Corporate Responsibility – an opportunity or a necessity?

The long-term economic success of any business can depend on factors beyond economic performance. For leading companies, corporate responsibility is not only a matter of public relations or philanthropic sentiment but also a strategic initiative that is carefully dovetailed into the business strategy. Increasingly, companies are aware that corporate responsibility attitudes and profit are not mutually exclusive. Commercially, corporate responsibility is an issue that some sectors, eg the financial and mining industries, have openly and publicly addressed. But for others, including the licensed retail and leisure industry, the issue remains one which organisations have difficulty communicating and as a result are failing to influence the opinions of key stakeholders. Although, the on-trade wants its stakeholders to trust in its business, organisations appear to be slow in taking a proactive approach to corporate responsibility in helping to enhance their credibility and reputation. External commentators perceive the industry to have failed to react with one voice to the current adverse media coverage, as well as the potential regulatory and political pressures it faces. A number challenge the effectiveness of the "responsible drinking" strap line on products and advertisements, while the off-trade seems to have avoided criticism, despite selling alcohol increasingly cheaply. In fact, it appears new levels of discernment within society mean a growing number of individuals, the government, financial and non-governmental institutions are expecting the on-trade to be the prime movers in determining economic, environmental and social well being for communities in which they operate. Some stakeholders continue to question the focus of the industry - believing it should be concentrating on building more measurability and accountability around the business risks associated with social responsibility. These are both financial (e.g. the impact on the bottom line if aggressive drinks promotions are stopped or local authority rates increased as the result of "binge drinking") and non-financial risks such as those associated with brand damage or ability to recruit and retain staff. Think about the impact the association with child labour caused and, some might argue, continues to cause well known global consumer brands. A few years ago the media industry faced a similar scenario. They were heavily criticised for perceived poor corporate responsibility performance. But rather than wait for ill-defined measurements or regulation, imposed on the industry by external bodies with a "one-size-fits-all" approach to corporate responsibility, the media set about defining their own goals. Nineteen companies joined forces to establish The Media CSR Forum. In 2004, twelve members funded a stakeholder project undertaken by KPMG. This work identified and prioritised the corporate responsibility issues for the industry as a whole and the specifics for the sub-sectors (e.g. broadcast and music). The issues, identified in red in the diagram below, are not necessarily relevant to all the companies, but relate to the industry as a whole. Finally, the work identified the fundamental corporate responsibility issue for the media to address was their influence on society through their programming or content output. The findings are currently being used by the media organisations to develop corporate responsibility strategies reflective of their culture and brand positioning and in response to the expectations of their stakeholders. There is unlikely to be a sole motivation for organisations in pursuing corporate responsibility policies but it is helpful to join forces and gain mutual benefit (including saving time and money) from working on dilemmas together. The licensed retail and leisure industry could follow a similar route to media. Other sectors, such as the chemical and financial industries, have also formed working groups and produced publications including "The Media CSR Forum" which can be found at KPMG’s website. These have proactively helped to transition corporate responsibility to a more forward-looking debate. As the industry faces increasing external pressures, including the media, the anti-smoking lobby and politicians, which could adversely affect company performance and shareholder value, there is an even greater onus on the licensed retail and leisure industry to present itself as socially responsible. It could consider the value of a similar forum and look at the overall messaging it wants to give on issues such as minimum pricing and extended licensing hours. Working together could help compliance with new regulation. From April 2005, changes in UK Company Law will require greater transparency from UK listed businesses in relation to employee, environmental and social performance in the Operating and Financial Review contained within their annual report. The current economic and regulatory climate dictates that it is good business practice to include corporate responsibility as part of a business’s risk management programme, and as such, the responsibility of the Board. Strong corporate responsibility strategies are viewed by many as a proxy for good management. Developing an organisation’s culture to encourage co-operation, increasing trust and reducing risk of unethical behaviour is at the core of corporate responsibility and can only be good for business. This is a great opportunity for the industry. Emma Brock has worked alongside the Media CSR Forum since February 2002. For further information email emma.brock@kpmg.co.uk