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Task 3
Develop CSR Commitments
What are CSR commitments?
CSR commitments are instruments a firm develops or signs on to that indicate what the firm intends to do to address its social and environmental impacts. CSR commitments flow from the CSR assessment and strategy and are developed at the point when a firm moves from planning to doing.
- They are key to ensuring that the firm's corporate culture is congruent with CSR values.
- They align and are integrated with the firm's business strategy, objectives and overall goals.
- They provide clear guidance to employees and others about how they should conduct themselves.
- They accurately communicate the firm's CSR approach to business partners, suppliers, communities, governments, the general public and others.
Before developing CSR commitments, firms must understand the range of available commitments and the distinctions between them. A key distinction is between aspirational and prescriptive commitments. Aspirational commitments tend to articulate the long-term goals of a firm and are usually written in general language, while prescriptive commitments, such as codes of conduct, stipulate more specific behaviours that the firm explicitly agrees to comply with.
Aspirational commitments often take the form of vision, mission, values and ethics statements, or charters. In many circumstances, firms may already have aspirational and prescriptive commitments in place that can be adjusted to fully integrate CSR. Aspirational commitments form the backdrop for specific and prescriptive codes of conduct and standards, which are usually designed to benchmark or to directly control behaviour.
Aspirational commitments
The main objective of aspirational commitments is to articulate a high level and common understanding of what a firm stands for and how it would like to be regarded. For CSR to be truly integrated into values, decision making and activities, a firm's apsirational commitments must fully reflect its social and environmental positions.
In the absence of CSR aspirational commitments, there is a risk that various parts of the organization will embark on CSR implementation activities at cross-purposes. The likelihood is reduced when work begins with a shared view of what the firm stands for and where it is heading.
The text below gives examples of aspirational commitments Canadian firms have developed.
Canadian examples of CSR aspirational commitments
Suncor's Long-term Vision
Suncor sets itself apart from the competition through a production strategy
that is tightly focused on the huge resources of the Athabasca oil sands,
combined with a broad vision of sustainability that recognizes the importance
of social and environmental performance in our business. Together,
these attributes help define a long-term vision of increasing shareholder
value, reducing our environmental footprint and contributing to the well-being
of the communities in which we operate.
Mountain Equipment Co-op's Vision and Mission
Our Vision:
Mountain Equipment Co-op is an innovative, thriving co-operative that inspires
excellence in products and services, passion for wilderness experiences, leadership
for a just world, and action for a healthy planet. Our vision is our picture
of the future and outlines where we want to go.
Our Mission:
Mountain Equipment Co-op (MEC ) provides quality products and services for
self-propelled wilderness-oriented recreation, such as hiking and mountaineering,
at the lowest reasonable price in an informative, respectful manner. We are
a member-owned co-operative striving for social and environmental leadership.
Our mission tells us what businesses we are in, who we serve, and how. It
represents the fundamental reason for MEC 's existence.
Prescriptive commitments
Prescriptive commitments -- typically taking the form of codes of conduct and standards -- set out specific behaviour changes for which a firm agrees to strive. A firm may choose to develop its own code of conduct (see Alcan's code of conduct) or to sign on to an existing code or standard developed by a third party. See Appendices 3 and 4 for a description of some of the key existing CSR initiatives, codes and standards.
A main advantage for a firm developing its own code of conduct is that the code can be tailored to reflect the firm's circumstances. On the other hand, developing a code of conduct can be a lengthy and expensive process, and the end product may not have the credibility of a third-party code. In one sense, firms that agree to comply with third-party codes and standards can "piggy back" on the extensive consultation and development process such initiatives require, and their higher profile.
There are many third-party, CSR-related codes and standards with which Canadian firms may choose to comply. Non-governmental organizations frequently play lead roles in developing these codes and standards and in ensuring that they undergo multi-stakeholder consultations. Codes and standards are often linked to third-party verification or certification labelling programs. A 2004 GlobeScan poll produced for Environment Canada indicated that 4 out of 10 Canadians look for such labels as a way to identify good CSR behaviour.
When considering subscribing to existing codes and standards, firms must recognize the significant risks they would face should they "sign on" and then fail to live up to the obligations set out in the codes. Careful examination of the codes' terms at the outset -- to make sure they are compatible with the firm's mission, culture and activities -- can reduce the likelihood of later programs failing; there is often a significant investment necessary for firms to "get up to code."
CSR commitments help diverse corporate cultures come
together
Two leading North American oil and gas explorers and producers merged in 2002
to create EnCana. The company is now one of the world's largest independent
oil and gas companies. EnCana's two founding companies
had strong and diverse corporate cultures, so the new firm needed its own
clear and cohesive CSR commitments.
EnCana also had to adopt an organization-wide standard to achieve its goal
of being a CSR leader. To define CSR at EnCana, the company decided to focus
on eight areas that reflect existing and emerging CSR benchmarks and are in
line with the values and principles embodied in the company's constitution.
The EnCana CSR commitments focus on leadership, sustainable value creation,
governance and business practices, human rights, labour practices, the environment,
health and safety, stakeholder engagement, and socio-economic and community
development.
Why have CSR commitments?
As noted in Part 1, customers, communities, business partners, investors, non-governmental organizations and others are increasingly asking firms to explain what it is they are doing to address their societal and environmental impacts. CSR commitments communicate the nature and direction of the firm's social and environmental activities and, so, help others understand how the firm is likely to behave in a particular situation.
The commitments are a vital component of any firm's efforts to be transparent and accountable. CSR commitments create the baselines against which behaviour may be subsequently measured. When properly implemented, CSR commitments can increase the likelihood that a firm will appropriately respond to an opportunity and decrease the probability it will engage in problematic conduct.
CSR commitments make it clear to parties what it is they can expect from a firm. By articulating these expectations up front, the firm decreases the potential for misunderstandings to arise later on. In this sense, CSR commitments can improve the quality of the involvement the firm has with parties with whom it interacts. In some cases, in fact, parties will only agree to engage with firms that have clearly stated their CSR commitments. Properly implemented CSR commitments can increase the likelihood of a firm being considered duly diligent and decrease the chances of it being deemed a substandard CSR performer.
Another benefit of CSR commitments is that they can play a key role in integrating diverse organizations.
Alcan Inc.'s code of conduct
In 2002, Alcan Inc. published a revised version of its Worldwide
Code of Employee and Business Conduct, with which all employees, consultants
and suppliers are expected to comply. Employees found to be non-compliant
may be subject to disciplinary action, while non-compliant consultants and
suppliers may no longer be hired. The code covers human rights, the environment,
health and safety, competition, improper payments, workplace harassment, and
shareholder, media and community relations.
A set of shared values supplements the code, highlighting the
importance of integrity, accountability and transparency (Alcan defines each
of these). The values are intended to reflect and foster an environment within
which all employees can seek their full potential.
How to develop CSR commitments
Here is one way of developing CSR commitments, but there are many others, since commitments deal with so many subjects and take so many forms.
- Do a scan of CSR commitments
- Hold discussions with major stakeholders
- Create a working group to develop the commitments
- Prepare a preliminary draft
- Consult with affected stakeholders
- Revise and publish the commitments
The process of developing the CSR commitments should recognize that considerable potential exists for misunderstandings and miscommunication about expectations. These can challenge a successful outcome. There will be a need to be pragmatic and focused.
1. Do a scan of CSR commitments
Before developing CSR commitments or agreeing to adhere to third-party CSR codes or standards, it is useful to examine the CSR commitment instruments others are using, particularly leading firms. Firms should also research CSR instruments developed by intergovernmental bodies such as the United Nations, the International Labour Organization and the Organisation for Economic Co-operation and Development. Because governments have developed these instruments in conjunction with other parties, they have credibility and are good guides to what are considered to be acceptable and unacceptable behaviours (see Appendix 3, "Key international CSR instruments,"for more information). Finally, a review of available third-party codes and standards (such as those in Appendix 4) should be undertaken.
When considering the CSR commitment instruments of others, it is useful to ask questions, such as the following.
- What people and organizations were involved in developing these commitments? Would these be the same people and organizations who would need to be involved in the firm's own CSR commitments?
- What are the objectives underlying development of these CSR commitments? Are those objectives the same as or different from those underlying the firm's CSR objectives?
- Can a particular CSR issue identified by the firm be resolved or addressed through use of these or similar CSR commitments? What are the potential costs, drawbacks and benefits of the various types of commitments?
- What is the applicability or suitability of these commitments to the organization in light of its scope of activities and geographic range of operations? Will the company benefit from the commitments and how?
2. Hold discussions with major stakeholders
Developing CSR commitments or agreeing to comply with existing codes and standards presents the firm with an opportunity to generate organizational interest in CSR and build agreement about how codes and standards apply to the firm. From that agreement, the firm can develop more practical steps towards implementation.
To begin with, it is critical that the board and top management be firmly behind a company's CSR commitments. Without such support, there is very little likelihood that subsequent CSR activities will effectively take place. Spending time at the outset "getting the CSR commitments right" in the eyes of board members and top management is time well spent.
Similarly, early and meaningful input from and support by the firm's personnel is very important. Employees possess front-line knowledge of the problems the organization faces and ultimately will play a critical role in implementation. For example, if a firm's code on bribery and corruption were developed without the viewpoints of sales personnel, it would not likely reflect operating reality and would be rejected at the outset.
There may also be value in having informal initial discussions with business partners, supply chain members and other contractors. The objective of these discussions would be to sound these parties out about which commitments to choose and to identify partners willing to help develop them. When the commitments apply to these parties, their involvement and agreement to comply with the terms of the commitments are crucial.
It can also be useful to reach beyond those with whom the firm has contractual relations to more broadly affected groups, such as consumer, labour and environmental organizations, community groups and governments. This can help to confirm initial perceptions of their interests and concerns, and could result in additional people and organizations helping develop the commitments. Focus groups, comprising like-minded peers or a broad cross-section of interests, can also be useful for testing new ideas.
3. Create a working group to develop the commitments
The working group should be a cross-section of the organization, from board members to senior management and front-line employees, and could include people who are very enthusiastic about CSR as well as those who are skeptical to give voice to differing opinions on the issues at hand. Contractors and others to whom the commitments apply should also be involved.
Having the right people in the group is essential. They must be dependable, credible and knowledgeable, and have the necessary time and resources to commit to the work involved.
Frank discussion should take place at the outset about the group's objectives, members' responsibilities, anticipated workload and outcomes, and the ground rules about how the group will operate. Regular two-way communication between the working group and the firm as a whole may also be useful.
4. Prepare a preliminary draft
CSR commitments should be plain-language statements and should contain clear and concise obligations.
It is recommended that working group members identify who within the organization will be responsible for implementing the commitments and involve them in preparing the draft.
Firms would also be well advised to use existing commitment documents (such as those described in step 1) as base documents when preparing their own.
5. Consult with affected stakeholders
Thorough consultations at the outset can prevent problems later. One good approach is to start with the people most likely to be directly affected by the CSR commitments and who are already aware of the associated issues. Next, the working group could have more formal discussions with groups and people who may not be aware of the CSR initiative.
A consultation plan can be useful. It should include roles for high-profile officials within the firm who have good communication skills and can clearly explain the CSR commitments and receive feedback. This feedback should go to the working group, who will discuss how and to what extent the final draft will reflect the comments.
6. Revise and publish the commitments
Drawing on the input from the consultations, the working group can finalize commitments to be published and shared with all employees as part of implementation. TeckCominco prints its commitments on business cards, which it gives to all employees.
Key international CSR initiatives of governmental or inter-governmental bodies
United Nations Global Compact
The United Nations Global Compact, which was developed in 1999-2000 as an initiative of United Nations Secretary-General Kofi Annan, calls on the private sector to embrace, support and enact a core set of values pertaining to human rights, labour, the environment, anti-competition and anti-corruption through 10 basic principles. The Compact promotes good corporate practices but does not endorse individual companies. Several Canadian companies have become signatories.
OECD Guidelines for Multinational Enterprises
In June 2000, the Organisation for Economic Co-operation and Development passed its revised Guidelines for Multinational Enterprises. The guidelines are voluntary principles and standards for responsible business conduct consistent with applicable laws. Provisions in the guidelines pertain to such issues as disclosure, employment and industrial relations, human rights, the environment, anti-bribery measures and consumer interests. The Government of Canada and 38 other governments have endorsed the revised guidelines. Canada has established a national contact point to promote the guidelines and to help resolve problems that may arise as they are implemented.
International Labour Organization commitments
The International Labour Organization (ILO) is a United Nations organization comprising governments, and employers' and workers' organizations. The ILO has given special attention to multinational enterprises by adopting the 1977 Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (recently revised). This is a global commitment designed to guide governments, employers and workers in areas of employment, training, working conditions and industrial relations. The ILO has also adopted international labour conventions and the Declaration on Fundamental Principles and Rights at Work.
International Finance Corporation/World Bank Equator Principles
The International Finance Corporation is a member of the World Bank. The World Bank was created at the end of World War II by a cross-section of national governments. The Equator Principles were first conceived in 2002, and create a voluntary set of environmental and social principles for banks to manage financing.
CSR and human rights
Voluntary Principles on Security and Human Rights
The Voluntary Principles on Security and Human Rights set out standards of behaviour for resource extraction companies operating in conflict zones. These principles are designed to help companies ensure security in ways that also promote and protect human rights. The principles were developed in 1999 and 2000 through consultations between the U.K. and U.S. governments, companies and non-governmental organizations, and were jointly launched in December 2000 by the Foreign and Commonwealth Office and the U.S. State Department. The governments of the Netherlands and Norway and a growing number of companies and non-governmental organizations have subsequently signed on.
United Nations human rights instruments
While the primary responsibility for the promotion and protection of human rights rests with states, there is growing recognition of the role that the private sector and other actors can play in avoiding any involvement in human rights violations and more widely promoting respect for human rights. Most multilaterally endorsed CSR initiatives include a human rights component based in part on key United Nations human rights instruments such as the Universal Declaration of Human Rights. For the most part, however, the human rights sections of existing mechanisms are not as well developed as other aspects of CSR. In an effort to better understand the relationship between business and human rights, Harvard Professor John Ruggie was appointed in July 2005 as Special Representative to the United Nations Secretary-General to look at the issue of human rights and transnational corporations and other business enterprises. The mandate calls for the Special Representative "to identify and clarify standards of corporate responsibility and accountability for transnational corporations and other business enterprises with regard to human rights."
See also the information on the Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights.
Make sure
to do this
Ensure consistent integration of CSR into the organization's
mission statement, statement of values, and codes of ethics and conduct.
Quick tips
- To ensure employee buy-in, include employees in the process of developing the vision and values. To spark the process, create a CSR working group or hold a contest for the best suggestions, encouraging employees and their representatives to put some thought into their submissions.
- Host a visioning session and ask participants to think about what the firm could look like in the future as a CSR leader.
- Review the CSR priorities to determine which codes of ethics or conduct fit best with the firm's goals.
Reality
check
"Yet another code. And there is already so much criticism
that codes without an accountability element are for the most part ineffective.
There are more than 250 CSR-related codes and standards in existence. How
are we supposed to navigate this landscape and choose something that works
for us? How do we know that a newer and better code won't be introduced next
year?"
The proliferation of CSR-related codes and standards is a good indication
of how new this field is and how much development work is under way. It is
also a sign that CSR is not going away anytime soon. It is best to begin by
designating a staff person to keep abreast of the relevant intergovernmental
commitments and non-governmental or private sector codes. One strategy for
addressing the proliferation of CSR instruments is to sign on to or adapt
an existing instrument that is considered credible and effective in the eyes
of your firm’s affected stakeholders, and that offers an opportunity to participate
in any revisions that may occur. That way, the firm is well positioned in
the short run to demonstrate the benefits to its key stakeholders that flow
from meeting the terms of the instrument, while at the same time being well
placed to influence future revisions based on its own experience.
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"How can we create commitments in a few simple steps?" Focus on creating a vision, mission and statement of values for the firm. The vision should explicitly include CSR as one of its core elements. This vision will inform the mission statement and statement of values. To ensure buy-in from employees, include them in the process of developing the vision and values. Hold a contest for the best suggestions, encouraging employees to put some thought into their submissions. |
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