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Case Studies

THE CORPORATE RESPONSIBILITY JOURNEY—WHERE TO BEGIN?

Today, at the end of the first decade of the 21st century, the notions of “corporate responsibility” and “sustainability” are familiar to most business people and yet the essential understanding of what these ideas entail and how they are best implemented in a company’s operations remain elusive. The terminology, complexity, lack of a clear mandate (e.g., no requirement (yet) for triple bottom line accounting in the GAAP standards) and a long period of economically challenging market conditions has resulted in inertia for many companies. Still, most company leaders…and employees…know that every company should be doing something about sustainability and “enterprise responsibility” (a term we use to clarify that responsibility applies to all business entities, regardless of their form of legal organization). The question, then, is how and where to begin?

 

START WITH THE “WHY”

At CSRG we are deeply committed to an integrated approach to sustainable business practices. This means that everyone in the organization is actively aware of the company’s efforts and initiatives and how their individual work contributes to the enterprise’s results. The goal is to inspire every employee to understand and accept what “responsibility” and sustainability” means so that they can act and think independently and in a manner consistent with the company’s goals and values.1* By exploring and achieving organizational consensus on why the company is in business (as evidenced by its values, mission statement, etc.), our clients gain the ability to prioritize tasks and resolve questions as to how to implement sustainable business practices. Of course, each client and company culture is different, requiring a broad array of tools, techniques and approaches to achieve success.

1*An additional benefit of this approach is the carry over of these behaviors and thinking into employee’s personal and social lives. A tangible example of how an express, intentional company action can have far reaching collateral societal benefits.

 

ASSESSMENT

Our client, a publicly traded industrial conglomerate with diverse domestic and international operations, had received a shareholder resolution asking the company to issue a “corporate social responsibility report.” Such shareholder resolutions are becoming more frequent and, as here, are often brought against companies that don’t have a clear articulation of their sustainable and responsible business practices. CSRG, as a strategic advisor to the company, diffused the situation by using its long term relationships within the SRI (socially responsible investment) community to create meaningful dialogue and provide assurance to the filing SRI firm that we were working with the company. This, in turn, resulted in an immediate lessening of adversarial posturing and improved communication and lead to the withdrawal of the resolution. Next, the CSRG proprietary CSR Self Assessment Tool (tm) was presented to the client’s project leadership team, to guide the internal assessment of the client’s practices and policies and provide the foundation necessary for reporting.

 The Self Assessment Tool (“SAT”) allows a client to accurately determine its relative strengths and weaknesses in five key areas: CSR Evolution (i.e. how much the company knows and does about socially responsible practices); Environment; Ethics & Governance; Stakeholder Engagement and Society. The tool is a series of easy-to-understand questions that can be answered “yes,” “no,” “work in progress” or “not applicable” presented in an Excel spreadsheet format.2* Employees throughout the organization provide answers to the assessment questions. The data is provided to CSRG for collation and analysis.

The deployment strategy for the SAT varies from client to client and is dependent on a number of factors including the client’s needs (short and long term), budget, operations and structure, etc. In the present example, the client and CSRG determined that it was best to use divisional vice presidents as the primary “in the field” contacts. Each of the VPs was free to select as many employees under his/her supervision as needed to provide sufficient detail for the assessment. Two primary contacts, the Chief Environmental Officer and the Director of Investor Relations, were responsible for leading the project internally and acting as liaisons with CSRG.

CSRG reviewed the client’s data, performed a SWOT analysis (strengths, weaknesses, opportunities, threats) and prepared a preliminary strategy for creating a CSR report based on the data gathered during the assessment. One of the many features of the SAT is that it maps to the Global Reporting Initiative (“GRI”) G3 metrics. This allows CSRG to show our clients which metrics have sufficient data for reporting and where to focus efforts to gather data or implement systems so that additional metrics and topics can be reported on in the future. During consultation between CSRG and the client’s project leadership team, issues such as the existence of historical data (three years’ worth is needed per GRI guidelines), possible themes for the report and relevant and valuable stories/personnel to give life to the data were discussed and resolved.

The Self Assessment data disclosed that there were 10 GRI metrics the client could report on, and that in a couple of cases, there was not three years’ worth of data to report.3* This result is not unusual, as the data gathering system are often not in place within an organization until the company explicitly commits to measuring relevant metrics data and establishes the systems (human and data) to track operational results. The creation of a GRI based report was a major accomplishment that has served the company in many ways (in addition to addressing the shareholder resolution) from reputation and risk management to clearer communication. The process becomes the impetus for longer term goals and initiatives that both improve operations, contribute to profitability and allow for more expansive reporting in the future.

2* A web based version is currently in development

3* The assessment showed data for other metrics, however, there was insufficient data and/or company practices and policies to support including them in a report.

 

RESULTS

The results of CSRG’s work with the client were profound. The shareholder resolution was withdrawn prior to the shareholder’s meeting, as a direct result of CSRG’s involvement, reputation and relationships that provided the stakeholder groups with confidence that the company was actively working and committed to reporting and the operational changes that go with it. Internally, the company’s workforce around the world was energized and united by the self-assessment process and the report. While the company already had employee awards programs and a company newsletter in place prior to deploying the SAT,4* the act of soliciting employee opinions around sustainability and corporate responsibility issues globally had the effect of “breaking down silos”—getting people to talk across business units and functional areas of work and expertise to share ideas and implement things that had worked in other parts/regions of the company. The publication of the report, which serendipitously coincided with an important anniversary in the company’s history, became an important tool in the company’s investor presentations (with particular success at attracting international institutional investors) and for use in discussions and activities throughout the company’s customer base and supply chain. Building upon the results of the Self Assessment and CSR report writing process, the company undertook initiatives to improve customer feedback and idea gathering systems (and capture the data).

4* Awards were given for safety, environmental activities like recycling and systems improvements and community outreach.

 

CONCLUSION

The only way to effectively and successfully start the work of instituting or increasing sustainability and corporate responsibility measures is to have an accurate picture of where the organization is at the outset. The CSRG Self Assessment Tool and related consulting services and analysis provide that foundation. The process provides the framework and working vocabulary for the development of a long term sustainability strategy that is holistic and integrative. It guides the company along the journey of sustainability integration and supports long term stakeholder communications and engagement, including reporting.5* It can engage a number of employees throughout the organization and become a catalyst of components of the integrated plan which can include, for example, long term and integrated reporting, carbon foot-printing and/or GHG analyses, supply chain work, etc. These are all services the CSRG provide to the client throughout our long term advisory engagements. The process and the results yield long term benefits and opportunities for change and growth that benefit the bottom line.

5* Many companies decide to move to a web-based approach to sustainability and corporate responsibility communications and “reporting,” using a web site to be a real time, dynamic communication and information tool. This has the additional benefit of saving paper and other natural resources by limiting the amount of printed materials.

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