CORPORATE social responsibility (CSR) is a concept that has been around for decades; however, a heightened interest in the role of business in society has resulted in organisations in all industries and regions in Australia re-evaluating how they impact their stakeholders.
CSR is a broad concept that encompasses myriad issues and activities. The Global Reporting Initiative, a global, multi-stakeholder network of thousands of experts promoting transparency, accountability and reporting in the area of sustainable development, has condensed these issues and activities into three dimensions: economic, environmental and social.
The economic dimension concerns an organisation’s impact on the economic conditions of its stakeholders. For example, economic performance and market presence are both contributing factors.
The environmental dimension concerns an organisation’s impact on natural systems and falls under the popular heading of “green.” This dimension includes materials, energy, water, emissions, effluents, waste and biodiversity.
The social dimension is the broadest of the three areas and concerns an organisation’s impact on social systems. Some specific examples include labour practices, human rights, social and product responsibility.
Following are three key trends Lawson has identified following a CSR study it conducted in conjunction with AMR Research in 2007:
1. Businesses are increasingly formalising and expanding their CSR programs. In the AMR Research study findings, approximately 70% of organisations had a dedicated CSR budget.
2. Compliance is the top driver of environmental CSR programs. There are many factors that influence why organisations establish environmental CSR programs, but compliance with regulatory requirements is the leading driver, especially for manufacturing and distribution organisations.
3. Organisations are looking to IT to help manage their CSR programs. An overwhelming percentage of organisations — manufacturing, distribution and service — are planning to use IT in the next two years to help manage their CSR programs. Organisations have identified a critical need to integrate and automate their CSR processes and information.
Where to start
For most companies, CSR programs may be initiated in any number of areas by individuals who would not consider themselves experts on the topic. As a result, a commonly asked question is “Where do I start?” Following is a high-level guide.
1. Assess your business. Start by conducting a CSR “audit” of your entire organisation. Key questions you should answer include:
• What are we already doing today and how can we do better?
• What are the business drivers for our CSR activities? Which areas of CSR present the greatest opportunities (e.g., reduce costs, increase customer satisfaction)? Which represent the greatest risk (e.g., fines for non-compliance, environmental accidents)?
• What existing IT systems can we leverage?
• What are our competitors doing in this area? CSR is an area where you do not want to be perceived as a laggard.
2. Plan at a corporate level and act at a local level. CSR is most commonly and effectively driven from the executive level because top management needs to establish the commitment to CSR across the company. On the other hand, CSR programs are best executed at a local (e.g., departmental, office, regional) level. This empowers employees to make a difference and creates a strong sense of ownership and pride.
3. Establish ownership and accountability. It is critical that an individual or group is identified as the program owner and is accountable for its results. Of course, the appropriate level of authority and budget should accompany this accountability in order to create the best opportunity for success.
4. Set targets, then measure performance and communicate results.
Like any business initiative, it is important to establish targets or goals that drive performance. Each CSR target should be broken down into a series of tasks, which are assigned to business owners.
The good news is that CSR programs typically lend themselves well to quantifiable measures, such as reduction in energy consumption, workforce diversity, charitable giving and volume of recycling. Remember to keep stakeholders informed of your progress.
5. Finally, start with smaller, manageable activities that generate measurable benefits. Get some “wins” under your belt to instil confidence and ensure support for larger programs.
Leveraging IT to manage CSR
As ERP systems are often integrated and enterprise-wide, they can sensibly form the foundation for managing CSR programs.
At Lawson, we recommend aligning ERP applications with the CSR programs organisations are implementing, and then incorporate internal control and enterprise performance management solutions to create a complete solution.
Together, these systems manage the transactions that flow through the enterprise and establish “one version of the truth”.
CSR is a rapidly growing area that presents organisations with a challenge and an opportunity.
Most companies have some CSR programs underway, but are just beginning to evaluate how CSR can become a more integral part of their business strategy.
IT initiatives to support CSR programs have started, but are far from mature. By using an integrated and automated approach, organisations can gain greater visibility into their CSR programs, have more confidence in the information they’re getting and produce better results.
*Stephen Moore is Australia and NZ MD at Lawson Software, www.lawson.com/csr.