CORPORATE SOCIAL RESPONSIBILITY

Mark James

Whether we like it or not, every person, group and organisation is a part of the network of
formal and informal contracts that bind together our society. How responsibly we behave
within the parameters of these contracts is largely driven by perceived self-interest. For
many companies, standards of corporate behaviour are determined by how to gain the
quickest returns for the least effort. However, for larger organisations, particularly
publicly listed companies, the triple bottom line is not just ‘good karma’; it is good
business.

In an increasingly connected world, corporations with a reputation for ethical business

practices will attract and retain discerning consumers, as well as being well positioned to
attract finance from the expanding number of ethical investors. In addition, the most
talented personnel are likely to be those individuals who are well informed about the
broader ramifications of corporate behaviour. A socially responsible corporation is much
more likely to find itself an employer of choice.

During his recent address to the University of NSW Australian Graduate School of
Management alumni, President of the National Competition Council, Graeme Samuel
proposed the term, corporate social sensibility, to highlight the interconnection between
business behaviour and social outcomes. “Business has an obligation to properly manage
change. Corporate social responsibility or sensibility is a business imperative as well as
an ultruistic nicety. It is not so much about cheques as it is about attitudes,” he said.

Samuel cited the example of community concern about bank closures, particularly in
rural communities: “what is surprising is the perception that the banks have not always
thought ahead to manage the impacts of change on their customers. The result was that
many rural communities were left with the perception – right or wrong – that the banks
did not care about them and that new services were offered only under pressure.”

In the 2002 Good Reputation Index compiled by The Sydney Morning Herald and The
Age, seven of the top ten companies in the index measuring social impact were banking,
mining and petroleum companies. Industries that have suffered from adverse publicity in
the past are now more conscious of their social responsibilities.

Westpac were rated the top Australian company in the 2002 Good Reputation Index and
were also rated the number one financial institution in the world by the 2002-03 Dow
Jones Sustainability Index. Group General Manger of Stakeholder Communications,
Noel Purcell said, “growing outrage during 1998, with branch closures and the ‘cash for
comment’ affair was impacting on our business. Sometimes leaders and businesses need
a wake up call that forces a fundamental rethink of corporate behaviour.”
Purcell believes the board and top management team must embrace the concept of a more
socially responsible organisation. “Leadership is about recognising the substance of
issues and addressing them. Westpac were withdrawing essential face to face banking
services throughout Australia. The fundamental aspirations of the organisation were out
of kilter with social expectation.” The situation required “getting alignment between
economic imperatives and broader social and environmental imperatives, without
compromising the core purpose of the company’s existence,” he said.

Shell Australia was rated as the top performer in the social impact index of the 2002
Good Reputation Index. However, Helen Morgner, Senior External Affairs Advisor with
Shell, recalls “the international outcry in the early to mid '90's over Shell's alleged
business practices in Nigeria and the international news coverage given to the
Greenpeace campaign to prevent Shell's efforts to dispose of the redundant oil storage
facility - the Brent Spar in the Atlantic Ocean - also in the mid 90s. It is fair to say that
they were amongst the prime causes of a fundamental change in Shell's culture, in the
way in which we interact with the world in which we operate.”

Morgner observes that socially responsible and sustainable corporate behaviour “is
surprisingly easy to avoid doing, particularly when there is often little short-term or
sometimes even long-term quantifiable benefit to the bottom line.” Nevertheless, “people
are withdrawing their trust from business and other institutions unless it can be
demonstrated such faith is warranted.” Morgner also believes that the trend towards
socially responsible corporate behaviour “is shifting the requisite skill set for business
managers.”

A strong indicator that Westpac had a problem was a decline in the morale of front line
staff. “There is a strong connectivity between how we treat our people and how we
behave in the broader community,” said Purcell. Significantly, the bank now “receives
applications from hundreds more graduates wanting to work for Westpac.” Morgner
concurs; “it is clear that (Shell’s) commitment to sustainable development is an important
factor in people’s decision to join and stay and that alignment between personal values of
staff and corporate values is a powerful motivator.”

According to Samuel, firms and industries that fail to act responsibly will eventually be
forced to do so. “More and more people will shy away from buying products from – or
even investing in – corporations perceived to be delinquent citizens. A business
philosophy that abdicates social responsibility or sensibility also runs the risk that
governments will intervene to address the community’s needs,” he said.

Corporate social responsibility is much more than putting paper recycling bins in every
office – it extends to all aspects of corporate culture and behaviour, from the sourcing of
raw materials through to the conduct of audit committees. The successful organisations
of the future will be those with the vision to see beyond their current obligations to take
full responsibility for their leadership role within society. As Purcell says, “you can’t
rely on a legal license to operate. You need a social and community license as well.”
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