Corporate Social Responsibility

Four years ago corporate social responsibility was not part of management vocabulary. One specialist in the field, J.F. Cumming talks about the introducing the subject into organisations: "Some people looked at us as if we were mad. Others thought we were the environmental, social and ethical police. We had to turn the issue on its head to show we were coming from a mainstream business angle. We asked clients about their key business issues and then developed ways of dealing with them in a socially responsible way."

Co-founder of 'Article 13', which is named after the convention on shared understanding drawn up at the 1992 Earth Summit in Rio, to advise businesses how to incorporate social responsibility into their ways of working.

Events such as the general collapse of the world markets will move things in their direction. People now understand that their pensions depend on the sustainable value of the companies that their pensions funds managers have made. Sustainability in the end demands balanced management and long term strategic thinking.

Interest in ethical investment is growing, the 'FTSE4Good' index was launched in 2001 to track ethically correct companies. The UK Government wants the top 350 UK companies to produce social and environmental audits in addition to the report and accounts. This dovetails and supports the shift to balanced Scorecard company reporting - a move which is also at the heart of underpinning the improvements in public services at national and local levels in the UK.

Ethical management is firmly on the practical and, according to Cumming, can help a business improve its competitive edge, its innovation, its employees' morale and even its profits.

The movement that began with companies supporting educational programmes for children on packaging and building ethical policies for drug testing - when drugs are used on human volunteers. Cumming says there is still a slight credibility problem. There is a danger that social responsibility can sound woolly. If this movement does contribute to predictability of future profits it will not be viewed as woolly, rather as the herald of shift in emphasis towards a more rounded future.

We believe that it is time for banks and institutional investors to press for the rounded view - not from sentimentality, but because this is the only way to protect their own assets and the people whose interests they look after.

01/08/2005