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A beginner’s guide to CSR
Presented to: CIM, Financial Market Interest Group
Presented by: Jolyon Ridgwell, Lighthouse
3rd October 2007
www.lighthouseglobal.eu.com
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About Lighthouse
Opportunity Analysis in Financial Services
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‘Financial services organisations must
demonstrate appropriate CSR activity for the
sake of their long term reputation’
Jolyon Ridgwell, Director
Column head
Jolyon manages market strategy projects for Lighthouse’s
financial services and accountancy clients, including Merrill
Lynch, Dresdner Kleinwort, Coutts & Co, Baker Tilly and the
ICAEW.
Before joining Lighthouse, Jolyon worked in the financial
services sector. For eight years he was in research-based
equity sales, five of which were spent with the institutional team
at the US broker, Prudential-Bache.
He completed his MBA at Cambridge University in 2000.
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Some of Lighthouse’s clients
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“CR is not an overhead – it’s part
of the value proposition”
The future of corporate responsibility
communications Radley Yeldar
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What we will cover in today’s discussion
CSR – its origins and definition
The key components of CSR
The importance and benefits of CSR to FS organisations
Key trends in CSR
CSR trailblazers – who’s doing it well and why
How can marketers make an impact on their organisation’s CSR
policy
7. Useful sources of CSR information for FS marketers
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CSR
Origins and definition
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CSR
Origins and definition
"Corporate Social Responsibility is the continuing
commitment by business 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.“
World Business Counsel for Sustainable Development
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CSR
Origins and definition
• Debate about corporate social responsibility began in the early 20th century.
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E.g. Ida Tarbell’s 1904 work The History of the Standard Oil Company helped lead to the
US Supreme Court’s decision to break up the company on antitrust grounds.
• Term Corporate Social Responsibility came into use in the Early 1970s.
• The term stakeholder, meaning those impacted by an organization's
activities, was used to describe corporate owners beyond shareholders
from around 1989.
• CSR is generally seen to extend beyond the statutory obligation to comply
with legislation.
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The key components of CSR
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A CSR policy should take responsibility
for the organisation’s impact on…
The customer / market place
The employees / workplace
Communities
The environment
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The CR Index provides a benchmark
for companies to evaluate
their performance in four key areas
Source: Business in the Community, Corporate responsibility Index
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Key elements of CSR
Communities
• Companies’ performance in the CR Index for community management was steady in
2006
• Community issues can relate to:
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geographic location (being a responsible neighbour)
issues (relating to a particular product or sector)
• Key topics for community CSR:
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skills
education
employability
social exclusion
access to facilities
welfare provision
• The CR Index survey identified a need for companies to develop better performance
measurement on the “outputs” of their community investment.
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Key elements of CSR
Environment
• Environmental responsibility covers a range of areas including:
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Carbon emissions (use of energy)
Waste generation and reduction
Use of recycled materials
Impact of construction and development
• Most companies identify climate change and resource-use as key issues for their
business.
• 78% of companies participating in the CR Index publically report on climate change.
However, for the first time since the Index began the Environment scores did not go
up
• 85% of companies manage their impacts through an Environment Management
System
• 66% of companies participating in the Index ask their suppliers to provide information
on their environmental performance.
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Key elements of CSR
The customer / marketplace
• Companies are showing an increased understanding of marketplace issues relevant
to their business.
• Issues frequently cited by companies are:
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Responsible selling and marketing (particularly important for FS organisations)
Procurement and supply chain (including outsourcing and shared service / call centres)
Financial inclusion (providing access to financial services to low income groups)
Product safety
• Significant increase in the number of companies working with their suppliers to help
them improve their social and environmental management.
• Also, more evidence of attempts to generate stakeholder engagement through focus
groups and workshops etc.
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Key elements of CSR
The employees / workplace
• This is a critical issue for financial services, in light of the fierce war for talent
• In the 2006 CR Index, workplace remains the strongest performing management area
since most companies have established frameworks that cater to HR issues as they
arise.
• Companies increasingly place emphasis on internal communications and training.
• Health & wellbeing issues are now being tackled on top of traditional health & safety
• Key workplace issues include:
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recruitment
retention
succession planning
work life balance
employee consultation (e.g. feedback surveys and suggestions)
• Many businesses are also focusing on diversity issues.
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The Triple Bottom Line
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The Triple Bottom Line
• “The Triple Bottom Line - economic, social and environmental - is a practical method
for companies that want to become sustainable businesses” CIM;Shape the Agenda,
issue no. 11 2007.
• The concept was introduced in the early 1990s
• This approach includes CSR within its framework
• Focus on balancing performance in the three areas should be seen as a key driver of
sustainability for a business
• Beyond financial profits:
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Environmental (e.g. use of, and attitude towards, resources)
Social (e.g. impact that the company has on people, directly or indirectly. This may include
suppliers or consumers for responsible lending issues)
Economic (e.g. ensuring longevity of the company’s financial health, minimisation of
detrimental impact to other economies)
• Marketers can play a key role here because of the closeness to customers
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Three significant initiatives
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Three significant initiatives
1. The Companies Act 2006
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Directors’ duty to promote the success of a company in a way that is consistent with the
concept of enlightened shareholder value
Directors are also required to give due regard to (among other things) the impact of their
decisions on employees, communities and the environment
Quoted companies must now report information on environmental matters, the
company’s employees and social and community issues that are material to business
2. UN-PRI (the United Nations Principles for Responsible Investment)
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A significant extension from the niche investors in the Socially Responsible Investments
sector into mainstream financial analysis
Defines principles of responsible investment, not requirements
Represents a commitment to incorporating principles into approach
Encourages greater use of GRI
3. The Global Reporting Initiatives (GRI) Third Generation Sustainability Reporting
Guidelines
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Cf The Triple Bottom Line
GRI’s objective is to help organisations give a balanced overview of their economic,
environmental and social impacts
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The importance and benefits
of CSR for organisations
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The business case for CSR depends on
risks and opportunities
Risks
Opportunities
Reputation
risk
management
Human
resources
Licence to
operate
Brand
differentiation
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The business case for CSR depends on
risks and opportunities
Risks
Opportunities
Reputational risk management
• Reputations that take decades to build can be
ruined in hours through:
• Corruption scandals (BBC phone-ins)
• Environmental incidents (Shell’s
dumping of the Brent Spar oil rig)
• Building a reputation of “doing the right thing”
within a corporation can mitigate these risks.
Human resources
• CSR programmes can aid recruitment and
retention.
• Giving staff the opportunity to take part in
fundraising activities or community volunteering
can improve their perception of their employer,
reinforce internal relationships and increase
sense of well-being.
Licence to operate
• Corporations will attempt to avoid interference in
their business through taxation and regulation.
• Substantial voluntary steps on current issues
like the environment organisations can allow
companies to escape intervention from
governments, regulators and the media.
• Particularly important for firms seeking to justify
eye-catching profits (e.g. private equity)
Brand differentiation
• CSR can play a role in differentiating
organisations and building customer loyalty
based through a distinctive set of ethical values,
e.g. Co-operative Group and Body Shop.
• Positions organisations as being in-touch with
sensitive issues.
• Encourages introduction of new products and
services (e.g. carbon neutral credit cards, online
statements) .
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The recent controversy about ‘unfair’ bank
charges exemplifies potential risks
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CSR trailblazers –
who’s doing it well?
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Source: http://www.bitc.org.uk/resources/publications/cr_index_2006_exec.html
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Some examples of recent award winners
• Kick-starting the careers of
young people in the arts
since 1993 with the
"Pyramid Awards“
• The Pyramid Award scheme
was launched in 1993 to offer
practical and financial support
to freelance artists,
craftspeople, designers and
performers to start a business
or conduct a project in the
crucial year after leaving
college.
• Ten years of helping the
homeless in partnership
with Shelter.
• Bradford & Bingley launched
its Community Affairs
programme in 1996, identifying
homelessness as one of its
core areas of support, and in
the same year entered into a
relationship with Shelter.
• EDF Energy Environmental
Leadership Award 2007 in
association with the Institute
of Environmental
Management and
Assessment
• By considering the
environmental impact of its
products and services,
Barclays PLC is accessing
new markets and helping
customers cut their carbon
footprint.
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Key trends in CSR
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Responsible business
a source of competitive advantage
Create
opportunities
Minimise
business risk
Compliance
with
legislation &
regulation
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How can marketers make an
impact in relation to CSR?
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Analyse your company’s CSR policy and turn
it into action
Articulate
Communicate
Demonstrate
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Understand your objectives
Define key messages
Relate to brand
Understand your target
audience
• Tailor to different stakeholders
Target all stakeholders
CSR reports
Website
Marketing comms
Advertising
PR
Beneficiaries (e.g. charities)
Relate to activity and action
Integrity
Commitment
Evidence
Pictures
Reinforce your brand
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A few useful sources of information on CSR
Business in the Community
www.bitc.org.uk/crindex
FORGE Group guidelines
www.abi.org.uk/forge/ForgeText.pdf
Harvard article: the link between CSR and competitive advantage (Michael Porter)
http://harvardbusinessonline.hbsp.harvard.edu/email/pdfs/Porter_Dec_2006.pdf
Radley Reldar report on Corporate Responsibility Communications
www.ry.com/files/news/4418/BiTC_RY_Brochure_FINAL.pdf
Article on Triple Bottom Line
www.cim.co.uk/mediastore/_Insights/Triple_Bottom_Line_Booklet_web.pdf
Companies Act 2006 (all 740 pages)
www.opsi.gov.uk/acts/acts2006/ukpga_20060046_en.pdf
United Nations Principles of Responsible Investment
www.unpri.org/
Global Reporting Initiatives G3 guidelines
www.globalreporting.org
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Questions?
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