The Guardian: worthwhile policy or simply propaganda? “Or take Shell. It suffered a series of public relations disasters in the mid-90s”

In the second half of his report about corporate social responsibility, Nic Paton looks into the deep credibility gap behind all those fine words

Saturday July 17, 2004

Fortune magazine voted it "the most innovative company in America" six years running, it was consistently high in the lists of "best company to work for", it spent millions on literacy and community projects and was a pioneer of renewable, wind turbine technology.

It was, of course, Enron, now far better known for its corporate and financial mismanagement, its culture of secrecy and deceit, close ties to US politicians and alleged human rights abuses by subsidiaries in India.

This, then, is the big problem with corporate social responsibility (CSR). It has become big business for firms to invest in environmental, ethical, social and community projects. But behind the warm words and sentiments there is often a deep credibility gap.

And Enron's not the only one by any means. Closer to home, although undoubtedly not in the same league, Marks & Spencer is a well respected pioneer of CSR. Yet in the late 90s it was quite happy to dump UK suppliers in favour of cheaper overseas rivals.

Now Stuart Rose is firmly in charge there are likely to be further cuts - even though the company insists on its website that "the importance of supplier relationships remains". It also abruptly shut down its French operations, leading to a storm of protest from workers.

Or take Shell. It suffered a series of public relations disasters in the mid-90s, notably the Brent Spar oil rig disposal fiasco and its association with human rights abuses in Nigeria. These debacles spurred it on to spend millions on rebranding, wooing environmentalists and human rights groups and investing in renewable energy.

Yet, having done all that, it now finds a lot of its good work undone by the financial scandal of its under-reporting of oil reserves.

"Shell as a corporate entity has had a culture of seriously engaging with the issue of sustainability. The people running its programmes are skilled," concedes Mallen Baker, development director at Business in the Community. "I'd imagine a lot of those people are feeling rather let down by the actions of a few individuals."

At the heart of the problem is the fact that CSR is very easy to do badly and quite a lot harder to do well. If, fundamentally, you are a bad employer, all you'll do by spending time and money producing CSR reports is create a culture of mistrust and cynicism among your employees.

"If you have not fed the message down the line and if it is not reflected in the way people are managed, CSR is just propaganda," warns Mike Emmott, an adviser with the Chartered Institute of Personnel and Development. "The way employees feel about it is a good test of whether it is real or not," he adds.

Even the little things that can come with CSR - instilling a culture where office politics is frowned upon, paying suppliers on time and so on - can make a big difference, argues Linda Holbeche, research director at management training school Roffey Park.

"Where there is much greater alignment between the corporate message and people's behaviour it makes a huge difference to the amount of engagement, activity and productivity that is seen," she explains.

One reason for this disjunction between rhetoric and reality is that the workforce nowadays is by and large better educated, more articulate, more enquiring and more aware - and so more demanding, suggests Sharon Jackson, director of consultancy Carl ton CSR. Employees, particularly young graduates, are increasingly looking at whether a firm's values are aligned with their own. "Businesses are still, really, run on fear and greed and they still have a lot of baggage," says Ms Jackson. "The older generation of leaders still do not really understand it."

There is, she believes, a new generation of leaders stepping into their shoes prepared to take a more value-led approach but "it is an evolution, not an overnight thing".

Then there's the fact that CSR reporting is purely voluntary. This has encouraged firms to take a "pick and choose" approach - boasting about their credentials in one area while ignoring another, argues Janet Williamson, policy officer at the TUC.

"A lot of people feel that CSR reports are more a PR exercise than a really rigorous assessment of what is a company's social and environmental impact. You are still going to find companies that are pretty poor employers parading their CSR credentials left, right and centre."

But, with recognition of its benefits growing and a new generation coming through who are more prepared to think in CSR terms, it may be - just may be - that CSR will begin to become a more credible workplace issue.

Double standards cloud the issue

A report earlier this year warned that some businesses adopted corporate social responsibility to use as a shield behind which to campaign against environmental and human rights regulations.

Christian Aid claims CSR has been adopted by some big companies that are simultaneously spending millions of pounds to block new regulations that protect workers, local communities and the environment.

The charity says the actions of these firms are counter-productive, worsening relations between business and local communities.

Shell's former chairman, Sir Philip Watts, was one of the executives attacked for playing a leading role in CSR while lobbying against tougher international laws. His company is held up as an example of a group that was implementing CSR initiatives in Nigeria, some of which backfired.

British American Tobacco is another FTSE 100 firm to be criticised for claiming it minimises the impact of its business on local communities while aggressively selling ciga rettes to people in developing nations.

Asked how he reacted to the report from Christian Aid on BAT activities in east Africa, outgoing chairman Martin Broughton attacked the charity as "totally irresponsible". The report, Behind The Mask: The Real Face of Corporate Social Responsibility, was a "pathetic piece of reporting" without providing evidence to counter the charity's claims.

(Phillip Inman)

http://www.guardian.co.uk/guardian_jobs_and_money/story/0,3605,1262898,00.html