What is corporate responsibility?

Corporate responsibility (CR) is an area of increasing significance — for organisations themselves and in terms of what they expect from their service providers. What is the impact on businesses and how can they decide whether their policies are on the right track? Alan Field explores this complex question.

Sometimes still referred to as corporate social responsibility, CR is defined differently by different organisations. The Chartered Institute of Personnel and Development (CIPD) has defined CR as the recognition that an organisation’s operating activities impact on society, the environment and the economy.

In other words, the impact of an organisation and its products or services goes further than just its immediate stakeholders and includes the wider community. This may include employees many thousands of miles away manufacturing goods that, in turn, form part of a long supply chain.

CR also includes policies on charitable giving (such as employees being encouraged to support fund raising) or providing direct voluntary services to designated charities.

Some organisations also see sustainability and promoting occupational health and safety as a part of CR policy. This can mean considering wider policies or goals for continual improvement not just within the organisation but in the supply chain as well.

Once the organisation has decided the scope of its CR, it can show this simply as a set of policies that guide business decisions. It could be limited to just that. Alternatively, the CR policy could be implemented further, eg as a set of defined processes and activities across the organisation or in a designated part of it, eg a particular outsourced contract. This might also lead, in turn, to an auditable standard being achieved. Some organisations will have aspects of their CR included within a management system — such as ISO 14001 — or go for a specific product, such as SA 8000 (which will be discussed later).

Clearly, CR is not something to agree to, or begin, simply off the cuff. The organisation needs to decide what it means by CR and why it wants to promote it.

Then, once the rationale has been decided at leadership level, the next decision is how far the organisation wants to implement its CR policy. This will be driven partly by resources but, more importantly, also by what the organisation wishes to achieve from a CR policy.

There are definite marketing and team building advantages from implementing a CR policy, eg enhanced awareness of sustainability and related cost savings in the organisation. Also, just as two examples, charitable giving and promoting responsible employment policies worldwide may demonstrate altruistic motives, even in a hard-nosed business.

The scope of CR

An organisation may follow a policy of expecting its contractors to follow its CR initiatives. Where the organisation and a service provider broadly share the same CR policies, this can be a powerful tool for team building and good working relationships with all stakeholders.

As with any contractual expectations, it is essential for all parties to have a clear understanding of precisely what is meant by CR and what the an organisation expects of its service providers.

For example, if it comprises simply encouraging charitable giving or providing charitable voluntary work, this must be communicated to the service providers and their contractors for their buy-in. More specific contractual requirements, such as following particular sustainable policies and environmental management systems, will usually involve just agreeing to certain policies, procedures and policies, which can then be costed and delivered within an agreed budget and performance based milestones.

Where a service provider already has a CR programme, it needs to be discussed with any organisation to whom it might sell its services, even if that organisation does not have any CR requirements itself. This could have cultural or budgetary implications at a later date. When staff are being transferred from an organisation or a previous service provider under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), then differing CR expectations or experiences also need to be taken into account. For instance, if the previous employer had a CR strategy and the new employer does not (or simply has a different approach) it could create concerns and should be managed at an early stage.

Setting the tone

Altruistic or even ideological policies, such as supporting particular voluntary activities, need to be communicated properly. For example, while supporting children's charities is not likely to be controversial, the organisation and any service providers it has need to agree the charities that are to be supported, especially if the organisation wants a “one team” approach, ie where the organisation’s staff and other contractors are encouraged to participate together in charitable activities.

Setting the standard

As with all management systems, there is no law that says you must have them audited or assessed, and some organisations will implement all or part of such systems without external assessment. Of course, contractual requirements often specify that ISO 9001 (the Quality Management Standard) and, increasingly, ISO 14001 (the Environmental Management Standard) must be in place and externally assessed. There is nothing to prevent an organisation adding CR policies and implementation as part of either or both of these management systems’ implementations. There is no obligation to do so, of course, but the organisation could so elect.

If the organisation wants to demonstrate that there is a responsible supply chain, it can comply with SA 8000 Standard published by Social Accountability International (SAI). This is a non-governmental organisation based in New York which licenses assessors throughout the work to conduct assessments to SA 8000. It also has a number of other voluntary codes and initiatives.

SA 8000 is an auditable social certification standard for what it describes as decent workplaces. It is based on the UN Declaration of Human Rights, as well as other conventions and policies from the International Labour Organisation (ILO).

Clearly, if this is specified within a supply chain, then achieving certification helps establish that each element of the chain is meeting the expectations of responsible labour management in the same way that compliance with ISO 9001 is often required in each element of the supply chain. This can apply in the UK, as well as abroad. For instance, let’s take the case of sub-contracted cleaning and landscaping staff, who are authorised to work in the UK. Are they paid at least the minimum wage and not being compelled to live in conditions or under supervision that is considered inappropriate by the organisation or the provider of those services? With overseas workers, the question more usually relates to the manufacture of building materials and spare parts which are eventually purchased in the UK.

There are obviously financial costs, both in terms of production and management systems, through making specific labour management requirements. Nobody wants to encourage child or slave labour anywhere in the world but ensuring this does not occur may impact on the bottom line. However, failure to do this has reputational and ethical risks, among others. This is one reason why so many blue chip companies support CR.

Conclusion

It may, one day, become as common to have CR expectations as it is today to have ISO 9001. Some companies have begun implementing, or at least looking at, CR policies so perhaps now is the time for everyone to start looking at what the marketplace — and wider stakeholders — expects to see.