Enron, Adelphia, Worldcom, Global Crossing — these are the names that brought us the Sarbanes-Oxley Act. Washington Mutual, Bear Stearns, Lehman Brothers — these are the names that helped bring us into the worst recession of our time. British Petroleum and Halliburton — took shortcuts and ignored protocol, which caused the worst oil spill in U.S. history. The scandals, acts of greed and irresponsibility shown by these organizations and many others have severely damaged our environment, cost taxpayers billions, and help set back personal wealth by 20 years.
So can corporate social responsibility (CSR) survive with all the negative activity we have seen in the last decade? Can there be some room for our business leaders to do something positive for our society? The fact is there are many corporations spending millions of dollars and man hours on CSR.
CSR is reflected in the way a company conducts itself. It is defined by a company's actions, established through a set of values, policies, and ethics. These values and policies are integrated into its business operations, whereby the interests of all stakeholders, including investors, customers, employees, the community, and the environment are considered.
CSR is most effective when it is related to a company's core business. Maybe Washington Mutual, Bear Stearns and Lehman installed solar panels at their offices, or donated money and hours to various charities. But wouldn't it have been better if they had taken that money and manpower and established independent oversight committees to understand the complexity of the derivatives they were selling and the ramifications of the credit decisions being made? In other words, before a company embarks to do their part to “save the world,” it's more important to establish a CSR strategy to ensure they don't damage the world while trying to please their shareholders. Companies need to have a CSR strategy.
Besides the corporate disasters discussed above, the last decade has given us our share of natural disasters. The role of business in a disaster response has been the catalyst for companies to start and improve their CSR strategies. “Skills-based volunteering” is the idea that corporations can increase the capacity of the non-profits they serve not just by writing checks, but by offering the time and the expertise of their team members. Financial services, information technology, logistics, construction companies, and others have expertise to lend society during these disasters.
The U.S. Chamber of Commerce did a study on “Corporate Expertise in Disasters” and discovered that companies are generating business by helping communities manage disasters. This goes back to leveraging a company's core business into a CSR strategy. For example, as part of the FedEx Global Citizenship program, personnel in FedEx's international engineering group work with international relief organizations year round. When it comes to transporting medicines, medical equipment and other relief supplies, their experts work with custom houses, regulatory bodies and ministries of health to get supplies where they need to go.
CSR is not just for the big companies, and doesn't have to include well established policies and procedures. I was at a ski conference last January at Stratton Mountain Resort and the resort's president made a presentation which discussed how the community handled the hurricane that devastated Vermont in early September of 2011. The presenter described how travel for more than a couple of miles was impossible because the many rivers of Vermont had washed away bridges in most of the surrounding towns and residents were isolated and cut off from basic services. Stratton Mountain Resort decided to lend its management expertise and every morning Stratton employees and other business owners who could drive to Stratton Mountain would meet and determine the day's action plan. Local business owners provided backhoes, bulldozers, equipment operators, gravel, culverts, concrete and other materials necessary to rebuild the bridges until they became passable. FEMA arrived at the end of the process, and were astounded at the progress made without outside help. Again, another great example of a skills-based volunteer approach to CSR.
In the global business environment we live in, Corporate Social Responsibility is more important than ever. We should find ways to encourage corporations and firms to have policies and values that give back to the community.
Mark. L. Fagan is the managing partner of Citrin Cooperman's Connecticut office as well as a writer and speaker on financial issues. Citrin Cooperman is an accounting and consulting firm with offices in Norwalk as well as in New York City; White Plains, NY; Short Hills, NJ, and Philadelphia.