The State of CSR in Australia (Guest Blog)

Guest Blog by Leeora Black

When we began analysing the responses to our State of CSR Annual Review 2010-2011, one of the things that most struck me was the ambiguous signals that Australian businesses are giving about the role of CSR in their organisations.

On the one hand, it’s clear – and very heartening – to see that more organisations are seeing value from CSR that goes beyond reputation and risk management. Businesses are seeing applications of CSR contributing to real value creation through new ways of working (e.g. saving costs through utilising more cost-effective resources, more efficient supply chains, employee work flow), new products and services and new business models – with the latter helping develop new markets and enhance existing market opportunities.

But on the other hand, most of the almost 500 managers and executives who responded to our survey said that getting organisational buy-in is the biggest single obstacle to their success with CSR.

Clearly, there is still something at the core of many organisations that says they don’t get it. What’s going on here? Why has senior organisational management still not fully comprehended that the opportunities flowing from CSR require full strategic consideration?

I think the issue lies with the nature of the CSR function itself: probably the most cross-functional, cross-silo business discipline to emerge so far in the history of management. It requires a profound level of cross-business functionality and integration to be effective. This is a real challenge to most companies, which are founded on vertical accountabilities.

There are opportunities for change, however.

Organisations typically change because changes are forced upon them from outside. This could be a catastrophic event (a natural disaster impacting on their business, a corporate scandal à la Enron); it could be a profound change in the business environment (such as via the introduction of a carbon tax); or it could be changing requirements from their stakeholders.

Businesses experience these impacts to varying degrees and in different ways. In Australia, some organisations may be impacted by all three. However, I see the most widespread impact coming from the changing expectations of stakeholders. They are becoming more sophisticated in their expectations of organisations, and this extends to their expectations of how CSR is operationalised in businesses.

Just as awareness of ‘greenwashing’ has expanded, many stakeholders are all too aware of whether a business treats its CSR activities as an opportunity for risk minimisation or reputation enhancement at the expense of genuine collaboration and value creation.
Our report’s research emphasises stakeholder engagement is the key capability for organisations to deliver enhanced CSR performance, with its positive business flow-on effects.

There are three reasons why this should translate into a more integrated strategic role for CSR:

1. Issues raised by external stakeholders will increasingly be aimed at the strategic intent, rather than the local impact, of the business.

2. Stakeholders can often drive innovation through working with businesses to address issues of mutual interest. For example, Procter and Gamble has opened up its innovation process to people outside the organisation and expects to reap $3 billion in annual sales growth as a result.

3. There will be fewer ‘low hanging fruit’ for organisations to harvest in business improvement processes. At the same time, increasing regulation will drive a need to innovate to reduce costs. CSR holds the promise of helping to solve this problem.
Change is part of business and successful ones adapt and move forward. The adoption of a more comprehensive approach to CSR will help achieve this.

How do you think CSR can help organisations adapt to change?

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Dr Leeora Black is Managing Director of the Australian Centre for Corporate Social Responsibility (ACCSR). The question of how to manage large and complex organisations for responsible business outcomes is a major focus of her consulting work. Why not visit the ACCSR Blog at http://www.csrconnected.com.au/?

Video Blog: Leeora Black on the State of CSR in Australia

Dr Leeora Black is the Founder and Managing Director of the Australian Centre for CSR (ACCSR). In this interview with Dr Wayne Visser, Director of CSR International, she shares what their recent annual CSR national survey has revealed, as well as where Australia is demonstrating best practice (e.g. Alcoa in community engagement). The interview took place in Melbourne on 10 March 2010.

The State of CSR in Australia: Too much sun!

By Wayne Visser

Yesterday, at the invitation of Leeora Black, Director of the Australian Centre for CSR (ACCSR), and sponsored by La Trobe Graduate School of Management, I gave a keynote address on "Leadership for social responsibility" at the ACCSR conference in Melbourne. The conference theme was around ISO 26000 in a post financial crisis world. I will blog separately on ISO 26000 and also share some video interviews that I conducted with, among others, Jonathon Hanks, Convenor of the ISO 26000 Integrated Drafting Task Force.

In this blog, however, I want to share some hot-off-the-press research findings, as well as my own impressions of CSR in Australia. Let's start with the data. In the ACCSR 2009 State of CSR in Australia Annual Review, here are some key findings:

• The global financial crisis (GFC) on CSR has had mixed effects: only 19% saw budget cuts and 14% reported reduced staff. On the other hand, 29% say the GFC has made them more interested in CSR, 49% say it has provided the opportunity to debate CSR and 40% say their CSR strategy is now more strongly linked to their business strategy.
• The biggest CSR priorities for 2010 are: reducing environmental impact (13%), building understanding of our CSR approach (12%), understanding climate change (10%), improving our sustainability reporting (10%), managing regulatory impacts (10%) and developing services with social or environmental attributes (10%).
• The lowest priority was given to combating corruption (5%) and addressing labour relations issues (5%). The latter is somewhat surprising, given that Australia lags the rest of the world on labour issues, including contravening some ILO conventions.

ACCSR also disclosed the Top Scoring Organisations on CSR for 2009, including:

• Top Australian listed companies: AXA Australia, Coca Cola Amatil, Lihir Gold Ltd, National Australia Bank, Rio Tinto, Sensis and Westpac Banking Corp
• Top foreign listed companies: Aon, Baxter Healthcare, BP Australia, Fuji Xerox Australia, Nestle Australia, Optus and Toshiba Australia
• Top government business enterprises: Australia Post, Horizon Power, Hydro Tasmania, Landcom, South Australian Water Corp and WorkSafe
• Top NGOs: Arts Project Australia, Credit Union Foundation Australia, Lifeline Australia, Marie Stopes International Australia and St Mary's House of Welcome
• Top industry associations: Australian Institute of Company Directors and Institute of Chartered Accountants.

So much for the data and plaudits. What are my impressions so far? I sense a huge frustration among people working in CSR in Australia. The biggest reasons cited are an unsupportive (some even say backward) government policy environment, and the negative lobby power of Australia's two biggest industries - extractives (mainly mining) and agriculture.

After about 10 years of severe drought (and even fatalities from runaway bush-fires in Victoria last year), it is hard to understand why climate change is not right at the top of government and business agendas. But perhaps that is testimony to the power of vested interests in the status quo.

Also, the opposition party is scoring cheap political points by calling everything to do with climate change a tax, to be avoided at all costs. They fail to mention that (according to the Stern Review) it may cost 1% of GDP now, but it will cost 20% of GDP later if nothing is done. So they are happy to tax the future 20 times as heavily, in order to get quick votes today.

I did hear one other explanation for why the take-up of CSR in general, and climate action in particular, is so lacklustre in Australia. "There's too much sun", said my friend and sustainability consultant, Samantha Graham. By which she meant, Australians are too laid back about life. They are eternal optimists who believe that things will get better sooner or later.

To be fair, there is some really progressive work going on in stakeholder engagement and social impact management among the mining companies (more about that another time). Meanwhile, why worry about disaster scenarios for 2050 when the sun is shining, the skies are blue, there's a cracking footie (or rugby or cricket) game on.

CSR-what? Surf's up!