Ethical Performance
inside intelligence for responsible business


time to accentuate the positive benefits of CSR

February 2002

Companies are not getting the most out of CSR if they focus solely on risk reduction and not productivity gains, says Stephanie Draper

The most common business case made for social responsibility is the positive effect it has on the management of risk. The recent Association of British Insurers guidelines on socially responsible investment put the reduction of risk at the centre of their argument for greater corporate social responsibility, and the UK company law review has done likewise. This is hardly surprising, because risk is a heavyweight business issue and packs a strong punch in the boardroom.

There is, however, a danger that we might be focusing too much on the threats that CSR can avert and not enough on the opportunities that it can provide.

Emphasizing the potential rewards of having CSR policies in place is more likely to generate long-term commitment than trying to scare directors into action. One way of accentuating the positive aspects of CSR is to focus on the motivation, retention and productivity of staff.

Part of the problem of promoting CSR has always been quantifying its benefits, but it is actually quite easy to measure the benefits of improved staff morale. Early analysis from a forthcoming survey by the Industrial Society on UK staff recruitment strongly suggests, for instance, that employees would rather work for companies that integrate CSR into their management systems. Other studies, both in Europe and the US, support these findings.

Despite such evidence, the effect of CSR on staff morale and commitment – and therefore business performance – is often overlooked. Yet in a time of economic downturn, the importance of employee performance may actually be magnified. Nurturing loyal and motivated employees can help companies ride out troubled times. If a company is truly committed to CSR, then it must realize that one of the most powerful ways of demonstrating this is through the commitment of its staff. Employees are at the hub of the stakeholder wheel, and their views and attitudes are an important influence on other stakeholders.

The risk management approach is great for managers and investors, but it does little to motivate staff, customers and other stakeholder groups. Employees are much more likely to respond to positive messages than to warnings about risk reduction. They may not be the original brokers of social responsibility, but they are central to making these strategies work in the long term.

Once employees and other stakeholders are inspired by CSR, the paybacks in terms of productivity can be substantial – and their engagement is the true route to embedding CSR in a company’s day-to-day activity.


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