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This article was first published on LexisLibrary on 19 February 2014. Click here for a free 24h trial of LexisLibrary.

The benefits of an effective CSR policy

Published Date 19 February 2014 Abstract Practice Management analysis: Kevin O'Callaghan, who heads Fasken Martineau LLP's corporate social responsibility (CSR) group in Vancouver, Canada, says that organisations which dedicate adequate time and attention to drafting CSR policies will reap a host of benefits. Analysis How can an organisation create an effective CSR policy that balances burden with genuine social impact? It is important for companies to be strategic in developing their CSR policies and activities to make sure they have the impact that they are intending. Consider the organisation's culture and values in developing its CSR policies and engage all levels of the organisation to shape CSR policies and activities. For effective CSR activities, consider the organisation's relationship with society--how does it affect the society in which it operates and what social pressures does society place on the company? Small projects that directly focus on these areas of intersection are often the best way to start CSR activities in a way that the burden is directly related to potential for social impact. What business case is there for organisations engaging with activities with a social purpose? There are many business reasons for organisations to engage in CSR activities, including investor relations and access to capital, marketplace competitiveness, maintaining a strong reputation, operational efficiency and employee satisfaction. More and more, investors, consumers and employees are making choices based on an organisation's reputation and 'values'. Since CSR has not yet been fully embraced by businesses, engaging in CSR activities is a way for organisations to position themselves as industry leaders. CSR policies and activities are also a useful tool for the management of reputational, regulatory, environmental and financial risks, and many investors are integrating CSR criteria into their selection processes and investment requirements to manage their own risk. An effective CSR program on the ground can be recognised by the market--as demonstrated in a study by two Wharton professors 'Spinning Gold: The Financial Returns to External Stakeholder Engagement', in which they show that discount to net present value can be reduced from a high of 72% to 32% with good CSR performance. Domestic legislation, international instrument and voluntary programs (such as the US's Dodd Frank Act, ss 1502 and 1504, Canada's Corruption of Foreign Public Officials Act, India's Companies Act, 2013, and the UN Global Compact) have also steadily developed, adding further requirements and pressure to organisations to improve or develop CSR policies and activities.

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Is it realistic for corporate bodies to expect a return on investment for their CSR activities? Yes--CSR activities can improve corporate reputation, mitigate risk, and lead to innovations that will benefit the company's competitiveness. It's just a matter of developing and measuring the right performance indicators. To expect a return on CSR activities, companies should take a strategic approach to CSR activities and include CSR strategy in all aspects of the business. What metrics should a corporate body use to assess the impact of their CSR policies? Although this area is still very much in development, the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines which include general and industry specific CSR metrics as well as an implementation manual for organisations of any size is a good starting point for developing CSR metrics. However, the GRI Guidelines are not an exhaustive list of CSR metrics. Companies should consider the underlying values and intentions of their CSR policies to ensure that they develop metrics and reporting systems to measure the success of those intentions. Are CSR policies the preserve of large corporate bodies? How can smaller organisations include CSR in their business activities? All organisations should consider incorporating CSR policies into their operations. Small organisations may not have the same extent or depth of policies and activities as large corporations, but they can still benefit from setting human rights, labour, supply chain, environmental and other standards as well as conducting activities to improve efficiency, productivity, innovation and transparency. In the mining industry the Prospectors and Developers Association of Canada's E3Plus program is a great example of a system designed for smaller companies. Communicating the organisation's CSR policies and activities and engaging with its consumers, investors and employees are effective ways to improve reputation and community relations for organisations of any size. What are the rules surrounding the structure of CSR policies? The rules regarding CSR policies depend on the type of policy, location of the organisation and the organisation's activities, industry, investor relationships and any voluntary standards agreed to. For many types of CSR policies, few standards exist--but for others, such as transparency of payments to public officials, domestic legislation in the organisation's home country, countries where the organisation's stocks are traded, and countries in which the organisation operates, as well as any voluntary standards that the organisation may have signed onto may apply. To ensure that CSR policies are compliant with domestic and international laws, fulfil their purpose and can be effectively used as risk management tools, we encourage organisations to dedicate adequate time and attention to drafting such policies and consult legal counsel. Interviewed by Anne Bruce. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.