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Task 4
Implement CSR Commitments
What is CSR commitment implementation?
Implementation refers to the day-to-day decisions, processes, practices and activities that ensure the firm meets the spirit and letter of its CSR commitments and thereby carries out its CSR strategy. If CSR commitments can be called “talking the talk,” then implementation is “walking the talk.”
Why does CSR commitment implementation matter?
As all businesses know, living up to promises is essential to success. Failing to meet CSR commitments, in the absence of satisfactory explanations, can lead to problems for a firm, including disgruntled employees, shareholders, business partners, customers, communities and others. A firm that effectively implements its commitments is not only less likely to run into problems, but may be more favourably looked upon when problems do arise than a firm that continually fails to meet its obligations.
How to implement CSR commitments
Every firm is different and will approach CSR implementation in different ways. The steps suggested below show one way to implement CSR commitments.
- Develop an integrated CSR decision-making structure
- Prepare and implement a CSR business plan
- Set measurable targets and identify performance measures
- Engage employees and others to whom CSR commitments apply
- Design and conduct CSR training
- Establish mechanisms for addressing problematic behaviour
- Create internal and external communications plans
1. Develop an integrated CSR decision-making structure
Although every firm is different, each has a decision-making structure in place to ensure that it can meet its commitments and customer needs. The key question to ask here is, “Given the firm's existing mission, size, sector, culture, way of organizing its affairs, operations and risk areas -- and given its CSR strategy and commitments -- what is the most effective and efficient CSR decision-making structure to put in place?”
It is essential that the firm align its CSR goals and decision making with its overall goals and strategies, so that taking CSR considerations into account in corporate decision making becomes as natural as taking customer perspectives into account. Some firms will prefer a centralized CSR decision-making structure, others a de-centralized one, while still others will want a hybrid, depending on their operating features and management style. There is no single way of organizing a firm's CSR decision making.
This guide emphasizes the importance of senior management buy-in from preliminary CSR assessment to strategy and commitment development. It is not likely, therefore, to be difficult to identify people or committees at the top levels of the firm who will assume key CSR decision-making responsibilities.
Given that CSR is fundamentally concerned with transparency, accountability and performance, it is important for the CSR decision-making structure to be an integral component of the firm's governance activities and to be visible. It should also be accountable throughout the organization, from the board, executive and senior levels, supported by coordinated cross-functional decision making and specialized staff expertise. It is important to develop the CSR decision-making structure with a view to the appropriate level of internal and external verification that will be needed.
Assigning CSR responsibilities to board members ensures that CSR issues will receive the attention they deserve, and as a result forms a strong basis for an effective chain of CSR accountability within the organization -- all of which supports the board's corporate governance function. There are several options for board participation: a sitting board member could be tasked with broad responsibility for CSR activities; a new member who has specific CSR expertise could be appointed; CSR responsibilities could be added to the work of existing board committees; a new CSR board committee could be formed; or the entire board could be involved in CSR decisions.
A senior official or committee responsible for overall CSR implementation within the firm should be identified and given the resources to do the job. Particular departments having CSR responsibilities (e.g. environmental, health and safety protection, worker relations, supplier relations, community relations, customer relations) will likely report to the senior official or committee. CSR responsibilities should be built into employees' job descriptions and performance evaluations.
2. Prepare and implement a CSR business plan
The decision-making structure identifies who is responsible for CSR decision making and action within the firm. These people play key roles in developing and implementing the CSR business plan, which should flow from the CSR strategy and commitments. The CSR business plan may be separately described or included as part of the company's existing overall business plan. With the strategy, commitments and decision-making structures in place, the CSR business plan helps ensure that the words are transformed into effective action. An excellent way of doing this is to determine what human, financial and other resources and activities will be required to carry out the CSR strategy and commitments.
For example, a CSR commitment may be that the firm will not offer improper payments to officials. The first step to implement that commitment might be to create a training course on the distinction between proper and improper payments, with an online version that includes frequently asked questions. A second step might be to review the organization's incentive and disincentive structure (e.g. commissions) to ensure it does not indirectly encourage improper behaviour. A third step might involve setting up a hotline, while a fourth could be creating whistle-blower protection measures. In the CSR business plan, each of these tasks could be further broken down into smaller components, with time lines and resource requirements for each. These obligations should be built into the job description and performance objectives of each lead person.
3. Set measurable targets and identify performance measures
To ensure effective implementation, a firm needs to set measurable targets for the commitments. In this regard, firms behave no differently from individuals. Athletes may set personal goals, such as “win an Olympic medal,” but they frequently set more achievable, intermediate targets such as “run the 100 m dash in less than x seconds,” “reduce my weight to x kilograms” and “be in the top five at the elimination trials next November.” In essence, these intermediate targets are guideposts along the way to the ultimate goal, providing a gauge of progress and an opportunity for re-evaluation should adjustment in approach, training or resources be necessary. When achieved, targets may also be a source of celebration in their own right. In this sense, they can help build momentum.
A firm's approach to setting measurable environmental, economic and social targets and tracking success in meeting them is fundamentally no different from the athlete's approach to winning an Olympic medal. A widely used approach to measuring success is to identify the objectives underlying a CSR commitment, develop key performance indicators, work out the measurement method and then measure the results. Regardless of the exact approach taken, it should follow the SMART guidelines:
- Simple
- Measurable
- Achievable
- Reliable
- Time-bound
Here is an example. Underlying a commitment to decrease the amount of waste a facility generates, there might be an objective to reduce solid waste by 25 percent by the end of the calendar year. The key performance indicator would be the amount of waste sent to the landfill. The measurement method might be the kilograms of garbage produced each month, which would be recorded.
To take another example, a commitment to improve relations with the community might be translated into objectives to double the number of town hall meetings the company holds and reduce the number of complaints by half. The key performance indicators underlying this commitment and objectives might be the number of town hall meetings and the number of complaints at the end of the year. The measurement method might be quarterly tallying of meetings and complaints, which would be recorded.
In both cases, regular review of the commitments, objectives, indicators and measurement methods might lead the firm to modify its objectives. In the second example above, the firm might conclude that increasing the numbers of town hall meetings did not improve community relations, since underlying problems were not also addressed. As a result, a better objective might be increasing the number of resolved complaints.
Note: There may be occasions when measurable targets may not be possible to develop. In such situations, a qualitative target may be used as a second-best option. One credible method for measuring whether a firm is meeting qualitative targets is by obtaining feedback on their effectiveness from a variety of stakeholders.
Canadian firm sets CSR targets
TELUS has set a target to reduce energy consumption per unit of revenue generated by 10 percent by 2007. TELUS has also set a 2005 target to reduce the number of chemicals it uses by 50 percent from 2000 levels.
4. Engage employees and others to whom CSR commitments apply
Following the approach set out in this guide, the input of employees and other key stakeholders has been solicited at every stage, from preliminary assessment, through strategy development and articulation of commitments. Employees play a central role in CSR implementation.
While overall CSR success depends first on senior leadership, ultimately, CSR implementation largely rests in the hands of employees and, in some cases, suppliers. In a sense, these parties are often a firm's human face (not to mention arms and legs), capable of acting as ambassadors, advocates and sources of new ideas and information on CSR.
On the other hand, if not properly engaged, employees and suppliers could be a source of problems for all concerned. Therefore, it is vitally important that there be good communication between top management and employees, employee representatives and suppliers about CSR strategy and commitment implementation. As well, all parties must be fully on side and enthusiastic about implementing a firm's CSR commitments. This will happen when they believe that senior management is serious about CSR and acts in a manner that reflects the spirit of the commitments. Nothing will dissolve a firm's progress faster than a CSR approach that is perceived as being just “hot air.”
Falconbridge acts on CSR suggestion from employees
In 1995, the employees at Falconbridge's Dominican Republic operation, Falcondo, decided that the surrounding communities needed a continuous and reliable supply of potable water. After much research and planning with the local people, it was decided to develop aqueducts that would collect water from mountain springs in concrete reservoirs. Falcondo provided the materials for the construction and the local people did the building after receiving the necessary training for construction, operation and maintenance from a local non-governmental organization. Since then, Falcondo has helped complete aqueducts for four neighbouring communities.
Engaging employees, employee representatives and suppliers in implementation means focusing on awareness (employees will be well aware of CSR directions, strategies and commitments from earlier activities, but suppliers may be less so). Employees and suppliers should receive context for and background on the firm's approach to CSR, including the motivation for engaging in it, why the approach was adopted, its relevance to the organization, how it fits with existing firm objectives, how it changes current approaches, and other implications.
Involving employees, employee representatives and suppliers in discussions of how CSR commitments are implemented is a way for these stakeholders to develop a sense of ownership of and pride in the firm's CSR activities. To the extent possible, bringing in a CSR champion to help to convey the message is important, since he or she is in the best position to understand the big picture and answer questions. As well, the champion is likely to convey enthusiasm and credibility; the involvement of a senior official signifies the importance with which the firm treats the issue.
Employee support for CSR implementation can be maintained in a number of ways:
- incorporating CSR performance elements into job descriptions and performance evaluations
- providing regular updates on progress (in meetings or the company newsletter)
- developing incentives (such as rewards for best suggestions)
- removing or reducing disincentives (e.g. competing interests such as premature deadlines that encourage employees to choose non-CSR options).
Suncor engaging employees in its CSR initiatives
Suncor Energy Inc. is a publicly traded Canadian energy company active in Canada's Athabasca oil sands. Suncor has made it a priority to seriously consider in its business practices the interests of its stakeholders, particularly those of its employees. The firm's initial focus was the top 40 people with the most power and influence within the company. Suncor stimulated the imagination and passion of its staff by introducing the concepts of CSR and sustainability at the senior levels of the organization and encouraging these executives to engage in and commit to looking at them thoroughly and strategically. As a result of successfully getting buy-in from its employees, Suncor has undertaken innovative and creative practices, such as supporting Aboriginal business development, holding solar car washes and building wind farms.
5. Design and conduct CSR training
Firms need to train employees directly involved in CSR activities. This is an ongoing commitment, since training needs will change as the CSR issues evolve. A comprehensive approach to training, such as the one taken by IKEA, will ensure employees have information on the firm's CSR commitments, programs and implementation. When the firm's employees speak various languages, training modules must be offered in those languages and must consider the employees' cultural orientation. This is particularly true when training employees in various parts of the world. Literacy levels may also need to be assessed.
Studies suggest that the most successful training addresses knowledge, skills and attitudes, and is based on “adult learning” approaches, whereby the learner has input into the development of the learning process. There are five steps to establishing a successful training program:
- conducting a needs analysis
- setting learning objectives
- designing the program (i.e. content, format, logistics, timing, duration)
- implementing the program
- evaluating the program against the learning objectives.
Comprehensive CSR training at IKEA
With 76 000 employees in 43 countries, IKEA has developed effective
strategies for operationalizing CSR. IKEA's Co-worker Environment and Social
Responsibility Training program was created in response to the company's first
environmental action plan, launched in 1992. The training covers IKEA's worldwide
environmental and social policies, programs, goals and performance, and all
aspects of business operations, such as suppliers, transportation waste management,
CO
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emissions, product design and packaging. The program
is also designed to show employees how they can help the company achieve its
goals in these areas. To facilitate implementation, interactive training is
offered in seven languages and is available in classroom and online formats,
allowing it to be easily updated. The program is implemented in each business
unit by the firm's human resources department and the unit's environmental coordinator.
The program has been well received by employees and has received consistent,
top-management support.
6. Establish mechanisms for addressing problematic behaviour
The very fate of employees, communities, the environment and firms can depend upon early detection of activity that is contrary to CSR principles and commitments. Auditing and monitoring can only go so far in this regard. For this reason, it is important for firms to put in place mechanisms and processes that will allow for early detection, reporting and resolution of problematic activity.
This is probably one of the most sensitive of CSR activities. In a perfect world, there would be no need to develop mechanisms for reporting problematic behaviour. However, people and organizations are fallible. In the best-managed organizations, there should be no fear of reprisals when approaching one's superior to discuss a problem. However, until such time when this is a reality in all workplaces, mechanisms for reporting and resolving problems are helpful.
Firms should devise approaches that are sensitive to the vulnerable position of employees who see wrongdoing or the potential for non-compliance. In addition to clear communications on the consequences of reporting breaches of CSR commitments, firms could consider anonymous hotlines, e-mail boxes and ombudspersons. Care must be taken to ensure that not only are the mechanisms for dealing with the problems designed well, but also that they are the option of last resort. Anonymous disclosure is open to abuse because it can encourage false or malicious disclosures, since the person making them can escape accountability for their actions. A senior manager should be assigned responsibility for investigating and reporting compliance on these issues.
For more specific guidance on whistle-blowing mechanisms, see the U.K.-based Public Concern at Work website (www.pcaw.co.uk) or visit the Ethics Practitioner's Association of Canada site (www.epac-apec.ca).
7. Create internal and external communications plans
Information about CSR commitments, activities and performance reporting must be communicated visibly and frequently to all employees. Whether through newsletters, annual reports, Intranet communication, meetings, training or informal mechanisms, employees must know that CSR is a company priority. Updates on CSR should also be put on the agenda of meetings at all levels of the company.
For external audiences, a good communications plan is important. It should identify the individuals and groups that need to be aware of a particular CSR initiative and those who should receive hard copies of CSR documents, as well as how those individuals and groups are to be reached. The communications activities might include an awareness campaign, featuring advertising and speeches. Firms may wish to avoid creating CSR reports that, through their sheer size, can intimidate potential readers. Website design can help to ensure that parties can easily access CSR information of interest to them. It is quite possible that communications will have to be tailored for various audiences (e.g. communications to investors are likely to be quite different from those addressed to communities).
Quick tips
- Identify the CSR chain of accountability through the firm.
- Allocate sufficient resources to ensure that CSR responsibilities can be effectively carried out.
- Incorporate CSR key performance indicators into the business plan.
- Inspire and educate. By reaching people on a personal level, they are more likely to take on the challenge of CSR.
- Display CSR commitments on the firm's website. This is one of the quickest and easiest sources of company information.
- Celebrate CSR achievements, motivating the team and building enthusiasm and pride
Make sure
to do this
Include CSR-related goals in the job descriptions
of officials, from board members through top management, middle management
and front-line employees, and tie the success of CSR initiatives to performance
plans and bonuses.
Reality
check
“This step makes sense to me, but I really
can't see us changing our corporate structure or creating any more staff positions
just to work on CSR. We're in efficiency mode and we're downsizing right now.
Nobody is getting any new staff. Without the staff, how can we implement CSR?”
Most companies begin by layering CSR into an existing position or portfolio
of responsibilities. Most typically, CSR gets directed to senior public affairs,
communications or marketing staff. In other instances, it is placed in the
human resources, government affairs, environment, health and safety or legal
departments. This is a good start, but in most cases this approach becomes
unsustainable unless there is strong senior management support, and resources
are allocated accordingly. If business conditions were to become worse, people
would default to their core responsibilities and CSR would likely drop off
the radar screen. One innovative
approach is to make the CSR group self-sustaining,
focusing on cost-saving or revenue-enhancing initiatives
(such as energy savings, waste reduction,
employee and customer loyalty programs, and new
CSR-related product lines), thus helping to ensure
that CSR activities contribute to the bottom line.
CSR and Small Businesses
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"As a small organization, we have very few staff to devote to CSR. How can we get started on CSR andavoid overwhelming our employees?" Implementing the CSR strategy and commitments is all about translating talk into action -- integrating the firm's CSR strategy and commitments into the daily routine. But with limited time and resources, it doesn't always make sense for a small business to hire CSR staff, nor for it to put too much CSR work on one employee's plate. Small firms also often face challenges (as do large firms) when they identify too many elements of CSR as being relevant to the company. The result may be that employees given responsibility for CSR are overwhelmed and do nothing, or become over-enthusiastic and bite off more than they can chew. To avoid overwhelming staff, take small steps: choose just one initiative and set targets for it the first year. If that goes well, add another, and so on. Ensure that the employees understand the CSR strategy and commitments and support the initiatives. Without the support of employees the implementation plan will likely be significantly delayed and may consequently not succeed. Here are some ideas for engaging employees in the process:
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