Responsible business is good business

There is growing recognition of the significant effect the activities of the private sector have on society -- on employees, customers, communities, the environment, competitors, business partners, investors, shareholders, governments and others. It is also becoming increasingly clear that firms can contribute to their own wealth and to overall societal wealth by considering the effect they have on the world at large when making decisions.

Report on Business Magazine recently noted that "many business leaders now believe that doing good for others means doing good for shareholders as well."1 Corporate social responsibility activities that integrate broader societal concerns into business strategy and performance are evidence of good management. In addition to building trust with the community and giving firms an edge in attracting good customers and employees, acting responsibly towards workers and others in society can be in the long-term interest of firms and their shareholders.

"There is no way to avoid paying serious attention to corporate citizenship: the costs of failing are simply too high. ... There are countless win-win opportunities waiting to be discovered: every activity in a firm';s value chain overlaps in some way with social factors-- everything from how you buy or procure to how you do your research-- yet very few companies have thought about this. The goal is to leverage your company';s unique capabilities in supporting social causes,and improve your competitive context at the same time. The job of today';s leaders is to stop being defensive and start thinking systematically about corporate responsibility."

Michael Porter, Professor, Harvard Business School, at the April 2005 Business and Society Conference on CorporateCitizenship, sponsored by the University of Toronto';s Rotman School of Management

Businesses are an integral part of the communities in which they operate. Their success is based on continued good relations with a wide range of individuals, groups and institutions. As Michael Sabia, President and Chief Executive Officer of BCE Inc., has said, "Corporations are also social institutions. What they do and how they act and the role they play in the community they operate in is important. ... We can build better communities, stronger communities and, frankly, better places to operate business. The opportunity we have is compelling."2

Canadians have high expectations of the private sector for responsible behaviour. Consumers expect goods and services to reflect socially and environmentally responsible business behaviour at competitive prices. Shareholders also search for enhanced financial performance that integrates social and environmental considerations. For example, according to a 2003 Environics poll conducted for Environment Canada, 9 out of 10 Canadian shareholders wanted fund managers to take environmental and social performance into account when valuing companies. In a 2004 GlobeScan survey, while 17 percent of Canadian respondents indicated that they had read a corporate social or environmental report, 77 percent indicated an interest in learning more about corporate social responsibility. In addition, 71 percent noted their belief that consumers can make a difference in how responsibly a company behaves.3

Research by global organizations, including the World Economic Forum, the International Institute for Management Development, and Transparency International, indicates that Canadian business leaders are considered to be among the most credible, most ethical, least corrupt and most value-driven in the world.4

At the same time, leading industry associations, such as the Canadian Council of Chief Executives, have suggested Canada might gain a competitive advantage from corporate social responsibility:

"The very turmoil that has created so much market uncertainty therefore creates an opportunity for Canada to establish another important advantage in the global competition for people and investment. Establishing Canada's reputation as the location of choice for well-run and responsible enterprises would represent a powerful contribution to our broader goal of making this country the best place in the world for people to live and to work and for enterprises to invest and to grow."5

But while Canadian firms may have a good reputation on the whole, they risk losing their hard-earned good name when they fail to put systematic approaches in place to ensure continued positive performance. The effect of a tarnished reputation often extends far beyond that one firm: entire sectors and, indeed, nations can suffer. There are several notorious examples of corporations losing their footing as a result of questionable behaviour, with many others subsequently being the victim of the collateral damage. These firms frequently expend considerable time and money attempting to regain their reputation, with mixed results.

So what can be done to increase the likelihood that Canadian firms will enhance their good reputation, and continue to demonstrate positive social and environmental performance?

One thing that governments are well placed to do is share information about best practices and provide guidance to firms concerning systematic approaches to meeting economic, environmental and social objectives in a balanced manner. These are the key objectives of this guide.

About this guide

This guide is a primer on corporate social responsibility. As such, it contains information on how to assess the effects of business activities on others, develop and implement a corporate social responsibility strategy and commitments, and measure, evaluate and report on performance and engage with stakeholders.

Senior managers in firms of all sizes operating in Canada and abroad -- from large corporations to small and medium-sized enterprises to micro-businesses -- will find this guide valuable, as will management teams, board members and front-line employees, as well as industry association personnel who work with businesses. It is hoped that the guide will also prove useful to those already engaged in corporate social responsibility activities. Finally, those outside the commercial world (e.g. government officials, representatives of non-governmental organizations and members of the public) should gain insights into the challenges firms face when addressing the effect of their activities on society.

The guide distils ideas and processes from a variety of sources, and is intended to be suggestive, not prescriptive. The guide has three parts.
  • Part 1 is an overview of corporate social responsibility -- how it is defined, the business case for it and the relationship between corporate social responsibility and the law.
  • magnifying glassPart 2 sets out a six-stage "plan, do, check and improve" implementation framework for a corporate social responsibility approach. This part also features information particular to small business, which is indicated by this icon.
  • Part 3 looks at stakeholder engagement and the integral role stakeholders can play in implementing an effective corporate social responsibility approach.

Four appendices contain supplementary information. There is a list of key sources upon which the Office of Consumer Affairs drew to prepare this guide.

Every effort has been made to provide up-to-date examples of corporate social responsibility practices and initiatives. Nevertheless, readers are encouraged to communicate directly with relevant specialist organizations, industry associations and other experts to obtain the latest information on these initiatives.

The guide will be revised periodically, when demands warrant and resources permit. When possible, updates and additional material will be made available on the CSR website

Questions, comments and suggestions concerning the guide should be sent to:

Corporate Social Responsibility Guide Project Leader
Office of Consumer Affairs
Industry Canada
235 Queen Street
Ottawa ON K1A 0H5

  1. Report on Business Magazine';s corporate social responsibility ranking, March 2005.
  2. Cited at Imagine Canada
  3. Per 2003 Environics and 2004 GlobeScan polls.
  4. Canadian Council of Chief Executives, Governance, Values and Competitiveness: A Commitment
    to Leadership: A Statement of the Canadian Council of Chief Executives, September 2002, p. 7.
  5. Canadian Council of Chief Executives, p. 8.