Why it’s crucial
for your business
Release date: July 7, 2011
Host/Guest: James Temple
Running time: 9:42 minutes
In this episode of Strategy Talks, PwC Corporate Responsibility director James Temple gives a commentary about CR, what it is exactly and why it is so important for your business to have a strong CR policy.
Announcer: Welcome to Strategy Talks, the business podcast series by PricewaterhouseCoopers Canada. Hosted by Helen Mallovy Hicks, National Leader of PwC’s Valuations, Forensics & Disputes Practice, and Calum Semple, an Operations and Consulting Partner. This interview series, featuring new topics and guests every episode, is designed to valuable insight into some of today’s hottest issues affecting your business.
Hi, this is James Temple, I am the director of Corporate Responsibility at PwC Canada, and director of the PricewaterhouseCoopers Canada Foundation. Today on Strategy Talks we will be doing things a bit differently, and I will be providing a commentary on Corporate Responsibility.
I often get asked the question: so what’s corporate responsibility anyway, and how does it deliver for my shareholder?
I feel these candid questions are part of an important discussion I’d like to tackle today: How can we look at Corporate Responsibility as a Strategic Business Opportunity. How do we balance the needs of our business, employees, marketplace, environment and community in a way that strikes the right mix of values that help reinforce our social license to operate?
For what its worth, the term Corporate Responsibility has been a work in progress. Over the past ten or so years, it’s been called a variety of things: Sustainability, Corporate Accountability, Shared Value, Social Responsibility, Citizenship – the list goes on. It came from a place where businesses recognized the need to advocate for human rights and for re-investing into their communities, to the importance of tackling climate change and looking into the values of those businesses involved in their supply chain.
The important point to make is that no matter what you call it, Corporate Responsibility speaks to the same fundamental role within the company’s operations: it’s about the belief that business has an obligation to society and must integrate good social, environmental and economic practices into its values, culture, decision-making and operations in an accountable and transparent manner.
When speaking to business leaders, this paradigm can be a hard sell. For those who are more skeptical, it’s about making the connection to the bottom line – the perception that this thought process is just that (and that it doesn’t deliver). The other side of the equation, it looks at CR as a critical role within the business and that it’s a greater risk to those companies who don’t practice it. Consider this the “value(s)” proposition – with an “s”.
So here’s my business case to you around why Corporate Responsibility is a strategic business opportunity. Consider this the case for the sceptics:
In PwC’s 14th Annual Global CEO Survey, we found that CEOs are interested in looking at ways to tap into growing customer concern about environmental and corporate responsibility practices.
In this year’s survey, nearly half of CEOs said they would change their companies’ strategies within the next three years because they expect stakeholders to factor the companies’ environmental and corporate responsibility practices into purchasing decisions. Companies are planning to adapt their offerings—or develop entirely new ones—to address society’s changing sentiments. They’re also planning to answer questions about their environmental and corporate responsibility practices—which includes the practices of their suppliers—to stay in their customers’ good graces.
Our survey speaks to a broad shift in societal expectations. We’ve all heard about the impact of boomer-millennial relations, and how a new wave of thought leaders are coming into the business world with greater expectations around how a business interacts with society.
We should now turn our heads to the people that empower our business engines:
Here is where the proof is in the pudding. In PwC’s 2008 Millennials at Work survey polling over 4,000 recent university graduates from over 40 countries, 88% of respondents indicated they will choose employers who have CR values that reflect their own, while 86% said they would consider leaving an employer whose CR values didn't reflect their own. This is only augmented by a recent Stanford study showing that more than 97% of MBAs at the top 11 US business schools said they are willing to forgo financial benefits to work for an organization with a better reputation for corporate social responsibility and ethics.
And finally, we must recognize the needs of our shareholders:
In a 2008 report by Business in the Community from the UK, the relationship between total shareholder return and the management of environmental and social impacts in 33 FTSE companies was measured. The results showed that FTSE companies that actively managed and measured corporate responsibility issues outperformed the FTSE 350 on total shareholder return by between 3.3% and 7.7% throughout the period 2002-2007.
Similar studies from other leading social agencies prove similar results and make a strong case for how a paradigm for good transparent business practices that align with societal expectations are actually improving the bottom line.
So now that we’ve built the legs to hold up the CR table – one might say “That’s great, but what do I do with all this information”:
At PwC, we suggest to our clients that Corporate Responsibility is a unique journey. There are, indeed, standard reporting frameworks and best practices in the marketplace that one must consider, but at the end of the day, the journey is one that is defined by first identifying the stakeholders that touch (in any way) your business. It’s about collaborating with these stakeholders to better understand what they see as material to your business in respect to the Corporate Responsibility wheel. From procurement practices to supply chain management to human rights or community investment, the options are limitless. However a skilled CR practitioner or consultants from a respected firm can assist you along the way.
From here, strategies can be developed, resources recommended, and a plan to continually engage stakeholders in a dialogue around how the business is performing year over year with an eye to speaking to them about not only what’s good – but also the areas for improvements.
The next big challenge, and often a perceived risk, is how we communicate CR work:
As each of us turn on the news tonight, let’s look for the many connectors into how companies communicate their work within the CR realm. There has always been a sentiment that quote “Big Business” is out to brand-wash, green-wash, and community-wash their messaging to help the bottom line.
I think it comes down to how we report back upon and position the work we’re doing.
In the January 2011 issue of the Harvard Business Review, an article written about ‘Shared Value’ spoke to a growing number of companies known for their perceived hard-nosed approach to business—many who are household names —who have already embarked on important efforts to create shared value by re-conceiving what they are calling the intersection between society and corporate performance. Many of them have begun to create communications and CR reports that take the emphasis off of what the business is “telling” society, and shifting towards a conversation between multiple stakeholder groups in an effort to create a shared language to help dispel myths of corporate undertones within the reporting space.
At PwC, we’re serious about Corporate Responsibility. We’ve identified the quadrants of community, environment, our people and the marketplace as what’s most material to help integrate CR into our business operations. Through our Global Network of Firms, we’ve developed a Global CR strategy and used this document to help guide our own Canadian strategy. Led by a CR Council made up of senior partners within our firm, we have laid out a plan that articulates how we’ll continue integrating good transparent social, environmental and economic values into our business operations.
We’ve also engaged our people in this conversation through 14 Environmental Committees, as well as a similar number of groups looking at our work within the community and our PricewaterhouseCoopers Canada Foundation.
As PwC Canada’s CR Director, I spend my time talking to other businesses about ways we can share our ideas within this space and collaborate for change. I also work closely with our Sustainable Business Solutions practice that consults companies who need support.
For more information about our approach to Corporate Responsibility, you can visit pwc.com/ca/corporateresponsibility, or check out our twitter account using @PwC_Canada_LLP.
I’ve also jumped on the social media wagon, and you can catch my monthly article about Business and Community in Canadian Fundraising and Philanthropy Magazine, or following me on twitter @CSRjames.
Stay tuned for upcoming audio-casts – our next installment: Strategic Community Investment.
Thank you for your time.
Announcer: This concludes this episode of strategy talks. Thank you for listening. We hope you will join us again soon for another episode. To download or to subscribe to this podcast series, or to find more information, please visit pwc.com/ca/strategytalks. The information in this podcast is provided with the understanding that the authors and publishers are not here and engaged in rendering legal accounting, tax or other professional advice or services. The audience should discuss with professional advisors how the information may apply to their specific situation. Copyright 2009 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP, an Ontario Limited liability partnership or as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each is which a separate and independent legal entity.