The spotlight is turning on senior executives: senior executives: not what they say, but what they actually do when it comes to structures for leadership and management of corporate social responsibility.
Getting the board on-board for CSR
South African Breweries , BP , Ford , Shell and Rio Tinto are among companies examined in a new study of corporate governance, The power to change: mobilising board leadership to deliver sustainable value to markets and society . Published in January by The Prince of Wales Business Leaders Forum and the consultancy, SustainAbility , the report focuses on six leadership principles for boards to act upon, if they are to thrive at a time of growing social expectations. Setting out the business case for action, the report offers a triple bottom line framework for management structures.
Board level commitment is also the bedrock of the PWBLF’s new human capitalism campaign, launched November, to encourage business leaders to commit to social responsibility. It highlights seven issues: putting society on the boardroom agenda, engaging business partners and investors, mobilising employees, promoting action in the wider business community, developing tomorrow’s business leaders, implementing and benchmarking performance, and aiming for transparency and accountability. Contact Jane Nelson, PWBLF, on 020 7467 3600 (http://www.csrforum.org)
Business leaders have their say
UK business leaders care more about social responsibility than a year ago, according to the latest MORI survey of company board directors. More than one in three (38%) agree or strongly agree with the statement ‘industry and commerce do not pay enough attention to their social responsibilities’ – up from 25% in 1995. On the environment, the number of senior executives who think companies should be doing more is now approaching half (44%), up from 31% in 1995. MORI’s annual survey is based on interviews with nearly 200 chairman, CEOs, MDs or presidents.
However the main preoccupation of the UK ‘captains of industry’ is skills shortage, with one in three citing this as their main concern, three times as many as last year. Outside the UK, changes in competition, impact of the internet and industry consolidation are the issues that preoccupy international executives most. Over a third places customer loyalty as the most critical management issue, according to a study of more than 500 business leaders from North America, Europe and Asia conducted by The Conference Board and Accenture (formerly Andersen Consulting), published in January. Contact Annabel Gilbert, MORI, on 020 7347 3000 (http://www.mori.co.uk/polls/2000) or Conference Board on 00 1 212 339 0345 (http://www.conference-board.org)
Microsoft most socially responsible
Corporate social responsibility features for the first time in The Financial Times World’s most respected companies survey, published on December 15. Microsoft , IBM , Toyota , General Electric and Shell are seen as the top five socially responsible corporations. Over 700 business leaders from around the world took part in the research, run by PricewaterhouseCoopers . Seven in ten said social responsibility is ‘very important’, compared to half of fund managers. Contact FT on 020 7643 2900 (http://surveys.ft.com)
Company directors’ HSE commitments
Company directors are the target for a new code of conduct which aims to ensure that health and safety risks are properly managed. A consultation draft was issued by the Health and Safety Commission on January 22, highlighting board members’ individual responsibility for health and safety. It calls on boards to develop an HSE policy, to explain how they will deliver on their HSE objectives, to appoint an individual board member to champion HSE issues, and to consult staff. The initiative forms part of the government’s Revitalising Health and Safety strategy, launched in June 2000 with the aim of cutting work-related deaths, illness and injuries in Britain over the next ten years. Contact HSE on 020 7717 6000 (http://www.hse.gov.uk)
Remuneration remains in need of review
Too few companies are following best practice for remuneration, according to a new survey of the top FTSE 500 companies. The research, carried out by Pensions & Investment Research Consultants , shows that over a quarter of the companies surveyed do not have a fully independent remuneration committee. Moreover, only three per cent of companies put their remuneration policies forward for shareholder endorsement. Contact Alan McDougal, PIRC, on 020 7247 2323 (http://www.pirc.co.uk)
news in brief
• The recommendations of the Turnbull Committee on corporate governance have come into force for publicly listed companies’ accounting periods ending on or after December 23. See Community Affairs Briefing 48 for details. Contact ICAEW on 020 7833 3291 (http://www.icaew.co.uk/internalcontrol)
• An initiative to enhance standards of corporate governance in Russia was launched at Davos on January 24: five leading Russian companies announced they are committing to a corporate governance code of conduct, aimed at dispelling foreign investors’ fears about poor boardroom practices. The World Economic Forum will monitor progress. Contact Ron Freeman, WEF, on 00 41 22 786 2744 (http://www.weforum.org)
Comment
A few companies have developed their genuine leadership position in CSR thanks to a charismatic CEO who walks the talk – not just giving eloquent speeches but putting in place management systems down the line. Sadly still too many CEOs do only the former, not the latter. But now, the noose is gradually tightening. Turnbull was a great fillip, asking for evidence of a systematic approach to risk management, broadly defined. Our stories reported above show how the spotlight is focusing brightly on boards and on individual directors, asking if the systems are in place to back up their claims to rate social responsibility highly.
So far, no single model for governance has yet clearly emerged. Some US corporations appear to be ahead, often with formal board subcommittees charged with public and wider social affairs issues, but too many focus only on philanthropic donations. In continental Europe, the two tier board structure provides another appearance of high-level focus, but the non-executive top tier tends to focus on employee issues, reflecting trade union representation. UK-based companies tend to lack board-level structures, but are increasingly appointing executive-level steering committees which drive action down the line; however these don’t automatically offer a clear link to the board (and thus to overall corporate strategy).
When the experimentation has settled down in a couple of years’ time, some best practice models may emerge. In the meantime, community engagement professionals will want to draw the attention of their senior executives to this changing climate: the question is no longer what we say, but how we manage it – and that requires senior leadership.
A few companies have developed their genuine leadership position in CSR thanks to a charismatic CEO who walks the talk – not just giving eloquent speeches but putting in place management systems down the line. Sadly still too many CEOs do only the former, not the latter. But now, the noose is gradually tightening. Turnbull was a great fillip, asking for evidence of a systematic approach to risk management, broadly defined. Our stories reported above show how the spotlight is focusing brightly on boards and on individual directors, asking if the systems are in place to back up their claims to rate social responsibility highly.
So far, no single model for governance has yet clearly emerged. Some US corporations appear to be ahead, often with formal board subcommittees charged with public and wider social affairs issues, but too many focus only on philanthropic donations. In continental Europe, the two tier board structure provides another appearance of high-level focus, but the non-executive top tier tends to focus on employee issues, reflecting trade union representation. UK-based companies tend to lack board-level structures, but are increasingly appointing executive-level steering committees which drive action down the line; however these don’t automatically offer a clear link to the board (and thus to overall corporate strategy).
When the experimentation has settled down in a couple of years’ time, some best practice models may emerge. In the meantime, community engagement professionals will want to draw the attention of their senior executives to this changing climate: the question is no longer what we say, but how we manage it – and that requires senior leadership.
COMMENTS