Developing Corporate Social Responsibility Commitments

Assessment and strategy development are planning stages in the corporate social responsibility (“CSR”) process and the real work begins when the company transitions to making its strategy come alive through action.  The first step in that process is the development of CSR commitments, which are the policies or instruments that a company develops or signs on to that indicate what it intends to do to address its social and environmental impacts.[1]   Hohnen and Potts explained that commitments are essential to the CSR initiative because they ensure that the company’s organizational culture is consistent with CSR values; help align and integrate the company’s business strategy, objectives and goals; provide guidance to employees about how they should conduct themselves, which is particularly important for companies whose employees are widely dispersed in locations all around the world; and communicate the company’s approach to addressing its societal and environmental impacts to business partners, suppliers, communities, governments, the general public and others.  Commitments can improve the quality of relationships with stakeholders by providing them with reasonable expectations of how the company may behave in a particular situation, thus making the company more transparent and credible and a more reliable business partner.  Commitments also provide a basis that senior management and stakeholders can use to benchmark and assess the company’s performance with respect to social and environmental responsibility.[2]

Development of CSR commitments requires understanding the distinction between aspirational and prescriptive commitments.  According to Hohnen and Potts, aspirational commitments typically focus on articulating the long-term goals of the firms with respect to CSR and are usually written in general language.  Aspirational commitments usually take the form of vision, mission, values and ethics statements and Hohnen and Potts explained that aspirational commitments are intended to articulate a high level and common understanding of what a company stands for and how it would like to be regarded with respect to its social and environmental positions. Aspirational commitments are important because they offer a basis for a shared view of what the company stands for and where it is heading that can be referenced by people throughout the organization as a guide when the implement the tactics of the CSR initiative.  Examples of aspirational commitments include moving to “zero emissions”, “eliminating any negative impacts our company has on the environment” and celebrating balanced emphasis on “people, process, product, place and profits”.[3]

In contrast, prescriptive commitments, such as codes of conduct and standards, lay out more specific behaviors that to which the company explicitly agrees to comply.  Some companies choose to develop their own codes of conduct in order to tailor it to their own specific circumstances; however, this can be a time-consuming process and other companies have found it easier to incorporate and publicly sign on to an existing sectoral CSR code or standard (i.e., codes and standards developed for a particular issue, such as human rights or climate change, or a specific industry, such as mining or agriculture) or another CSR instrument such as the United Nations Global Compact.   Many believe that adopting a third-party instrument provides more credibility than relying on a self-developed code, but the codes of conduct of many companies have become recognized standards for excellence and should at least be reviewed before a final decision is made.  Third party instruments allow companies to take advantage of the extensive consultations and discussions among various stakeholders that occurred as they were developed and their adoption signals the seriousness and sophistication of the company’s CSR initiative.

The aspirational commitments typically take the form of a policy statement that articulates the basic values, mission and goals of the company with respect to CSR and lays out the corresponding targets for the performance of the company against those goals.  The policy, which is sometimes referred to as a “commitment statement”, should be made available to all stakeholders for viewing on the company’s website along with other documents and instruments pertaining to the company’s governance and operational guidelines.  The responsibility for formulating the policy and selecting the specific objectives or commitments that the company will pursue lies with directors and senior management, all of whom should be visibly involved in the process beginning with stakeholder engagement and continuing through dissemination of the policy and objectives among the stakeholders.  The policy statement is generally stated fairly broadly and lays out the company’s mission with respect to CSR based on the expectations and needs of all of its stakeholders.  The policy statement should be inspirational and should be designed to influence the behavior of management, employees and other groups such as stakeholders as they go about their day-to-day activities and make decisions about issues relating to the company’s overall strategic plan.  In other words, the policy statement is an expression of the values upon which the company’s business is being conducted and when the policy statement is drafted and adopted by the directors and the members of the senior management team, they are explicitly setting the “tone at the top” of the organization with respect to sustainable development, something that is essential to success of sustainability projects. 

In many cases companies already have some aspirational and prescriptive commitments in place and expansion of the CSR initiative triggers a review and adjustment of existing values, norms and mission statements, codes of conduct and compliance procedures.  Companies rarely rely on just one of the two types of commitments—aspirational commitments, although relatively general, are an important foundation for the specific tenets in the prescriptive commitments.  While adopting third-party CSR instruments appears to be easier and faster than developing a customized code of conduct, senior management must be careful to understand how much work will be needed in order to overhaul the company’s operations to the point where it is in compliance with the instrument since it does the company no good to endorse the instrument if it has no reasonable chance to meeting its standards.  In particular, senior management should expect that the company will be called upon to benchmark its performance against the standards in the instrument and report the results to stakeholders.  In addition, in order for the company’s adoption of third-party instruments to be perceived as credible it will need to participate in third-party verification or certification labelling programs, another expensive and time-consuming process that will sap the company’s resources.[4]

Lists of CSR commitments provide a basic framework for the organization’s CSR strategy, goals and objectives and each commitment should have its own set of targets that are defined for a period of three to five years.  The organization should also develop a schedule, timetable and budget for each of the actions associated with the commitments that will be necessary during that period and assign specific personnel to be accountable for seeing that the actions are completed.  At this point the CSR plans should include all of the goals and objectives and the associated indicators.  Once an initial list of commitments has been prepared and approved by the top leadership of the organization, they should be reviewed and updated as necessary, no less frequently than annually.  Most organizations find it easiest to synchronize their reviews with process of reporting to stakeholders on their CSR activities since they can use the indicators that have been recommended by the sponsors of widely used reporting regimes such as the Global Reporting Initiative (“GRI”).[5]

Since the development and dissemination of CSR commitments is pivotal to the launch and success of the company’s CSR initiative, companies should follow a deliberative process that includes scanning CSR commitments already in use, identifying and understanding existing organizational norms and value, discussions with major stakeholders, identifying the company’s key CSR perspectives (i.e., material CSR topics and issues), creation of a working group to develop the list of commitments, preparation of a preliminary draft of the commitments and identifying and describing performance targets for the commitments followed by consultation with affected stakeholders, revision and publication of the commitments and, finally, continuous monitoring of the external environment.[6]  It often seems easier to merely adopt, without customization, the standards laid out in recognized third-party CSR instruments; however, doing so misses opportunities to expand organizational understanding of CSR and engage stakeholders in the process in a way that leads to an end product that is focused on their specific needs and expectations and feasible given the company’s available resources.

This article is an excerpt from the author’s forthcoming book on Strategic Planning for Sustainability to be published by Business Experts Press in Fall 2020. For further information, see the page on Strategic Planning for Sustainability at the Sustainable Entrepreneurship Project website.

[1] P. Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), 42-43.

[2] Id. at 42, 44-45.

[3] Id. at 43.

[4] Id. at 43.

[5] Id. at 13.

[6] P..Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), 45-46.