CRS Lessons Learned
Corporate Social Responsibility is the label applied to the
structured efforts that corporations make to avoid environmental and human
rights violations. The desire to be a good citizen of the community the
corporation does business in is probably about as old as the concept of
business itself. No business manager in their right mind would deliberately set
out to upset the community their business depends on. The term "Corporate
Social Responsibility (CSR)" came into use in the 1970s and was an attempt
by its pioneers to incorporate business ethics into the business model. For
years large companies have been aware of their public images and made attempts
to improve that image through advertising campaigns.
The 70s brought with it an increased public awareness of the
effects that large corporations could have on the communities they operated in.
The communities themselves have always had a sense of the impact a large
company could have on them. Some had a negative effect, for example the Homestead
strike of 1892 which pitted Carnegie Steel against the community of Homestead.
Some had a positive effect, for example the many contributions the Hershey
Chocolate company had on the community of Derry Church PA, USA, which led to
its being renamed Hershey. The advent of television and an increasing awareness
of the environment spread corporate reputations far beyond their host
communities and corporations began to draw the parallel between public
perception of their business ethics and their sales.
The move to CSR reflects a realization that business ethics
must be tied to the "bottom line". A negative public perception of a
corporation's business ethics can have a disastrous effect on their marketing
campaigns. CSR attempts to integrate a set of business ethics into the
corporation's business model. The goals and objectives that are defined to
implement those business ethics must be just as much of the strategic plan as
business goals and objectives. This integration of CSR related goals and objectives
and business related goals and objectives is where most companies seem to
I'm going to draw CSR Lessons Learned from 2 examples of CSR
policies. The first is the BP disaster in the Gulf of Mexico. BP has addressed
the business ethics and environmental responsibility question by implementing a
CSR policy. The BP website does not use the term "CSR", rather they
have a group of directors who form the safety, ethics, and environmental
assurance committee (SEEAC) which is responsible for oversight for the company.
The directors in this group are directors on BP's board. BP has gathered
several policies which are applicable to each individual area. For example,
they have adopted the Universal Declaration of Human Rights from the United
Nations to govern conduct in the area of human rights for all their
stakeholders. They have a Code of Conduct developed internally which governs
their relations with the communities they do business in.
In 2000 BP began a $200M advertising campaign which include
a change in the company logo and the slogan "Beyond Petroleum". This
advertising campaign coincided with a campaign to invest in renewable energy
sources which peaked at 4% of its exploratory budget. Despite these efforts BP
is facing the most costly public relations disaster in its history with the
Gulf of Mexico disaster. What went wrong?
What Went Right
- BP has a mature CSR policy. They prefer to use
the term "the responsibility of the company" but all the components
of a well developed and documented CSR policy are in place.
- BP has implemented a governance model which
places responsibility for CSR efforts at the most senior level of management -
the board of directors.
- BP has integrated their strategic CSR goals and
objectives with their business goals and objectives. They demonstrated this
with their investment in renewable energy sources and other environmentally
What Went Wrong
- The spill. The Gulf spill was a monumental
disaster that cost 11 lives, ruined many businesses relying on the environment
that the spill has ruined, and polluted many square miles of ocean and many
miles of shorelines.
- The spill was not the first disaster in BP's
resume. Previous to this spill BP caused a spill in Prudhoe Bay, Alaska, USA, and
in 2005 an explosion at an oil refinery in Texas City, Texas, USA killed 15
workers and released thousands of pounds of chemicals into the air.
- BP was held criminally and civilly responsible
for the Texas City disaster, causing irreparable harm to their reputation. They
have taken civil responsibility for the Gulf Spill to the tune of $20Bn (USD)
and time will tell what other penalties they face.
- The $200M (USD) advertising campaign to burnish
their image as a responsible company has been pretty much wasted.
What to Do Next Time
The assumption here is that you want to prevent the things
that went wrong from happening again and ensure that the things that went right
continue to go right.
- Maintain oversight of the corporate CSR policy
at the board level.
- Continue focusing on the integration of CSR
goals and objectives with business/profit related goals and objectives.
- BP makes use of sub-contractors to perform many
of their sub-projects and employed several on the Gulf of Mexico project. BP needs to work more closely
with those sub-contractors to ensure there is alignment between BP's CSR policy
and the sub-contractor's policies.
- Examine the message received at the work level
of the organization. There appear to be conflicts between BP's CSR goals and
objectives and what is actually happening in the field.
- Make the board members responsible for CSR
stakeholders on the individual projects. The stakeholders should satisfy
themselves that the project CSR goals and objectives are sufficient to support
their overall CSR goals and objectives.
- Review BP's CSR policy, goals, and objectives.
Is the policy practical? Is it too vague? Does it contain enough specifics, or
is it too specific? Is it feasible? Can it be implemented in the field? Can the
team in the field easily translate the policy into actions?
Obviously I'm not in a position
to advise BP on their CSR policy, but the lessons I perceive applicable to BP's
situation will also be applicable to any organization implementing and
overseeing a CSR policy. The second example I will use is also in the
extraction sector, however it has more to do with mining than gas or oil.
The second example is based on a survey
commissioned by the Prospectors and Developers Association of Canada,
"Corporate Social Responsibility & the Canadian International
Extractive Sector: A Survey" and performed by the Canadian Centre for the
Study of Resource Conflict (CCSRC). The survey was undertaken to assess the
level of CSR among companies in the Canadian extractive sector doing business
internationally. The survey was performed in the context of government interest
which led to Bill C-300 which proposed empowering the government to investigate
and act on human rights and safety incidents involving Canadian companies
operating in foreign countries.
The survey posed 6 questions:
- Do you have a CSR policy or Code of
International Business Conduct?
- If yes, how long have you had a policy been in
- Which code or set of principles do you adhere
to? (there are numerous organizations who have authored policies)
- Did the implementation/formulation of your CSR
policy come about as a result of circumstances in the field?
- In addition, did your CSR policy come about as a
result of any of the following: shareholder interest, public perception/demand, perceived domestic requirement, overseas regulatory requirement, internal management decision, or other.
- Finally, how has having a CSR policy or Code of
International Business Conduct affected your company and/or operations?
The survey was sent to companies
in the extraction sector (exploration, gas, mining, or oil), listed on the TSX,
with a head office in Canada and with operations outside of North America
(Canada and the United States). Survey results can be accessed through the
survey, I have summarized the survey results in the form of Lessons Learned.
What Went Right
- 50% of "major" companies surveyed had
some form of CSR policy. Major companies were
- companies with larger revenues who had been operating internationally for
- 35% of the major companies surveyed had CSR
policies in place for over 5 years. This means that CSR policies were mature.
- 62% of companies who had implemented CSR
policies experienced improved community relations. 24% reported reduced
conflicts and complications. These companies also reported additional benefits
such as improved employee morale, relations with host governments, and investor
What Went Wrong
- Only 202 of the 584 companies contacted for the
survey, responded. Since this survey was conducted for the PDAC it indicates
that umbrella organizations do not exert a great deal of influence in the area
- 50% of major companies and 73% of all companies
who responded to the survey did not have any form of CSR policy.
- Few of the companies surveyed identified an
international code of ethics as a source for their CSR policies. Those
companies that had adopted such a code identified a wide variety of codes;
there does not seem to be a single recognized source for CSR policies.
- CSR policies are not always effective in
avoiding conflict. This Lesson did not come from the survey, but rather news
reports of Canadian mining companies involved in local disputes in foreign
What to do Next Time
Although this survey was done to serve companies in the
extraction sector, I will attempt to generalize the Lessons and make them
applicable to any company.
- Learn from larger, more mature, companies in
your business so that you don't have to learn lessons already learned by them.
Don't adopt CSR policies of other companies unaltered but start with an example
from a company that has matured their policy and adapt it to fit your
- Set reasonable expectations for your CSR policy.
CSR policies won't solve all your company's public relations problems, or avoid
conflict that arises from stakeholders beyond your control.
- Look for globally accepted practices in human
rights, safety, and environmental areas and accommodate these with your CSR
- Define the business case for the creation and
implementation of your CSR policy. Identify the attendant costs and weigh them
against target benefits. Divide benefits into tangible and intangible and
estimate the tangible benefits.
- Identify CSR goals and objectives for each
project or program undertaken by your company. These goals should be specific
to the work performed and the location of the work. Measure project performance
against these goals.