Ethical Performance
inside intelligence for responsible business


CEOs have accepted a new responsibility

July 2006

Peter Erskine, who became chief executive of mobile phone company O2 in 2001, talks to EP about corporate responsibility as seen from a CEO’s perspective

In many ways, O2’s Peter Erskine is the typical private sector chief executive – confident, dynamic, articulate, and committed to making his business a runaway success. But his active commitment to corporate responsibility marks him out from the herd.

Speak to the man himself, however, and he will leave you with the impression that most chief executives have now ‘got’ CSR. Erskine mixes regularly with the heads of Europe’s largest companies and is in no doubt that any cynicism at the highest level of business about the need for corporate responsibility has largely been dispelled.

‘Of course chief executives have come at corporate responsibility from a sceptical stance; I think they’re sceptical of all things,’ he says. ‘But I’ve not met any CEOs of FTSE 100 companies who now don’t realize it’s very important to get things correct in that space, and that if you don’t get the brand right as a result, then you’re dead meat.’

While he concedes that not all CEOs have moved at the same pace, Erskine says it would be wrong to argue that a lack of commitment from the most senior executives remains a significant sticking point.

With 14 CEOs last month publicly urging UK prime minister Tony Blair to set tougher targets on greenhouse gases, Erskine points out that company leaders are even beginning to get to grips with climate change, although he concedes that this is one area where more commitment is needed from the most senior executives. ‘Chief execs are getting there on climate change, but I would say that many still need to be convinced, and some just pay lip service,’ he says. ‘There’s a lot more that can be done. More CEOs need to become more aware that climate change is a competitive challenge to their brand – that they will perform better if they tackle it. Climate change is the litmus test of just how serious any business really is about being responsible.’

Erskine was not one of the chief executives who signed the letter to Blair, and he concedes that it is easier for the head of a mobile phone company, which has a relatively small impact on climate change, to take a strong position on the need to cut emissions. He has however gone much further than most signatories by publicly committing O2 to the long-term goal of being entirely ‘carbon neutral’, although the company has yet to state when this goal, which is highly unusual for a FTSE100 company, will be met.

‘We certainly get a big push on climate change and other business responsibility issues from the public at O2, and in particular from our employees. The staff are challenging us all the time, and they represent their customers,’ he said.

Erskine, who is 55, has a background in the telecoms industry. Before joining O2, he held senior posts at BT from 1993 and is now on the board of Telefónica, O2’s new owner. Will the takeover by the Spanish telecoms provider, which was completed earlier this year, be detrimental to O2’s CSR strategy? Erskine thinks not, saying the two companies are in many ways kindred spirits on CSR.

He makes no claims to being a proponent of corporate responsibility in the mould of Sir Mark Moody-Stuart or Lord John Browne. But the roots of his enthusiasm for CSR go back to 2001, when O2 was spun off from the former state-owned BT. ‘I don’t think I could ever have been classed as a CSR sceptic, but undoubtedly what crystallized things in my mind was when we became a new and separate business from BT,’ he says. ‘I realized then the importance of getting these things right. When you’re launching a new brand you can very soon kill it if you don’t get across the feeling that you’re a company which acts responsibly.

‘The push to behave responsibly also came very powerfully from within, that is to say, from our staff. It mattered to them that we were seen to be responsible, and, as we met lots of potential new shareholders when separating from BT, we had a lot of the big institutions asking us questions in that area.’

CEOs, it seems, are no less immune to peer pressure than lesser mortals. David Varney, the former O2 chairman and leading light in Business in the Community, was a ‘great challenger and mentor’ for Erskine, who believes that CEOs also need to be talked to in a language that they understand.

‘It would be a shame if some sceptics were not “converted” just for the want of a better chosen word here and there,’ he says. ‘Some people in CSR have to be more aware of that, and to move towards commercial reality – to move an inch further towards the business agenda. It’s an important balance to strike.’

When chief executives do show interest, Erskine believes that the expectations placed on them should be realistic. ‘I haven’t got the time to manage detailed programmes, so it’s about knowing what’s going on, setting the agenda, making sure you have clear measures to track progress, and asking the right questions,’ he says. ‘But it’s also about how you do the job. If you can run the business in the way you would like to live your life, you’re not going to go too far wrong.’


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