By Georgina Wainwright Kemdirim,
Strategic Policy Branch, Industry Canada
Corporate Social Responsibility: A Competitive Advantage for Canadian Businesses
Like the Values and Ethics Code for the Public Service, corporate social responsibility1 initiatives are key drivers in the sustainability performance of Canadian industry. Values and ethics are important to Industry Canada both in its internal practices and in the direction it is promoting to its clients. Industry Canada is committed to helping industry make corporate social responsibility a mainstream and best practice, and has been working to that end for over ten years. The promotion of corporate social responsibility to Canadian businesses is an important strategic activity of the Department and is consistent with its mandate to support the development of competitive industries and sustainable communities, as well as to protect consumer interests.
Generally, corporate social responsibility is seen as the private sector's way to integrate the socioeconomic and environmental imperatives of their values, culture, decision-making, strategy with their activities in a transparent and responsible manner and in so doing, establish improved internal management and contribute to society’s prosperity and well-being. Typically, corporate social responsibility policies and practices address a range of aspects related to a business's behaviour, including: health and safety, environmental protection, human rights, human resource management practices, corporate governance, community development, consumer protection, labour protection, supplier relations, business ethics, and stakeholder rights.
For the Public Service, the Values and Ethics Code for the Public Service serves as a balanced framework of democratic, professional, ethical and people values leading to enhanced service to the public and the increased trust and confidence of Canadians. Similarly, corporate social responsibility is about building trust and credibility in the marketplace which can only serve to enhance a business’s economic, social and environmental performance–its triple bottom line
When promoting corporate social responsibility to Canadian businesses, Industry Canada aims to sell the business case for this mode of governance and stresses that socially and environmentally responsible practices can make businesses more competitive. There is growing evidence to demonstrate that corporate social responsibility can result in: operational efficiency gains; improved risk management; favourable relations with the investment community and improved access to capital; enhanced employee relations; stronger relationships with communities and an enhanced licence to operate; and improved reputation and branding.
Corporate social responsibility practices promote operational efficiencies which can be achieved through reducing energy and materials consumption. Waste can also be reduced and materials can be recycled. These sorts of eco-efficiency actions produce environmental and economic benefits for the business and thereby contribute to stronger financial performance and more positive profitability.
By integrating socially and environmentally responsible practices into the business’s management systems, risks are better anticipated and mitigated and potentially costly problems avoided. This can also help a business improve its access to capital because financial institutions are confident that effective risk management systems are in place.
The investment community has been exploring the links between corporate social responsibility and financial performance of businesses. There is growing evidence that businesses that embrace this mode of governance generally outperform others. Thus, the non-financial aspects of a business’s performance are directly affecting decision-making by the investment community, as social and environmental criteria are incorporated into assessments of projects. Investors are favouring businesses focused on corporate social responsibility through increased market valuation and access to capital.
As well, businesses that have turned to corporate social responsibility attract high quality personnel who want to stay with the business over the long term, thus reducing recruitment and retention costs. Employees who work for a responsible business have higher levels of motivation, productivity and innovation performance. They also have high morale and loyalty, and become champions of a business for which they are proud to work.
Another benefit of a business’s corporate social responsibility policies and practices is the enhanced license to operate in the communities in which they are located. This license to operate is achieved when a business engages with its full range of stakeholders including employees, suppliers, customers, communities, aboriginal groups, non-governmental organizations, and governments. The result of stakeholder engagement which promotes an open dialogue and demonstrates transparency is the credible and trustworthy relationship between the business and the community. The license to operate benefits the business because it enhances their business prospects over the long term.
Integration of social responsibility practices as a key corporate value can help make a business more competitive because it enhances the reputation of the business and brands its products and services in a positive manner. This phenomenon is particularly important in today’s highly globalized world where businesses strive for a competitive advantage by distinguishing themselves from their competitors. Successful business and brand differentiation can lead to new customers, increased market share, and in so doing, provide increased profitability.
With a view to helping businesses implement corporate social responsibility principles, practices and policies, Industry Canada has sought to broaden awareness of corporate social responsibility and the related values and ethical practices embedded in this concept, improve corporate social responsibility reporting, develop corporate social responsibility tools and build knowledge and management capacity in this area.
Industry Canada has also contributed significantly to the following initiatives: the development of the publication Corporate Social Responsibility: An Implementation Guide for Canadian Business; the development of a social responsibility guidance standard through the International Standards Organization (ISO); the development of a departmental corporate social responsibility website; and consumer group research on sustainable consumption and climate change.
In its Sustainable Development Strategy 2006-09, Industry Canada has committed to broadening the use of corporate social responsibility management tools and applications in an effort to increase the number of businesses that integrate corporate social responsibility into their decision making. Industry Canada is collaborating in the development of tools that can be applied to corporate planning, operations, audit and evaluation, and productivity improvement.
All of these activities have contributed in the past and continue to contribute more than ever to making a difference in Canadian business practices.
Examples to follow
Mountain Equipment Co-op (MEC) envisions itself as an outdoor recreational co-operative that inspires excellence in products and services, passion for wilderness experiences, leadership for a just world and action for a healthy planet. Striving for social and environmental leadership, MEC defines its mission as providing quality products and services for self-propelled wilderness-oriented recreation at the lowest reasonable price in an informative and respectful manner. Their mission determines what businesses they are in, who they serve, and how.
Falconbridge acted on a suggestion from an employee at one of their operations in the Dominican Republic and decided that the surrounding communities needed a continuous and reliable supply of potable water. After much discussion with the local people, it was decided to develop aqueducts in concrete that would collect water from mountain springs. Falconbridge provided the materials and the local people did the building after receiving the necessary training for construction, operation and maintenance from a local NGO.
Suncor sets itself apart from the competition through a tightly focused production strategy concentrated on the oil sands, combined with a broad vision of sustainability that recognizes the importance of social and environmental performance in their business. These attributes define a long-term vision of increasing shareholder value, reducing the company’s environmental footprint and contributing to the wellbeing of the communities in which it operates.
Alcan Inc in 2002 revised its Worldwide Code of Employee and Business Conduct, with which all employees, consultants and suppliers are expected to comply. A set of shared values supplements the code, highlighting the importance of integrity, accountability and transparency. The values are intended to reflect and foster an environment within which all employees can seek their full potential.
1 . Corporate social responsibility is also known by a number of other names: corporate responsibility, corporate accountability, corporate ethics, corporate citizenship, sustainability, stewardship, triple bottom line and responsible business, to name just a few. Corporate Social Responsibility: An Implementation Guide for Canadian Business, 90 p., p.5.
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