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s t e p s

the common good


State Chamber of
Commerce

f i r s t
t h e
t a k i n g

an overview
corporate social
responsibility
in australia
This paper has been commissioned as part of the Common Good
Program, an initiative of the State Chamber of Commerce (NSW).

State Chamber of
Commerce
The State Chamber of Commerce wishes to thank its business partners in
the Common Good.

Program Sponsors
Taking the First Steps

an overview
corporate social
responsibility
in australia

The State Chamber of Commerce (NSW)

February 2001

1
contents

Executive Summary 5

1. Introduction 7

2. Change and the Global Community 8


2.1. Drivers of Change 8
2.2. The New Realities Facing Business 9

3. Australian Companies and CSR 14


3.1. Internal Initiatives 15
• Mission, Vision, Value, Ethics, Principle Statements 15
• Business Ethics Program 16
• Employee Empowerment and New Employment Policies 16
• Green Offices and the Development of Green Products 17
• Quality and Environmental Standards 18
• Customer Focus, Safety and Care 18
• New Standards in Advertising 18
• Environmental Reporting 18
• Social Audits 20

3.2. External Initiatives 21


• Philanthropy 21
• Pro Bono Work 23
• Employee Volunteering 24
• Gift Matching Programs 25
• Public Education Programs 25
• Mentoring and Secondment 26
• Partnerships with Non-profit/Community Organisations 26
• Cause-Related Marketing 28
• Community Forums and Institutionalised Feedback 30

4. First Steps - A Process for CSR in Australian Companies 31


4.1. Identifying the Objective of the Company 32
4.2. Who are the Stakeholders in a Company 32
4.3. What Issues are Important to a Company’s Stakeholders 33
4.4. The Four Approaches to CSR 34
4.5. Identifying an Integrated Strategy of Initiatives 36
4.6. Implementing and Monitoring 36
4.7. Measuring the Returns 37

5. CSR - What are the Benefits? 38


5.1 Benefits to Business 38
5.2 Benefits to the Wider Community 42

6. First Steps Action Guide 44

References 45
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TABLE OF FIGURES

Figure 1: Drivers of Changes and New Business Realities 13


Figure 2: Examples of Australian CSR Initiatives 15
Figure 3: CSR - A Process 31
Figure 4: A Stakeholder Model 32
Figure 5: Australian Attitudes on Corporate Community Involvement 35
Figure 6: Four Approaches to CSR 36
Figure 7: Time frame for Evaluation of Inputs, Outputs and Impacts 42

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EXECUTIVE SUMMARY - THE FIRST STEPS

This report is the first in a series of research papers to be prepared by the Common
Good Program, an initiative of the State Chamber of Commerce (NSW). The report
defines Corporate Social Responsibility (CSR) and explains why and how Australian
companies are beginning to embrace it. The object of this paper is to mark out
some of the existing research in order to introduce readers to the potential that CSR
can deliver to Australian business. The report highlights different approaches to
CSR and explains the related tactics, activities and benefits.

Corporate Social Responsibility (CSR) refers to a range of practices that a business


might adopt to ensure that it operates in a manner that meets or exceeds the
ethical, legal, commercial and public expectations that society has of business.
CSR is larger than corporate community involvement or strategic corporate
philanthropy and extends to a range of management practices and business
initiatives.

This review contains research and analysis conducted by the State Chamber but
also provides an overview of existing studies and research, both Australian and
international. It sets out the many different types of CSR initiatives a company can
pursue, a process for integrating these initiatives into core operations and likely
benefits that a properly implemented CSR strategy can deliver. Additionally, the
research found that the Australian business community is lagging behind the UK,
USA and the EU in some key aspects of CSR.

A number of studies have indicated that Australian businesses are becoming


increasingly aware that CSR can contribute to their long term competitive
advantage. However, many Australian companies are not developing a fully
integrated CSR strategy and as a result are failing to realise the full business
benefits of CSR.

Research has found that elements of the Australian business sector are community
oriented. This report includes case studies of many companies that are actively
engaging their stakeholders. These companies have implemented initiatives that
display a new commitment to their employees as well as programs that address
sustainability issues.

However, to many companies CSR is still a goodwill exercise rather than an


integrated part of everyday business. While some Australian companies are
becoming corporate citizens, it appears that a large number are still happy to make
philanthropic contributions unrelated to their core business objectives. Still others
view corporate social responsibility as a business transaction and are focusing on
single events and tend to measure only the short-term business results.

Many Australian businesses are active in the broad area of corporate social
responsibility. However very few have an integrated strategy to manage their CSR
activities. For most Australian businesses CSR initiatives have been developed in
an isolated manner without due consideration as to how they could be aligned with
corporate goals. Consequently Australian businesses are not reaping the full
potential returns of their investment in corporate social responsibility. In this respect
Australia is falling behind international best practice.
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Typical CSR initiatives that Australian businesses adopt were identified, these
include: drafting a code of ethics, instituting business ethics programs, revising
employment relations strategies, social and environmental reporting and audits,
strategic philanthropy, pro-bono work, employee volunteering, gift matching
programs, public education programs, mentoring, corporate community partnering,
cause related marketing and community forums.

Benefits from CSR initiatives occur at two levels. At the business community level
and at the enterprise level. The business community benefits when companies act
responsibly. It gains a voice in the political arena, legitimacy, trust, power and
freedom from regulations. These gains ensure that Australian companies will be
competitive in domestic and global markets. Enterprise level benefits can be
grouped into four areas; operating performance, market goals, human resources
and external relations.

• Operating performance benefits include, improved financial performance,


reduced risk exposure, easier access to investment funds and more efficient
use of resources.

• Market goals benefits include, identification of new products, identification of


new markets, enhanced brand image and increased sales and customer loyalty.

• Human resource benefits include, improved recruitment and retention


performance, creation of new business networks, increased motivation of staff
and enhanced skill set.

• External relations benefits include, social licence to operate, improved trust,


enhanced corporate reputations, improved government relations and reduced
regulatory intervention.

A major disincentive for Australian businesses in engaging in CSR is the


complexities surrounding the measurement of the returns from their activities. The
State Chamber will, over the coming months, seek to develop a range of
assessment tools to measure the benefits from CSR.

Another key issue that emerged was the need for Australian businesses to engage
their customers, investors, employees, government, business partners and the
community at large, and understand their changing expectations and concerns.

This report recommends that CSR be adopted in a manner that transcends


individual departments and initiatives and should be managed as a holistic
approach that incorporates policies, business practices and special programs
throughout a company’s business operations. This report concludes that Australian
businesses that seek to improve the effectiveness of their CSR initiatives, should
adopt an integrated strategy that is aligned with their business operations by
following an integrated process. Australian business leaders are underestimating by
a significant extent the impact that performing in a socially and environmentally
responsible manner has on consumer preference. Those companies which quickly
adjust to this reality will reap real business benefits.

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I. INTRODUCTION

What is Corporate Social Responsibility? Corporate Social Responsibility (CSR) is


a term that most businesses in Australia have come across in one way or another,
a concept promoted in the Prime Minister’s notions of a social coalition, reflected in
an avalanche of debates in the media, encouraged by business representations and
embraced by leading Australian companies.

A common definition is “a business operating in a manner that meets or exceeds


the ethical, legal, commercial and public expectations that society has of
business.”1 It is a concept that transcends individual departments and initiatives
motivated purely by marketing or PR exercises. It is a holistic approach to
incorporate policies, business practices and special programs throughout a
company’s business operations.

Most Australian business leaders would like their company to have a positive impact
on society and the environment. Yet in the day-to-day commercial pressures to
maximise shareholder value and profitability, managers are wondering if they can
afford to have ‘fuzzy feelings’ about their business operations.

What began in the 1970s as an emerging trend is increasingly becoming a high


priority item on the agenda of the world’s leading CEOs. What motivates leading
companies to change their profiles and corporate policies? Have they forsaken their
commitment to shareholders to pursue utopian idealism or to gain personal
gratification? How can leading CEOs publicly claim that today CSR is a topic that
no company can afford to ignore? Is there a business case for CSR? Can a small
company take advantage of the potential returns from CSR? How are industry
leaders adopting socially responsible business practices?

CSR is not an esoteric topic. Today’s companies are faced with an array of difficult
decisions that go to the heart of CSR. Questions which confront business leaders
on a daily basis typically include:

• Should we persist with a project despite increased opposition from


the community?
• Should we lay off people for more efficiency and rationalisation due to increased
integration of our information systems and e-business?
• Should we merely satisfy the environmental regulations or should the company
go beyond what is expected from us? Can the company justify expenditures on
enhanced environmental performance that goes beyond legal requirements?

This report is the first in a series of research papers to be prepared by the Common
Good Program which has been initiated by the State Chamber of Commerce (NSW).
This report defines Corporate Social Responsibility and features a selected number
of brief case studies demonstrating how Australian companies in different industries
and of various sizes are beginning to embrace corporate social responsibility. The
object of this report is to mark out some of the existing research and business
community experience in this area. It is designed to provide an overview to the
potential value of CSR for an innovative Australian business. Further research
papers will seek to develop a comprehensive business case for CSR in Australia.

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2. Change and the Global Community

CSR is not a new concept. Major corporations have been reflecting on their role for
more than half a century. An early study on CSR in an Australian context dates back
to 1976. In a realisation that “unless the ‘invisible contract’ between society and
business is renegotiated, the two (business and society) are on a collision course,”
a researcher set out to define social responsibility.2 He observed various pressures
in the 70s that would foster the rise of CSR. “These issues include education, the
environment, pollution, the general problem of cities and the issues of
consumerism.” Today, the wide range of reasons for the increased engagement in
CSR can be summarised in one word: change.

2.1. FIVE KEY DRIVERS OF CHANGE

Globalisation
Globalisation has brought businesses and consumers from around the world
together: national boundaries are giving way to business operations and practices.
This trend has increased with the spread of liberal democracies, which has given
business a strong position. Growth in access to new markets and technological
developments have meant that business is now experiencing unprecedented power.
The largest 100 companies in the world have revenue that exceeds the GDP of 50%
of the world’s nations.

Capital Markets and ‘Footloose’ Capital


One of the first industries to globalise was the capital market. Trillions of investment
dollars circulate the globe searching for investment opportunities every day.
Investors are attracted to low risk opportunities, which are typically found within
fiscally and socially responsible countries and businesses. The Asian economic
crisis was driven by a lack of transparency and corruption in economies which
triggered investment dollars fleeing those countries en masse. Individual stocks
have fallen after news of environmental or social difficulties and of poor treatment of
employees as investors moved money to less risky investments. Investors are
pressuring companies to increase their disclosure on a wide range of business
activities.

Technology and Communication


The revolution in technology with the ready availability of information and the speed
at which news is circulated around the world have further raised the level of
stakeholder awareness and activism. Increased traditional media as well as the
development of new media such as the Internet, enables computer users to access
any kind of information within a few minutes.

E-business and e-markets are changing the rules of the game. Technology is being
used as a competitive advantage: companies are further integrating their supply
chains and are now being held responsible for the actions of their suppliers.
Historical competitors are now partnering and forming e-markets to change the way
buyers, suppliers and intermediaries interact. Pressure is building on businesses to
differentiate themselves in new ways in this e-world.

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Intellectual Capital
The boom economies of today are not the resource-rich countries of the past but
are nations such as Singapore, Hong Kong and the US that have invested heavily in
‘knowledge-based’ industries. Businesses are investing in technology to capture
and leverage knowledge. At the same time a new generation of ‘industrially strong’
professionals is emerging. Good people with specialty skills are increasingly hard
to attract and strategies to boost retention rates are eagerly sought after.

Environmental Awareness
A decline in natural resources, increased pollution, the Greenhouse Effect and
population pressure have brought a sense of urgency to the need to protect the
environment. Issues generated in the area of environmental management are
increasingly linked to the broader economic concerns. In the international policy
arena, programs for regulatory and legislative responses to environmental problems
are being vigorously discussed.

2.2. THE NEW REALITIES FACING BUSINESS

These drivers of change are redefining the world in which Australian businesses are
operating. Some of these new realities are listed below.

Markets are more volatile


Never before have the Nasdaq, New York Stock Exchange, London Stock Exchange
and Australian Stock Exchange been so volatile. The phenomena of globalisation
and new technologies such as the Internet have meant that shareholders are better
informed about a range of activities undertaken by companies. CEOs and managers
are now operating in an environment where all actions have consequences. It is
becoming increasingly clear that traditional branding, a public relations mindset and
risk management strategies are no longer sufficient to portray the increasingly
sought-after image of a ‘good’ company. High profile research in the United States
revealed that only those companies that behaved in a socially responsible manner
have managed to stay in business over decades.3 The ultimate driver for CSR is to
ensure the sustainability and long term competitive advantage of business.

Government is redefining its role


Globalisation and the concentration of business power have led to new
expectations of business. At the same time governments are facing problems of
legitimacy and are redefining their roles. The public is demanding lower taxation and
hence smaller government, which has meant increased cross sector collaboration.

The United States of America has a long tradition of corporate philanthropy and
partnerships based on a desire to keep the government out of as many economic
and social areas as possible. The United Nations Development Program (UNDP)
Development Report ranks the USA as first in terms of competitiveness, but it also
notes a high level of poverty compared with other OECD countries.4 A shift in
government policy in the United Kingdom has meant that the actions of many UK
companies have been under considerable scrutiny, which has resulted in a number
of boycotts over the last decade. This has enhanced the pressure on businesses to
contribute to social causes and play an active role in their communities.

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While English-speaking countries are often grouped together as liberal systems in
which the non-profit sector represents a powerful private alternative to the state,
traditional welfare states are still dominant in the European context. In Europe,
governments have traditionally provided many forms of social services. Current
discussions focus on how to simultaneously achieve economic competitiveness
and social cohesion. This is a balancing act between labour market flexibility and
personal security, between state provision and fully privatised approaches, financial
constraints and provision of social security, between further integration embracing
a global economy and protection of local social values.

Numerous organisations promote corporate social responsibility and social


cohesion globally: the Conference Board, CIVICUS, the Council on Foundations,
Business for Social Responsibility, Prince of Wales Business Leaders Forum, the
United Nations, Business in the Community, Social Venture Network and the
Copenhagen Business Centre are only a few.

The public’s expectations of business are changing


An Australian survey on the role of business and social responsibility highlights the
reality of this new environment. The public is suspicious of what business is doing.5
Almost half of all the people surveyed believed that Australian companies have a
short-term planning horizon. 81% of respondents felt that companies are putting
profits ahead of people. Only 13% felt that businesses were achieving a balance
between profit and social responsibility.

The survey also found that the most important factor characterising a “good”
company was how the company looked after its employees (34%). This was
followed by financial returns (17%), profitability (17%), customer relations (6%), and
level of community responsibility (6%). Surprisingly only 5% would judge a
company “good” by its products or services. 45% think that the level of profit which
the average Australian company is achieving is reasonable, yet often the way that
profit is achieved and its distribution is questioned.

A recent survey conducted in the United States suggests that the American public
has a somewhat more positive attitude towards business, but it also has higher
expectations of the role business should play. 68% gave business credit for the
prosperity that has prevailed during the last decade. 66% felt that large profits were
more important to big business than developing safe, reliable, quality products for
consumers. 95% of respondents stated that US corporations should have more
than one purpose: they owed something to the communities in which they operated
and they should sacrifice some profit for the sake of making things better for their
workers and communities.6

The Millennium Poll on Corporate Social Responsibility interviewed 25,000 people


from 23 countries around the world. The study suggests that the Australian public
is displaying a high level of awareness on issues related to corporate social
responsibility. 45% of Australians believe that companies should set higher ethical
standards and assist in building a better society.

Only 8% hold the view that companies are solely to generate profits and pay taxes.
47% of the consuming public felt that the Australian companies should operate
somewhere in between these two positions.7 The State Chamber of Commerce
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(NSW) asked the same question of businesses leaders and found that the majority
of respondents (74%) felt that the role of business was to operate somewhere
between the two positions. 24% of respondents felt that the role of business was to
pay taxes, make profit and create jobs.

Only 2% of business leaders considered the role of business to be about setting


higher ethical standards and building a better society.8 These two findings suggest
a gap between the expectations the Australian public has of business and the role
Australian businesses see for themselves.

Australian business needs to be alert. The Millennium Poll also found that 51% of
Australian respondents would punish a company not seen as socially responsible.

Customers and the public are acting


It is estimated that in Australia around 60% of all consumer decisions are made with
an awareness of environmental impacts.9 Australians also care about what brands
stand for and this is likely to affect their purchasing decisions. 73% of those
surveyed said that they would prefer to buy a product associated with a good cause
if its quality was the same and 49% said they would switch brands to do so.
Australians also rated a company’s commitment to ethics and corporate community
involvement higher than Olympic sponsorship, media advertising and customer
loyalty programs.10

A current study revealed that 75-82% of Australians had bought products on the
basis of social or environmental issues over the previous year.11 A survey by the
State Chamber of Commerce (NSW) has found that only 50% of businesses believe
that consumers are more likely to purchase goods and services from businesses
that they know are seeking to achieve social and environmental goals.12 Australian
business leaders are underestimating the importance of performing in a socially and
environmentally responsible manner by a massive extent. Australian companies
which quickly adjust to this reality will reap significant business benefits.

Consumers are not the only ones who are acting. The increasing successful
shaming of companies by Non Government Organisations (NGO) puts new
pressures on business. Leading consulting companies such as
PricewaterhouseCoopers are warning companies to be prepared for these new
realities.13

Investors are acting


The profile of investors has changed, over 50% of Australians own shares and many
of these investors are no longer satisfied with financial gain in itself. Australians are
increasingly concerned about where their money is being invested. In a recent
study 76% of people contacted said that they would like to know what companies
their superannuation is invested in. 74% of respondents would consider moving
between 10-100% of their investment portfolio to a socially responsible fund.14

The survey also found that human rights and the environment are the two issues of
concern to Australians. A recent report produced by the Allen Consulting Group and
commissioned by the Ethical Investment Group suggests that socially responsible
investing is increasing in popularity. The report reveals a shift from first generation
funds that were classified as “good causes/non-financial rewards” to a new
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generation of funds offering a greater portfolio diversification that is explicit about
selection and screening techniques.15

In the US social investment funds account for 12% of all funds. This $2 trillion
industry continues to grow at a rate of 27% per year.

Employees are acting


A new generation of professionals is dictating new labour rules: good people with
specialty skills are increasingly hard to attract and retain. Salary is no longer the
only attraction. This new generation of employees wants to work for a business that
shares their values. Employees are also seeking stimulating work that they can see
making a difference to society. Employees are not willing to make necessary job
adjustments if these needs are not being met. The Australian employment situation
is characterised by a number of paradoxes:

• There is a trend towards rationalisation, restructuring and outsourcing of services


which has resulted in redundancies. In addition, a shift towards new
technologies and the resulting enhanced skill set means that businesses are
becoming increasingly focused on attracting highly skilled employees.

• Senior managers judge their effectiveness by such things as profitability,


analysis, pricing decisions and technology. Employees measure their
satisfaction by camaraderie of the workplace, the values and humour of their
peers, and the esteem they enjoy as people.16 Employees feel increasingly loyal
to their peers rather than to their company: one employee resigning often results
in a multitude of resignations.17

The Australian public rates unemployment as one of the biggest economic problems
facing Australia today. While in 1975 the majority blamed unions for Australia’s level
of unemployment, in 1998 large corporations were held responsible.18 Companies
are increasingly cognisant of the costs of recruitment and prefer to retain employees
rather than see them headhunted. This is especially true for companies that aim to
recruit senior personnel from within.

Competition is increasing
The reduced role of governments has lead to new business opportunities. Services
and products, which were once produced by the public sector, are being delivered
by private businesses. Many of these privatised products and services are still
subject to a degree of public scrutiny which has raised expectations of businesses
and their operations.

Free trade and deregulation of capital markets have increased the capacity of
businesses to access new markets. These new opportunities have also meant even
the most established brands are facing unprecedented levels of competition.
Consulting companies suggest that a sound understanding of CSR will be a major
differentiating factor for successful businesses in the future.

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The following figure summarises the global changes and new realities for business:

Key Drivers of Change


New Realities for Business

Globalisation

Capital Markets and Free Markets are Volatile


Movement of Money
Government is Redefining its Role
Technology and Communication
New Expectations of Business
Intellectual Capital
Customers and Public are Acting
Environment Awareness
Investors are Acting

Employees are Acting

Competition is Increasing

Veronika Peters 2000

Figure 1: Drivers of Changes and New Business Realities

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3. Australian Companies and CSR

In response to these new realities, Australian companies have not stood still.
Companies are looking for best practice examples to assist them to devise new
strategies and to cope with the new business environment.

Until the early 1970s the Australian Government protected the Australian economy
and business from international markets by imposing restrictive trade measures on
foreign companies. However, as it became clear that this policy was damaging the
country’s long-term competitiveness, the Government began to reverse its
protectionist policies and commenced integrating Australia into the global economy.

It has become increasingly apparent that there are environmental and social costs
as well as economic benefits arising from this shift to lower trade barriers,
deregulation and increased competition. The public has realised that businesses
are benefiting the most from these changes and so should shoulder some of the
responsibility for addressing these costs. Subsequently, leading Australian
companies have been launching initiatives to address some of these issues.

These companies are detecting a change in the expectations of their customers.


The Australian public considers larger companies to be capable of contributing
more towards solving some of the resulting social and environmental problems.
Recently, the Australian Government has initiated a program to establish new
relationships between the sectors (government, business, and non-profit) to explore
these problems together.

Australian companies have developed a number of internal and external initiatives


which can all be placed under the banner of corporate social responsibility. They are
beginning to address the economic, social and environmental concerns of their
various stakeholders.

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Examples of Internal Examples of External
Initiatives Initiatives

, • Mission, Vision, Value, Ethics, • Philanthropy


Principle Statements • Pro-bono Work
• Business Ethics Programs • Employee Volunteering
• Employee Empowerment and • Gift Matching Programs
Employment Policies • Public Education Programs
• Green Offices, Products and Services • Mentoring and Secondment
• Quality and Environmental Standards • Partnering with Nonprofit/Community
• Customer Focus, Safety and Care Organisations
• New Standards in Advertising • Cause Related Marketing
• Social and Environmental Reporting • Community Forums and
• Social and Environmental Audits Institutionalised Feedback

Figure 2: Examples of Australian CSR Initiatives

3.1. INTERNAL INITIATIVES

Australian companies are refocusing their agendas. They are assessing their
traditional business operations and are using some of the traditional areas of
business to revise their practices. This report labels these initiatives ‘internal
initiatives’ as they all refer to the company’s immediate, internal operations. Internal
initiatives are reflected in mission statements, in ethics programs, in employee
empowerment and in green offices, services and products, as well as social and
environmental reporting.

Mission, Vision, Value, Ethics, Principle Statements


Australian businesses are increasingly developing statements that articulate their
values and ethical outlooks. A survey by the State Chamber of Commerce (NSW)
has found that 78% of Australian companies have a code of ethics or an equivalent
statement.19 Anecdotal evidence suggests that the objective is to build a clear
identity, motivate staff, boost confidence, ensure transparency and avoid
professional misconduct. The challenge for businesses is to bring these statements
to life rather than simply have them decorating entrance halls or conference rooms.

CASE: BP Australia - Mission Statement


“BP believes that wherever we operate, our activities should generate economic
benefits and opportunities and our conduct should be a source of positive
influence; that our relationships should be open and honest, and that we should
be held accountable for our actions.

Our business policies focus on five areas - ethical conduct; employees;


relationships; health, safety and environmental performance; and finance and
control. They apply to all our activities worldwide.

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BP’s policy commitments are the foundation on which we will build and conduct
our business. Everyone who works for BP is expected to live up to these
commitments.”

Business Ethics Program


The challenge for any business ethics program is how to translate concepts into
action. A number of recent studies reveal that the success of a company’s business
ethics program largely depends on the nature and principles that Board and
managers have fostered in the company over time.20 Programs that were created to
build a framework for corporate values with the purpose of developing employees
and giving them guidelines for corporate behaviour, were considered successful.
When employees felt that the initiatives were a compliance exercise designed to
protect management, corporate ethics programs tended to result in more unethical
behaviour rather than less.

The International Business Ethics Institute examined the reasons for the failure of
newly adopted corporate ethics programs. These reasons were:

• failing to set realistic expectations


• senior management failing to take ownership of the program
• developing program materials that do not meet the needs of employees
• designing training programs that are primarily lectures
• exporting US-centric ethics programs to international operations.21

Employee Empowerment and New Employment Policies


Leading Australian companies are reconsidering their employment policies and
practices and are striving to create new standards to attract and retain employees.
Employees are seeking a transparent merit-based career planning system,
continuous development and flexible working hours that meet their expectations. An
increasing number of companies are now considering family issues and are
providing child-care.

Australian companies have adopted a variety of employee recognition and reward


programs to motivate their staff. The future of many businesses is dependent on
more than just keeping employees happy in specific areas or adopting short-term
motivational exercises.

Australian companies such as the Body Shop, Esprit and other large retailers have
changed their recruitment policies to tackle the problem of unemployed youth and
to train and re-integrate disadvantaged young people into society. These strategies
build employee trust and job satisfaction which in turn contributes to better
customer service and high staff retention rates.

Some Australian businesses have radically changed their employment policies,


leading to a boost in employee morale. For example, the pro-active integration of
disabled employees can serve as a good example of how companies are
demonstrating their commitment to a socially responsible workplace. Benbro,
winner of the Prime Minister’s 1998 Employer of the Year Small Business Award, is
an outstanding example of initiative and leadership by an Australian Small Medium
Enterprise (SME).

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CASE: Benbro - Employment of People with Disabilities
Benbro Electronics Pty Ltd, based in Brookvale, was established in 1985. The
company designs and manufactures quality electronic equipment. It currently
employs 16 people. Benbro’s policy is that 25% of its work force are to be
employees with disabilities. The owners recently formed an organisation called
EMAD (Employers Making A Difference) to encourage other businesses to
employ people with disabilities.

As business owners they base their recommendations on their own experience:


people with disabilities display on average more loyalty, equal or higher
performance, higher attendance rates and lower turnover rates. Their experience
is consistent with results of a number of international studies in the same area.

For Director John Bennett there are clear advantages to the company as a whole:
“The atmosphere and work morale increases among all staff when you show that
you are an employer who cares. There are over 15,000 unemployed people with
disabilities and plenty of services that assist in the selection, integration and
training of them. Hiring people with disabilities is one way of transforming the
workplace.” Benbro is a company whose directors see the big picture. “If all
people with disabilities looking for work could be employed the country would
save approximately $126 million in social security and could raise tax revenue.”

Participation is a boost to any economy. Benbro knows that it transforms lives of


people - beyond those with disabilities.

Green Offices and the Development of Green Products


Heightened awareness of the potential impact of environmental problems has
changed the expectations of both customers and employees. Leading companies
such as the Body Shop are transforming workplaces physically, creating attractive,
environmentally safe workplaces that people enjoy working in. This growing public
concern about the environment is also an opportunity to bring new products and
services into the market.

CASE: EnergyAustralia - Green Products/Services


Customers of EnergyAustralia can now choose between energy produced by
either renewable or non-renewable sources. A new product, known as
PureEnergy, uses a portfolio of solar, wind, hydro and biomass power - all of
which are renewable sources of energy that avoid the use of coal in the
generation process. Coal based generation produces carbon dioxide and has
been identified as a major greenhouse gas contributor.

PureEnergy offers customers an opportunity to make a positive contribution to


the environment. When customers choose PureEnergy, the energy purchased by
EnergyAustralia on their behalf comes from a portfolio of renewable supply
generators. Customers can purchase either 50% or 100% PureEnergy. While the
energy cost is higher than that of traditional sources, this product has already
attracted over 15,000 customers, among them some of Australia’s leading
businesses.

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Quality and Environmental Standards
Australian companies are increasingly viewing sustainability and quality as
processes. A number of companies proudly report on their ISO 14001 certification
in their annual reports. Certification is not an end in itself but an impetus for
continual improvement and critical self-examination.

CASE: Coca-Cola Amatil (CCA) - Advocate for New Environmental Standards


Coca-Cola Amatil is committed to achieving sound environmental performance
across all operations, evidenced by its constant improvement and its ambition to
achieve ISO 14001 for all Australian bottling facilities.

CCA was the driving force behind the establishment of the Packaging
Environment Foundation of Australia, pursuing environmental action plans in
areas such as waste management and minimisation. CCA has pioneered the
promotion of effective recycling, energy conservation and litter reduction and is
the largest recycler of PET bottles in Australia.

Thanks to its effective environmental education program, CCA employees take


environmental impact into account in the planning stages of development
proposals.

Customer Focus, Safety and Care


Long-term business success is based on a solid relationship with an enterprise’s
existing and potential customers. Increasingly, customers are confronted with
unlimited information and a multitude of choices. In these unstable markets, tried
and trusted brands offer security and confidence to the customer. Building the trust
of customers can be achieved by going beyond consumer expectations in terms of
product quality and safety.

A few years ago an Australian company producing biscuits withdrew all its products
from the market when warned that its products might be poisoned. This statement
was unfounded and later the accuser spreading the rumour was charged. The quick
reaction by the company and its commitment to safety above profits earned it
national praise. Companies that manage their crises well in public can turn a
potential disaster into public victory.

New Standards in Advertising


Advertising has been a grey area for many businesses. Australian companies are
now adapting their advertising strategies to achieve higher ethical standards. In
advertising the consuming public were traditionally viewed as the ‘target group’, as
people driven by weaknesses, and companies knew how to appeal to them. Today
more and more companies view their potential customers as real people and seek
to appeal to their values and virtues. Ethical advertising involves the protection of
social values and of vulnerable groups such as children, minorities and the
disadvantaged.

Environmental Reporting
Throughout the world companies have engaged in reporting on performance that
goes beyond finances. A study conducted by Ethicscan in Canada for the Canadian
Auditor General revealed that no fewer than 60% of Canadian companies have
18
voluntarily embarked on including sustainability factors in their audits - this
compared to 45% in 1992.22 In the United States, the Investor Responsibility Centre
found that 61% published official environmental reports; many more indicated that
they would do so in the near future.23

Key issues for environmental reporting are relevance, consistency, balance,


credibility and comparability.24 Following intensive consultations between the
private and the public sector, The Commonwealth Minister for the Environment
launched a Framework for Public Environmental Reporting in Canberra in March this
year.25 The report aims to facilitate environmental reporting and to provide broad
national guidelines compatible with other national and international guidelines such
as GRI (Global Reporting Initiative). The Business Council of Australia together with
Environment Australia prepared a background review setting the stage for public
environmental reporting in Australia.26 The report revealed that there is little
information available on Australian reporting practices that would allow an
international comparison. It quotes, however, the Snowy Mountain Engineering
Company, which undertook a benchmark study comparing 30 Australian companies
as well as assessing 50 high profit companies. The results were benchmarked
internationally and suggested that Australian reporting is generally below global
standards.27

John Elkington, Chairman of SustainAbility, notes that while financial reporting has
evolved over 500 years, environmental reporting is in its infancy. At an Australian
Conference in 1997 he said: “Community, cultural and increasingly customer and
financial sector pressures will continue to cause corporations to look at the triple
bottom line, that is financial, environmental and social/ethical impact.” 28

CASE: Waste Service NSW - Environmental and Social Reporting


Waste Service NSW is a solid and liquid waste service provider to the greater
Sydney region. With about 130 employees it belongs to the category of medium
enterprises. The company manages a network of waste management centres for
recycling, resource recovery and treatment and disposal where no other options
exist. These centres include waste transfer stations, engineered landfills, material
recycling facilities and an industrial liquid waste plant servicing the needs of the
greater Sydney region.

Customers include local government, industry and commerce, collectors and


transporters of waste and private households.

Waste Service NSW undertakes regular comprehensive environmental audits.


The results of these audits are published in an annual environmental performance
report appended to its annual report.

The report provides stakeholders with information on environmental as well as


social performance. The production of the report is not a legal requirement, but
is offered to customers, stakeholders and the community ‘in good faith’.

Information is gathered from various sources throughout the organisation to


ensure that the report balances attention to environmental, social and business
values. The report features issues of:
19
• environmental management, showing efforts that aim to maintain the
ISO 14001 and ISO9002 certifications;
• monitoring techniques Waste Service NSW is employing to prevent pollution
occurring. Waste Services spends $250,000 each year on comprehensive
environmental monitoring of all its sites;
• conservation of resources including water conservation, energy recovery and
waste minimisation as well as rehabilitation;
• strategies to support research and development studies that will further
contribute to the knowledge and progress of effective waste and recycling
management techniques;
• education, training and contributions to environmental awareness.

Social Audits
While companies have started to assess their environmental performance, there are
still many questions about how to report on social performance. Amnesty
International, in conjunction with a number of business groups, has developed a
framework of minimum standards of corporate responsibility for humanitarian
issues.

The framework serves as a benchmark on human rights issues a company should


be upholding.29 However many companies feel that holistic frameworks are needed
to measure social performance in a variety of ways. New benchmarks such as the
Social Accountability 8000 (SA 8000) were developed by the US Council on
Economic Priorities. The UK-based Institute for Social and Ethical AccountAbility
aims to bridge the different styles of accounting. It has developed an AA1000
standard, a range of principles that should facilitate the process of conducting
holistic audits.

Social audits measure and evaluate a company’s relationships with employees,


consumers and other stakeholders. They review employment practices and
diligence in responding to legitimate needs of the community.

The term “social audit” is often used to describe a variety of audit practices, which
might be quantitative, qualitative or descriptive in nature. The term “audit” should
remind the company of principles of objectivity and consistency, as well as thorough
analysis and systematic reporting.

Australian companies conduct social audits through a range of ways. Some report
on specific initiatives, others internally assess activities or their whole company, and
only few have themselves holistically audited by independent professionals for
increased transparency and objectivity. Australian companies have been hesitant
and inconsistent in their use of social audits.

This might be due to a lack of know-how and appreciation of the exercise.


Undertaking social audits is a time-consuming activity. However, Australian
managers realise that stakeholders are assessing them whether they conduct audits
or not. Some Australian companies have begun preparing social audits voluntarily.

20
CASE: The Body Shop: Social and Environmental Audits
The Body Shop is a global retailer of personal care products, with over 1600
stores around the world. The company is committed to ‘people and the planet’
and emerges as a corporate leader for social and environmental change.

The staff of The Body Shop developed corporate policies and principles, and
addressed social and environmental issues accordingly. Regular audits assist the
company to assess their performance and be transparent to all stakeholders. For
the preparation of the social audit the company surveyed staff, customers and
local suppliers, and consulted with the stakeholder community. The
environmental audit is carried out annually.

Some of the key environmental performance indicators are: product stewardship,


sustainable timber, water, renewable energy, greenhouse gas emissions and
campaigning. Both the social and the environmental audits of The Body Shop are
verified independently.

3.2. EXTERNAL INITIATIVES

Besides the revision of traditional and internal practices that directly relate to
business activities, Australian companies have demonstrated increased community
involvement over recent years. These initiatives are termed ‘external initiatives’ as
they refer to activities that go beyond the immediate operations of a business.
External initiatives come in the form of philanthropy, in-kind giving, pro bono work,
employee volunteering, matched gift programs, public education programs,
mentoring and secondment, partnerships with community organisations and cause-
related marketing.

Philanthropy
The Webster Dictionary defines philanthropy as an “active effort to promote human
welfare.” Philanthropy is often associated with rich individuals giving large sums of
money to well-known causes. However, numerous businesses have played a
significant role in their communities by providing financial support to nonprofits and
community groups.

In the USA corporate giving is on the rise. According to the latest estimates of
‘Giving USA’ total corporate giving reached US $11.02 billion. Corporate giving as
a percentage of pre-tax profit climbed from 1.0% in 1996 to 1.3% in 1999.30 These
figures are impressive by international standards, especially given that they do not
even include further marketing and sponsoring expenditures to the community
sector.31

In Australia the extent of financial contributions by private sector companies to


nonprofits is still small compared to the support given by government and
individuals. Lyons estimates that corporate support to nonprofits accounted for
$1.65 billion in 1996/97 with another $150 million given to public benefit government
organisations. This compares with $8.5 billion in government grants to nonprofits
and around $3 billion in individual gifts.32 Recent changes in taxation should foster
philanthropic giving in Australia.33

21
Companies either support causes and community organisations direct or establish
philanthropic foundations which then distribute the funds on behalf of the company.
Philanthropy Australia is an organisation that acts as intermediary for individuals,
companies, charities and foundations. The organisation provides a wealth of
information through its education programs, networking and advocacy.34

Support today often goes beyond traditional financial contributions: products and
in-kind donations, technical support, groups of volunteering employees and
managerial know-how transfer often supplement the financial support initiatives. A
company in the consumer product industry recently donated a number of
computers to a local school.

The company updated computers and decided to donate their old computers that
were still of high standard. The company also sent to the school employees who
volunteered to set up the equipment and train the children in basic computer skills.

A large number of companies in NSW donate food to over 1300 charities nation-
wide. This surplus food stock managed by the Foodbank feeds 18,000 people
throughout Australia.35

It appears that over the last decade some Australian businesses have changed their
approach towards corporate giving. These changes include:

• adoption of a more strategic approach


• a link to the business’s marketing programs
• expansion of geographic focus
• development of more sophisticated measurement tools for evaluating the impact
of their philanthropic giving
• innovative partnerships: greater stakeholder participation
• long-term relationships with nonprofits
• a sense of social responsibility/social citizenship.

CASE: Coca-Cola Amatil (CCA) - Strategic Philanthropy


Coca-Cola Amatil manufactures, distributes and sells non-alcoholic beverages in
Australasia and the Asia Pacific region. In Australia CCA employs 4000 people.
While the company views its prime commitment to be to its shareholders, it aims
to act as a corporate citizen by “being mindful of our involvement in local
communities”.

The company has become strategic in its philanthropy. Corporate giving lines up
with business objectives. It is related to youth, the company’s main target group
- a policy that is supported by shareholders. “As a public company we are
expected to give something back to the community - yet it has to be consistent
with what we are recognised for,” explains Ian Brown, Corporate Affairs Manager,
as he describes the shift the company has undertaken in its support of
communities. CCA receives about 600 serious approaches for funding each year.

22
The company is continuing to support a number of flagship organisations such
as the Red Cross, the Salvation Army and the Wesley Mission. However, rather
than giving random donations to a multitude of recipients, the company tries to
concentrate its support. CCA is now building systematic corporate partnerships
with organisations in three areas:

1. Arts: Australian Theatre for Young People:


CCA gives support to the Theatre’s education program, conducting drama
workshops in secondary schools and promoting local talent through the national
performance studio.

2. Medical and Health: The Juvenile Diabetes Foundation:


CCA supports the annual sponsored “Walk for the Cure” that takes place in most
capital cities and some rural areas. For CCA it is an opportunity for employee
participation and a good promotional window for Diet Coke and Mount Franklin
Water. It is also an opportunity to establish contacts with other sponsors such as
Westpac and McDonald’s.

3. Welfare: Reach Out (Inspire Foundation)


This Internet-based organisation publicises services available to youth and hence
promotes existing community support structures. Reach Out provides much
needed information, assistance and referrals in a format that appeals to young
people.

Pro Bono Work


Expertise in legal issues, technological problems or software can sometimes be
more valuable to community organisations than cash. Australian companies such as
the leading corporate law firm Freehills provide free legal advice to selected
organisations or causes.

CASE: Clayton Utz - Pro Bono


The Clayton Utz Pro Bono Scheme is one of the largest commitments ever made
by an Australian law firm to providing free community legal work. In the past
financial year, over 14,000 hours and $3.5 million worth of pro bono assistance
was conducted for individuals and community organisations who were unable to
obtain Legal Aid and who were unable to obtain access to a lawyer.

All of Clayton Utz’s solicitors are expected to conduct at least one pro bono
matter each financial year. Pro bono work is included as part of a solicitor’s
annual professional review and genuinely recognised as part of each solicitor’s
budget performance. Last year, 93% of Sydney solicitors acted in pro bono
matters.

Apart from the obvious benefits to the community, pro bono work also challenges
Clayton Utz solicitors with new and unusual legal issues and helps junior lawyers
develop their client skills and their confidence as professionals in a meaningful,
‘hands on’ manner. Pro bono work is genuinely satisfying and is a valuable tool in
maintaining a high level of professional staff morale. The Pro Bono Scheme is
also extremely prominent in the recruitment activities conducted by the firm and
in Clayton Utz’s positive public image.
23
Employee Volunteering
Another way a business can demonstrate social responsibility is to encourage and
support community volunteering by their staff. According to a study on community
involvement, volunteering emerges as an essential component of the new strategies
of Australian companies.36 Community Days gained popularity when Westpac
commenced supporting ‘Clean up Australia’ and LendLease encouraged its
employees to work on a variety of building projects.

Elisabeth Cham, Executive Director of Philanthropy Australia, cautions employers


not to isolate their external activities from their corporate culture: “Most employees
are not interested in engaging in social activities if the company does not consider
the social issues that its own employees are dealing with.”37 However, if corporate
volunteer programs are part of a holistic CSR program, they can be rewarding
exercises for all parties.

CASE: EnergyAustralia as “EnergyAngels”


EnergyAustralia is one of Australia’s largest energy services corporations. With
around 3300 employees it supplies electricity to approximately 1.4 million
customers. The company’s vision is “to maximise shareholder value by becoming
the leading multi-utility company in the Asia/Pacific region”. In order to achieve
this vision, EnergyAustralia pursues the following values: integrity, excellence,
respect for people, community commitment, safety and commercial drive.

Energy Australia has undergone far-reaching changes as a result of electricity


reform within NSW and Australia in recent years and is currently preparing for full
market contestability from 2002. EnergyAustralia views these changes as a
challenge in which corporate social responsibility will play an important role. As
the company manages the transition from being a monopoly to a competitive
market player, transparency and community support have emerged as key
principles in the framework for the company’s new CSR program.

The EnergyAngels Day is one way in which EnergyAustralia demonstrates its


commitment to the community. 130 projects were nominated for inclusion in the
program in 2000. A panel of company and community representatives carefully
selected 45 projects across Sydney and the organisation coordinated and
sponsored more than 1200 volunteers including community members,
employees, and their families to complete the projects. EnergyAustralia
employees nominated five successful projects, with another project benefiting
EnergyAustralia’s charity partner The Smith Family.

The program started in 1999 as a pilot in Newcastle and was extended to the
greater Sydney area due to its success. The many volunteers from within the
organisation and the community offered their assistance in the areas of
maintenance, cleaning, general repairs and gardening. They restored community
buildings, provided safe areas for children, restored neglected reserves and
helped improve living conditions at a number of disadvantaged care facilities.
The initiative is not an isolated event but an annual contribution that
complements other community initiatives that EnergyAustralia pursues, including
supporting The Smith Family’s “Learning for Life Program.” In 2000, the company

24
provided the Smith Family with nearly 2000 Olympic tickets for distribution to
financially disadvantaged families and individuals for a once-in-a-lifetime
opportunity to attend the Sydney Olympic Games.

Gift Matching Programs


Another way that companies are supporting good causes and involving their
employees is establishing internal donation programs. Employees can usually
nominate their favourite cause or charity for inclusion in the gift matching scheme.
The company sets up a deduction program and often matches the gift dollar for
dollar by the company.

CASE: Westpac - Gift Matching


One of the most comprehensive staff community support programs at Westpac
is a gift matching program. The Westpac Matching Gifts program matches
contributions made by staff to any tax-deductible charity on a dollar for dollar
basis. Since December 1998 Westpac has matched contributions from staff,
bringing the total distribution to over $1.6 million to some 300 charities across
Australia.

Public Education Programs


Some companies use their facilities to advocate and bring important causes to the
attention of the public. They provide research results and information so that the
public can be better informed. Other companies seek to educate the public in
schools, by company visitations, or through various media channels on issues
relevant to their core business.

Case: Kellogg and Kids Help Line - Anti-Bullying Campaign


In 1998 Kellogg Australia became Kids Help Line’s major corporate sponsor. A
powerful component of the relationship is using the back of Kellogg cereal packs
to promote the relationship and raise awareness amongst adults and children of
Kids Help Line and issues facing children today. In the year 2000, five million
packs, reaching 75% of all Australian households, were used to promote an
anti-bullying campaign.

Calls to Kids Help Line about bullying have increased steadily over the past few
years. Analysis of these calls indicated many children were reluctant to speak
out about bullying, fearing an escalation of the situation, or that nothing would be
done. Given the link between bullying in childhood and anxiety, low self-esteem,
loss of confidence and, in the long term, depression and self-harm, using Kellogg
cereal packs provided a very powerful way of raising awareness about the issue
among kids, parents and school personnel across Australia.

The message on packs encouraged children to speak out about bullying and
provided tips to kids and adults about how to deal with bullying. The cereal packs
encouraged students, teachers and parents to work together to find ways to stop
bullying and make schools a safer place for everyone. The Kellogg’s packs also
featured the Kids Help Line number (1800 55 1800) and web-based resources for
kids, parents and schools to effectively address bullying.

25
Policy makers, federal and state education ministers and education personnel in
government and non-government sectors were informed about the campaign
and its possible effects. The campaign was fully supported by the Australian
Primary Principals Association. Reports of bullying to school personnel were
expected to increase once the packs were in store. Kids Help Line experienced
a 60% increase in calls about bullying during the period of the campaign as
children took advantage of the promotion to seek help. Feedback from parents,
schools and kids around the nation continues to be overwhelmingly positive with
many schools requesting resources and developing anti-bullying policies.

Mentoring and Secondment


The Sydney Leadership Program initiated by the Benevolent Society trains
executives from various backgrounds to see the big picture and how their
organisation can impact on society38. The SEAL Force program is another executive
learning program which aims to develop relationships between Australian
businesses and the community. The program places senior managers in selected
community development initiatives on a part-time basis. The purpose of the
program is to transfer intellectual capital into the not-for-profit sector. Often
participating managers gain just as much in experience and skills in this process as
they contribute.

Partnerships with Non-profit/Community Organisations


In order to encourage non-profit-business partnerships, the Government launched
an award to recognise best practice partnerships. While in 1999, 53 partnerships
submitted applications, in 2000, 217 nominations were submitted.39

Partnerships and other forms of inter-sectoral collaboration are on the rise.


Companies realise the benefit in partnering with nonprofits: often the skill sets of
nonprofits complement those of business in areas where companies have little
expertise, access or infrastructure.

CASE: NRMA CrimeSafe: a corporate funded crime prevention program


In 1999, NRMA was Australia’s largest insurance company, holding around 1.9
million motor vehicle policies, 1.4 million home insurance policies and with 35%
of motor vehicle registrants covered by NRMA CTP insurance. In 1997/98 the
cost to the company of household burglary was $43.4 million while motor vehicle
theft cost $120 million.

In the light of these figures the company decided to add a further component to
their efforts to reduce crime, through the sponsorship of projects which aim to
stop young people engaging in motor vehicle crime. This followed on previous
involvement in providing free information to community members about home
and car security methods, undertaking research into vehicle designs which make
cars harder to steal and lobbying of government and industry.

Each of the projects focussed on social or personal circumstances that place


youth at risk of criminal behaviour.

26
Projects funded in both New South Wales and Victoria include:
• The “Clean Slate” Program: This intensive, pre-sentencing, diversionary
program consisting of group and individual counselling sessions, adventure
camp, training on anger management and conflict resolution, assists juveniles
to constructively process their offense and its consequences in order to
reduce the likelihood of re-offending.

• Hunter STAR (Students at Risk) Foundation: An initiative in which local


businesses assist in funding alternative secondary education and work
experience for disadvantaged young people who are not suited to
conventional schooling.

• Kempsey Assistance Patrol: An after hours bus patrol staffed by volunteers


that brings adults under the influence of alcohol and unsupervised juveniles to
their residence or another safe place in order to reduce anti social behaviour
and law breaking. This project was a collaboration between business, local
government, police and local residents who volunteer their service.

• Hand Brake Turn: This ten week training course assists young offenders in
developing skills in basic automotive repairs. 80% of participants continue
their education after graduation, gaining apprenticeships, returning to school
or finding full term employment.

• Fathers and Sons Recreational Group: A once a week, five week long course
for fathers and their sons aged 11-16. This course aims to assist fathers to
develop their skills as parents and mentors through an activity based support
program. The course leads to increased confidence of parents to discipline,
communicate and show affection to their children as well as improving adult
role models for adolescent males.

All NRMA projects aim to build social cohesion, establish and build trust between
all partners and participants involved, as well as build a sense of hope and
purpose in the participants. In determining suitable projects, NRMA Community
Relations first identified the scope and nature of the local or regional problem,
then identified those who where already working to address the issue.

In consultation with the various groups, the company could decide where and
how to make contributions which would have the maximum impact. The
company believes in simple interventions that are backed up with a long-term
commitment. Regular monitoring and project reviews ensure that the company is
on track in its various programs.

NRMA CrimeSafe makes good business sense:


• The investments in youth crime prevention are reasonable compared to the
costs generated by claims for home and car theft and the societal costs of the
juvenile justice system.
• If crime rates can be reduced, insurance claim rates do not continue to rise
and therefore insurance costs remain affordable, instead of increasing to
cover the spiralling cost of claims.
• NRMA Insurance believes that consumers prefer companies that address
social issues that concern them.
27
• NRMA Insurance is a large company, with over 5,000 employees. A socially
responsible company gains the loyalty and commitment of its existing
employees and of those it may wish to attract in the future.
• NRMA realises that social unrest creates costs for small businesses, large
corporations, public funders and local communities alike. NRMA understands
that public funding is no longer sufficient to meet the increasing demand for
social services. Hence the company engages in inter-sectoral partnerships to
address problems that are of concern to all; the business, employees,
offenders, community organisations and all levels of government.

Mission Australia, the Salvation Army, the Smith Family, Wesley Mission, Barnados
and Asthma Victoria are some of the high-profile nonprofits that have led the way in
professionally partnering with businesses in new ways. However, there are many
smaller nonprofits just as ambitious and eager to partner with business. For a small
or medium enterprise (SME) it is often sensible to support a locally-established
nonprofit.

CASE: Mildura Fruit Company - Mallee Family Care - A Case for Partnerships
Mildura Fruit Company is in the business of packaging citrus fruit and avocados
for both overseas and Australian markets. The innovative General Manager
brought together local fruit growers, businesses, employees and the community
to work towards a mutual goal.

Together they raised $50,000 to support Mallee Family Care, which provides
welfare services to assist disadvantaged children and families and young people
with disabilities. The multi-stakeholder project impacted the community
organisation, the business and its relations with all its business partners.

Cause-Related Marketing
The term “Cause-Related Marketing” (CRM) was first used in the 1980s to describe
a range of successful international promotional campaigns such as American
Express’ Restoration Program of the Liberty Statue, Tesco’s donating computers to
schools and McDonald’s support for Ronald McDonald Houses. The Body Shop,
Timberland, Microsoft, IBM and Benetton are other well-known companies that
have chosen a new direction for their marketing strategies.

Cause-related marketing is “a strategic positioning and marketing tool, which links


a company or brand to a relevant social cause or issue, for mutual benefit.”40 This
can be achieved by means of a strategic alliance with a non-profit partner or by
direct support of a cause. The charity lends its good name to endorse its corporate
partner’s products; the company publicises the association to help raise funds or
promote the cause. Often companies commit themselves to donating a percentage
of their profit to the cause.

In Australia, “Kellogg’s Help-line” and the current “Better Start Initiative” by Procter
& Gamble are some of the best-known cause-related marketing examples.
However, these high profile initiatives are just the tip of the iceberg of Australian
cause-related marketing activity. According to a recent study in which 197
marketing managers of the top 500 Australian companies were surveyed, 42% of

28
Australian corporations are currently involved in cause-related marketing and 21%
of those that were not yet involved indicated that they would invest in CRM in the
future. The reasons for becoming involved differ.

The majority, 93%, indicated that the main reason was to support the cause.
However, these companies are not purely altruistic: 85% believed that it would
enhance their corporate reputation. Interestingly 53% relied on their cause partner
to promote the initiative.41

CASE: Proctor & Gamble: Cause-Related Marketing - “Better Start”


Procter & Gamble is a multinational company that operates in 140 countries and
markets 300 different consumer product brands. In Australasia the company is a
medium-sized company with approximately 200 employees. The “Better Start”
represents a new corporate ‘cause-marketing’ initiative for P&G in Australasia. It
aims to link well-known brands to the company and to the cause. Primary
objectives were to:

• enhance P&G’s reputation as a company that gives back to the community


• generate significantly more funding than was possible from the annual
A$100,000 sponsorship and donations budget
• help the business prosper in the longer term.

P & G’s key partner in the “Better Start” program is aid agency “Save the
Children”. Their main role is to identify appropriate health and education
programs and to monitor and report on agreed projects that will provide a better
start for targeted children.

Strict criteria were agreed for the selection of “Better Start” programs. They
must:

1) be of benefit to targeted children


2) involve community support
3) have measurable outcomes
4) be self-sustaining at the completion of the program.

Two projects are already underway:

1) Nganampa Health Council School Age Health Screening Program across the
remote northern part of South Australia
2) Redfern Foundation Computer Centre that will soon be fully operational at
Redfern Public School to provide after school computer training for
disadvantaged children in this inner city area.

Cause-related marketing is designed to mutually benefit both the cause or charity


and the company or associated brands. P&G Australasia aims to build both the
image and reputation of P&G as a good corporate citizen and their business in
the longer term.

29
‘Better Start’ has received the enthusiastic support of its 200 employees,
suppliers and strategic business partners, including the media and senior
management at major customers and agencies, particularly Saatchi & Saatchi
and The Rowland Company, who have provided valuable ‘pro-bono’ support.

After just ten months the company has raised approximately A$200,000 from
employee donations, fund raising events, supplier contributions, company
donations and an inaugural multi-product, multi-store promotional event fielded
February 15 - March 30, 2000 across Australia.

Awareness of P&G as a good corporate citizen improved to 5% of all grocery


buyers and 10% of those aware of the company. Awareness of ‘Better Start” was
17%, stemming mainly from the six weeks of advertising around the multi-store
promotional event.

Some 60% of the $A1 million + schedule was ‘no-charge’ due to the relationship
P&G has built up with the media. Research indicated a higher degree of
purchasing of the five participating P&G products (Pantene, Head & Shoulders,
Oil of Olay, Febreze and Dawn) from grocery buyers aware of ‘Better Start’ versus
those that were not aware.

Community Forums and Institutionalised Feedback


Australian companies are starting to manage their stakeholders in the community in
a structured way. They set up committees consisting of representatives from the
community that regularly report any ideas, issues and complaints to the company.
Regular surveys and computerised feedback assist companies to align their
operations with the expectations of the community.

30
4. First Steps - A Process for CSR in Australian Companies

The previous chapter discussed various internal and external CSR initiatives that
Australian companies have adopted. However, many Australian companies adopt
various initiatives in an isolated manner and consequently fail to realise the full
benefits of their CSR investment.

CSR will deliver better returns when a company takes a strategic approach that fully
integrates CSR initiatives into the core of the business. This graphic below
demonstrates that CSR is a process, which if followed, will enhance the long term
success of a company’s CSR strategy.

Identify what the company


wishes to stand for

Identify the company’s


Measuring the stakeholders
returns

What issues are relevant to


your stakeholders?
Implementing
and monitoring

Identify which approach to


CSR

Which initiatives will meet the needs


of the stakeholders & the company

Veronika Peters 2000

Figure 3: CSR - A Process

Before a company embarks on CSR linked initiatives, which is in fact the fifth stage
of this process, it should resolve a number of questions relating to its overall
purpose, its stakeholders, their concerns and expectations and the most suitable
approaches to adopt. Following the selection and implementation of CSR initiatives
the company should concentrate on measuring the tangible returns to their bottom
line.

31
4.1. IDENTIFYING THE OBJECTIVE OF THE COMPANY

Even a perfectly executed CSR program will ultimately fail if the objective of the
company is contrary to the interests of society. No good cause or well-meant
corporate initiative will compensate for an overall objective that negatively impacts
upon society. For example an arms manufacturer will have a very difficult time
convincing its stakeholders that it is concerned about the well being of society due
to the nature of its business objective ie to produce guns and ammunition.

Hence the first question that must be addressed in the CSR process is: what is the
overall purpose of a specific company? What goods or services does it produce?
How does this objective benefit shareholders, stakeholders, community, the
environment and the society? This basic question is the start of devising a CSR
strategy that is appropriate for a particular business.

4.2. WHO ARE THE STAKEHOLDERS IN A COMPANY

Leading businesses realise that their interdependence and relationships with


stakeholders are a cornerstone for their success. Any company, no matter what its
size, exists in a context of six main stakeholder groups: shareholders, customers,
employees, business partners, government and the community. Each group
provides essential resources and has an interest in the company’s operations, as the
following chart reveals:

Employees
(human capital)

Shareholders Customers
(capital) (revenue, loyalty)

Company

Business Partners Government


(supply, add value to Community (regulating)
and buy products)
(civic society ensures the
health status in the
community and
consequently all markets)

Figure 4: A Stakeholder Model

Stakeholders influence the company and vice versa. The complex issue of
balancing conflicting stakeholder demands is one of the key issues in the successful
management of corporate social responsibility. Logically the first step of managing
these expectations is to identify the stakeholders.

32
An international example: The Shell Case
In 1996 the Australian Financial Review debated the dilemma for companies to
be accountable to either their shareholders or stakeholders. Shell, then in a
serious crisis due to its association with the military government in Nigeria, was
cited as a company which exclusively devoted its efforts to increasing
shareholder value, no matter how high the price. “Many believe that Shell’s petrol
is mixed with a little too much blood,” wrote Legge.42 Two years later the
Australian Financial Review again reported on Shell. This time the company, the
second largest company worldwide, is being cited as a new leader in corporate
citizenship. A radical conversion to stakeholder management has been fully
implemented throughout the company worldwide. “In Shell we believe the only
way forward is to engage with all those who have an interest in our activities -
understanding their perspectives, responding to their concerns and gaining their
trust,” said Jeroen van der Veer, Managing Director of Shell Group, earlier this
year.43 In May 2000 Shell International was winner of the 2000 Social Reporting
Award issued by the Association of Chartered Accountants and the Institute for
Social and Ethical AccountAbility. When the largest companies worldwide
embrace values of corporate citizenship it is time for the sector to re-think its
role, suggests the Australian author.44

4.3. WHICH ISSUES ARE IMPORTANT TO A COMPANY’S STAKEHOLDERS?

Any business seeking to implement a successful CSR strategy should develop a


clear understanding of which social and environmental issues concern their
stakeholders. Stakeholders have a number of expectations about how a company
can contribute to the betterment of society as well as specific concerns about
potential negative impacts the company may be having. It is critical for businesses
to understand both the expectations and the concerns of their stakeholders.
Businesses should also be aware that these issues are relatively fluid and should be
re-assessed on an ongoing basis.

The issues that typically concern stakeholders can be categorised into 3 broad
groups. A business, which is intent on capitalising on a fully integrated CSR
strategy will have taken steps to ensure that all three categories are adequately
addressed.

Economic Impact
Stakeholders want to know how profits are made, how they are distributed, how
sustainable they are, how the Board is elected, and what basic principles decisions
are based on. What ensures the long term economic survival of the company?

Social Impact
Stakeholders are equally concerned about how a business manages its relations
with all its stakeholders. Typical inquiries centre around how a company treats,
develops and compensates its employees. Does the company build an atmosphere
that fosters human rights, safety and health in its immediate operations and with its
supply chains? How does a company interact with the community? Does it
demonstrate care and social concern to its customers and the wider society?

33
Environmental Impact
Stakeholders are concerned about how natural resources are being managed and
whether the company operates in a sustainable, environmentally conscious way.
Internationally the priority issues on the corporate agenda have been energy and
eco-efficiency, sustainable resources, production and consumption, the greenhouse
effect and gas emissions. In the Australian context, issues of particular concern
have been water quality, land degradation, salinity and recycling. Is the company
meeting other expectations, economic and social, without compromising the
environment?

4. 4. FOUR APPROACHES TO CORPORATE SOCIAL RESPONSIBILITY

There are four different approaches companies take when they look at the concept
of corporate social responsibility. Some argue it is profit maximisation, to others it
means being altruistic, others realise an enlightened self-interest, and yet others
want to see themselves as corporate citizens.45

A. ‘CSR as Profit Maximization’

The Nobel Prize-winning economist Milton Friedman argued that ‘socially


responsible’ companies are those that operate most profitably. A company is doing
‘good’ by generating profit, providing labour, goods and services that are demanded
and by paying taxes. Friedman does not believe that corporate philanthropy or any
social programs achieve their goals. Further, they interfere with the concept of
personal freedom and take away money that belongs to shareholders.46 In this
traditional approach the company gives a higher priority to the interests of
shareholders than to those of other stakeholders.

B. ‘CSR as Altruism’

Companies with an altruistic orientation use financial surpluses to make a positive


contribution to society, to groups or causes that are not necessarily related to their
business activities. Corporations in this category act with a philanthropic
perspective.

Company resources are distributed in a reactive way according to social value and
social and moral precepts.

C. ‘CSR as Enlightened Self-Interest’

According to this approach business leaders recognise that giving back to the
community and protecting the environment ensure indirect returns to their
companies. Causes are related to business activities and create a variety of benefits
for the partners involved. Support for community groups or causes is viewed as a
business investment. There is a clear rationale for any expenditure.

D. ‘CSR as Corporate Citizenship’

The concept of corporate citizenship goes beyond the previous models. CEOs
recognise the need for sustainability and for social investment strategies in
business. Corporate citizenship refers to the relationship a company has with the
34
wider society, rather than merely with selected stakeholder groups. With an increase
in wealth and freedom and the internationalisation of operations, corporations are
increasingly realising a new sense of responsibility.47 The approach suggests that
stakeholders are not only being managed but also integrated in decision making.
Corporations want to be held responsible for any actions that affect people, their
communities and the environment. Corporate citizenship suggests a three-way
partnership between business, nonprofits and government.

Different companies value different approaches to CSR. The following figure


highlights how Australian CEOs view the social responsibilities of their companies.

"Business must
be a good corporate citizen
and put back into the community"
(CEO from the manufacturing sector)
"In order to sustain community sanction for
"Business should be prepared to put back into the business they [companies ] must be seen
community in return for the support it receives from to contribute beyond the confines of
the community" (CEO from manufacturing sector) customers,employees and taxation"
(CEO from the resource sector)
"Business must be good corporate citizens -this responsibility
goes beyond their immediate operation and extends to taking
ownership of community issues" (CEO from retail sector) "A genuine approach to community
involvement pays dividends in terms
of goodwill and morale"
For the
(CEO from the service sector )
public good
"A company's responsibility is to – do not expect a
manage its business affairs -social commercial
welfare is the responsibility of return Enlightened "Sustained profit (return to
government"(CEO from resource self interest shareholders) is not contradictory
sector) with community benefit and corporate
Community serviced – longer term
responsibility.I define a successful
by maximising commercial company as one which is both
"Our company's main responsibility shareholder returns interest of profitable and responsible"
is to satisfy the needs of customers and satisfying the business (CEO from the resource sector)
and shareholders"(CEO from
customers
services sector)

"It is important for all companies


to contribute to the community,
"Return to shareholder value but they should do so in a way
drives our strategy and direction" that is aligned with their business
(CEO from services sector ) objectives and can therefore be
justified to shareholders"
"We should aim to be profitable,we should
(CEO from the service sector)
aim to reduce our environmental impacts
and we should aim to invest in our
communities as well as in our businesses.
The aim is to achieve a balance between
these three"
(CEO from the resource sector)

Source:Centre for Corporate Public Affairs and the Business Council of Australia,Survey 2000

Figure 5: Australian Attitudes on Corporate Community Involvement48

35
4. 5. IDENTIFYING AN INTEGRATED STRATEGY OF INITIATIVES

The CSR initiatives a company adopts will depend on which approach to corporate
social responsibility it has adopted. A company that views its social responsibilities
as maximising profits will focus its efforts to that end. Altruistic companies will be
satisfied with giving to good causes. A company which follows the strategy of
enlightened self-interest will try to improve its connections with the community, or
invest in projects and research that enhance the environmental operations of the
company. A company that wants to act as a corporate citizen will start to rethink all
of its priorities and its internal and external operations.

The following figure gives an overview of the four different approaches to CSR and
how it can influence a company’s formulation of its CSR strategy.

Approaches to CSR
Profit Altruistic Enlightened
Maximization Self-Interest Corporate Citizenship

Responsibility, Transparency,
GOAL Profit Give back Mutual benefits
Sustainability, Accountability

Governance
PR, Image Programs Applied Ethics
Activities in the Restructuring of Business
VEHICLES Rationalisation Philanthropy Community; Cause Priorities and Practices
Related Marketing, Active Stake-holders Dialogue
Volunteers Any other community activities
integrated

Activity focused
MEASUREMENT Financial Results Donations Holistic, Triple Bottom Line
reporting

To Community To both sides: To company: Survival, position, role


To Shareholders
BENEFICIARIES Groups and Business and To partners of all sectors
to others indirect
Causes Community To the wider society

• Benefits not • Performance


• Tangible plus potentially
BENEFITS • Financial necessarily • Market Goals
• Intangible
measured • Human Resource

TIME FRAME Short term vision Sporadic Medium term planning Long term horizon

Veronika Peters 2000

Figure 6: Four Approaches to CSR

4.6. IMPLEMENTING AND MONITORING

During this stage a company determines how best to achieve its social objectives.
During all stages the inclusion of stakeholders will impact the outcome of individual
activities as well as the program as a whole. Companies often form partnerships to
pool their resources and achieve mutual benefits. Monitoring and continual learning
and improvement emerge as crucial factors to effectively manage the process of
CSR.
36
4.7. MEASURING THE RETURNS

Corporate social responsibility requires transparency and accountability. Triple


bottom line, also called sustainable development reporting or social reporting,
attempts to provide the new accounting principles needed to measure the full extent
of a business’s impact on society. The idea is not to forsake the traditional bottom
line, but to harmonise it with the new demands on business set out here. “The
approach does not necessarily imply a new concept of what companies are
primarily for, rather it extends the time horizon over which the full range of a
company’s and its shareholders’ interests should be assessed.” With the triple
bottom line, as proposed by John Elkington, a company is measured against three
indicators: 49

Economic Value-Added: The profits a company makes are adjusted by the costs of
capital employed. Market Value-Added, a similar concept, calculates how much
value a company has created since it was founded.

Environmental Value-Added: The profit of a company has to be further adjusted to


take into account the natural resources that were employed and whether they are
renewable.

Social Value-Added: Finally the bottom line needs to reflect the impacts the
company has on human and social capital. Is knowledge gained, skills added, trust
built?

37
5. WHAT ARE THE BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY?

Businesses will realise better returns on their CSR investment if they align individual
initiatives into a business strategy that reflects their own core operations. While
some businesses have done this, many adopt individual initiatives on an ad hoc
basis and so run the risk of reduced returns from their CSR investment.

But what are these returns? CSR practitioners are frequently confronted with the
problems of measuring the returns to a company. Many benefits are difficult to put
dollar figures on, so a diverse range of measures is slowly being developed to
measure the impact of CSR. The easiest to measure benefits occur at an enterprise
or internal level where CSR activities benefit the business that initiates them. The
other forms of benefits occur at the business community level where benefits
accrue across the entire business community.

5.1. BENEFITS TO BUSINESS

When a company engages in corporate social responsibility it can expect a range of


intangible benefits. Among them are corporate assets such as motivated
employees, reliable supplier relations, an extended base of loyal customers and
improved reputation. However, increasingly, companies are learning to translate
other less tangible benefits into more measurable ones. They can be grouped into
four areas:
• operating performance
• market goals
• human resources
• external relations.

OPERATING PERFORMANCE:

• Improved financial performance


Acting in a socially responsible manner does not necessarily have to impede the
improvement of the financial bottom line but can potentially improve it. A study
undertaken at the Harvard Business School indicated that stakeholder-oriented
companies showed four times the growth rate and eight times the employment
growth compared to companies that were only shareholder-focused. A recent study
reveals that corporate performance is closely linked to a strong ethical commitment.
In the 300 large US companies studied, the average market value added (MVA) of
companies with a public ethical commitment was US$8.1 billion or 2.5 times larger
than those without an ethics code.50 The Australian Eco Share Index has
outperformed overall market shares. (The top ten holdings at 9 August 2000 were
AMP, BHP, Commonwealth Bank, LendLease, National Australia Bank, News Corp,
Optus, Rio Tinto, Telstra and Westpac).

• Reduced risk exposure


CSR enables businesses to tap into new information channels and become better
equipped to predict future trends and scenarios. The company balances risks in
volatile markets and responds more quickly to customer needs or threats by
pressure groups. The company enjoys the trust of its main resource groups. A
higher status among other businesses enables the company to choose its partners,
leading to higher quality and efficiency. Risks of potential environmental and social
38
concerns on the supply side can be discovered at an early stage. Management can
make informed decisions leading to the long-term sustainability of shareholder
value.

• Easier access to investment funds


A number of investment banks in the US and Europe have started to screen the
environmental practices of companies and are creating standards for investment
purposes. Hence, CSR will also be a means to ensure access to funds if these
trends continue. Monash recently surveyed 160 Australian companies on behalf of
Westpac. The Westpac-Monash Eco Share Fund has already announced that it
would put companies on negative watch until their environmental practices
improve.51

• More efficient use of resources


With an increased awareness of social and environmental concerns, companies can
reduce waste and save costs related to energy. Processes are improved, leading to
greater efficiency.

MARKET GOALS:

• Identification of new products and markets


As it identifies new markets and creates new products, CSR can assist in
understanding market shifts and in developing green products and services that
meet the expectations of the new customers. For example, EnergyAustralia realised
a market for renewable energy and developed its PureEnergy product. The Body
Shop Australia built their whole business on products that would meet the needs of
a socially and environmentally aware generation.

• Enhanced brand image


In a time when customers have unlimited choices, CSR can increase brand
awareness and recognition. CSR can assist in building an image, if internal changes
are supported by cause-related marketing initiatives.

• Increased sales and customer loyalty


Customers are loyal to companies who care and they reward them with increased
sales if they believe in the cause and the trustworthiness of the company.

HUMAN RESOURCES:

• Improved recruitment and retention performance


A number of socially aware Australian companies, such as Freehills, indicated that
graduates are attracted to what the company stands for. CSR can hence be a
recruitment tool in a competitive labour market. In organisations where internal
recruitment is the rule, such as Procter & Gamble, it is of utmost importance to
retain staff. A decrease in turnover can serve as an indicator of the effects of CSR.
Staff who are proud of the company they work for often act as the best PR.
Employees are the most visible ‘business card’ a business has.

Hewlett Packard and IBM are high performers and both count as visionary
companies of our time. Yet their industry known for structural changes and
rationalisation, does not hinder them from offering a wider range of employer
39
benefits and supportive redeployment systems for redundant workers.
Rationalisation and job cuts in many cases are inevitable - how people are laid off
differentiates one leadership style from another.

• The creation of new business networks and social capital


Employees who are connected in their communities can enhance their business
through new contacts and the creation of partnerships. Creating contacts and
building relationships of trust and collaboration are seen as key in the formulation of
social capital.

• Increased productivity through motivated staff


When employees appreciate what a company stands for, CSR can result in higher
levels of productivity and lower operating costs. The quality of work is improved as
employees display lower turnover rates and fewer days of absenteeism. The
Mildura Fruit Company managed to settle ongoing arguments with a union by
becoming involved in a partnership with Mallee Family Care, a well-respected local
community organisation. This, in combination with improved working conditions,
ensured smooth operations.

• Enhanced skill set


Managers who return from secondments or projects involved with the community,
re-enter the corporate world with a skill set they could not have gained at a
university or through corporate training.52
Re-evaluated Skill Set: Managers feel that by using their skills in a non-
corporate setting they realise the expertise they have actually gained in their
profession, be it marketing or finance, and rediscover the value of this know-
how that is frequently taken for granted in the corporate world. Often new
skills emerge as managers operate in a new field. A sense of broadened
horizons and new self-esteem help executives to benchmark their leadership
skills in their corporate position. Such a program can help people reflect on
their life values. Some managers feel that after having been through this “life
training” they are in a better position to act as mentors in a corporate setting.

Communication and Negotiation: The new setting often does not allow the
jargon and speed of action managers are used to in their offices. Decisions
are made in different ways, often influenced by different power levels and
bureaucracy. What managers experience initially as frustration eventually
increases their understanding of stakeholder relations and a tolerance for
people they might usually not feel comfortable with. Discipline and a new
sense of commitment to tasks also foster problem-solving skills in the
long run.

Strategic Thinking and Actual Implementation: Managers are often placed in


complex settings and learn to work with limited resources. This challenges
them to stay strategically focused and master their project
management skills.

40
EXTERNAL RELATIONS:

• Social licence to operate and trust


A company that is respected in the community enjoys support from its stakeholders
and gains a licence to operate. Companies build trust over time. Reputable
companies such as Rio Tinto and Levi Strauss have not gained their status by
chance. For these proactive companies it has meant adopting innovative strategies,
leadership and persistence in times of pressure and committed management of
stakeholder needs.

• Enhanced corporate reputation


Bad news hits the headlines the quickest. In product recalls, downsizing,
rationalisation, mergers and accidents involving contamination, the media tends to
focus on providing an explanation and showing potential consequences for the
wider public. At these moments an existing reputation can save a company’s life.
Public relations or crisis management is often not enough to counter public
accusations. Leading business magazines, such as the Financial Times in the UK,
Fortune magazine in the US or Asia Business, have started to evaluate and rank
companies according to their reputation. Most companies which have achieved a
high ranking have displayed strong stakeholder relationships and active leadership
on social issues. The increased inclusion of non-financial criteria in these surveys
serves as evidence that the evaluation of corporate capital will go beyond the
financial bottom line. It will increasingly be linked to a company’s reputation.53
Australian companies are aware of their reputation as well.

• Improved relations with the government and reduced regulatory intervention


A number of Australian companies have found that socially responsible strategies
can lessen the likelihood of restrictive Government regulations being applied to their
industry. A company that can demonstrate that it is attempting to deal with complex
social and environmental problems has a strong case to argue against punitive
government regulations. Furthermore, businesses which have a reputation as
being socially responsible are beginning to gain an advantage over other less
responsible companies when it comes to competition for public tenders.

While it is important to know and measure the short-term benefits of CSR programs,
they should not be the ultimate driver. In attempts to establish a ‘business case’ for
CSR expenditures, managers tend to focus on measuring the effects of CSR on the
immediate financial bottom line. This shows that managers still think of CSR
benefits as being short term. If the motivation for CSR ultimately is to improve the
financial bottom line, the business, in all likelihood, has not understood the long-
term perspective and the wider impacts of the corporate citizenship approach.

41
Measurement Time Scale
INPUTS 1 year

OUTPUTS 1-2 years

IMPACTS 1-10 years

Figure 7: Time frame for Evaluation of Inputs, Outputs and Impacts 54

5.2. BENEFITS TO THE WIDER COMMUNITY

A recent study by Mark Glazebrook, Coordinator of the Corporate Citizenship


Research Unit at Deakin University, investigated how Australian’s top 500
companies are becoming corporate citizens. The study reveals that 37 of Australia’s
top 500 companies view corporate citizenship as a determining factor for the
strategic directions of their businesses. Almost half of these companies had
adopted strategies to enhance their level of corporate citizenship over the previous
12 months.55 This finding could be an indicator for a shift that is taking place in the
way companies conduct business.

The Australian business community is beginning to recognise that CSR is not an


obligation, nor a threat, nor a trend, but an opportunity and at times a business
imperative. The rules of business continue to change. The new relationship
between the government, the business sector and the community opens doors to
deal with and foster society economically, socially and environmentally. If
companies act as corporate citizens they can be part of the solution to many socio-
economic problems.

42
Corporate citizens are gaining a voice in the political arena. The private sector
realises that concepts of corporate citizenship give the sector legitimacy, trust,
power and freedom from regulations. Australia is in a vulnerable position, in danger
of becoming over-regulated.56 The eighties have demonstrated how pressure
groups and environmentalists can mobilise consumers and bring about regulations
on emissions and toxic waste. Increased awareness by consumers has pushed
companies to change.

However, with increased freedom comes increased responsibility. The business


sector has an opportunity to show committed leadership. At the turn of the century,
the joint efforts of the business sector in collaboration with government and the
community will impact on Australia’s prosperity for generations to come.

43
6. First Steps

The context of business has changed. Globalisation, the communication revolution


and new technologies have brought a shift in how business is being conducted in
the new millennium. Stakeholders are educated and well informed and expect
transparency, involvement and accountability.

Australian companies have responded in a variety of ways. The country has a


number of best practice examples for corporate social responsibility. Companies
have started internal programs such as ethics programs, employee empowerment
and social and environmental accounting as well as external programs which foster
their links with the community and external stakeholders. Partnerships with
nonprofits emerge as a key strategy for community involvement.

Corporate social responsibility is associated with a range of benefits, including


improving operating performance, providing market advantages, employee
empowerment and building external relations.

While Australian companies engage in social and environmental activities, their


programs are rarely integrated under a well-founded concept of CSR. Frequently
businesses simply address individual stages of the CSR process seen in isolation.
Yet the process involves a range of stages. A simple outline of those steps would
include:
• starting with a purpose, with stakeholder involvement
• identifying critical issues
• deciding on a CSR approach
• choosing appropriate tools and partners
• implementing and monitoring the accounting processes and auditing

A company needs to run its business profitably, effectively, safely, legally and
ethically. Furthermore companies have to minimise the negative impacts their
operation has on society and the environment. Initiatives in this area are driven by
concerns for reputation and ensuring the survival of the company in the long term.

As companies undertake a range of CSR initiatives, they are learning how to turn
social initiatives into business benefits. Realising mutual benefits, evaluating and
accounting for social activities are important exercises that businesses have to
engage in. When a company addresses the social issues that society is dealing with,
it is an opportunity to show initiative and leadership.

The business sector as a whole also benefits when companies act responsibly. The
corporate sector gains a voice in the political arena, legitimacy, trust, power and
freedom from regulations.

44
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56 Mackay Research (1996) for Joint Business Functions. 21/6/1996

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NOTES

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This paper was prepared by Veronika Peters on behalf of the State Chamber
of Commerce (NSW) for the Common Good Program.
Level 12
83 Clarence Street
Sydney NSW 2000 Australia
Phone 02 9350 8100 Fax 02 9350 8199
www.thechamber.com.au