CSR needs to be more than just a PR activity by the leaders of the ITC industry but it’s almost impossible, as most very large ITC suppliers have the legal responsibility to ‘maximise shareholder value’. Japan is a notable exception, since companies there also have a duty to do something for their stakeholders as part of their legal governance.
As the world turns against globalisation (evidenced by the election of Donald Trump, Brexit and the growing troubles as Catalonia seeks independence from Spain), it’s time to rethink CSR strategies if you want to continue to be successful.
Adjusting CSR to address increased nationalism
It’s difficult to judge whether a good CSR strategy shows altruism or just enlightened self-interest. However there are a number of areas in which we should make adjustments to address the growing nationalism in the world. In particular:
- Declare where and how much income tax you pay, so local communities can judge your contribution to society.
- Move the balance of your encouragement and support away from global and towards more local sports teams, Arts and charities.
- Move the balance of your advertising away from global themes and images – there are fewer international audiences who aspire to be rich, young Americans.
- Don’t take sides, but try to remain (or become!) a valued member of society in those countries going through social and political change and disorder. The backlash against globalism may affect you negatively if you don’t.
Of course you build your international presence in line with your revenues – witness Amazon’s roll out of data centers across the world. However you need to build a reputation and value as a local supplier rather than a global one ignoring the increasingly idiosyncratic way in which many countries will be governed.
What is Corporate And Social Responsibility?
I define Corporate and Social Responsibility (CSR) as:
“An organization’s strategy to behave ethically and contribute through its resources to social, ecological and economic development – directed at specific types of stakeholders, who fall into classes of clients, staff, communities and the environment”.
There are 4 types of CSR stakeholder you should be addressing in your strategy (see Figure). These are defined by their proximity to the company – the closest being your staff and, furthest away, the environment (an extremely complicated entity). There are a number of things to be considered when thinking of stakeholders. In particular:
- Staff – the employees of a company (minus those who are also significant owners) form the first and closest group of stakeholders. Employment terms and conditions that cover benefits beyond the legal minimum requirements may be considered part of a CSR strategy, although not in those countries in which these are set very low. It is typically the non-monetary aspects of employment that are included such as offering extra holiday leave, providing crèches, offering free meals, drinks and social events, encouraging education and supporting time off for charity work. The creation of Port Sunlight and Bournville in the Victorian UK were extreme CSR activities by which a soap and chocolate manufacturer respectively created ‘model’ communities for their employees and their families.
- Clients – because their relationship with the organization is contractual, there are arguably fewer CSR activities concerned with customers than the other three stakeholder types. It is also important that all customers be treated in the same way for the offering they have purchased. However customers who live in remote locations or are of a specific type (the disabled, school children for instance) can be successfully addressed in CSR programmes.
- Communities – Today the Internet and the growth of social networking allows companies to support the needs of more diverse and geographically dispersed communities than before. CSR progammes often involve sponsorship of sports teams, the Arts, or provide encouragement for underprivileged, or under-represented parts of society (advancing education in Science, Technology, Engineering and Mathematics (STEM) for girls for instance).
- The Environment – this is the most generic CSR stakeholder. Organisations regularly address the needs of the biosphere and the plants, animals and humans within it as part of their strategy. As major industrial companies ITC suppliers almost always strive to stretch beyond mere compliance with current environmental legislation.
Owners and shareholders should not be considered as CSR stakeholders because they act on behalf of and represent the organisation. In fact the legal requirement of publicly listed companies to maximise shareholder value runs counter to the aims of a CSR strategy – especially if the ‘value’ is considered purely in monetary terms. Potential investors can be addressed as stakeholders, but cease to be so once they actually invest. The senior management of a company should typically also be considered as an owner – rather than stakeholder.
Drawing up an enacting a successful strategy is made more complicated by evolving government legislation – reducing carbon emissions from manufacturing operations and data centers is very different today from 30 years ago for instance. Organisations can only claim their approach as part of their CSR activity if it goes beyond the – typically tightening – legal requirements. There is more scope in those countries like the US under Donald Trump’s presidency to do ‘the right thing’ by not taking advantage of slackening environmental legislation. Providing good data privacy and protection for your customers will no longer be part of your CSR strategy it doesn’t go beyond the GDPR legislation being introduced in May 2018.
Traditional CSR activities
There are a great many different CSR activities currently being undertaken by vendors and users today (see Figure). Some specific examples of vendor activities are as follows:
- Microsoft launched its Unlimited Potential strategy some years ago, which aims to develop business in emerging countries. As with Cisco’s approach to emerging markets, it is arguable that these will cease to be CSR activities once the associated business has been developed.
- IBM is active in developing Ghanese IT/Business Professionals, working with an EU consortium on memory loss in aging populations, being part of the ‘Nutritious Rice Project’ and also working with IBEC for improving rural American broadband access.
- HP is particularly involved in reducing carbon emissions and improving working conditions for those employed by its sub-contractors. It has also been active in addressing data privacy and data protection for years.
- Dell is particularly involved in encouraging women to join the IT industry through STEM programmes for schoolgirls and the support of a number of women’s charities.
All major suppliers have such programmes, which have had positive effects over the years; however I believe that the current social and political shifts towards increased nationalism require a number of new additions.
Changing government responsibilities
In my view too many pieces of legislation have been passed by governments through the influence of (and in the interests of) large suppliers, rather than in the interests of citizens. UK examples include the ‘casino economy’ in which citizens are forced to switch utility, broadband and insurance policy suppliers regularly to avoid over-paying for their current services. Although the encouragement of greater competitiveness is reasonable – especially in previously nationalized industries, or compulsory services such as car insurance – the endorsement of dual – new v existing – pricing strategies is not. I expect those suppliers who lobby governments to avoid current legislation to become very unpopular in future – and the politicians who support them to be voted out of office.
New nationalism will pall in significance if the current trend towards automation increases. It’s difficult to see how ‘maximising shareholder value’ can remain the only business imperative for the world’s largest ITC suppliers as millions are made unemployed through IoT, AI and robotics. Some of our industry’s largest suppliers currently have bigger revenues than some of the smaller countries they trade in; they need to become more in touch with their CSR stakeholders, while our governments struggle with how to deal with social challenge of rewarding citizens in a world in which traditional employment becomes extinct.