisations towards
world class status as far as social responsibility
and environmental practices are concerned.
References
Elkington, J. (1999), ``The link between accountability and
sustainability ± theory put into practice'',
Conference on the Practice of Social Reporting for
Business, ISEA, 19 January, Commonwealth
Conference Centre, London.
Elkington, J., Van Dijak, F., Delbe, C. and Terry, V. (1998),
The Social Reporting Report, Sustainability
Publication, London.
Green Money Journal (1996), Fall, available at: http://
www.greenmoney.Com/gmj/Fall96/htm
Jacques, M.L. (1999), ``Applying quality concepts to
community issues'', Quality Progress, March,
pp. 49-56.
Juran, J.M. (1994), ``The upcoming century of quality'',
Annual Quality Congress Proceedings, ASQC Quality
Press, Milwaukee, WI.
Nelson, J. (1998), ``Leadership companies in the 21st
century: creating shareholder value and societal
value'', Visions of Ethical Business, Financial Times
Management, No. 1, October, pp. 21-6.
Appendix
Table AI
Degree of
importancea
Best practice application from MBNQA winners
Degree of effectivenessb
1. The organisation's principal business activities include systems
to analyse, anticipate and minimise public risk from hazards
& & & & &
2. Indicators for risk areas are identified and monitored
& & & & &
3. Continuous improvement strategies are used consistently, and
progress is reviewed regularly
& & & & &
4. The organisation considers the impact that its operations,
products and services might have on society and considers
those impacts in planning
& & & & &
5. Employees at various levels in the organisation are encouraged
to be involved in professional organisations, committees, task
forces or other community activities
& & & & &
6. Employees participate in a variety of professional, quality and
business improvement associations
& & & & &
1
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3
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5
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5
1
2
3
4
5
1
2
3
4
5
1
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3
4
5
1
2
3
4
5
Overall actual score (maximum = 60)
Notes:
a
1 = not very important,. 3 = relatively important,. 5 = very important
b
1 = not effective at all,. 5 = relatively effective,. 10 = extremely effective
Commentary
Practical guidance and useful insights into this key area of modern business.
178
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