Message from the Chair – Not If, But How: 3 Essential Best Practices in CSR for 2014 & Beyond

By: Wanda Lopuch, Chair, The Global Sourcing Council

We’ve come a long way from the days when greed was good.

According to the 2013 Cone Communications Study, 91% of consumers are likely to switch brands to be associated with a good cause. Given comparable price and quality, a mere 6% of global consumers believe that the sole role of business is to make money www.conecomm.com/global-csr-study; 2013 Cone Communication/Echo Global CSR Study.

Wow, only a decade ago, studies were showing that the highest return on capital was considered to be the dominant goal of business! Today, the conduct of companies matter. The values of companies matter. Today, it is not IF, but HOW enterprises will bring social and environmental values into products and services.

Moreover, it’s not just consumers who care. Impact investors, which account for one of every eight dollars of the global investment capital, make their portfolio decisions based on criteria incorporating social and environmental impact. Increasingly, institutional investors set sustainability filters, mostly to screen out “black sheep” with social liabilities. Values matter to a broad spectrum of constituencies.

Qualifications for strategic partnership or participation in a supply chain depend to some extent on sustainability credentials; in the case of Microsoft, “global citizenship” accounts for up to 11% of the total vendor/partner score. Regulators, especially those in principle-based regimes like in the UK, make inferences about organizational values using sustainability as a proxy.

Values matter to a broad spectrum of constituencies.

In this April issue of The Source, we share examples of unique approaches to global sourcing human values. We applaud and celebrate the success of diversity of the workforce, as shown in the case study of autistic software testers at the SAP operations in India. We also discuss the growing pains of the maturing field of reporting on CSR initiatives. As the emphasis on sustainable sourcing deepens across supply chains we take an in-depth look at some of the frameworks and contractual protocols which leverage the intentions of impact investing and shared value business models. With this issue we are pleased to launch, In Conversation, a monthly profile featuring people actively engaged in sourcing who share their unique perspectives into evolving trends.

As compelling as these examples are, the business question arises: how do we put business value on these unique approaches that go beyond traditional business efficiency matrices? How do we evaluate the impact of the first paycheck of an autistic young man testing the software in India, or operating a Walgreens warehouse in Chicago? Or a single mom from San Paulo’ favela, who was given an opportunity, and skills, which allow her to offer her young children a descent leaving conditions?

Gone are the days of superficial sustainability reporting based on glossy pictures of children playing against the background of the Amazon jungle, to be followed by pages of promotional anecdotes. Consumers, and other key stakeholders, expect and demand more now. Today, business and consumers alike demand materiality, transparency, and accountability.

We know that consumers consistently reward products and services with social values. So, the best practices in CSR in 2014 are: Measure-Report-Communicate.

Measure

CSR initiatives and programs in sustainable and socially responsible sourcing, or 3S programs, need both emotional engagement AND discipline in evaluating their impact, right from inception. When conceiving a new project, however emotionally we may be driven, we must incorporate from the start methodologies that assess the impact of these initiatives. We must be prepared to collect data, patiently, over time, adhering to accepted standards, such as the GRI – Global Reporting Initiative, which offers a roadmap of which data points should be captured.

Report

Early days superficial, anecdotal CSR reports are being rapidly replaced by evidence-based reporting. Reporting standards for CSR, based on the ESG framework (Environment, Social and Governance) are being adopted rapidly throughout sectors and industries, giving substance and authenticity to CSR reporting.

However, in this rapidly developing sustainability and social responsibility space, new challenges present themselves. Lou Coppola, in his article “Supply ChainSustainability Data Requests Stop the Madness” discusses data proliferation, “hunger” for data and “survey fatigue”. Lou calls for a data-sharing approach across sectors and industries. It is easy to see how such best practice will bring efficiency into reporting, especially for global companies with a vast supply chain.

Communicate

Understanding the impacts of CSR and 3S efforts, and returns on these efforts, is universally demanded by businesses, shareholders, and consumers alike. Expectations are high as businesses and consumers become more educated and more sophisticated.

Data in the reports can be complex, confusing, and still the numbers will not capture every aspect of a project. Yet this data, when well communicated, translates directly into consumers’ loyalty, brand value and reputational standing, which in turn creates real and material assets.

In the age of information overload, even those aspects of CSR initiatives that are captured by data, need to be re-emphasized; their complexities explained, important points underscored. It is the responsibility of owners of a CSR project, to design and execute an effective communication strategy, again based on principles of transparency and accountability. In the 2013 Cone Echo Study, 85% of respondents said this it is acceptable if a company is not perfect, as long as it is honest about its efforts. So, adopting transparency and accountability should be viewed, not as a burden but rather a brand-boost.

There has never been a better environment for creating a communication plan that will reach the hearts and minds of consumers and other influencers. Communication strategies can now incorporate a variety of channels, ranging from traditional marketing materials, package inserts, point-of-sale information, etc., to tools and techniques which allow engaging the audience through social media with not only factual information but also story-telling and experience sharing.

The best practices for socially responsible endeavors, based on principles of Measure – Report – Communicate, are here to stay with us in 2014 and beyond, as there is a serious work ahead of us. Just to name few challenges which will keep us busy in the months and years to come:

  • Defining materiality in evidence-based measurement
  • Bringing efficiencies into reporting
  • Adopting standards across sectors and industries
  • Safeguarding transparency

This focus on materiality, transparency and accountability not only injects rigor and discipline into CSR, but by benchmarking, enables continuous improvement and development of the sustainability and social responsibility space.

Fellow GSC community members – we invite you to review and reflect on this issue. We encourage you to share your experiences, thoughts and ideas for other community members to learn from and get inspired. You may contact us at: contactgsc@gsccouncil.org.

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