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CSR leaders accused of ignoring bottom line

May 2002

Senior company executives are in danger of concentrating on corporate social responsibility to the detriment of their core business, a former UK government minister has warned.

John Redwood, the Welsh secretary in the last Conservative administration, told a CSR conference in London that social responsibility activities ‘can become an excuse by those running businesses to concentrate on what matters less rather than what matters more’.

In a thinly-veiled reference to BT, he criticized ‘one of the leading UK telecoms companies’ for paying too much attention to CSR while it was wrestling with financial problems at the core of its business.

‘The role of a telecoms company is to provide good telecommunications at a price people can afford,’ he said. ‘When they are spending a couple of million pounds on environmental projects it seems to me that the whole matter is getting out of hand’.

Redwood said BT, which is one of the main proponents of CSR in the UK, would serve the community more effectively if it concentrated on producing cheaper and better services for its customers.

‘My advice is not to expect [CSR] to turn around your underlying business problems,’ he said. ‘You should be concerned about the quality and price of your goods and services, because that is the main way a competitive and successful business can be socially responsible.’

The MP for Wokingham, who is a former executive director of NM Rothschild, told delegates at the Middlesex University Business School conference that companies indulging in fashionable ‘stakeholder fests’ risked taking their eye off the ball.

He added that some business leaders were beginning to see CSR as ‘a substitute’ for good performance in financial areas.

Dunstan Hope, social policy development manager at BT, said his company saw CSR as important because it delivered the financial results and customer satisfaction that Redwood had outlined, and for that reason was not a distraction.

‘CSR is not a fluffy add-on, it’s about putting customers first,’ he said. ‘Our research has shown us that customers stay with BT because of our CSR measures, and we can now work that out quantitatively.’

Sandra Waddock, professor of management at Boston College in the US, said Redwood was confusing philanthropy with doing good. ‘Social responsibility is not just about building duck ponds, it is about looking after customers,’ she said.

Waddock added that Redwood’s argument ignored the growing demand from investors for CSR programmes. ‘In the US, one-eighth of investment now has a socially responsible basis, so if you don’t behave responsibly you’ve just lost one-eighth of your potential investment,’ she claimed.

The conference was organized by Middlesex University’s International Centre for Business Performance and Corporate Responsibility.




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