Small Business Hops on CSR Bandwagon
Smaller businesses that have embraced CSR have found that there are some useful lessons to be learned by larger companies. By Alex Blyth
Smaller businesses that have embraced CSR have found that there are some useful lessons to be learned by larger companies. By Alex Blyth
The area commonly known as corporate social responsibility is difficult to define, primarily because the theory is constantly evolving and the activities are so broad in scope. Many view it as simply charitable giving and community involvement, but there is growing concern that this simplistic view leads many businesses to view CSR as expensive and time-consuming, and so deters them from becoming involved at all.
Peter Rosen, Commercial Director of Bovince, a printing firm that for over fifty years has pioneered socially responsible business practices, argues that companies ought to view CSR differently: “Rather than looking at it as a costly, but necessary, exercise requiring the company to leap into large scale, external projects, people should view it more as a path and begin by implementing a few sensible, internal practices from which a full program of social responsibility may logically develop.”
Using what’s already there
A simple first step down that path is to assess and formalize existing practices. Rob Cameron, MD of Flag Communications, a consultancy advising companies on CSR communications, always begins with his clients at this natural starting point. He says, “Many business people Ideal with are surprised to find just how much their company already does in areas such as employee or supplier relations. These existing arrangements are usually the best springboard for the formalization and development of a more comprehensive program.”
Philippa Foster-Back, Chief Executive of the Institute of Business Ethics, agrees: “Before considering large scale CSR policies, companies need to put into words simply how they want to do business. They need to be explicit and to put it into a code that will become ingrained into the culture of the business. Nearly 80% of companies in the FTSE100 have such a code and we would view a code as the essential starting-point for CSR policies. For instance a company may decide to support a certain charity because it fits in with values expressed in its code.” The IBE provide advice and training to companies on the subject but are adamant that the company itself must devise the content.
Whose code? If any…
Despite this, many codes published by FTSE250 companies are similar, focusing on delivery to customers, supplier policies, employment terms and conditions, environmental awareness and open and transparent reporting. Almost all are tempered by the recognition of the need to maximize shareholder value. Although a broad consensus exists, there are undoubtedly variations of emphasis.
For instance, Sainsburys is focusing heavily on socially responsible sourcing in response to mounting customer concern on the subject. It established a Code of Practice in early 1998 and became a founding member of the Ethical Trading Initiative. From that point it began to stock an ever-growing number of Fairtrade products and is now becoming directly involved in specific projects, such as one in which it is sponsoring training programs for South African women.
The question of how to embark on CSR policies is particularly relevant to SMEs, as they often lack the time or financial resources to investigate the possibilities. Increasingly, the government is recognizing that SMEs will require encouragement and incentives if they are to become as socially responsible as many of the larger companies.
Douglas Alexander, CSR Minister until the June 2002 reshuffle, stated recently that, “CSR is not just for large, multinational companies that have anational or global impact. The role that smaller companies play in their local community is also vital. SMEs give around £3 billion a year to social issues but need tools to develop their own CSR practices.” The government has introduced initiatives such as the payroll giving system, the Community Investment Tax Credit and the Company Law Review in an attempt to provide a framework and incentives for SMEs.
“CSR is not just for large, multinational companies that have a national or global impact. The role that smaller companies play in their local community is also vital.”
Douglas Alexander, Former CSR Minister
However, perhaps more immediately useful are the real-life examples set by companies such as Bovince, the Seaview Hotel and Happy Computers in developing admirable CSR credentials from simple internal practices.
Employees at the center of the enterprise
Since its inception Bovince has placed employee policies at the heart of its business. Peter Rosen says, “We have always paid our staff well, given them job security, communicated with them, and worked hard to get them to buy into our company vision. These policies have helped to create a loyal and committed work-force. The average length of service is over a decade. It amazes me that so few employers see the benefits of a deal whereby you give your staff money and they bring their hearts, minds, creativity and enthusiasm to your business.” From this focus on employee welfare, Bovince has moved into a whole array of CSR projects such as the London Children’s Scrap Project.
“When the council withdrew funding for this project, we were one of the first companies to contribute to this excellent scheme which collects scrap and waste paper from businesses, recycles it and gives it free to local schools,” explains Peter Rosen.“ There are sixty such schemes nationwide so any company can do it. It costs nothing and is very easy to do.” At Bovince they firmly believe that CSR policies, stemming from responsible internal practices, have contributed significantly to their success and to the fact that in the past five years, although turnover has remained steady, profit has increased by 10% year on year.
Cool and green, not impossible…
Howies is a younger company with a very different story. David and Clare Hieatt began designing T-shirts in the living room of their flat in June 1995.Says David, “From the outset our purpose was not simply to make money. We are in business primarily because we want to make people think about the world we live in. ”Most of their T-shirts are bought by those involved in BMX, mountain biking, skating, surfing, snowboarding or other outdoor sports, and are all more than simply fashion statements. They are also political, environmental or ethical statements.
This approach has been reflected in the way in which they have run the company as it has grown to the point where they are now selling 15,000 T-shirts per year. David explains: “We have had to make some compromises in order to remain true to our beliefs. For instance we could make higher profits if we didn’t invest so much in the product, but we want all of our T-shirts to be brilliantly designed and made of the best material available. Of course we know that we have to make money to remain in business. We give 1% of our turnover or 10% of pre-tax profits, whichever is greater, to grassroots environmental and social projects and we want this to be as much as possible so we have accepted that growth is necessary.”
“However, unlike many companies, we’ve done everything possible to ensure that growth is not too rapid. At every stage we have thought carefully about the implications of growth. It has also meant that we have only hired people with whom there is a strong bond of trust. Often we have met people and said to ourselves that when the time is right we’ll hire them. This has resulted in a much more trusting environment than would be the case if we’d grown too quickly and had to advertise for staff.”
This approach has paid off for Howies. It has remarkable levels of customer loyalty in a notoriously fickle market and next year expects to more than double its turnover by selling over 40,000 T-shirts.
Back to the basics
In an entirely different industry, the Seaview Hotel on the Isle of Wight has thrived since 1980 by constantly developing ethical policies and practices. Its co-owner, Nicky Hayward, grew up on the island, and when she and her husband left successful careers in London they decided to return there to run a hotel and restaurant that was not only successful, but also an integral part of the community.
Like Peter Rosen, she sees employee issues as central: “We look after our employees. We pay well above the minimum wage, provide on-going training, and make sure no one works more that 48hours a week. But what makes the Seaview really special for our staff is that they run the hotel. As we have a bottom-up management system and they are all able to see all the hotel figures and make decisions both large and small about the running ofthe business, they can make decisions not only for the benefit of the business but, as most of them are locals, also for the benefit of the community.”
She takes an equally enlightened approach with her suppliers: “We never forget that our suppliers are also customers. I could buy milk more cheaply from Unigate, but because I continue to buy it from our local dairy farmer he continues to eat in our restaurant.” The environment is the third strand: “We produce a lot of paper for our menus and so we cut them up and use the reverse as jotter pads. It may seem a small thing but it really is the little things like that which make people feel good about working here.”
The community is clearly demarcated on the Isle of Wight, but is less so in the world of IT training. Yet Happy Computers are proof that the principles apply regardless of geography or sector. A London-based consultancy, it won the Institute of IT Training’s Company of the Year award in 2001, and, whilst its market has contracted by 10% in the past two years, it has grown by 20%.
Henry Stewart, Chief Executive, argues that responsible internal policies have played a key role in this success: “We always pay our trainers rapidly and I believe that if any company is paying small suppliers in anything more than thirty days then they need to take a serious look at themselves. More radically, we offer considerable flexibility to all of our staff, not just parents. Many choose to work four long days and have three-day weekends. In terms of the environment, we recycle all of our paper, donate money to the Rainforest Foundation and use only Fairtrade coffee and tea. All of this has resulted in a staff drop-off rate below 5% and a feeling of togetherness that is rare to find in a modern company. The industry has been going through a difficult period, but because our all our staff believe in what we are trying to achieve we have been able to work together as a team and remain highly successful.”
So the case for responsible internal practices as a starting-point for CSR policies seems clear. For those looking for more ideas on how to get started, Gee Publishing has recently produced a practical guide to CSR management, entitled “Corporate Social Responsibility Monitor.” One of the editors, Walter Raven, explains its purpose in this way: “CSR is a rapidly developing field and one where actions are in danger of being subordinated to theories. The Monitor will be updated every four months and will aim to provide practical and up-to-date guidance on emerging CSR issues and techniques. ”Many others offer advice in written or consultancy form, but perhaps the best advice is the simplest, as put by Peter Rosen: “Anyone with any imagination can get started on a program of CSR. You just have to want to.”
------------------------------
Alex Blyth is a freelance journalist who contributes regularly to Ethical Corporation magazine.
The area commonly known as corporate social responsibility is difficult to define, primarily because the theory is constantly evolving and the activities are so broad in scope. Many view it as simply charitable giving and community involvement, but there is growing concern that this simplistic view leads many businesses to view CSR as expensive and time-consuming, and so deters them from becoming involved at all.
Peter Rosen, Commercial Director of Bovince, a printing firm that for over fifty years has pioneered socially responsible business practices, argues that companies ought to view CSR differently: “Rather than looking at it as a costly, but necessary, exercise requiring the company to leap into large scale, external projects, people should view it more as a path and begin by implementing a few sensible, internal practices from which a full program of social responsibility may logically develop.”
Using what’s already there
A simple first step down that path is to assess and formalize existing practices. Rob Cameron, MD of Flag Communications, a consultancy advising companies on CSR communications, always begins with his clients at this natural starting point. He says, “Many business people Ideal with are surprised to find just how much their company already does in areas such as employee or supplier relations. These existing arrangements are usually the best springboard for the formalization and development of a more comprehensive program.”
Philippa Foster-Back, Chief Executive of the Institute of Business Ethics, agrees: “Before considering large scale CSR policies, companies need to put into words simply how they want to do business. They need to be explicit and to put it into a code that will become ingrained into the culture of the business. Nearly 80% of companies in the FTSE100 have such a code and we would view a code as the essential starting-point for CSR policies. For instance a company may decide to support a certain charity because it fits in with values expressed in its code.” The IBE provide advice and training to companies on the subject but are adamant that the company itself must devise the content.
Whose code? If any…
Despite this, many codes published by FTSE250 companies are similar, focusing on delivery to customers, supplier policies, employment terms and conditions, environmental awareness and open and transparent reporting. Almost all are tempered by the recognition of the need to maximize shareholder value. Although a broad consensus exists, there are undoubtedly variations of emphasis.
For instance, Sainsburys is focusing heavily on socially responsible sourcing in response to mounting customer concern on the subject. It established a Code of Practice in early 1998 and became a founding member of the Ethical Trading Initiative. From that point it began to stock an ever-growing number of Fairtrade products and is now becoming directly involved in specific projects, such as one in which it is sponsoring training programs for South African women.
The question of how to embark on CSR policies is particularly relevant to SMEs, as they often lack the time or financial resources to investigate the possibilities. Increasingly, the government is recognizing that SMEs will require encouragement and incentives if they are to become as socially responsible as many of the larger companies.
Douglas Alexander, CSR Minister until the June 2002 reshuffle, stated recently that, “CSR is not just for large, multinational companies that have anational or global impact. The role that smaller companies play in their local community is also vital. SMEs give around £3 billion a year to social issues but need tools to develop their own CSR practices.” The government has introduced initiatives such as the payroll giving system, the Community Investment Tax Credit and the Company Law Review in an attempt to provide a framework and incentives for SMEs.
“CSR is not just for large, multinational companies that have a national or global impact. The role that smaller companies play in their local community is also vital.”
Douglas Alexander, Former CSR Minister
However, perhaps more immediately useful are the real-life examples set by companies such as Bovince, the Seaview Hotel and Happy Computers in developing admirable CSR credentials from simple internal practices.
Employees at the center of the enterprise
Since its inception Bovince has placed employee policies at the heart of its business. Peter Rosen says, “We have always paid our staff well, given them job security, communicated with them, and worked hard to get them to buy into our company vision. These policies have helped to create a loyal and committed work-force. The average length of service is over a decade. It amazes me that so few employers see the benefits of a deal whereby you give your staff money and they bring their hearts, minds, creativity and enthusiasm to your business.” From this focus on employee welfare, Bovince has moved into a whole array of CSR projects such as the London Children’s Scrap Project.
“When the council withdrew funding for this project, we were one of the first companies to contribute to this excellent scheme which collects scrap and waste paper from businesses, recycles it and gives it free to local schools,” explains Peter Rosen.“ There are sixty such schemes nationwide so any company can do it. It costs nothing and is very easy to do.” At Bovince they firmly believe that CSR policies, stemming from responsible internal practices, have contributed significantly to their success and to the fact that in the past five years, although turnover has remained steady, profit has increased by 10% year on year.
Cool and green, not impossible…
Howies is a younger company with a very different story. David and Clare Hieatt began designing T-shirts in the living room of their flat in June 1995.Says David, “From the outset our purpose was not simply to make money. We are in business primarily because we want to make people think about the world we live in. ”Most of their T-shirts are bought by those involved in BMX, mountain biking, skating, surfing, snowboarding or other outdoor sports, and are all more than simply fashion statements. They are also political, environmental or ethical statements.
This approach has been reflected in the way in which they have run the company as it has grown to the point where they are now selling 15,000 T-shirts per year. David explains: “We have had to make some compromises in order to remain true to our beliefs. For instance we could make higher profits if we didn’t invest so much in the product, but we want all of our T-shirts to be brilliantly designed and made of the best material available. Of course we know that we have to make money to remain in business. We give 1% of our turnover or 10% of pre-tax profits, whichever is greater, to grassroots environmental and social projects and we want this to be as much as possible so we have accepted that growth is necessary.”
“However, unlike many companies, we’ve done everything possible to ensure that growth is not too rapid. At every stage we have thought carefully about the implications of growth. It has also meant that we have only hired people with whom there is a strong bond of trust. Often we have met people and said to ourselves that when the time is right we’ll hire them. This has resulted in a much more trusting environment than would be the case if we’d grown too quickly and had to advertise for staff.”
This approach has paid off for Howies. It has remarkable levels of customer loyalty in a notoriously fickle market and next year expects to more than double its turnover by selling over 40,000 T-shirts.
Back to the basics
In an entirely different industry, the Seaview Hotel on the Isle of Wight has thrived since 1980 by constantly developing ethical policies and practices. Its co-owner, Nicky Hayward, grew up on the island, and when she and her husband left successful careers in London they decided to return there to run a hotel and restaurant that was not only successful, but also an integral part of the community.
Like Peter Rosen, she sees employee issues as central: “We look after our employees. We pay well above the minimum wage, provide on-going training, and make sure no one works more that 48hours a week. But what makes the Seaview really special for our staff is that they run the hotel. As we have a bottom-up management system and they are all able to see all the hotel figures and make decisions both large and small about the running ofthe business, they can make decisions not only for the benefit of the business but, as most of them are locals, also for the benefit of the community.”
She takes an equally enlightened approach with her suppliers: “We never forget that our suppliers are also customers. I could buy milk more cheaply from Unigate, but because I continue to buy it from our local dairy farmer he continues to eat in our restaurant.” The environment is the third strand: “We produce a lot of paper for our menus and so we cut them up and use the reverse as jotter pads. It may seem a small thing but it really is the little things like that which make people feel good about working here.”
The community is clearly demarcated on the Isle of Wight, but is less so in the world of IT training. Yet Happy Computers are proof that the principles apply regardless of geography or sector. A London-based consultancy, it won the Institute of IT Training’s Company of the Year award in 2001, and, whilst its market has contracted by 10% in the past two years, it has grown by 20%.
Henry Stewart, Chief Executive, argues that responsible internal policies have played a key role in this success: “We always pay our trainers rapidly and I believe that if any company is paying small suppliers in anything more than thirty days then they need to take a serious look at themselves. More radically, we offer considerable flexibility to all of our staff, not just parents. Many choose to work four long days and have three-day weekends. In terms of the environment, we recycle all of our paper, donate money to the Rainforest Foundation and use only Fairtrade coffee and tea. All of this has resulted in a staff drop-off rate below 5% and a feeling of togetherness that is rare to find in a modern company. The industry has been going through a difficult period, but because our all our staff believe in what we are trying to achieve we have been able to work together as a team and remain highly successful.”
So the case for responsible internal practices as a starting-point for CSR policies seems clear. For those looking for more ideas on how to get started, Gee Publishing has recently produced a practical guide to CSR management, entitled “Corporate Social Responsibility Monitor.” One of the editors, Walter Raven, explains its purpose in this way: “CSR is a rapidly developing field and one where actions are in danger of being subordinated to theories. The Monitor will be updated every four months and will aim to provide practical and up-to-date guidance on emerging CSR issues and techniques. ”Many others offer advice in written or consultancy form, but perhaps the best advice is the simplest, as put by Peter Rosen: “Anyone with any imagination can get started on a program of CSR. You just have to want to.”
------------------------------
Alex Blyth is a freelance journalist who contributes regularly to Ethical Corporation magazine.