Ethical Performance
inside intelligence for responsible business


time to blow the froth off all this empty CSR talk

September 2002

Good social reports clarify the impact companies have on society. But some fudge the difficult issues, say Peter Knight and Nigel Salter

As noted in the fifth story of this issue, 50 companies reported for the first time on their social and environmental performance in 2001/02, compared with only 18 new reporters when we took the pulse of the UK’s top companies at the same time last year.

If reporting is an indicator of commitment, is this level of interest sustainable or are we living inside a corporate social responsibility bubble? Evidence abounds of frothy activity.

Questions from socially responsible investment analysts – the current teenage scribblers of the financial community – swamp listed companies in all sectors. Chief executives use every opportunity to boast of their commitment to good corporate citizenship. A recent research finding showed – rather unbelievably – that 73 per cent of European top 200 chief executives think social responsibility boosts profitability.

Politicians are riding the bubble too. The UK has a minister responsible and the French have passed a decree. Non-governmental organizations are panting from their pursuit by companies that want to engage with them. Public relations companies – excited by the potential mileage to be gained out of fluffy issues and the perceived need of companies to communicate their good behaviour – are in a feeding frenzy, scrabbling to service the fuzzy world of CSR.

We hope we are witnessing a real change in business sentiment rather than a fashionable flirtation with doing good. But there is a wide gap between the reality of corporate citizenship – witness Enron et al – and the story companies put forward in environmental and social reports. It is not without irony that Enron, Tyco, WorldCom and other casualties of recent accounting scandals were public do-gooders, constantly trumpeting their socially responsible behaviour.

Critics are being patient and welcoming reporting virgins to the fold. But companies will have to improve the rigour of their reporting to ensure that the gap between perception and reality is narrowed, particularly in social issues where measures are few and fuzz leads to fudge.

Continued enthusiasm among the financial community is key. If it fails to reward the CSR leaders and punish the laggards, then the bubble will deflate very quickly indeed.

We hope those chief executives who say that good CSR leads to better profits will get out there, do a lot of good and make loads of money. We also trust that this fine, upstanding and profitable behaviour will be noticed and richly rewarded by investors.

Peter Knight is a director of Context, a CSR consultancy specializing in strategy and communications. Nigel Salter is director of SalterBaxter, a corporate identity and corporate communications design consultancy


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