Implementing CSR Commitments

Companies often announce their corporate social responsibility (“CSR”) mission statements and commitments with great public fanfare, pledging to proactively contribute to improving social conditions and protecting the environment.  While putting the company’s brand and reputation on the line in this way is important, the reality is that CSR cannot and will not be effective unless and until it is tightly integrated into every aspect of organizational operations including products and services, governance systems and practices, culture, marketing and other external communications, training, recruiting and relationships with business partners.  Once the CSR commitments are finalized and published, attention needs to turn to the actual implementation of those commitments, which includes the day-to-day decisions, processes, practices and activities that are required in order for the company to adhere to its commitments and effectively carry out its overall CSR strategy.  A company that fails to implement its CSR commitments will find itself losing employees, customers and business partners and will see its standing in the marketplace and community plummet.

There is no universal approach to implementing CSR commitments and the methods used by companies will vary depending upon the specific content and focus of their commitments, current organizational structure, organizational culture, resources, priorities of the CEO and the other members of the senior management team and other factors.  One way to view the process is as follows: develop a CSR implementation plan; establish an internal organizational structure; implement CSR management systems; develop a sustainability-oriented organizational culture; develop an integrated CSR decision-making structure; prepare and implement a CSR business plan; set measurable targets and identify performance measures; integrate CSR into strategic values; engage employees and others to whom CSR commitments apply; design and conduct CSR training; establish mechanisms for addressing problematic behavior; create internal and external communications plans; and implement CSR partnering arrangements.  While primary responsibility for CSR implementation may be vested with a group or department, input and support will be need from the board of directors, all members of the executive team and managers and employees in all of the functional and customer departments.  Also important to effective CSR implementation is continuously building stakeholder awareness through messaging and engagement.  While most of the issues relating to the actual implementation of the CSR strategy come into play once the strategic plan is finalized it is important for those involved in the preparation of the strategy to identify and resolve the practical problems that are likely to arise when actual pursuit of the goals and objectives begins.

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It often seems that much of the focus of corporate social responsibility (“CSR”) is on mission statements and public commitments by organizational leaders regarding the contributions that the company is making, or intends to make, to improving social conditions and protecting the environment.  While these steps are certainly important, the reality is that CSR cannot and will not be effective unless and until it is tightly integrated into every aspect of organizational operations including products and services, governance systems and practices, culture, marketing and other external communications, training, recruiting and relationships with business partners.  Once the CSR commitments are finalized and published, attention needs to turn to the actual implementation of those commitments, which includes the day-to-day decisions, processes, practices and activities that are required in order for the company to adhere to its commitments and effectively carry out its overall CSR strategy.  It is imperative that companies follow through on the promises and aspirations spelled out in the CSR commitments and demonstrate to all of their stakeholders that they are serious about fulfilling their obligations.  Implementation failures create mistrust and cause confusion among stakeholders as to how the company will respond to certain situations.  Taken to the extreme, a company that fails to implement its CSR commitments will find itself losing employees, customers and business partners and will see its reputation in the marketplace and community plummet.

Implementing CSR commitments involves identifying and setting clear goals and targets that can be readily measured and reported on to stakeholders.  While many of the aspirations associated with CSR commitments are big and brave, often akin to dreams, it is nonetheless necessary to turn them into objectively stated goals with a timeframe and performance criterion so that at some point a fairly clear answer can be given to the question of whether or not the goal has been achieved.  Goals and targets bring commitments to life and take companies beyond good words and intentions to the point where they take actions based on their preexisting strategic and management capabilities and core competencies.  The power of goals and targets are enhanced by disseminating them throughout the company’s stakeholder groups and committing to report regularly on progress and connect the goals and targets to measurement of performance and effectiveness among directors, executives, managers and employees.  Hopefully a good deal of thought has been given to goals and targets as the CSR commitments were being selected since stakeholders will understandably expect to see companies proceed quickly to implementation once the initial fanfare surrounding the announcement of the commitments fades away.

ISO 26000 describes several practices for integrating social responsibility throughout an organization, but notes that ease and pace with which social responsibility can be integrated throughout the organization will depend on various factors including existing organizational values and culture.  Some parts of the organization may already have significant experience with, and empathy for, CSR-related values and may be good places to begin the expansion of CSR activities with short-term project that can serve as showcases of the potential for improvement.  ISO 26000 also cautioned that the process of integrating social responsibility throughout an organization does not occur all at once or at the same pace for all core subjects and issues.  The important thing is to have an actual plan for integration that is realistic, includes short- and long-term goals and takes into account the capabilities of the organization, the resources available and the priority of the issues and related actions.[1]

According to ISO 26000, CSR integration requires securing commitment and cultivating an understanding of the principles, core subjects and issues relating to CSR at all levels of the organization.  Section 7.4.1 of ISO 26000 notes that commitment and understanding need to start at the top of the organization and that the easiest way to start spreading CSR internally is to focus the initial CSR efforts on areas within the organization where the practice of CSR and its value can be effectively and quickly demonstrated.  As time goes by, a culture of social responsibility can and should emerge; however, leadership needs to be patient and ensure that the organization has the necessary competencies and skills for implementing CSR practices (e.g., education on each of the core subjects of CSR, training in stakeholder engagement and value chain management techniques and new technologies to track sustainability-related indicators).  ISO 26000 also noted that organizations need to consider appropriate changes in decision-making processes and governance in order to provide managers and employees with greater latitude to suggest new approaches and ideas that can be used by the organization to power its drive toward more socially responsible behavior.[2]

Another practice recommended by ISO 26000 was ensuring that the organization set its direction toward CSR by making social responsibility an integral part of its policies, organizational culture, strategies, structures and operations.  Section 7.4.2 of ISO 26000 included the following specific ideas on how this might be done[3]:

• Including in the organization’s aspirations or vision statement reference to the way in which it intends social responsibility to influence its activities
• Incorporating in its purpose (or in a mission statement) specific, clear and concise references to important aspects of social responsibility, including the principles and issues of social responsibility that help determine the way the organization operates
• Adopting written codes of conduct or ethics that specify the organization’s commitment to social responsibility by translating the principles and values into statements on appropriate behavior
• Including social responsibility as a key element of the organization’s strategy, through its integration into systems, policies, processes and decision-making behavior
• With stakeholder input, translating the priorities for action on core subjects and issues into manageable organizational objectives with strategies, processes, budgets timelines and specific, measurable and verifiable objectives

CSR integration initiatives also need to include the organization’s governance system and procedures in order to ensure that social responsibility is included as an important criterion when decisions are being regarding the organization’s strategies and the allocation of organizational resources.  Thoughtful decision-making must include consideration of the likely impacts of decisions on stakeholders, society and the environment, and steps should be taken to ensure that established management practices reflect and address the organization’s social responsibility; identify the ways in which the principles of social responsibility and the core subjects and issues apply to the various parts of the organization; if appropriate to the size and nature of the organization, establish departments or groups within the organization to review and revise operating procedures so that they are consistent with the principles and core subjects of social responsibility; take account of social responsibility when conducting operations for the organization; and incorporate social responsibility into purchasing and investment practices, human resources management and other organizational functions.[4]

In providing guidance on implementation of CSR strategy, the UN Global Compact emphasized the need to develop the organization’s systems and procedures in the following ways[5]:

• Integrating CSR into established management practices and management systems
• Identifying which parts of the organization need to think about CSR and how (e.g., procurement departments integrating CSR into supply chains)
• Making sure that the organization translates it priorities into key aims and objectives
• Linking those objectives to short-term targets (e.g., one year) so that the company can easily track progress and can translate objectives into practices
• Making sure that resources are allocated in an appropriate way and demonstrating to senior management that they are getting value from these resources
• Making sure that CSR responsibilities are appropriate allocated to people and/or department and that they are aware of their role in delivering CSR
• Making sure CSR is embedded into the functional areas of the organization (e.g., human resources management, procurement, compliance, communications etc.)

Lasting integration of CSR activities requires continuous monitoring and measurement of performance in order to evaluate the effectiveness of CSR activities, build a strong internal CSR knowledge base, improve the delivery of CSR activities and properly allocate resources.  A range of methods can be used for monitoring and measurement including internal audits, regular reporting and inspections and audits by independent external groups.  The measurement process should be used to track progress again previously established key performance indicators and to benchmark the organization’s CSR activities against those of competitors and peers.  As noted elsewhere in this chapter, performance indicators should be both quantitative and qualitative and should be designed creatively to capture environmental and social impact and track management commitment, innovation and stakeholder engagement.

There is no universal approach to implementing CSR commitments and the methods used by companies will vary depending upon the specific content and focus of their commitments, current organizational structure, organizational culture, resources, priorities of the CEO and the other members of the senior management team and other factors.  One way to view the process is as follows[6]:

• Develop a CSR implementation plan
• Establish an internal organizational structure
• Implement CSR management systems
• Develop a sustainability-oriented organizational culture
• Develop an integrated CSR decision-making structure
• Prepare and implement a CSR business plan
• Set measurable targets and identify performance measures
• Integrate CSR into strategic values
• Engage employees and others to whom CSR commitments apply
• Design and conduct CSR training
• Establish mechanisms for addressing problematic behavior
• Create internal and external communications plans
• Implement CSR partnering arrangements

As should be clear from reviewing the bullet points above and sections below describing each of the steps, implementation requires support and investment from across the entire organization.  While primary responsibility may be vested with a group or department, input will be need from the board of directors, all members of the executive team and managers and employees in all of the functional and customer departments.  For example, directors and executives must set the appropriate “tone at the top” and take the lead in forging CSR partnering arrangement and employees should not only be trained but also should be brought into the process of generating ideas for goals and targets and creating communications to external stakeholders regarding those goals and targets.  This chapter also describes the “Fit/Commit/Manage/Connect” management framework that extends through the whole process described in this publication and includes, among other things, guidelines on developing and managing CSR practices and building stakeholder awareness through messaging and engagement.

While most of the issues relating to the actual implementation of the CSR strategy come into play once the strategic plan is finalized it is important for those involved in the preparation of the strategy to identify and resolve the practical problems that are likely to arise when actual pursuit of the goals and objectives begins.  In some cases senior management may find that it is best to reject, or make a significant modification to, a particular goal or objective due to concerns that it will just be too difficult to deploy the resources needed to be successful.  For example, what appears to be the preferred strategy with respect to manufacturing or marketing may be beyond the financial resources available to the company during the planning period.

Alan S. Gutterman is the Founding Director of the Sustainable Entrepreneurship Project.  This article is an excerpt from Alan’s book Strategic Planning for Sustainability.  For more information and tools on the subject, see here.

Notes

[1] ISO 26000 Guidance on Social Responsibility (Geneva: International Organization for Standardization, 2010), 76.

[2] Id. at 75.

[3] Id. at 75-76.  See also UN Global Compact: Training of Trainers Course Guidance Manual (New York: UN Global Compact), 42.

[4] Id. at 76.

[5] UN Global Compact: Training of Trainers Course Guidance Manual (New York: UN Global Compact), 41.

[6] Apart from developing a sustainability-oriented organizational culture, which has been added by the author, the list of steps is based on recommendations by P..Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), 57.