Australian Research

State Chamber of

an overview corporate social responsibility in australia

t a k i n g

t h e

f i r s t

Commerce

s t e p s

the common good

This paper has been commissioned as part of the Common Good Program, an initiative of the State Chamber of Commerce (NSW).

State Chamber of

Commerce The State Chamber of Commerce wishes to thank its business partners in the Common Good.

Program Sponsors

Taking the First Steps an overview corporate social responsibility in australia

The State Chamber of Commerce (NSW) February 2001

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contents Executive Summary

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1. Introduction

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2. Change and the Global Community 2.1. Drivers of Change 2.2. The New Realities Facing Business

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3. Australian Companies and CSR 3.1. Internal Initiatives • Mission, Vision, Value, Ethics, Principle Statements • Business Ethics Program • Employee Empowerment and New Employment Policies • Green Offices and the Development of Green Products • Quality and Environmental Standards • Customer Focus, Safety and Care • New Standards in Advertising • Environmental Reporting • Social Audits

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3.2. External Initiatives • Philanthropy • Pro Bono Work • Employee Volunteering • Gift Matching Programs • Public Education Programs • Mentoring and Secondment • Partnerships with Non-profit/Community Organisations • Cause-Related Marketing • Community Forums and Institutionalised Feedback

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4. First Steps - A Process for CSR in Australian Companies 4.1. Identifying the Objective of the Company 4.2. Who are the Stakeholders in a Company 4.3. What Issues are Important to a Company’s Stakeholders 4.4. The Four Approaches to CSR 4.5. Identifying an Integrated Strategy of Initiatives 4.6. Implementing and Monitoring 4.7. Measuring the Returns

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5. CSR - What are the Benefits? 5.1 Benefits to Business 5.2 Benefits to the Wider Community

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6. First Steps Action Guide

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References

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TABLE OF FIGURES Figure Figure Figure Figure Figure Figure Figure

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1: 2: 3: 4: 5: 6: 7:

Drivers of Changes and New Business Realities Examples of Australian CSR Initiatives CSR - A Process A Stakeholder Model Australian Attitudes on Corporate Community Involvement Four Approaches to CSR Time frame for Evaluation of Inputs, Outputs and Impacts

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EXECUTIVE SUMMARY - THE FIRST STEPS This report is the first in a series of research papers to be prepared by the Common Good Program, an initiative of the State Chamber of Commerce (NSW). The report defines Corporate Social Responsibility (CSR) and explains why and how Australian companies are beginning to embrace it. The object of this paper is to mark out some of the existing research in order to introduce readers to the potential that CSR can deliver to Australian business. The report highlights different approaches to CSR and explains the related tactics, activities and benefits. Corporate Social Responsibility (CSR) refers to a range of practices that a business might adopt to ensure that it operates in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. CSR is larger than corporate community involvement or strategic corporate philanthropy and extends to a range of management practices and business initiatives. This review contains research and analysis conducted by the State Chamber but also provides an overview of existing studies and research, both Australian and international. It sets out the many different types of CSR initiatives a company can pursue, a process for integrating these initiatives into core operations and likely benefits that a properly implemented CSR strategy can deliver. Additionally, the research found that the Australian business community is lagging behind the UK, USA and the EU in some key aspects of CSR. A number of studies have indicated that Australian businesses are becoming increasingly aware that CSR can contribute to their long term competitive advantage. However, many Australian companies are not developing a fully integrated CSR strategy and as a result are failing to realise the full business benefits of CSR. Research has found that elements of the Australian business sector are community oriented. This report includes case studies of many companies that are actively engaging their stakeholders. These companies have implemented initiatives that display a new commitment to their employees as well as programs that address sustainability issues. However, to many companies CSR is still a goodwill exercise rather than an integrated part of everyday business. While some Australian companies are becoming corporate citizens, it appears that a large number are still happy to make philanthropic contributions unrelated to their core business objectives. Still others view corporate social responsibility as a business transaction and are focusing on single events and tend to measure only the short-term business results. Many Australian businesses are active in the broad area of corporate social responsibility. However very few have an integrated strategy to manage their CSR activities. For most Australian businesses CSR initiatives have been developed in an isolated manner without due consideration as to how they could be aligned with corporate goals. Consequently Australian businesses are not reaping the full potential returns of their investment in corporate social responsibility. In this respect Australia is falling behind international best practice. 5

Typical CSR initiatives that Australian businesses adopt were identified, these include: drafting a code of ethics, instituting business ethics programs, revising employment relations strategies, social and environmental reporting and audits, strategic philanthropy, pro-bono work, employee volunteering, gift matching programs, public education programs, mentoring, corporate community partnering, cause related marketing and community forums. Benefits from CSR initiatives occur at two levels. At the business community level and at the enterprise level. The business community benefits when companies act responsibly. It gains a voice in the political arena, legitimacy, trust, power and freedom from regulations. These gains ensure that Australian companies will be competitive in domestic and global markets. Enterprise level benefits can be grouped into four areas; operating performance, market goals, human resources and external relations. • Operating performance benefits include, improved financial performance, reduced risk exposure, easier access to investment funds and more efficient use of resources. • Market goals benefits include, identification of new products, identification of new markets, enhanced brand image and increased sales and customer loyalty. • Human resource benefits include, improved recruitment and retention performance, creation of new business networks, increased motivation of staff and enhanced skill set. • External relations benefits include, social licence to operate, improved trust, enhanced corporate reputations, improved government relations and reduced regulatory intervention. A major disincentive for Australian businesses in engaging in CSR is the complexities surrounding the measurement of the returns from their activities. The State Chamber will, over the coming months, seek to develop a range of assessment tools to measure the benefits from CSR. Another key issue that emerged was the need for Australian businesses to engage their customers, investors, employees, government, business partners and the community at large, and understand their changing expectations and concerns. This report recommends that CSR be adopted in a manner that transcends individual departments and initiatives and should be managed as a holistic approach that incorporates policies, business practices and special programs throughout a company’s business operations. This report concludes that Australian businesses that seek to improve the effectiveness of their CSR initiatives, should adopt an integrated strategy that is aligned with their business operations by following an integrated process. Australian business leaders are underestimating by a significant extent the impact that performing in a socially and environmentally responsible manner has on consumer preference. Those companies which quickly adjust to this reality will reap real business benefits.

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I. INTRODUCTION What is Corporate Social Responsibility? Corporate Social Responsibility (CSR) is a term that most businesses in Australia have come across in one way or another, a concept promoted in the Prime Minister’s notions of a social coalition, reflected in an avalanche of debates in the media, encouraged by business representations and embraced by leading Australian companies. A common definition is “a business operating in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business.”1 It is a concept that transcends individual departments and initiatives motivated purely by marketing or PR exercises. It is a holistic approach to incorporate policies, business practices and special programs throughout a company’s business operations. Most Australian business leaders would like their company to have a positive impact on society and the environment. Yet in the day-to-day commercial pressures to maximise shareholder value and profitability, managers are wondering if they can afford to have ‘fuzzy feelings’ about their business operations. What began in the 1970s as an emerging trend is increasingly becoming a high priority item on the agenda of the world’s leading CEOs. What motivates leading companies to change their profiles and corporate policies? Have they forsaken their commitment to shareholders to pursue utopian idealism or to gain personal gratification? How can leading CEOs publicly claim that today CSR is a topic that no company can afford to ignore? Is there a business case for CSR? Can a small company take advantage of the potential returns from CSR? How are industry leaders adopting socially responsible business practices? CSR is not an esoteric topic. Today’s companies are faced with an array of difficult decisions that go to the heart of CSR. Questions which confront business leaders on a daily basis typically include: • Should we persist with a project despite increased opposition from the community? • Should we lay off people for more efficiency and rationalisation due to increased integration of our information systems and e-business? • Should we merely satisfy the environmental regulations or should the company go beyond what is expected from us? Can the company justify expenditures on enhanced environmental performance that goes beyond legal requirements? This report is the first in a series of research papers to be prepared by the Common Good Program which has been initiated by the State Chamber of Commerce (NSW). This report defines Corporate Social Responsibility and features a selected number of brief case studies demonstrating how Australian companies in different industries and of various sizes are beginning to embrace corporate social responsibility. The object of this report is to mark out some of the existing research and business community experience in this area. It is designed to provide an overview to the potential value of CSR for an innovative Australian business. Further research papers will seek to develop a comprehensive business case for CSR in Australia. 7

2. Change and the Global Community CSR is not a new concept. Major corporations have been reflecting on their role for more than half a century. An early study on CSR in an Australian context dates back to 1976. In a realisation that “unless the ‘invisible contract’ between society and business is renegotiated, the two (business and society) are on a collision course,” a researcher set out to define social responsibility.2 He observed various pressures in the 70s that would foster the rise of CSR. “These issues include education, the environment, pollution, the general problem of cities and the issues of consumerism.” Today, the wide range of reasons for the increased engagement in CSR can be summarised in one word: change. 2.1. FIVE KEY DRIVERS OF CHANGE Globalisation Globalisation has brought businesses and consumers from around the world together: national boundaries are giving way to business operations and practices. This trend has increased with the spread of liberal democracies, which has given business a strong position. Growth in access to new markets and technological developments have meant that business is now experiencing unprecedented power. The largest 100 companies in the world have revenue that exceeds the GDP of 50% of the world’s nations. Capital Markets and ‘Footloose’ Capital One of the first industries to globalise was the capital market. Trillions of investment dollars circulate the globe searching for investment opportunities every day. Investors are attracted to low risk opportunities, which are typically found within fiscally and socially responsible countries and businesses. The Asian economic crisis was driven by a lack of transparency and corruption in economies which triggered investment dollars fleeing those countries en masse. Individual stocks have fallen after news of environmental or social difficulties and of poor treatment of employees as investors moved money to less risky investments. Investors are pressuring companies to increase their disclosure on a wide range of business activities. Technology and Communication The revolution in technology with the ready availability of information and the speed at which news is circulated around the world have further raised the level of stakeholder awareness and activism. Increased traditional media as well as the development of new media such as the Internet, enables computer users to access any kind of information within a few minutes. E-business and e-markets are changing the rules of the game. Technology is being used as a competitive advantage: companies are further integrating their supply chains and are now being held responsible for the actions of their suppliers. Historical competitors are now partnering and forming e-markets to change the way buyers, suppliers and intermediaries interact. Pressure is building on businesses to differentiate themselves in new ways in this e-world.

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Intellectual Capital The boom economies of today are not the resource-rich countries of the past but are nations such as Singapore, Hong Kong and the US that have invested heavily in ‘knowledge-based’ industries. Businesses are investing in technology to capture and leverage knowledge. At the same time a new generation of ‘industrially strong’ professionals is emerging. Good people with specialty skills are increasingly hard to attract and strategies to boost retention rates are eagerly sought after. Environmental Awareness A decline in natural resources, increased pollution, the Greenhouse Effect and population pressure have brought a sense of urgency to the need to protect the environment. Issues generated in the area of environmental management are increasingly linked to the broader economic concerns. In the international policy arena, programs for regulatory and legislative responses to environmental problems are being vigorously discussed. 2.2. THE NEW REALITIES FACING BUSINESS These drivers of change are redefining the world in which Australian businesses are operating. Some of these new realities are listed below. Markets are more volatile Never before have the Nasdaq, New York Stock Exchange, London Stock Exchange and Australian Stock Exchange been so volatile. The phenomena of globalisation and new technologies such as the Internet have meant that shareholders are better informed about a range of activities undertaken by companies. CEOs and managers are now operating in an environment where all actions have consequences. It is becoming increasingly clear that traditional branding, a public relations mindset and risk management strategies are no longer sufficient to portray the increasingly sought-after image of a ‘good’ company. High profile research in the United States revealed that only those companies that behaved in a socially responsible manner have managed to stay in business over decades.3 The ultimate driver for CSR is to ensure the sustainability and long term competitive advantage of business. Government is redefining its role Globalisation and the concentration of business power have led to new expectations of business. At the same time governments are facing problems of legitimacy and are redefining their roles. The public is demanding lower taxation and hence smaller government, which has meant increased cross sector collaboration. The United States of America has a long tradition of corporate philanthropy and partnerships based on a desire to keep the government out of as many economic and social areas as possible. The United Nations Development Program (UNDP) Development Report ranks the USA as first in terms of competitiveness, but it also notes a high level of poverty compared with other OECD countries.4 A shift in government policy in the United Kingdom has meant that the actions of many UK companies have been under considerable scrutiny, which has resulted in a number of boycotts over the last decade. This has enhanced the pressure on businesses to contribute to social causes and play an active role in their communities.

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While English-speaking countries are often grouped together as liberal systems in which the non-profit sector represents a powerful private alternative to the state, traditional welfare states are still dominant in the European context. In Europe, governments have traditionally provided many forms of social services. Current discussions focus on how to simultaneously achieve economic competitiveness and social cohesion. This is a balancing act between labour market flexibility and personal security, between state provision and fully privatised approaches, financial constraints and provision of social security, between further integration embracing a global economy and protection of local social values. Numerous organisations promote corporate social responsibility and social cohesion globally: the Conference Board, CIVICUS, the Council on Foundations, Business for Social Responsibility, Prince of Wales Business Leaders Forum, the United Nations, Business in the Community, Social Venture Network and the Copenhagen Business Centre are only a few. The public’s expectations of business are changing An Australian survey on the role of business and social responsibility highlights the reality of this new environment. The public is suspicious of what business is doing.5 Almost half of all the people surveyed believed that Australian companies have a short-term planning horizon. 81% of respondents felt that companies are putting profits ahead of people. Only 13% felt that businesses were achieving a balance between profit and social responsibility. The survey also found that the most important factor characterising a “good” company was how the company looked after its employees (34%). This was followed by financial returns (17%), profitability (17%), customer relations (6%), and level of community responsibility (6%). Surprisingly only 5% would judge a company “good” by its products or services. 45% think that the level of profit which the average Australian company is achieving is reasonable, yet often the way that profit is achieved and its distribution is questioned. A recent survey conducted in the United States suggests that the American public has a somewhat more positive attitude towards business, but it also has higher expectations of the role business should play. 68% gave business credit for the prosperity that has prevailed during the last decade. 66% felt that large profits were more important to big business than developing safe, reliable, quality products for consumers. 95% of respondents stated that US corporations should have more than one purpose: they owed something to the communities in which they operated and they should sacrifice some profit for the sake of making things better for their workers and communities.6 The Millennium Poll on Corporate Social Responsibility interviewed 25,000 people from 23 countries around the world. The study suggests that the Australian public is displaying a high level of awareness on issues related to corporate social responsibility. 45% of Australians believe that companies should set higher ethical standards and assist in building a better society. Only 8% hold the view that companies are solely to generate profits and pay taxes. 47% of the consuming public felt that the Australian companies should operate somewhere in between these two positions.7 The State Chamber of Commerce 10

(NSW) asked the same question of businesses leaders and found that the majority of respondents (74%) felt that the role of business was to operate somewhere between the two positions. 24% of respondents felt that the role of business was to pay taxes, make profit and create jobs. Only 2% of business leaders considered the role of business to be about setting higher ethical standards and building a better society.8 These two findings suggest a gap between the expectations the Australian public has of business and the role Australian businesses see for themselves. Australian business needs to be alert. The Millennium Poll also found that 51% of Australian respondents would punish a company not seen as socially responsible. Customers and the public are acting It is estimated that in Australia around 60% of all consumer decisions are made with an awareness of environmental impacts.9 Australians also care about what brands stand for and this is likely to affect their purchasing decisions. 73% of those surveyed said that they would prefer to buy a product associated with a good cause if its quality was the same and 49% said they would switch brands to do so. Australians also rated a company’s commitment to ethics and corporate community involvement higher than Olympic sponsorship, media advertising and customer loyalty programs.10 A current study revealed that 75-82% of Australians had bought products on the basis of social or environmental issues over the previous year.11 A survey by the State Chamber of Commerce (NSW) has found that only 50% of businesses believe that consumers are more likely to purchase goods and services from businesses that they know are seeking to achieve social and environmental goals.12 Australian business leaders are underestimating the importance of performing in a socially and environmentally responsible manner by a massive extent. Australian companies which quickly adjust to this reality will reap significant business benefits. Consumers are not the only ones who are acting. The increasing shaming of companies by Non Government Organisations (NGO) pressures on business. Leading consulting companies PricewaterhouseCoopers are warning companies to be prepared for realities.13

successful puts new such as these new

Investors are acting The profile of investors has changed, over 50% of Australians own shares and many of these investors are no longer satisfied with financial gain in itself. Australians are increasingly concerned about where their money is being invested. In a recent study 76% of people contacted said that they would like to know what companies their superannuation is invested in. 74% of respondents would consider moving between 10-100% of their investment portfolio to a socially responsible fund.14 The survey also found that human rights and the environment are the two issues of concern to Australians. A recent report produced by the Allen Consulting Group and commissioned by the Ethical Investment Group suggests that socially responsible investing is increasing in popularity. The report reveals a shift from first generation funds that were classified as “good causes/non-financial rewards” to a new 11

generation of funds offering a greater portfolio diversification that is explicit about selection and screening techniques.15 In the US social investment funds account for 12% of all funds. This $2 trillion industry continues to grow at a rate of 27% per year. Employees are acting A new generation of professionals is dictating new labour rules: good people with specialty skills are increasingly hard to attract and retain. Salary is no longer the only attraction. This new generation of employees wants to work for a business that shares their values. Employees are also seeking stimulating work that they can see making a difference to society. Employees are not willing to make necessary job adjustments if these needs are not being met. The Australian employment situation is characterised by a number of paradoxes: • There is a trend towards rationalisation, restructuring and outsourcing of services which has resulted in redundancies. In addition, a shift towards new technologies and the resulting enhanced skill set means that businesses are becoming increasingly focused on attracting highly skilled employees. • Senior managers judge their effectiveness by such things as profitability, analysis, pricing decisions and technology. Employees measure their satisfaction by camaraderie of the workplace, the values and humour of their peers, and the esteem they enjoy as people.16 Employees feel increasingly loyal to their peers rather than to their company: one employee resigning often results in a multitude of resignations.17 The Australian public rates unemployment as one of the biggest economic problems facing Australia today. While in 1975 the majority blamed unions for Australia’s level of unemployment, in 1998 large corporations were held responsible.18 Companies are increasingly cognisant of the costs of recruitment and prefer to retain employees rather than see them headhunted. This is especially true for companies that aim to recruit senior personnel from within. Competition is increasing The reduced role of governments has lead to new business opportunities. Services and products, which were once produced by the public sector, are being delivered by private businesses. Many of these privatised products and services are still subject to a degree of public scrutiny which has raised expectations of businesses and their operations. Free trade and deregulation of capital markets have increased the capacity of businesses to access new markets. These new opportunities have also meant even the most established brands are facing unprecedented levels of competition. Consulting companies suggest that a sound understanding of CSR will be a major differentiating factor for successful businesses in the future.

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The following figure summarises the global changes and new realities for business:

Key Drivers of Change New Realities for Business Globalisation Capital Markets and Free Movement of Money Technology and Communication Intellectual Capital Environment Awareness

Markets are Volatile Government is Redefining its Role New Expectations of Business Customers and Public are Acting Investors are Acting Employees are Acting Competition is Increasing Veronika Peters 2000

Figure 1: Drivers of Changes and New Business Realities

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3. Australian Companies and CSR In response to these new realities, Australian companies have not stood still. Companies are looking for best practice examples to assist them to devise new strategies and to cope with the new business environment. Until the early 1970s the Australian Government protected the Australian economy and business from international markets by imposing restrictive trade measures on foreign companies. However, as it became clear that this policy was damaging the country’s long-term competitiveness, the Government began to reverse its protectionist policies and commenced integrating Australia into the global economy. It has become increasingly apparent that there are environmental and social costs as well as economic benefits arising from this shift to lower trade barriers, deregulation and increased competition. The public has realised that businesses are benefiting the most from these changes and so should shoulder some of the responsibility for addressing these costs. Subsequently, leading Australian companies have been launching initiatives to address some of these issues. These companies are detecting a change in the expectations of their customers. The Australian public considers larger companies to be capable of contributing more towards solving some of the resulting social and environmental problems. Recently, the Australian Government has initiated a program to establish new relationships between the sectors (government, business, and non-profit) to explore these problems together. Australian companies have developed a number of internal and external initiatives which can all be placed under the banner of corporate social responsibility. They are beginning to address the economic, social and environmental concerns of their various stakeholders.

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Examples of Internal Initiatives ,

• Mission, Vision, Value, Ethics, Principle Statements • Business Ethics Programs • Employee Empowerment and Employment Policies • Green Offices, Products and Services • Quality and Environmental Standards • Customer Focus, Safety and Care • New Standards in Advertising • Social and Environmental Reporting • Social and Environmental Audits

Examples of External Initiatives • • • • • • •

Philanthropy Pro-bono Work Employee Volunteering Gift Matching Programs Public Education Programs Mentoring and Secondment Partnering with Nonprofit/Community Organisations • Cause Related Marketing • Community Forums and Institutionalised Feedback

Figure 2: Examples of Australian CSR Initiatives 3.1. INTERNAL INITIATIVES Australian companies are refocusing their agendas. They are assessing their traditional business operations and are using some of the traditional areas of business to revise their practices. This report labels these initiatives ‘internal initiatives’ as they all refer to the company’s immediate, internal operations. Internal initiatives are reflected in mission statements, in ethics programs, in employee empowerment and in green offices, services and products, as well as social and environmental reporting. Mission, Vision, Value, Ethics, Principle Statements Australian businesses are increasingly developing statements that articulate their values and ethical outlooks. A survey by the State Chamber of Commerce (NSW) has found that 78% of Australian companies have a code of ethics or an equivalent statement.19 Anecdotal evidence suggests that the objective is to build a clear identity, motivate staff, boost confidence, ensure transparency and avoid professional misconduct. The challenge for businesses is to bring these statements to life rather than simply have them decorating entrance halls or conference rooms.

CASE: BP Australia - Mission Statement “BP believes that wherever we operate, our activities should generate economic benefits and opportunities and our conduct should be a source of positive influence; that our relationships should be open and honest, and that we should be held accountable for our actions. Our business policies focus on five areas - ethical conduct; employees; relationships; health, safety and environmental performance; and finance and control. They apply to all our activities worldwide.

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BP’s policy commitments are the foundation on which we will build and conduct our business. Everyone who works for BP is expected to live up to these commitments.” Business Ethics Program The challenge for any business ethics program is how to translate concepts into action. A number of recent studies reveal that the success of a company’s business ethics program largely depends on the nature and principles that Board and managers have fostered in the company over time.20 Programs that were created to build a framework for corporate values with the purpose of developing employees and giving them guidelines for corporate behaviour, were considered successful. When employees felt that the initiatives were a compliance exercise designed to protect management, corporate ethics programs tended to result in more unethical behaviour rather than less. The International Business Ethics Institute examined the reasons for the failure of newly adopted corporate ethics programs. These reasons were: • • • • •

failing to set realistic expectations senior management failing to take ownership of the program developing program materials that do not meet the needs of employees designing training programs that are primarily lectures exporting US-centric ethics programs to international operations.21

Employee Empowerment and New Employment Policies Leading Australian companies are reconsidering their employment policies and practices and are striving to create new standards to attract and retain employees. Employees are seeking a transparent merit-based career planning system, continuous development and flexible working hours that meet their expectations. An increasing number of companies are now considering family issues and are providing child-care. Australian companies have adopted a variety of employee recognition and reward programs to motivate their staff. The future of many businesses is dependent on more than just keeping employees happy in specific areas or adopting short-term motivational exercises. Australian companies such as the Body Shop, Esprit and other large retailers have changed their recruitment policies to tackle the problem of unemployed youth and to train and re-integrate disadvantaged young people into society. These strategies build employee trust and job satisfaction which in turn contributes to better customer service and high staff retention rates. Some Australian businesses have radically changed their employment policies, leading to a boost in employee morale. For example, the pro-active integration of disabled employees can serve as a good example of how companies are demonstrating their commitment to a socially responsible workplace. Benbro, winner of the Prime Minister’s 1998 Employer of the Year Small Business Award, is an outstanding example of initiative and leadership by an Australian Small Medium Enterprise (SME). 16

CASE: Benbro - Employment of People with Disabilities Benbro Electronics Pty Ltd, based in Brookvale, was established in 1985. The company designs and manufactures quality electronic equipment. It currently employs 16 people. Benbro’s policy is that 25% of its work force are to be employees with disabilities. The owners recently formed an organisation called EMAD (Employers Making A Difference) to encourage other businesses to employ people with disabilities. As business owners they base their recommendations on their own experience: people with disabilities display on average more loyalty, equal or higher performance, higher attendance rates and lower turnover rates. Their experience is consistent with results of a number of international studies in the same area. For Director John Bennett there are clear advantages to the company as a whole: “The atmosphere and work morale increases among all staff when you show that you are an employer who cares. There are over 15,000 unemployed people with disabilities and plenty of services that assist in the selection, integration and training of them. Hiring people with disabilities is one way of transforming the workplace.” Benbro is a company whose directors see the big picture. “If all people with disabilities looking for work could be employed the country would save approximately $126 million in social security and could raise tax revenue.” Participation is a boost to any economy. Benbro knows that it transforms lives of people - beyond those with disabilities. Green Offices and the Development of Green Products Heightened awareness of the potential impact of environmental problems has changed the expectations of both customers and employees. Leading companies such as the Body Shop are transforming workplaces physically, creating attractive, environmentally safe workplaces that people enjoy working in. This growing public concern about the environment is also an opportunity to bring new products and services into the market.

CASE: EnergyAustralia - Green Products/Services Customers of EnergyAustralia can now choose between energy produced by either renewable or non-renewable sources. A new product, known as PureEnergy, uses a portfolio of solar, wind, hydro and biomass power - all of which are renewable sources of energy that avoid the use of coal in the generation process. Coal based generation produces carbon dioxide and has been identified as a major greenhouse gas contributor. PureEnergy offers customers an opportunity to make a positive contribution to the environment. When customers choose PureEnergy, the energy purchased by EnergyAustralia on their behalf comes from a portfolio of renewable supply generators. Customers can purchase either 50% or 100% PureEnergy. While the energy cost is higher than that of traditional sources, this product has already attracted over 15,000 customers, among them some of Australia’s leading businesses.

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Quality and Environmental Standards Australian companies are increasingly viewing sustainability and quality as processes. A number of companies proudly report on their ISO 14001 certification in their annual reports. Certification is not an end in itself but an impetus for continual improvement and critical self-examination.

CASE: Coca-Cola Amatil (CCA) - Advocate for New Environmental Standards Coca-Cola Amatil is committed to achieving sound environmental performance across all operations, evidenced by its constant improvement and its ambition to achieve ISO 14001 for all Australian bottling facilities. CCA was the driving force behind the establishment of the Packaging Environment Foundation of Australia, pursuing environmental action plans in areas such as waste management and minimisation. CCA has pioneered the promotion of effective recycling, energy conservation and litter reduction and is the largest recycler of PET bottles in Australia. Thanks to its effective environmental education program, CCA employees take environmental impact into account in the planning stages of development proposals. Customer Focus, Safety and Care Long-term business success is based on a solid relationship with an enterprise’s existing and potential customers. Increasingly, customers are confronted with unlimited information and a multitude of choices. In these unstable markets, tried and trusted brands offer security and confidence to the customer. Building the trust of customers can be achieved by going beyond consumer expectations in terms of product quality and safety. A few years ago an Australian company producing biscuits withdrew all its products from the market when warned that its products might be poisoned. This statement was unfounded and later the accuser spreading the rumour was charged. The quick reaction by the company and its commitment to safety above profits earned it national praise. Companies that manage their crises well in public can turn a potential disaster into public victory. New Standards in Advertising Advertising has been a grey area for many businesses. Australian companies are now adapting their advertising strategies to achieve higher ethical standards. In advertising the consuming public were traditionally viewed as the ‘target group’, as people driven by weaknesses, and companies knew how to appeal to them. Today more and more companies view their potential customers as real people and seek to appeal to their values and virtues. Ethical advertising involves the protection of social values and of vulnerable groups such as children, minorities and the disadvantaged. Environmental Reporting Throughout the world companies have engaged in reporting on performance that goes beyond finances. A study conducted by Ethicscan in Canada for the Canadian Auditor General revealed that no fewer than 60% of Canadian companies have 18

voluntarily embarked on including sustainability factors in their audits - this compared to 45% in 1992.22 In the United States, the Investor Responsibility Centre found that 61% published official environmental reports; many more indicated that they would do so in the near future.23 Key issues for environmental reporting are relevance, consistency, balance, credibility and comparability.24 Following intensive consultations between the private and the public sector, The Commonwealth Minister for the Environment launched a Framework for Public Environmental Reporting in Canberra in March this year.25 The report aims to facilitate environmental reporting and to provide broad national guidelines compatible with other national and international guidelines such as GRI (Global Reporting Initiative). The Business Council of Australia together with Environment Australia prepared a background review setting the stage for public environmental reporting in Australia.26 The report revealed that there is little information available on Australian reporting practices that would allow an international comparison. It quotes, however, the Snowy Mountain Engineering Company, which undertook a benchmark study comparing 30 Australian companies as well as assessing 50 high profit companies. The results were benchmarked internationally and suggested that Australian reporting is generally below global standards.27 John Elkington, Chairman of SustainAbility, notes that while financial reporting has evolved over 500 years, environmental reporting is in its infancy. At an Australian Conference in 1997 he said: “Community, cultural and increasingly customer and financial sector pressures will continue to cause corporations to look at the triple bottom line, that is financial, environmental and social/ethical impact.” 28

CASE: Waste Service NSW - Environmental and Social Reporting Waste Service NSW is a solid and liquid waste service provider to the greater Sydney region. With about 130 employees it belongs to the category of medium enterprises. The company manages a network of waste management centres for recycling, resource recovery and treatment and disposal where no other options exist. These centres include waste transfer stations, engineered landfills, material recycling facilities and an industrial liquid waste plant servicing the needs of the greater Sydney region. Customers include local government, industry and commerce, collectors and transporters of waste and private households. Waste Service NSW undertakes regular comprehensive environmental audits. The results of these audits are published in an annual environmental performance report appended to its annual report. The report provides stakeholders with information on environmental as well as social performance. The production of the report is not a legal requirement, but is offered to customers, stakeholders and the community ‘in good faith’. Information is gathered from various sources throughout the organisation to ensure that the report balances attention to environmental, social and business values. The report features issues of: 19

• environmental management, showing efforts that aim to maintain the ISO 14001 and ISO9002 certifications; • monitoring techniques Waste Service NSW is employing to prevent pollution occurring. Waste Services spends $250,000 each year on comprehensive environmental monitoring of all its sites; • conservation of resources including water conservation, energy recovery and waste minimisation as well as rehabilitation; • strategies to support research and development studies that will further contribute to the knowledge and progress of effective waste and recycling management techniques; • education, training and contributions to environmental awareness. Social Audits While companies have started to assess their environmental performance, there are still many questions about how to report on social performance. Amnesty International, in conjunction with a number of business groups, has developed a framework of minimum standards of corporate responsibility for humanitarian issues. The framework serves as a benchmark on human rights issues a company should be upholding.29 However many companies feel that holistic frameworks are needed to measure social performance in a variety of ways. New benchmarks such as the Social Accountability 8000 (SA 8000) were developed by the US Council on Economic Priorities. The UK-based Institute for Social and Ethical AccountAbility aims to bridge the different styles of accounting. It has developed an AA1000 standard, a range of principles that should facilitate the process of conducting holistic audits. Social audits measure and evaluate a company’s relationships with employees, consumers and other stakeholders. They review employment practices and diligence in responding to legitimate needs of the community. The term “social audit” is often used to describe a variety of audit practices, which might be quantitative, qualitative or descriptive in nature. The term “audit” should remind the company of principles of objectivity and consistency, as well as thorough analysis and systematic reporting. Australian companies conduct social audits through a range of ways. Some report on specific initiatives, others internally assess activities or their whole company, and only few have themselves holistically audited by independent professionals for increased transparency and objectivity. Australian companies have been hesitant and inconsistent in their use of social audits. This might be due to a lack of know-how and appreciation of the exercise. Undertaking social audits is a time-consuming activity. However, Australian managers realise that stakeholders are assessing them whether they conduct audits or not. Some Australian companies have begun preparing social audits voluntarily.

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CASE: The Body Shop: Social and Environmental Audits The Body Shop is a global retailer of personal care products, with over 1600 stores around the world. The company is committed to ‘people and the planet’ and emerges as a corporate leader for social and environmental change. The staff of The Body Shop developed corporate policies and principles, and addressed social and environmental issues accordingly. Regular audits assist the company to assess their performance and be transparent to all stakeholders. For the preparation of the social audit the company surveyed staff, customers and local suppliers, and consulted with the stakeholder community. The environmental audit is carried out annually. Some of the key environmental performance indicators are: product stewardship, sustainable timber, water, renewable energy, greenhouse gas emissions and campaigning. Both the social and the environmental audits of The Body Shop are verified independently. 3.2. EXTERNAL INITIATIVES Besides the revision of traditional and internal practices that directly relate to business activities, Australian companies have demonstrated increased community involvement over recent years. These initiatives are termed ‘external initiatives’ as they refer to activities that go beyond the immediate operations of a business. External initiatives come in the form of philanthropy, in-kind giving, pro bono work, employee volunteering, matched gift programs, public education programs, mentoring and secondment, partnerships with community organisations and causerelated marketing. Philanthropy The Webster Dictionary defines philanthropy as an “active effort to promote human welfare.” Philanthropy is often associated with rich individuals giving large sums of money to well-known causes. However, numerous businesses have played a significant role in their communities by providing financial support to nonprofits and community groups. In the USA corporate giving is on the rise. According to the latest estimates of ‘Giving USA’ total corporate giving reached US $11.02 billion. Corporate giving as a percentage of pre-tax profit climbed from 1.0% in 1996 to 1.3% in 1999.30 These figures are impressive by international standards, especially given that they do not even include further marketing and sponsoring expenditures to the community sector.31 In Australia the extent of financial contributions by private sector companies to nonprofits is still small compared to the support given by government and individuals. Lyons estimates that corporate support to nonprofits accounted for $1.65 billion in 1996/97 with another $150 million given to public benefit government organisations. This compares with $8.5 billion in government grants to nonprofits and around $3 billion in individual gifts.32 Recent changes in taxation should foster philanthropic giving in Australia.33

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Companies either support causes and community organisations direct or establish philanthropic foundations which then distribute the funds on behalf of the company. Philanthropy Australia is an organisation that acts as intermediary for individuals, companies, charities and foundations. The organisation provides a wealth of information through its education programs, networking and advocacy.34 Support today often goes beyond traditional financial contributions: products and in-kind donations, technical support, groups of volunteering employees and managerial know-how transfer often supplement the financial support initiatives. A company in the consumer product industry recently donated a number of computers to a local school. The company updated computers and decided to donate their old computers that were still of high standard. The company also sent to the school employees who volunteered to set up the equipment and train the children in basic computer skills. A large number of companies in NSW donate food to over 1300 charities nationwide. This surplus food stock managed by the Foodbank feeds 18,000 people throughout Australia.35 It appears that over the last decade some Australian businesses have changed their approach towards corporate giving. These changes include: • • • •

adoption of a more strategic approach a link to the business’s marketing programs expansion of geographic focus development of more sophisticated measurement tools for evaluating the impact of their philanthropic giving • innovative partnerships: greater stakeholder participation • long-term relationships with nonprofits • a sense of social responsibility/social citizenship.

CASE: Coca-Cola Amatil (CCA) - Strategic Philanthropy Coca-Cola Amatil manufactures, distributes and sells non-alcoholic beverages in Australasia and the Asia Pacific region. In Australia CCA employs 4000 people. While the company views its prime commitment to be to its shareholders, it aims to act as a corporate citizen by “being mindful of our involvement in local communities”. The company has become strategic in its philanthropy. Corporate giving lines up with business objectives. It is related to youth, the company’s main target group - a policy that is supported by shareholders. “As a public company we are expected to give something back to the community - yet it has to be consistent with what we are recognised for,” explains Ian Brown, Corporate Affairs Manager, as he describes the shift the company has undertaken in its support of communities. CCA receives about 600 serious approaches for funding each year.

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The company is continuing to support a number of flagship organisations such as the Red Cross, the Salvation Army and the Wesley Mission. However, rather than giving random donations to a multitude of recipients, the company tries to concentrate its support. CCA is now building systematic corporate partnerships with organisations in three areas: 1. Arts: Australian Theatre for Young People: CCA gives support to the Theatre’s education program, conducting drama workshops in secondary schools and promoting local talent through the national performance studio. 2. Medical and Health: The Juvenile Diabetes Foundation: CCA supports the annual sponsored “Walk for the Cure” that takes place in most capital cities and some rural areas. For CCA it is an opportunity for employee participation and a good promotional window for Diet Coke and Mount Franklin Water. It is also an opportunity to establish contacts with other sponsors such as Westpac and McDonald’s. 3. Welfare: Reach Out (Inspire Foundation) This Internet-based organisation publicises services available to youth and hence promotes existing community support structures. Reach Out provides much needed information, assistance and referrals in a format that appeals to young people. Pro Bono Work Expertise in legal issues, technological problems or software can sometimes be more valuable to community organisations than cash. Australian companies such as the leading corporate law firm Freehills provide free legal advice to selected organisations or causes.

CASE: Clayton Utz - Pro Bono The Clayton Utz Pro Bono Scheme is one of the largest commitments ever made by an Australian law firm to providing free community legal work. In the past financial year, over 14,000 hours and $3.5 million worth of pro bono assistance was conducted for individuals and community organisations who were unable to obtain Legal Aid and who were unable to obtain access to a lawyer. All of Clayton Utz’s solicitors are expected to conduct at least one matter each financial year. Pro bono work is included as part of a annual professional review and genuinely recognised as part of each budget performance. Last year, 93% of Sydney solicitors acted in matters.

pro bono solicitor’s solicitor’s pro bono

Apart from the obvious benefits to the community, pro bono work also challenges Clayton Utz solicitors with new and unusual legal issues and helps junior lawyers develop their client skills and their confidence as professionals in a meaningful, ‘hands on’ manner. Pro bono work is genuinely satisfying and is a valuable tool in maintaining a high level of professional staff morale. The Pro Bono Scheme is also extremely prominent in the recruitment activities conducted by the firm and in Clayton Utz’s positive public image. 23

Employee Volunteering Another way a business can demonstrate social responsibility is to encourage and support community volunteering by their staff. According to a study on community involvement, volunteering emerges as an essential component of the new strategies of Australian companies.36 Community Days gained popularity when Westpac commenced supporting ‘Clean up Australia’ and LendLease encouraged its employees to work on a variety of building projects. Elisabeth Cham, Executive Director of Philanthropy Australia, cautions employers not to isolate their external activities from their corporate culture: “Most employees are not interested in engaging in social activities if the company does not consider the social issues that its own employees are dealing with.”37 However, if corporate volunteer programs are part of a holistic CSR program, they can be rewarding exercises for all parties.

CASE: EnergyAustralia as “EnergyAngels” EnergyAustralia is one of Australia’s largest energy services corporations. With around 3300 employees it supplies electricity to approximately 1.4 million customers. The company’s vision is “to maximise shareholder value by becoming the leading multi-utility company in the Asia/Pacific region”. In order to achieve this vision, EnergyAustralia pursues the following values: integrity, excellence, respect for people, community commitment, safety and commercial drive. Energy Australia has undergone far-reaching changes as a result of electricity reform within NSW and Australia in recent years and is currently preparing for full market contestability from 2002. EnergyAustralia views these changes as a challenge in which corporate social responsibility will play an important role. As the company manages the transition from being a monopoly to a competitive market player, transparency and community support have emerged as key principles in the framework for the company’s new CSR program. The EnergyAngels Day is one way in which EnergyAustralia demonstrates its commitment to the community. 130 projects were nominated for inclusion in the program in 2000. A panel of company and community representatives carefully selected 45 projects across Sydney and the organisation coordinated and sponsored more than 1200 volunteers including community members, employees, and their families to complete the projects. EnergyAustralia employees nominated five successful projects, with another project benefiting EnergyAustralia’s charity partner The Smith Family. The program started in 1999 as a pilot in Newcastle and was extended to the greater Sydney area due to its success. The many volunteers from within the organisation and the community offered their assistance in the areas of maintenance, cleaning, general repairs and gardening. They restored community buildings, provided safe areas for children, restored neglected reserves and helped improve living conditions at a number of disadvantaged care facilities. The initiative is not an isolated event but an annual contribution that complements other community initiatives that EnergyAustralia pursues, including supporting The Smith Family’s “Learning for Life Program.” In 2000, the company 24

provided the Smith Family with nearly 2000 Olympic tickets for distribution to financially disadvantaged families and individuals for a once-in-a-lifetime opportunity to attend the Sydney Olympic Games. Gift Matching Programs Another way that companies are supporting good causes and involving their employees is establishing internal donation programs. Employees can usually nominate their favourite cause or charity for inclusion in the gift matching scheme. The company sets up a deduction program and often matches the gift dollar for dollar by the company.

CASE: Westpac - Gift Matching One of the most comprehensive staff community support programs at Westpac is a gift matching program. The Westpac Matching Gifts program matches contributions made by staff to any tax-deductible charity on a dollar for dollar basis. Since December 1998 Westpac has matched contributions from staff, bringing the total distribution to over $1.6 million to some 300 charities across Australia. Public Education Programs Some companies use their facilities to advocate and bring important causes to the attention of the public. They provide research results and information so that the public can be better informed. Other companies seek to educate the public in schools, by company visitations, or through various media channels on issues relevant to their core business.

Case: Kellogg and Kids Help Line - Anti-Bullying Campaign In 1998 Kellogg Australia became Kids Help Line’s major corporate sponsor. A powerful component of the relationship is using the back of Kellogg cereal packs to promote the relationship and raise awareness amongst adults and children of Kids Help Line and issues facing children today. In the year 2000, five million packs, reaching 75% of all Australian households, were used to promote an anti-bullying campaign. Calls to Kids Help Line about bullying have increased steadily over the past few years. Analysis of these calls indicated many children were reluctant to speak out about bullying, fearing an escalation of the situation, or that nothing would be done. Given the link between bullying in childhood and anxiety, low self-esteem, loss of confidence and, in the long term, depression and self-harm, using Kellogg cereal packs provided a very powerful way of raising awareness about the issue among kids, parents and school personnel across Australia. The message on packs encouraged children to speak out about bullying and provided tips to kids and adults about how to deal with bullying. The cereal packs encouraged students, teachers and parents to work together to find ways to stop bullying and make schools a safer place for everyone. The Kellogg’s packs also featured the Kids Help Line number (1800 55 1800) and web-based resources for kids, parents and schools to effectively address bullying. 25

Policy makers, federal and state education ministers and education personnel in government and non-government sectors were informed about the campaign and its possible effects. The campaign was fully supported by the Australian Primary Principals Association. Reports of bullying to school personnel were expected to increase once the packs were in store. Kids Help Line experienced a 60% increase in calls about bullying during the period of the campaign as children took advantage of the promotion to seek help. Feedback from parents, schools and kids around the nation continues to be overwhelmingly positive with many schools requesting resources and developing anti-bullying policies. Mentoring and Secondment The Sydney Leadership Program initiated by the Benevolent Society trains executives from various backgrounds to see the big picture and how their organisation can impact on society38. The SEAL Force program is another executive learning program which aims to develop relationships between Australian businesses and the community. The program places senior managers in selected community development initiatives on a part-time basis. The purpose of the program is to transfer intellectual capital into the not-for-profit sector. Often participating managers gain just as much in experience and skills in this process as they contribute. Partnerships with Non-profit/Community Organisations In order to encourage non-profit-business partnerships, the Government launched an award to recognise best practice partnerships. While in 1999, 53 partnerships submitted applications, in 2000, 217 nominations were submitted.39 Partnerships and other forms of inter-sectoral collaboration are on the rise. Companies realise the benefit in partnering with nonprofits: often the skill sets of nonprofits complement those of business in areas where companies have little expertise, access or infrastructure.

CASE: NRMA CrimeSafe: a corporate funded crime prevention program In 1999, NRMA was Australia’s largest insurance company, holding around 1.9 million motor vehicle policies, 1.4 million home insurance policies and with 35% of motor vehicle registrants covered by NRMA CTP insurance. In 1997/98 the cost to the company of household burglary was $43.4 million while motor vehicle theft cost $120 million. In the light of these figures the company decided to add a further component to their efforts to reduce crime, through the sponsorship of projects which aim to stop young people engaging in motor vehicle crime. This followed on previous involvement in providing free information to community members about home and car security methods, undertaking research into vehicle designs which make cars harder to steal and lobbying of government and industry. Each of the projects focussed on social or personal circumstances that place youth at risk of criminal behaviour.

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Projects funded in both New South Wales and Victoria include: • The “Clean Slate” Program: This intensive, pre-sentencing, diversionary program consisting of group and individual counselling sessions, adventure camp, training on anger management and conflict resolution, assists juveniles to constructively process their offense and its consequences in order to reduce the likelihood of re-offending. • Hunter STAR (Students at Risk) Foundation: An initiative in which local businesses assist in funding alternative secondary education and work experience for disadvantaged young people who are not suited to conventional schooling. • Kempsey Assistance Patrol: An after hours bus patrol staffed by volunteers that brings adults under the influence of alcohol and unsupervised juveniles to their residence or another safe place in order to reduce anti social behaviour and law breaking. This project was a collaboration between business, local government, police and local residents who volunteer their service. • Hand Brake Turn: This ten week training course assists young offenders in developing skills in basic automotive repairs. 80% of participants continue their education after graduation, gaining apprenticeships, returning to school or finding full term employment. • Fathers and Sons Recreational Group: A once a week, five week long course for fathers and their sons aged 11-16. This course aims to assist fathers to develop their skills as parents and mentors through an activity based support program. The course leads to increased confidence of parents to discipline, communicate and show affection to their children as well as improving adult role models for adolescent males. All NRMA projects aim to build social cohesion, establish and build trust between all partners and participants involved, as well as build a sense of hope and purpose in the participants. In determining suitable projects, NRMA Community Relations first identified the scope and nature of the local or regional problem, then identified those who where already working to address the issue. In consultation with the various groups, the company could decide where and how to make contributions which would have the maximum impact. The company believes in simple interventions that are backed up with a long-term commitment. Regular monitoring and project reviews ensure that the company is on track in its various programs. NRMA CrimeSafe makes good business sense: • The investments in youth crime prevention are reasonable compared to the costs generated by claims for home and car theft and the societal costs of the juvenile justice system. • If crime rates can be reduced, insurance claim rates do not continue to rise and therefore insurance costs remain affordable, instead of increasing to cover the spiralling cost of claims. • NRMA Insurance believes that consumers prefer companies that address social issues that concern them. 27

• NRMA Insurance is a large company, with over 5,000 employees. A socially responsible company gains the loyalty and commitment of its existing employees and of those it may wish to attract in the future. • NRMA realises that social unrest creates costs for small businesses, large corporations, public funders and local communities alike. NRMA understands that public funding is no longer sufficient to meet the increasing demand for social services. Hence the company engages in inter-sectoral partnerships to address problems that are of concern to all; the business, employees, offenders, community organisations and all levels of government. Mission Australia, the Salvation Army, the Smith Family, Wesley Mission, Barnados and Asthma Victoria are some of the high-profile nonprofits that have led the way in professionally partnering with businesses in new ways. However, there are many smaller nonprofits just as ambitious and eager to partner with business. For a small or medium enterprise (SME) it is often sensible to support a locally-established nonprofit.

CASE: Mildura Fruit Company - Mallee Family Care - A Case for Partnerships Mildura Fruit Company is in the business of packaging citrus fruit and avocados for both overseas and Australian markets. The innovative General Manager brought together local fruit growers, businesses, employees and the community to work towards a mutual goal. Together they raised $50,000 to support Mallee Family Care, which provides welfare services to assist disadvantaged children and families and young people with disabilities. The multi-stakeholder project impacted the community organisation, the business and its relations with all its business partners. Cause-Related Marketing The term “Cause-Related Marketing” (CRM) was first used in the 1980s to describe a range of successful international promotional campaigns such as American Express’ Restoration Program of the Liberty Statue, Tesco’s donating computers to schools and McDonald’s support for Ronald McDonald Houses. The Body Shop, Timberland, Microsoft, IBM and Benetton are other well-known companies that have chosen a new direction for their marketing strategies. Cause-related marketing is “a strategic positioning and marketing tool, which links a company or brand to a relevant social cause or issue, for mutual benefit.”40 This can be achieved by means of a strategic alliance with a non-profit partner or by direct support of a cause. The charity lends its good name to endorse its corporate partner’s products; the company publicises the association to help raise funds or promote the cause. Often companies commit themselves to donating a percentage of their profit to the cause. In Australia, “Kellogg’s Help-line” and the current “Better Start Initiative” by Procter & Gamble are some of the best-known cause-related marketing examples. However, these high profile initiatives are just the tip of the iceberg of Australian cause-related marketing activity. According to a recent study in which 197 marketing managers of the top 500 Australian companies were surveyed, 42% of 28

Australian corporations are currently involved in cause-related marketing and 21% of those that were not yet involved indicated that they would invest in CRM in the future. The reasons for becoming involved differ. The majority, 93%, indicated that the main reason was to support the cause. However, these companies are not purely altruistic: 85% believed that it would enhance their corporate reputation. Interestingly 53% relied on their cause partner to promote the initiative.41

CASE: Proctor & Gamble: Cause-Related Marketing - “Better Start” Procter & Gamble is a multinational company that operates in 140 countries and markets 300 different consumer product brands. In Australasia the company is a medium-sized company with approximately 200 employees. The “Better Start” represents a new corporate ‘cause-marketing’ initiative for P&G in Australasia. It aims to link well-known brands to the company and to the cause. Primary objectives were to: • enhance P&G’s reputation as a company that gives back to the community • generate significantly more funding than was possible from the annual A$100,000 sponsorship and donations budget • help the business prosper in the longer term. P & G’s key partner in the “Better Start” program is aid agency “Save the Children”. Their main role is to identify appropriate health and education programs and to monitor and report on agreed projects that will provide a better start for targeted children. Strict criteria were agreed for the selection of “Better Start” programs. They must: 1) 2) 3) 4)

be of benefit to targeted children involve community support have measurable outcomes be self-sustaining at the completion of the program.

Two projects are already underway: 1) Nganampa Health Council School Age Health Screening Program across the remote northern part of South Australia 2) Redfern Foundation Computer Centre that will soon be fully operational at Redfern Public School to provide after school computer training for disadvantaged children in this inner city area. Cause-related marketing is designed to mutually benefit both the cause or charity and the company or associated brands. P&G Australasia aims to build both the image and reputation of P&G as a good corporate citizen and their business in the longer term.

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‘Better Start’ has received the enthusiastic support of its 200 employees, suppliers and strategic business partners, including the media and senior management at major customers and agencies, particularly Saatchi & Saatchi and The Rowland Company, who have provided valuable ‘pro-bono’ support. After just ten months the company has raised approximately A$200,000 from employee donations, fund raising events, supplier contributions, company donations and an inaugural multi-product, multi-store promotional event fielded February 15 - March 30, 2000 across Australia. Awareness of P&G as a good corporate citizen improved to 5% of all grocery buyers and 10% of those aware of the company. Awareness of ‘Better Start” was 17%, stemming mainly from the six weeks of advertising around the multi-store promotional event. Some 60% of the $A1 million + schedule was ‘no-charge’ due to the relationship P&G has built up with the media. Research indicated a higher degree of purchasing of the five participating P&G products (Pantene, Head & Shoulders, Oil of Olay, Febreze and Dawn) from grocery buyers aware of ‘Better Start’ versus those that were not aware. Community Forums and Institutionalised Feedback Australian companies are starting to manage their stakeholders in the community in a structured way. They set up committees consisting of representatives from the community that regularly report any ideas, issues and complaints to the company. Regular surveys and computerised feedback assist companies to align their operations with the expectations of the community.

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4. First Steps - A Process for CSR in Australian Companies The previous chapter discussed various internal and external CSR initiatives that Australian companies have adopted. However, many Australian companies adopt various initiatives in an isolated manner and consequently fail to realise the full benefits of their CSR investment. CSR will deliver better returns when a company takes a strategic approach that fully integrates CSR initiatives into the core of the business. This graphic below demonstrates that CSR is a process, which if followed, will enhance the long term success of a company’s CSR strategy.

Identify what the company wishes to stand for

Measuring the returns

Identify the company’s stakeholders

What issues are relevant to your stakeholders? Implementing and monitoring Identify which approach to CSR Which initiatives will meet the needs of the stakeholders & the company Veronika Peters 2000

Figure 3: CSR - A Process

Before a company embarks on CSR linked initiatives, which is in fact the fifth stage of this process, it should resolve a number of questions relating to its overall purpose, its stakeholders, their concerns and expectations and the most suitable approaches to adopt. Following the selection and implementation of CSR initiatives the company should concentrate on measuring the tangible returns to their bottom line.

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4.1. IDENTIFYING THE OBJECTIVE OF THE COMPANY Even a perfectly executed CSR program will ultimately fail if the objective of the company is contrary to the interests of society. No good cause or well-meant corporate initiative will compensate for an overall objective that negatively impacts upon society. For example an arms manufacturer will have a very difficult time convincing its stakeholders that it is concerned about the well being of society due to the nature of its business objective ie to produce guns and ammunition. Hence the first question that must be addressed in the CSR process is: what is the overall purpose of a specific company? What goods or services does it produce? How does this objective benefit shareholders, stakeholders, community, the environment and the society? This basic question is the start of devising a CSR strategy that is appropriate for a particular business. 4.2. WHO ARE THE STAKEHOLDERS IN A COMPANY Leading businesses realise that their interdependence and relationships with stakeholders are a cornerstone for their success. Any company, no matter what its size, exists in a context of six main stakeholder groups: shareholders, customers, employees, business partners, government and the community. Each group provides essential resources and has an interest in the company’s operations, as the following chart reveals:

Employees (human capital)

Shareholders

Customers

(capital)

(revenue, loyalty)

Company Business Partners (supply, add value to and buy products)

Government Community

(regulating)

(civic society ensures the health status in the community and consequently all markets)

Figure 4: A Stakeholder Model Stakeholders influence the company and vice versa. The complex issue of balancing conflicting stakeholder demands is one of the key issues in the successful management of corporate social responsibility. Logically the first step of managing these expectations is to identify the stakeholders.

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An international example: The Shell Case In 1996 the Australian Financial Review debated the dilemma for companies to be accountable to either their shareholders or stakeholders. Shell, then in a serious crisis due to its association with the military government in Nigeria, was cited as a company which exclusively devoted its efforts to increasing shareholder value, no matter how high the price. “Many believe that Shell’s petrol is mixed with a little too much blood,” wrote Legge.42 Two years later the Australian Financial Review again reported on Shell. This time the company, the second largest company worldwide, is being cited as a new leader in corporate citizenship. A radical conversion to stakeholder management has been fully implemented throughout the company worldwide. “In Shell we believe the only way forward is to engage with all those who have an interest in our activities understanding their perspectives, responding to their concerns and gaining their trust,” said Jeroen van der Veer, Managing Director of Shell Group, earlier this year.43 In May 2000 Shell International was winner of the 2000 Social Reporting Award issued by the Association of Chartered Accountants and the Institute for Social and Ethical AccountAbility. When the largest companies worldwide embrace values of corporate citizenship it is time for the sector to re-think its role, suggests the Australian author.44

4.3. WHICH ISSUES ARE IMPORTANT TO A COMPANY’S STAKEHOLDERS? Any business seeking to implement a successful CSR strategy should develop a clear understanding of which social and environmental issues concern their stakeholders. Stakeholders have a number of expectations about how a company can contribute to the betterment of society as well as specific concerns about potential negative impacts the company may be having. It is critical for businesses to understand both the expectations and the concerns of their stakeholders. Businesses should also be aware that these issues are relatively fluid and should be re-assessed on an ongoing basis. The issues that typically concern stakeholders can be categorised into 3 broad groups. A business, which is intent on capitalising on a fully integrated CSR strategy will have taken steps to ensure that all three categories are adequately addressed. Economic Impact Stakeholders want to know how profits are made, how they are distributed, how sustainable they are, how the Board is elected, and what basic principles decisions are based on. What ensures the long term economic survival of the company? Social Impact Stakeholders are equally concerned about how a business manages its relations with all its stakeholders. Typical inquiries centre around how a company treats, develops and compensates its employees. Does the company build an atmosphere that fosters human rights, safety and health in its immediate operations and with its supply chains? How does a company interact with the community? Does it demonstrate care and social concern to its customers and the wider society?

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Environmental Impact Stakeholders are concerned about how natural resources are being managed and whether the company operates in a sustainable, environmentally conscious way. Internationally the priority issues on the corporate agenda have been energy and eco-efficiency, sustainable resources, production and consumption, the greenhouse effect and gas emissions. In the Australian context, issues of particular concern have been water quality, land degradation, salinity and recycling. Is the company meeting other expectations, economic and social, without compromising the environment? 4. 4. FOUR APPROACHES TO CORPORATE SOCIAL RESPONSIBILITY There are four different approaches companies take when they look at the concept of corporate social responsibility. Some argue it is profit maximisation, to others it means being altruistic, others realise an enlightened self-interest, and yet others want to see themselves as corporate citizens.45 A. ‘CSR as Profit Maximization’ The Nobel Prize-winning economist Milton Friedman argued that ‘socially responsible’ companies are those that operate most profitably. A company is doing ‘good’ by generating profit, providing labour, goods and services that are demanded and by paying taxes. Friedman does not believe that corporate philanthropy or any social programs achieve their goals. Further, they interfere with the concept of personal freedom and take away money that belongs to shareholders.46 In this traditional approach the company gives a higher priority to the interests of shareholders than to those of other stakeholders. B. ‘CSR as Altruism’ Companies with an altruistic orientation use financial surpluses to make a positive contribution to society, to groups or causes that are not necessarily related to their business activities. Corporations in this category act with a philanthropic perspective. Company resources are distributed in a reactive way according to social value and social and moral precepts. C. ‘CSR as Enlightened Self-Interest’ According to this approach business leaders recognise that giving back to the community and protecting the environment ensure indirect returns to their companies. Causes are related to business activities and create a variety of benefits for the partners involved. Support for community groups or causes is viewed as a business investment. There is a clear rationale for any expenditure. D. ‘CSR as Corporate Citizenship’ The concept of corporate citizenship goes beyond the previous models. CEOs recognise the need for sustainability and for social investment strategies in business. Corporate citizenship refers to the relationship a company has with the 34

wider society, rather than merely with selected stakeholder groups. With an increase in wealth and freedom and the internationalisation of operations, corporations are increasingly realising a new sense of responsibility.47 The approach suggests that stakeholders are not only being managed but also integrated in decision making. Corporations want to be held responsible for any actions that affect people, their communities and the environment. Corporate citizenship suggests a three-way partnership between business, nonprofits and government. Different companies value different approaches to CSR. The following figure highlights how Australian CEOs view the social responsibilities of their companies.

"Business must be a good corporate citizen and put back into the community" (CEO from the manufacturing sector) "Business should be prepared to put back into the community in return for the support it receives from the community" (CEO from manufacturing sector)

"In order to sustain community sanction for business they [companies ] must be seen to contribute beyond the confines of customers,employees and taxation" (CEO from the resource sector)

"Business must be good corporate citizens -this responsibility goes beyond their immediate operation and extends to taking ownership of community issues" (CEO from retail sector)

"A company's responsibility is to manage its business affairs -social welfare is the responsibility of government"(CEO from resource sector)

"Our company's main responsibility is to satisfy the needs of customers and shareholders"(CEO from services sector)

For the public good – do not expect a commercial return Community serviced by maximising shareholder returns and satisfying customers

"A genuine approach to community involvement pays dividends in terms of goodwill and morale" (CEO from the service sector )

Enlightened self interest – longer term commercial interest of the business

"Return to shareholder value drives our strategy and direction" (CEO from services sector ) "We should aim to be profitable,we should aim to reduce our environmental impacts and we should aim to invest in our communities as well as in our businesses. The aim is to achieve a balance between these three" (CEO from the resource sector)

"Sustained profit (return to shareholders) is not contradictory with community benefit and corporate responsibility.I define a successful company as one which is both profitable and responsible" (CEO from the resource sector)

"It is important for all companies to contribute to the community, but they should do so in a way that is aligned with their business objectives and can therefore be justified to shareholders" (CEO from the service sector)

Source:Centre for Corporate Public Affairs and the Business Council of Australia,Survey 2000

Figure 5: Australian Attitudes on Corporate Community Involvement48

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4. 5. IDENTIFYING AN INTEGRATED STRATEGY OF INITIATIVES The CSR initiatives a company adopts will depend on which approach to corporate social responsibility it has adopted. A company that views its social responsibilities as maximising profits will focus its efforts to that end. Altruistic companies will be satisfied with giving to good causes. A company which follows the strategy of enlightened self-interest will try to improve its connections with the community, or invest in projects and research that enhance the environmental operations of the company. A company that wants to act as a corporate citizen will start to rethink all of its priorities and its internal and external operations. The following figure gives an overview of the four different approaches to CSR and how it can influence a company’s formulation of its CSR strategy.

Approaches to CSR

GOAL

Profit Maximization

Altruistic

Enlightened Self-Interest

Corporate Citizenship

Profit

Give back

Mutual benefits

Responsibility, Transparency, Sustainability, Accountability

Governance Applied Ethics Restructuring of Business Priorities and Practices Active Stake-holders Dialogue Any other community activities integrated

VEHICLES

Rationalisation

Philanthropy

PR, Image Programs Activities in the Community; Cause Related Marketing, Volunteers

MEASUREMENT

Financial Results

Donations

Activity focused reporting

Holistic, Triple Bottom Line

BENEFICIARIES

To Shareholders to others indirect

To Community Groups and Causes

To both sides: Business and Community

To company: Survival, position, role To partners of all sectors To the wider society

BENEFITS

• Financial

• Benefits not necessarily measured

• Performance • Market Goals • Human Resource

• Tangible plus potentially • Intangible

TIME FRAME

Short term vision

Sporadic

Medium term planning

Long term horizon

Veronika Peters 2000

Figure 6: Four Approaches to CSR

4.6. IMPLEMENTING AND MONITORING During this stage a company determines how best to achieve its social objectives. During all stages the inclusion of stakeholders will impact the outcome of individual activities as well as the program as a whole. Companies often form partnerships to pool their resources and achieve mutual benefits. Monitoring and continual learning and improvement emerge as crucial factors to effectively manage the process of CSR. 36

4.7. MEASURING THE RETURNS Corporate social responsibility requires transparency and accountability. Triple bottom line, also called sustainable development reporting or social reporting, attempts to provide the new accounting principles needed to measure the full extent of a business’s impact on society. The idea is not to forsake the traditional bottom line, but to harmonise it with the new demands on business set out here. “The approach does not necessarily imply a new concept of what companies are primarily for, rather it extends the time horizon over which the full range of a company’s and its shareholders’ interests should be assessed.” With the triple bottom line, as proposed by John Elkington, a company is measured against three indicators: 49 Economic Value-Added: The profits a company makes are adjusted by the costs of capital employed. Market Value-Added, a similar concept, calculates how much value a company has created since it was founded. Environmental Value-Added: The profit of a company has to be further adjusted to take into account the natural resources that were employed and whether they are renewable. Social Value-Added: Finally the bottom line needs to reflect the impacts the company has on human and social capital. Is knowledge gained, skills added, trust built?

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5. WHAT ARE THE BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY? Businesses will realise better returns on their CSR investment if they align individual initiatives into a business strategy that reflects their own core operations. While some businesses have done this, many adopt individual initiatives on an ad hoc basis and so run the risk of reduced returns from their CSR investment. But what are these returns? CSR practitioners are frequently confronted with the problems of measuring the returns to a company. Many benefits are difficult to put dollar figures on, so a diverse range of measures is slowly being developed to measure the impact of CSR. The easiest to measure benefits occur at an enterprise or internal level where CSR activities benefit the business that initiates them. The other forms of benefits occur at the business community level where benefits accrue across the entire business community. 5.1. BENEFITS TO BUSINESS When a company engages in corporate social responsibility it can expect a range of intangible benefits. Among them are corporate assets such as motivated employees, reliable supplier relations, an extended base of loyal customers and improved reputation. However, increasingly, companies are learning to translate other less tangible benefits into more measurable ones. They can be grouped into four areas: • operating performance • market goals • human resources • external relations. OPERATING PERFORMANCE: • Improved financial performance Acting in a socially responsible manner does not necessarily have to impede the improvement of the financial bottom line but can potentially improve it. A study undertaken at the Harvard Business School indicated that stakeholder-oriented companies showed four times the growth rate and eight times the employment growth compared to companies that were only shareholder-focused. A recent study reveals that corporate performance is closely linked to a strong ethical commitment. In the 300 large US companies studied, the average market value added (MVA) of companies with a public ethical commitment was US$8.1 billion or 2.5 times larger than those without an ethics code.50 The Australian Eco Share Index has outperformed overall market shares. (The top ten holdings at 9 August 2000 were AMP, BHP, Commonwealth Bank, LendLease, National Australia Bank, News Corp, Optus, Rio Tinto, Telstra and Westpac). • Reduced risk exposure CSR enables businesses to tap into new information channels and become better equipped to predict future trends and scenarios. The company balances risks in volatile markets and responds more quickly to customer needs or threats by pressure groups. The company enjoys the trust of its main resource groups. A higher status among other businesses enables the company to choose its partners, leading to higher quality and efficiency. Risks of potential environmental and social 38

concerns on the supply side can be discovered at an early stage. Management can make informed decisions leading to the long-term sustainability of shareholder value. • Easier access to investment funds A number of investment banks in the US and Europe have started to screen the environmental practices of companies and are creating standards for investment purposes. Hence, CSR will also be a means to ensure access to funds if these trends continue. Monash recently surveyed 160 Australian companies on behalf of Westpac. The Westpac-Monash Eco Share Fund has already announced that it would put companies on negative watch until their environmental practices improve.51 • More efficient use of resources With an increased awareness of social and environmental concerns, companies can reduce waste and save costs related to energy. Processes are improved, leading to greater efficiency. MARKET GOALS: • Identification of new products and markets As it identifies new markets and creates new products, CSR can assist in understanding market shifts and in developing green products and services that meet the expectations of the new customers. For example, EnergyAustralia realised a market for renewable energy and developed its PureEnergy product. The Body Shop Australia built their whole business on products that would meet the needs of a socially and environmentally aware generation. • Enhanced brand image In a time when customers have unlimited choices, CSR can increase brand awareness and recognition. CSR can assist in building an image, if internal changes are supported by cause-related marketing initiatives. • Increased sales and customer loyalty Customers are loyal to companies who care and they reward them with increased sales if they believe in the cause and the trustworthiness of the company. HUMAN RESOURCES: • Improved recruitment and retention performance A number of socially aware Australian companies, such as Freehills, indicated that graduates are attracted to what the company stands for. CSR can hence be a recruitment tool in a competitive labour market. In organisations where internal recruitment is the rule, such as Procter & Gamble, it is of utmost importance to retain staff. A decrease in turnover can serve as an indicator of the effects of CSR. Staff who are proud of the company they work for often act as the best PR. Employees are the most visible ‘business card’ a business has. Hewlett Packard and IBM are high performers and both count as visionary companies of our time. Yet their industry known for structural changes and rationalisation, does not hinder them from offering a wider range of employer 39

benefits and supportive redeployment systems for redundant workers. Rationalisation and job cuts in many cases are inevitable - how people are laid off differentiates one leadership style from another. • The creation of new business networks and social capital Employees who are connected in their communities can enhance their business through new contacts and the creation of partnerships. Creating contacts and building relationships of trust and collaboration are seen as key in the formulation of social capital. • Increased productivity through motivated staff When employees appreciate what a company stands for, CSR can result in higher levels of productivity and lower operating costs. The quality of work is improved as employees display lower turnover rates and fewer days of absenteeism. The Mildura Fruit Company managed to settle ongoing arguments with a union by becoming involved in a partnership with Mallee Family Care, a well-respected local community organisation. This, in combination with improved working conditions, ensured smooth operations. • Enhanced skill set Managers who return from secondments or projects involved with the community, re-enter the corporate world with a skill set they could not have gained at a university or through corporate training.52 Re-evaluated Skill Set: Managers feel that by using their skills in a noncorporate setting they realise the expertise they have actually gained in their profession, be it marketing or finance, and rediscover the value of this knowhow that is frequently taken for granted in the corporate world. Often new skills emerge as managers operate in a new field. A sense of broadened horizons and new self-esteem help executives to benchmark their leadership skills in their corporate position. Such a program can help people reflect on their life values. Some managers feel that after having been through this “life training” they are in a better position to act as mentors in a corporate setting. Communication and Negotiation: The new setting often does not allow the jargon and speed of action managers are used to in their offices. Decisions are made in different ways, often influenced by different power levels and bureaucracy. What managers experience initially as frustration eventually increases their understanding of stakeholder relations and a tolerance for people they might usually not feel comfortable with. Discipline and a new sense of commitment to tasks also foster problem-solving skills in the long run. Strategic Thinking and Actual Implementation: Managers are often placed in complex settings and learn to work with limited resources. This challenges them to stay strategically focused and master their project management skills.

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EXTERNAL RELATIONS: • Social licence to operate and trust A company that is respected in the community enjoys support from its stakeholders and gains a licence to operate. Companies build trust over time. Reputable companies such as Rio Tinto and Levi Strauss have not gained their status by chance. For these proactive companies it has meant adopting innovative strategies, leadership and persistence in times of pressure and committed management of stakeholder needs. • Enhanced corporate reputation Bad news hits the headlines the quickest. In product recalls, downsizing, rationalisation, mergers and accidents involving contamination, the media tends to focus on providing an explanation and showing potential consequences for the wider public. At these moments an existing reputation can save a company’s life. Public relations or crisis management is often not enough to counter public accusations. Leading business magazines, such as the Financial Times in the UK, Fortune magazine in the US or Asia Business, have started to evaluate and rank companies according to their reputation. Most companies which have achieved a high ranking have displayed strong stakeholder relationships and active leadership on social issues. The increased inclusion of non-financial criteria in these surveys serves as evidence that the evaluation of corporate capital will go beyond the financial bottom line. It will increasingly be linked to a company’s reputation.53 Australian companies are aware of their reputation as well. • Improved relations with the government and reduced regulatory intervention A number of Australian companies have found that socially responsible strategies can lessen the likelihood of restrictive Government regulations being applied to their industry. A company that can demonstrate that it is attempting to deal with complex social and environmental problems has a strong case to argue against punitive government regulations. Furthermore, businesses which have a reputation as being socially responsible are beginning to gain an advantage over other less responsible companies when it comes to competition for public tenders. While it is important to know and measure the short-term benefits of CSR programs, they should not be the ultimate driver. In attempts to establish a ‘business case’ for CSR expenditures, managers tend to focus on measuring the effects of CSR on the immediate financial bottom line. This shows that managers still think of CSR benefits as being short term. If the motivation for CSR ultimately is to improve the financial bottom line, the business, in all likelihood, has not understood the longterm perspective and the wider impacts of the corporate citizenship approach.

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OUTPUTS

IMPACTS

Measurement Time Scale

INPUTS

1 year

1-2 years

1-10 years

Figure 7: Time frame for Evaluation of Inputs, Outputs and Impacts

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5.2. BENEFITS TO THE WIDER COMMUNITY A recent study by Mark Glazebrook, Coordinator of the Corporate Citizenship Research Unit at Deakin University, investigated how Australian’s top 500 companies are becoming corporate citizens. The study reveals that 37 of Australia’s top 500 companies view corporate citizenship as a determining factor for the strategic directions of their businesses. Almost half of these companies had adopted strategies to enhance their level of corporate citizenship over the previous 12 months.55 This finding could be an indicator for a shift that is taking place in the way companies conduct business. The Australian business community is beginning to recognise that CSR is not an obligation, nor a threat, nor a trend, but an opportunity and at times a business imperative. The rules of business continue to change. The new relationship between the government, the business sector and the community opens doors to deal with and foster society economically, socially and environmentally. If companies act as corporate citizens they can be part of the solution to many socioeconomic problems.

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Corporate citizens are gaining a voice in the political arena. The private sector realises that concepts of corporate citizenship give the sector legitimacy, trust, power and freedom from regulations. Australia is in a vulnerable position, in danger of becoming over-regulated.56 The eighties have demonstrated how pressure groups and environmentalists can mobilise consumers and bring about regulations on emissions and toxic waste. Increased awareness by consumers has pushed companies to change. However, with increased freedom comes increased responsibility. The business sector has an opportunity to show committed leadership. At the turn of the century, the joint efforts of the business sector in collaboration with government and the community will impact on Australia’s prosperity for generations to come.

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6. First Steps The context of business has changed. Globalisation, the communication revolution and new technologies have brought a shift in how business is being conducted in the new millennium. Stakeholders are educated and well informed and expect transparency, involvement and accountability. Australian companies have responded in a variety of ways. The country has a number of best practice examples for corporate social responsibility. Companies have started internal programs such as ethics programs, employee empowerment and social and environmental accounting as well as external programs which foster their links with the community and external stakeholders. Partnerships with nonprofits emerge as a key strategy for community involvement. Corporate social responsibility is associated with a range of benefits, including improving operating performance, providing market advantages, employee empowerment and building external relations. While Australian companies engage in social and environmental activities, their programs are rarely integrated under a well-founded concept of CSR. Frequently businesses simply address individual stages of the CSR process seen in isolation. Yet the process involves a range of stages. A simple outline of those steps would include: • starting with a purpose, with stakeholder involvement • identifying critical issues • deciding on a CSR approach • choosing appropriate tools and partners • implementing and monitoring the accounting processes and auditing A company needs to run its business profitably, effectively, safely, legally and ethically. Furthermore companies have to minimise the negative impacts their operation has on society and the environment. Initiatives in this area are driven by concerns for reputation and ensuring the survival of the company in the long term. As companies undertake a range of CSR initiatives, they are learning how to turn social initiatives into business benefits. Realising mutual benefits, evaluating and accounting for social activities are important exercises that businesses have to engage in. When a company addresses the social issues that society is dealing with, it is an opportunity to show initiative and leadership. The business sector as a whole also benefits when companies act responsibly. The corporate sector gains a voice in the political arena, legitimacy, trust, power and freedom from regulations.

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NOTES

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This paper was prepared by Veronika Peters on behalf of the State Chamber of Commerce (NSW) for the Common Good Program.

Level 12 83 Clarence Street Sydney NSW 2000 Australia Phone 02 9350 8100 Fax 02 9350 8199 www.thechamber.com.au