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Last Updated: Friday, 1 December 2006, 00:13 GMT
Do firms really need a social policy?
By Will Smale
Business reporter, BBC News

Salesforce.com employee at a school in Sri Lanka
Salesforce.com staff can choose their own projects to support
In today's socially aware times, it is almost impossible to find a multinational company that does not express a commitment to corporate social responsibility (CSR).

Take a quick look at a number of corporate websites and you cannot miss such phrases as "a desire to put something back", "committed to being a global citizen", and "investing in communities".

The wording may be slightly different, but the theme remains the same - we may be a giant company, but we care for more than just our bottom line.

CSR was once an exotic ambition of corporate do-gooders. Today it has become virtually omnipresent.

The concept itself is fairly straightforward.

It's about doing the right thing, it's not complicated
Gallaher's Michelle McKeown

It means a company has moved beyond profit maximisation and the best insular interests of the company, its staff and its shareholders, to include a wider commitment to helping to build a better society in general.

Having a good CSR policy means that, both through its day-to-day business activities and extra-curricular activities such as charitable donations, a company thinks of the needs of communities and the environment.

Yet does CSR make business sense? Is a company that does good also doing better? Or do some firms use it mostly as a public relations exercise?

Like most things in life, there are both good and bad examples.

Tsunami relief

Salesforce.com - a global on-demand software services company - is one business whose commitment to CSR is very difficult to question.

Enron logo
Former energy giant Enron won a host of awards for its CSR work

Its CSR policy is to give 1% of its profit (in the form of products), 1% of its employees' time, and 1% of its equity to charities and other non-profit organisations.

When Google floated on the stock market, founders Larry Page and Sergey Brin spelled out to investors that they would follow the model developed by Salesforce.com founder Marc Benioff.

With all Salesforce.com staff able to do six days of charity work a year on full company pay, they are invited to come up with their own ideas for which organisations to support.

These have included helping to rebuild tsunami-damaged schools in Sri Lanka, fund-raising for arthritis charities and supporting projects that help deprived children start up their own companies.

Isabel Kelly, one of the directors of the Salesforce.com foundation, says that in addition to helping a wealth of good causes, such a commitment to CSR helps the company attract and retain the best staff.

Yet Ms Kelly warns that some companies can appear to miss the point of corporate social responsibility.

"A lot of firms make the mistake that CSR means just writing a big cheque once in a while, or a company boss asking his secretaries to do voluntary work once a year at Christmas," she says.

"We prefer to get much more involved and have a model of partnership with non-profit groups. Otherwise it could some across as rather patronising."

'Uncomplicated'

Yet while a software firm's commitment to CSR can be straightforward, the ethics become much more blurred when a company's very product is controversial, such as the tobacco giants.

Cigarette packs
Can cigarette firms ever profess to have social responsibility?

However, all the cigarette firms have CSR policies and say they take them very seriously.

One example is UK business Gallaher, the world's fifth-largest cigarette-maker.

Its CSR policy means it will not buy tobacco from any developing world producers that use child labour and has firm policies on the prevention of sales to minors.

"It's about doing the right thing, it's not complicated," says Gallaher's group corporate manager, Michelle McKeown.

But for all the good examples of CSR, there are some very high-profile cases where a firm's actions have smacked of, at best, lip-service and narcissism or, at worst, dishonest public relations.

Such appears to be the case with a Texan energy giant back in the 1990s.

It gave millions to local charities and was forever winning national awards for its CSR work.

Unfortunately, the business was called Enron, and collapsed in 2001 with debts of $31.8bn (18bn), after it was revealed that its boss had orchestrated a giant fraud.

The boss in question, chief executive Jeffrey Skilling, was recently jailed for 24 years for the crime.

Critics of CSR argue that Enron is a case in point - that CSR is irrelevant if the essential business practice of a firm is dishonest.

'Government's role

Madsen Pirie, president of the free market economics think-tank Adam Smith Institute, goes even further, saying that CSR should not be a company's concern.

"CSR should not be a firm's role. Instead, it should be determined by society as whole through the rules and laws set by government," he says.

"A business therefore should simply only follow the rules and regulations set by the country in which it operates.

"CSR may make a firm's directors feel good to give money to local charities, but a company's responsibility should be increasing profits and adding to a nation's wealth."

Yet despite this philosophical objection to CSR, the concept is undoubtedly here to stay.

And for all the bad examples and criticisms, the great majority of CSR cases appear to be having a sincere and positive impact, not only for the wider community, but for the companies themselves.




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