Could Corporate Responsibility be the key to growth?

With economic forecasts bearing an uncanny similarity to our dismal UK weather, business attention, not surprisingly, is being focused on surviving the recession. Budgets are being squeezed, growth is slow and jobs are in the balance.

At times like these, businesses tend to focus on the ‘must haves’ rather than the ‘nice to have’ and many in the field of Corporate Responsibility have been asking into which category CR will be placed?

The answer may well depend on a company’s view of CR. Many equate corporate responsibility with being green, philanthropy and social causes, all neatly packaged in a glossy CR report.

Social causes and philanthropy could easily be argued as the preserve of the good times. CR reports are already in decline. And while being green can provide businesses with a chance to cut costs in the form of energy savings and waste reduction, it is only part of the corporate responsibility mix.

Despite numerous calls from politicians and commentators alike for greater responsibility, they struggle to provide a clear definition of what this actually means.

While Milton Friedman famously argued that the only responsibility of a company is to make a profit, we would argue that a responsibly run organisation makes more profit. Businesses that participate in the Corporate Responsibility Index regularly out-perform other FTSE 100 companies.

So how would we define responsibly run? In our view, Corporate Responsibility is less about planting trees and building schools – although we would be the last to knock those that do – and more about good management practices and processes that protect the interests of all stakeholders equally. It’s about treating those that work for you well in order to produce a product or service that people trust and want without damaging the community in which you operate or the wider environment.

Given that any business, however large or small, needs management practices, making sure that these are good ones seems like an obvious choice. A Corporate Responsibility team (increasingly including compliance officers) that works at the heart of a business, ensuring that practices and processes are properly in place, plays an essential role in the future success of that business and should therefore be seen as a ‘must have’. Far from being a casualty of the recession, we believe that Corporate Responsibility can help us find a way out by building better businesses that people trust, that become more profitable and ultimately provide the growth that is currently proving so elusive. For the sunshine to return we need a far more ethical approach to business management that will restore customer trust and deliver the growth that the economy so badly needs.