Why Corporate Social Responsibility Is At The Bottom Of The List

Good CSR means companies being committed to developing and integrating appropriate practices into everyday corporate strategic plans, which will both ensure they behave as good corporate citizens and help promote a better society.  

Alas, a recent PricewaterhouseCoopers (PwC) report reveals that in Canada, ‘About one-half (48 per cent) of private companies don’t have a CSR plan in place.’  

This spells trouble for businesses that may someday expand and join the ranks of their public counterparts; and it throws up the question of why private companies are failing to take CSR seriously.

‘Unlike public companies, privately held companies may not have the types of public scrutiny and shareholder demands that have strongly influenced public companies to adopt a CSR strategy,’ says Michael Torrance, a lawyer at Toronto-based Ogilvy Renault who advises on international standards of corporate responsibility and sustainability as they pertain to corporate governance.

‘Private companies may also feel more inclined to not view issues as ‘CSR’ issues, but rather as environmental, health and safety, labour relations or human rights matters,’ Torrance continues.  

By way of background, the research – published under the title PwC Pulse Survey: Insights into CSR and Sustainability  – surveyed 82 Canadian private companies; and it found that a majority (53 per cent) of them view CSR as ‘nice-to-have’ rather than a priority. 

But, according to Torrance, ‘All businesses looking to remain competitive should be trying to ensure that they manage environmental and social risks as best they can.’

So, where is the corporate secretary in all this?

According to Torrance, good CSR begins with corporate secretaries. Part of their job is to align the company’s corporate vision with its strategic direction.

‘Ultimately CSR is about effective governance of environmental and social risks,’ he continues. ‘It necessitates corporate self-regulation, not just a focus on government-imposed regulation; and only corporate secretaries can ensure that these objectives are not compromised.’

The CSR guru offers the following advice to corporate secretaries seeking to establish a holistic CSR approach.

(i)    ‘The first step is to understand what CSR and sustainability mean to the organisation.’  By doing this, effective management of shareholder concerns, such as the environmental and social impact of the business’s activities, will come to the fore.

(ii)    The second step is to recognise that CSR and compliance are two sides of the same coin; they should not be seen as mutually exclusive. ‘With rare exceptions, no socially responsible business operates in non-compliance with state laws.’ Torrance adds that if companies understand that CSR and compliance are inextricably intertwined with each other this is likely to lead to a successful CSR program.

Surprisingly, the study suggests that only 30 per cent of private companies see CSR initiatives as a tool for gaining a competitive edge. ‘Rather than being perceived as non-essential,’ Torrance concludes, ‘it is evident that effective CSR management is essential to stay in business, and in fact can be a driver of competitive advantage for a company.’