Corporate social responsibility

One of the most frequently asked questions - and probably for all those individuals and organisations dealing with CSR issues is the obvious - just what does "Corporate Social Responsibility" mean anyway? Is it a stalking horse for an anti-corporate agenda? Something which, like original sin, you can never escape?

Different organisations have framed different definitions - although there is considerable common ground between them. The definition used by Business Respect since 2001: CSR is about how companies manage the business processes to produce an overall positive impact on society. - Mallen Baker, Founding Director, Business Respect.

Companies need to answer to two aspects of their operations.

1. The quality of their management - both in terms of people and processes (the inner circle).

2. The nature of, and quantity of their impact on society in the various areas.

Outside stakeholders are taking an increasing interest in the activity of the company. Most look to the outer circle - what the company has actually done, good or bad, in terms of its products and services, in terms of its impact on the environment and on local communities, or in how it treats and develops its workforce. Out of the various stakeholders, it is financial analysts who are predominantly focused - as well as past financial performance - on quality of management as an indicator of likely future performance.

Of course, one of the challenges in considering cases "for" and "against" CSR is the wide variety of definitions of CSR that people use. We assume here we are talking about responsibility in how the company carries out its core function - not simply about companies giving money away to charity.

There are 4 main areas that companies tend to report against in terms of their corporate social responsibility (CSR), that is those which emerged from the 'Winning with Integrity' framework by Business in the Community in 2000, which were adopted as common labels by other organisations and by many companies.

The central issue area is that of marketplace issues - in other words, how your business shows responsibility in how it makes its money. How much value do your goods and services create? What are the costs they impose on society? Do you approach the selling process with integrity and honesty? Do you buy from suppliers fairly and pay your bills on time? Do those suppliers share your values - or do they use practices such as child or forced labour?

It's not just about ethical niche brands that sell specifically to customers that are activist shoppers. It's about the expectations that underpin the trust between the company and its customers, its suppliers and its shareholders.

You retain trust by delivering on your promises, looking after the other person's interests, and correcting things if you put it wrong.

Climate change looms large over the future of successful business. We now better know than at any time before how high the stakes have become. Anyone with children has a stake in future generations and the ability of the environment to support life. But environmental good practice is also about business efficiency – it is about the best use of valuable raw materials, and feeding the benefits of action straight through to the bottom line.

Can companies take customers with them in their attempt to reduce their environmental impact? Can we design successful businesses that add value to people's lives without having to make more and more "stuff" that has a high environmental cost? And when we really get to grips with the huge cuts in carbon emissions we will need to meet, will companies be able to rise to the challenge?

Workplace

One of your company's biggest positive impacts on society will be the jobs you provide, and the wealth you put into the community via the wages you pay. But a big positive can be a big minus if you discriminate - or you provide soul destroying meaningless work that takes no account of your people's right to a private life. And the simple fact of the matter is that if people are your company's greatest asset, you need to invest seriously to begin to realise the returns.

You employ a lot of people - but how much do you really get from them? If you pay out good money to recruit talent, but then find you can't keep hold of it, it may be that you're missing out on a basic truth of human nature - people need to be developed, and challenged, and nurtured for them to be motivated to meet your business goals. And if you hold people back because of their sex, or the colour of their skin - or you insist that if they've left the office before 7pm they don't have what it takes to make a senior manager, or if you think training is a mugs game because people might leave - then you're certainly not getting the most from your recruitment.

Recent surveys of business leaders have suggested that the ability to recruit and hold onto key talent is one of the biggest emerging issues for businesses. And there is plenty of evidence as well that the corporate reputation of the business - including its social responsibility- is seen as a key factor for a significant number of recent graduates considering where they should go.

A successful company needs to operate in a healthy, thriving community - the kind of community your employees will want to live in, with the kind of schools they will want to send their kids to. You need to be seen as a good neighbour to those communities. If you want to operate well, and to be able to expand or change when the time is right, you need the goodwill that comes of being an active supporter of the community - not a hostile intruder.

What are the impacts upon the local community of your business processes? Are you the kind of firm you yourself would want to live next to? If not, how does that affect your "licence to operate" with the community that does?

Do your employees see you as caring about the communities in which they live? Do you involve them in taking an approach to investing in those communities? If not, just how much could you benefit by getting them on your side to improve the situation?

Business ethics maintained as a high standard in your business 100% of the time should not be an option, it should be your rule, a rule never to be broken! If you are treating others the way you wish to be treated in business, then more times than not, you will be dealing with people that share the same principals. If you want to know the secret to building a long term and strong business, it has to be done with ethics.

Here are 5 Principals of Success with the standard practice of business ethics:

1) You are who you do business with: If the person you are considering doing business with, or the person you are already doing business with is openly or seemingly un-ethical, then do not do business with them. You are or will be compromising the future of your business if you go down this slippery slope.

2) Be fair and honest in your dealings: Ensuring that you always give a fair price and always honestly represent yourself, then down the road it will come back to you in either repeat or referral business.

3) Be up front: The customer will appreciate it and likely do more business with you if there are no surprises. Make sure that everything is disclosed and that there is nothing that a client could come back to you to say that they want their money back because you left something out.

4) Think like a customer: If you think this way, you will likely have a much better relationship with your customers; as there will be a greater understanding of what is expected in the transaction experience.

5) Be prepared to walk away: Part of maintaining high ethics is the willingness to walk away from potential business if it does not meet the utmost ethical standard. If the business is meant to be, then you will still get it, but on your terms.

In 1962, John F. Kennedy had equated the rights of the ordinary American consumer with national interest. He gave the American consumer four basic rights: 

1. 
   The Right to Safety - to be protected against the marketing of goods which are hazardous to health or life.
   
2. 
   The Right to Choose - to be assured, wherever possible, access to a variety of products and services at competitive prices: and in those industries where competition is not workable and Government regulation is substituted, an assurance of satisfactory quality and service at fair prices.
   
3. 
   The Right to Information - to be protected against fraudulent, deceitful or grossly misleading information, advertising, labeling, or other practices and to be given the facts s/he needs to make an informed choice.
   
4. 
   The Right to be Heard - to be assured that consumer interests will receive full and sympathetic consideration in the formulation of Government policy, and fair and expeditious treatment in its administrative tribunals.
   

1. Basic Needs 

The following represent links where you can find further information about consumers’ rights:

Why have a Code of Ethics?

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  to define accepted/acceptable behaviours;
  
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  to promote high standards of practice;
  
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  to provide a benchmark for members to use for self evaluation;
  
• 
  to establish a framework for professional behaviour and responsibilities;
  
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  as a vehicle for occupational identity;
  
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  as a mark of occupational maturity.
  

1. 
   What will be the purpose of your new code? Is it to regulate behaviour? To inspire?
   
2. 
   Different kinds of documents serve different purposes. Is your new document intended to guide people or to set out requirements? Is it really a Code of Ethics that you need? You might consider creating a Statement of Values, a Policy, a Mission Statement, a Code of Conduct...
   
3. 
   A code of ethics should be tailored to the needs and values of your organization.
   
4. 
   Many ethics codes have two components. First, an aspirational section, often in the preamble, that outlines what the organization aspires to, or the ideals it hopes to live up to. Second, an ethics code will typically list some rules or principles, which members of the organization will be expected to adhere to.
   
5. 
   Will your new ethics document include some sort of enforcement? If so, what kind?
   
6. 
   Often the principles or values listed in an ethics document will be listed in rough order of importance to the organization. The ordering need not be strict, but generally the value or principle listed first will have a natural prominence.
   
7. 
   Think carefully about the process by which you create your new code. Who will be involved? A small working group? Or all the people affected by the code? How will you distil the needs of your organization and the beliefs of your members into a document? The process may matter as much as the final product.
   
8. 
   How will your new code be implemented? How will it be publicized, both inside and outside of your organization? What steps, if any, will be taken to ensure that the values embodied in your code get implemented in organizational policies and practices?
   
9. 
   How / when will your code be reviewed / revised?
   

Most major corporations, and many smaller companies, now have Codes of Ethics,

1. Tailor-make your code.

Ideally, a Code of Ethics should be custom-made for your organization. Ask yourself, what makes your Code specific to your organization? Is there anything that differentiates it from similar documents devised other firms in your field, or in other fields? If not, what makes it your Code, other than the fact that your logo is at the top?

2. Get employees involved.

The people who will be guided by the code should be actively involved in writing it. If your organization is too large to get everyone involved, consider selecting representatives from various departments or various business units. The document is bound to be more meaningful, and find higher levels of acceptance, if employees are part of the process.

3. Consult key stakeholders.

It’s a good idea to consult key stakeholders – including, for example, customers,
suppliers, and local community groups – as to what they think should be in your Code.
This will help reveal what important external constituencies see as your key obligations,
and will help make sure that the Code you write deals with the full range of issues that
might confront your organization.

4. Outsource the job only carefully.

Hiring a consultant to help write your code can be useful – but don’t let them take over. A
consultant can bring a wealth of knowledge and experience, and can help you avoid a
whole range of pitfalls, from lack of clarity through to the inclusion of too little – or too
much – detail. But at the end of the day, this Code is still yours: it should reflect your
organization’s values, principles, and aspirations.

5. Seek out good examples.

If you’re writing your own code, begin by looking at relevant examples. There are lots of
good Codes out there (a quick internet search can be very revealing.) A code that is
simply copied from another organization is unlikely to provide either effective guidance
or inspiration – but there’s also no point in reinventing the wheel.

6. Be clear about Scope.

Your Code should make clear who within your organization will be governed by it. Does
it cover everyone from the mailroom through to the boardroom? Only senior managers?
Who has to sign off on it? Keep in mind that lower-level employees may not take very
seriously a document that senior managers either aren’t bound by, or take lightly.

7. Be specific about implementation.

How will the Code be implemented? Once it’s written, will it gather dust, or will it
influence policy and practice? What procedures are in place to make sure that writing a
Code is more than just organizational navel-gazing? An effective implementation
scheme (perhaps as an appendix to the Code) will explain to all concerned how the
values embodied in your Code will be put into practice.

8. Plan for education.

A key aspect of implementation has to be employee training and education. How will
employees be educated about the Code? A Code can only be effective if your
employees know about it. Will new employees receive training regarding the Code’s
requirements? Will current employees receive refresher courses? Especially for large
organizations, the steps required to train employees on the requirements of a Code
deserve special attention.

9. Be clear about enforcement.

How, if at all, will the Code be enforced? Are there specific penalties for violating the
Code, or is the Code merely there to provide guidance? Who will decide when an
employee has violated the Code – will that be up to the employees' immediate
supervisor, or will that be the exclusive domain of senior managers?

10. Specify a sunset date.

When will the code be reviewed and updated? Times change, and new issues come to

ARTICLE 1 - INTRODUCTION

The Pirelli Group conducts its internal and external operations in accordance with the principles set out in this Code, in the belief that business ethics must be pursued alongside business success.

ARTICLE 2 - AIMS AND VALUES

The main aim of the Group’s companies is to create value for shareholders. Industrial and financial strategies and the resulting operations are geared accordingly, targeting the effective use of resources. In the pursuit of this goal, the Group’s companies are unfalteringly committed to the following principles of conduct:

• As active and responsible members of the communities in which they operate, the Group’s companies are committed, in both their internal and external relations, to the observance of national laws and the standard ethical principles sanctioned by international business practice: transparency, honesty and fairness.

• They reject and condemn all and any recourse to illegitimate or dishonest behaviours (towards the community, public authorities, customers, workers, investors and competitors) for the achievement of business goals. The latter shall be pursued exclusively through excellence in performance in terms of quality and the value for money of products and services, based on experience, customer focus and innovation;

• Organizational structures are designed to prevent any violation of the principles of legality, transparency, honesty and fairness by employees and partners and to monitor the observance and implementation of these principles;

• While ensuring the competitiveness of the Company’s businesses, the market, investors and the community in general are to be assured of complete transparency.

• Fair competition is encouraged, this being central to the interests of the Company as well as to those of competitors, customers and stakeholders in general;

• Pirelli companies pursue market excellence and competitiveness, offering customers a quality of service that effectively meets their requirements;

• The Group’s human resources are to be valued and fostered;

• Resources are to be used responsibly, with a view to sustainable development, respect for the environment and the protection of the rights of future generations.
ARTICLE 3 - SHAREHOLDERS

Group companies are committed to ensuring equal treatment for all categories of shareholders, avoiding any preferential treatment. The reciprocal benefits that derive from belonging to a group of companies are pursued in accordance with the relevant legislation and the autonomous interests of each Group Company as it seeks to create value.

The excellence of the Group’s products and services is based on customer service and the readiness to meet customer needs. The aim is to offer immediate, thoroughgoing and competent responses, tailored to the needs of customers, and in keeping with the spirit of legality, courtesy and co-operation.

ARTICLE 5 - COMMUNITY

Group companies are committed to contributing to the economic well-being and growth of the community in which they operate by providing efficient and technologically advanced services.

In line with these objectives, and with their commitments towards the various stakeholders,

Group companies regard research and innovation as being the keys to growth and success.

Group companies maintain relationships with local, national and supranational authorities in a spirit of full and active cooperation and transparency that does not compromise their independence, economic targets or the values enshrined in this Code.

Group companies encourage and, where necessary, provide support for social, cultural and educational initiatives geared towards promoting personal development and improving standards of living.

Group companies do not contribute or confer advantages or other benefits upon political parties and trade union organizations or their representatives and candidates, without prejudice to compliance with the relevant prevailing legislation.
ARTICLE 6 - HUMAN RESOURCES

Group companies recognize the central importance of human resources in the belief that the key to the success of any business is the professional contribution of the people that work for it, in a climate of fairness and mutual trust. Group companies shall safeguard health and safety in the workplace and consider respect for workers’ rights as fundamental to the business. Working relationships are managed with a view to guaranteeing equal opportunities and promoting the personal development of each employee.

Group companies believe in sustainable international growth in the common interest of all stakeholders, both current and future. Their investment and business decisions therefore reflect respect for the environment and public health. Without prejudice to compliance with specific prevailing legislation, Group companies are aware of the importance of environmental issues when making choices, not least in the adoption of specific technologies and manufacturing methods (where this is technically feasible and economically viable) that allow for the reduction of the environmental impact of their operations, even beyond the minimum limits set down by regulatory requirements.

Group companies are aware of the importance of providing the market, investors and the community

in general with fair and accurate information about their businesses.

Therefore, without prejudice to the obligations of confidentiality attendant upon any business dealings, Group companies see transparency as key to their relations with stakeholders. In particular,

Group companies communicate with the market and investors in compliance with the principles of accuracy, clarity and equal access to information.
ARTICLE 9 - COMPLIANCE WITH THE CODE

The governance bodies, management and workers across all Group companies, as well as external partners such as consultants, agents and suppliers, are all bound by this Code. Group companies are committed to implementing proper procedures, regulations and directives aimed at ensuring that the values enshrined in this Code are reflected in their actions and in the behaviour of all their employees and partners, providing proper sanctions to be applied for any infringement, as and where appropriate.