Your views on Corporate Social Responsiblity
Author:
Alan Tyrrell
The results of the Accountancy Ireland reader survey on Corporate Social Responsibility (CSR) are now in and deliver a new insight into CSR practice and understanding from the perspective of business in Ireland.
Although widely supportive of CSR, there were also some dissenting voices among the respondents. The results also show some strong contradictions in attitudes toward CSR and its interplay with business practice, corporate strategy and profitability. However similar contradictions have characterised CSR since the concept first emerged. For example one respondent stated their belief that CSR was just '…a fancy new name for good customer service…'. Others saw CSR as a marketing tool with 41% stating that the most important reason for engaging in CSR was that it improves the reputation of the company. Exemplifying the divided nature of the discussion, one respondent defined CSR as 'the pretence that business is not all about profit by pandering to the demented and paranoid views of public servants, academics and general woolly jumper brigade…'. While not representative of the majority view, this definition shows clearly the polarising nature of the debate on CSR and corporate practice. Leaving aside the debate on the topic it is notable that 71% of respondents to the Accountancy Ireland survey state that the ethical conduct of business is a standard business practice - nothing more, nothing less. Getting into the activities that embody CSR there are some interesting results. Not surprisingly 92% of respondents state that supporting charities is CSR. 83% described it as activities to help solve social problems like crime and poverty. For a similarly high percentage (77%), CSR is exceeding legal or regulatory obligations in areas of business operation e.g. health and safety, consumer rights. Taking measures to ensure that products do not harm the environment is seen as a CSR action by 62% of respondents and 66% state that managing the supply chain to ensure that suppliers respect human rights is CSR as opposed to standard business practice. Respondents were equally clear on what is not CSR. For instance, making sales literature customer friendly is seen as a CSR action by just 16% of respondents whereas 79% see this as standard business practice. Protecting health and safety of employees is seen as standard business practice by 87% of respondents as is maximising long-run profits for shareholders. While 70% see the provision of transparent product information as standard business practice, 27% see this as an act of CSR. While there are differences in views on what passes for CSR, the results do show a very high level of awareness of CSR with 90% of respondents stating that they had heard of the term. Importantly, this awareness translates into action for a sizeable number of the respondents with 69% stating that their companies are engaged in CSR activities. Even more importantly, this activity is growing with 40% of respondents stating that their companies were spending more now on CSR than they were two years ago. Additionally 7% felt that their company was doing an excellent job on CSR and 32% believed that their performance was above average. In contrast just 16% rated their actions as below average or poor. Given these results it would be interesting to compare the outcomes with measurements in other areas of business activity. It is also notable that 56% of respondents agreed that many companies do a great deal more for their communities than is talked about or known. This is possibly as a result of a reported lack of media coverage of the CSR activities of businesses. Just 40% of respondents stated that they had received positive media coverage of their CSR actions in the past two years. This is despite the fact that media coverage was seen as the best method of communicating to consumers about CSR. With a rating of just 4%, advertising was seen as among the least preferred means of communicating CSR actions to consumers. This is not surprising as international research shows that advertising campaigns to showcase CSR often generate cynicism among consumers. Looking beyond consumer communications, just 22% of respondents stated that they formally communicated CSR actions to investors whereas 37% did not. While there was a very high 'don't know' response to this question (41%), the fact that so few companies do communicate CSR to investors highlights a potential opportunity to gain competitive advantage through broadening the range of target audiences for CSR communications. Apparent throughout the results were seemingly contradictory views on the interplay between CSR and business. 78% agreed that businesses generally do not pay enough attention to their social responsibilities. Yet 65% of respondents stated that CSR needs to be a priority for a company. Elsewhere in the survey 80% stated that it was important or fairly important that companies expend resources on efforts to improve their communities. However, 66% stated their belief that many companies promote CSR but are not truly committed to it. When presented with a series of priorities to choose from, the largest cohort (36%) selected 'balancing the demands of all stakeholders' as the most important priority for a business. Testing these stated beliefs on balancing the needs of stakeholders also unearthed some unusual results. When asked whether they would close a 200 job factory to increase profits or keep it open with static profits, the respondents were almost evenly split - 51.6% in favour of closing the factory and 48.4% in favour of keeping it open. Interestingly, 36% of respondents to an earlier question indicated that providing secure, long term jobs for employees was an activity best described as CSR whereas 49% described this as a standard business practice. Looking at the results for these questions in tandem shows the difficulty inherent in balancing the needs of all stakeholders. Dealing with the links between profitability and CSR the results also showed some contradictions. For example, 56% agreed with the statement that 'CSR makes a tangible contribution to profitability'. In another similar question 61% of respondents stated that CSR activities could be directly linked to increasing the profitability of the company. Yet when asked to be more specific and state whether their company's CSR actions over the past two years had lead to increased profitability just 12% said 'yes'. A significant portion (43%) answered 'no' and 45% were unsure as to whether a profit increase had been achieved. Nor did the majority of respondents see CSR as providing a mechanism for achieving a price premium. When asked if a company known for CSR could charge a higher price than a company that did not engage in CSR, 62% said the price would be the same for both companies and just 36% said it would be higher. Despite these apparent contradictions 67% of respondents stated that a company's CSR actions were an important factor in their purchase decision. Thus CSR could be seen as the tie-breaker in a purchase decision thus leading indirectly to increased sales and profits. Getting deeper into the heart of the debate on CSR versus profit maximisation the responses show the difficulty of the issue at hand. Just 1.5% agreed strongly that 'businesses exist for the sole purpose of improving society'. While the result in itself is not surprising, it contrasts starkly with the 13% who strongly agreed with the polar opposite statement that 'businesses exist for the sole purpose of making a profit'. Aggregating the responses on the 'purpose' of business, 64% came down on the side of profit making as being the main purpose of business with 24% undecided and 12% on the side of improving society. Additionally, when asked which area of business would face the most severe cutbacks in a cost saving exercise, the largest cohort (43%) stated that CSR would get the most severe cutbacks. The next largest cohort (20%) selected marketing for the most severe cutbacks, followed by payroll (16%), plant & machinery expenditure (12%) and finally R&D (9%). Finally, with regard to leadership in the area of CSR, the respondents are clearly signalling that they are busy enough already! Just 2% see the Finance Department as leading a company's CSR actions. Unsurprisingly, the CEO's office is seen as the department which should lead the CSR charge by the largest group of respondents. However respondents state that senior management interest alone should not be the reason for CSR involvement. In fact senior management interest in CSR was seen as the most important factor for engaging in CSR by just 3% of respondents.
Almost 150 respondents participated in this survey which was undertaken using a detailed self-completion questionnaire hosted on www.accountancyireland.ie
Alan Tyrrell is an Account Director with Slattery Communications.