Ethical Performance
inside intelligence for responsible business


Cisco adopts global CSR strategy

June 2004

Internet network company Cisco Systems is to establish a global CSR strategy over the next 12 months as part of a dramatic move away from its traditional philanthropic approach to social responsibility.

Cisco’s change of direction comes amid growing criticism of the social and environmental performance of information technology companies, particularly in their supply chains.

The California-based multinational, which had an $18.9billion (£10.6bn) turnover last year, says it will develop the strategy in parallel with efforts to measure and report its social and environmental performance. It will also carry out a ‘CSR gap analysis’ to identify areas for improvement.

In the 2005-06 financial year it intends to set up global CSR training for its 36,000 employees and to be in a position to report on its social and environmental performance. During 2006-07 it wants to have ‘integrated CSR processes’ throughout the company.

Adrian Godfrey, who was recently appointed worldwide CSR director, said there had been a sea change in Cisco’s approach.

‘About two years ago our language was about philanthropy, corporate giving and community involvement – and mainly focused on the US,’ he said. ‘The reality was that it was a public relations tool, but today the language has changed to talk about CSR on a more strategic level, about how it can help with market sector development and partnerships. And it has moved from a US to a global focus.’

The company, which operates in 72 countries, sells mostly in the Americas (56 per cent) but also has a substantial market in Europe, the Middle East and Africa (27 per cent). The Catholic Agency for Overseas Development recently highlighted working conditions in the IT sector in its ‘Clean up your computer’ campaign, which urges customers to move their business from firms with poor labour standards in their supply chains. Several firms have since responded, most recently IBM, which has accepted the validity of the campaign and adopted a code of conduct for suppliers.

Godfrey said Cisco’s new policy was partly to increase customer retention and loyalty, but was also a response to the general increase in regulation and voluntary guidelines on CSR. Investor pressure was also a factor, he added.

According to Devon Crago, an analyst with US-based SRI research firm Innovest, Cisco has until now ‘failed to construct a comprehensive corporate strategy around sustainability that effectively addresses the various risks and opportunities that impact investors’, and its lack of ‘a well-rounded strategy’ has made it a riskier investment than some of its peers.

Godfrey said: ‘Cisco has had inconsistent ratings due to our lack of transparency to stakeholders, and we want to put that right.’ A corporate citizenship council of heads of Cisco divisions around the world will oversee the preparation of the strategy.

The digital divide, access to education and supply chains will be among issues covered, according to Godfrey.

Cisco, which designs and manufactures networking hardware such as broadband equipment as well as associated software, faces growing reputational risk as it expands its supplier base into emerging markets such as China.

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