Is it time to throw in the towel or hunker down and get serious?
By Dennis Schaal
The price of oil just hit $120 per barrel, UBS plans to cut 5,500 jobs, and more than a few former CEOs are finding ample time to hone their golf games as the weakening economy takes its casualties.
For corporate responsibility aficionados, is it time to cut back on corporate responsibility programs and prepare to do battle again when the economic fog clears?
Au contraire, say the people in the trenches on the sustainability front.
“Far from sustainability being an optional add-on that business can afford in times of plenty, it can and should be seen as an integral part of any business through good times and bad,” says Scott McAusland, a spokesman for the the Global Reporting Initiative in Amsterdam. “Moreover, a company that looks at sustainability issues seriously and reports upon their sustainability performance is likely to see business benefits in terms of cost efficiencies and a loyal customer base, which in times of economic turbulence, is essential for business to survive.”
Meanwhile, Verizon, too, views corporate responsibility as a competitive advantage regardless of the economy’s ups and downs.
Chris Lloyd, Verizon’s Executive Director of Public Policy and Corporate Responsibility, notes the company sees corporate responsibility as good business practice, and is attempting to “take best advantage of our resources” and is measuring outcomes “as we view ourselves from the outside in.”
That kind of sentiment was oft-repeated as CRO queried corporations, consultants and technology providers about what steps to take to weather the inclement economic times.
So, the following are 10 Ways to Stay Responsible During an Economic Slowdown:
1. Up the Ante and Accelerate Corporate Responsibility Initiatives
Hey, if corporate responsibility really is a competitive advantage, then putting more effort into and applying more resources toward your programs during trying times should reap enhanced rewards.
“CR programs enable companies to manage and assess environmental impact and costs and to track them,” says Philippe Tesler, co-founder and head of business development at GRC solutions-provider Enablon. “In so doing, companies are able to reduce costs, reduce risks and be more competitive in an adverse economic environment.”
Jeffrey Hollender, the President and “Chief Inspired Protagonist” of Seventh Generation, the green cleaning-product firm, concurs that now is the time to speed things up.
“If a company has developed a strategy that incorporates or is driven by corporate responsibility issues, given the huge growth in consumer interest and demand for more responsible companies, as well as increasing external drivers, now is the time to accelerate progress if you are truly focused on long-term value,” Hollender says.
2. Focus and Prioritize
One prominent retailer, who declined to be identified, acknowledged that “just about all budgets are being cut right now. However, that does not mean that companies are abandoning their CR programs. In many cases, those programs are being strengthened if by nothing more than [by] time on task.”
The retailer noted that many companies can’t afford any CR letdown because customers demand that corporations track the sustainability of their products and “gauge the overall CR health of the companies they do business with.”
Chris Park, a Principal at Deloitte Consulting, says corporate responsibility officials need to “give senior management a reason to say yes” to budget requests. He counsels CR officials to talk to workforce representatives, supervisors of supply chain practices and those responsible for introducing new products and list the projects that are feasible to undertake.
“Document as much payback, financial or otherwise, as you can,” Park says. “Document the costs and risks, too. Then prioritize them so that the most straightforward projects can get done first. Carefully benchmark performance in each area you address, then be sure to track and communicate the improvements internally and externally. Once the management team is confident you can get things done, who knows? Maybe the next budget conversation you have won’t be, ‘What can you cut?’ It will be, ‘What do you need?’”
3. Think Different and Tell the World About It
Once you have ensured that your internal staff is focusing on things that matter from a corporate responsibility perspective, then go out and tell the world about it.
“The internal piece is key,” says Krista Pilot, a Senior Vice President at DKC, a public relations and marketing firm, “whether it’s monitoring emissions, factory labor standards or product stewardship. Communicating about all of this to customers, partners and shareholders is also crucial, as this creates continued support for the company’s license to operate.”
Paul Klein, the President of Impakt, a corporate responsibility consulting firm in Toronto, agrees on the need to tout your value proposition.
“It doesn’t cost anything to ensure that a company’s CSR commitment and programs are included appropriately in external communications to customers, consumers, investors and other stakeholders,” Klein says. “The ROI (return on investment) of this is clearer differentiation, stronger sales, better supplier and customer relationships, more consumer loyalty and improved investor relations.”
4. Share and Share Alike
Heresy to some, we know, but consider collaborating with other company departments.
“Strike a deal,” Pilot of DKC counsels. “CR is multidisciplinary covering legal, Human Resources, environment and communications, so go out and make friends with your fellow corporate department heads to see if you can collaborate on CR projects and share the costs.”
There usually is plenty of overlap so cooperate and find some efficiencies.
5. Proper Prior Planning Prevents Poor Performance
Hopefully, some visionary within the reaches of your brain trust realized that capitalism is cyclical and that the gravy train would slow at some point. Looking to the future and preparing for a juncture when restructuring, even retrenchment, is needed, would be a prudent move.
Klein of Impakt points to a Michelin program in Europe and Canada that provides loans to small- and medium-size businesses in communities where the company operates. So, if Michelin has to close a facility, at least the company has done something to blunt the impact in that locale.
“The biggest challenge is how to be seen as responsible when significant operational changes are needed,” Klein says. “There’s no easy answer for a company that’s had to downsize its operations in a local community. There are a few ways to minimize the reputational damage, but these all involve earlier foresight and groundwork.”
Kevin Moss, head of Corporate Social Responsibility, Americas, for BT Global Services, argues that companies committed to corporate responsibility usually don’t gut the CSR budget in economically stressful times.
“A component of sustainability is looking at the medium and long term and ensuring we don’t compromise the long-term well-being of the natural environment, and our social and economic environment,” Moss says.
Take out the crystal ball, Moss advises. “Our strategic CSR investments are made in the context of what new information we have learned about the future, not the present,” Moss says. “We need to improve our understanding of climate change, world poverty etc. and consider how to address these issues.
Rather than asking ourselves, ‘What is happening now?” we ask ‘What have we learned about the world in 10 years (or 20) that will affect sustainability?’”
6. In Lean Times, Lean on Your Partners, Get More Efficient
Robert Leffel, associate director of the Ethisphere Institute in New York City, believes “there is solid reason for ramping up your investment into corporate responsibility efforts and communication” in sluggish economic times as “the battle for the customer and profit is more fierce.”
Still, Leffel notes that there is a good chance during such a downturn to negotiate better rates from advertising and communication vendors.
And, Anthony Napoli, President of destination management company Briggs in New York City, advises similarly that in trying times companies shouldn’t trim corporate responsibility budgets, but should “just spend wisely and get the bang for the buck.”
Volume-pricing concessions are in order, Napoli adds.
Meanwhile, Pilot of DKC indicates that there are ways to get more efficient if your budget indeed gets chopped up a bit.
“CR reports can be costly things, particularly if you want lots of beautiful, glossy pictures and fancy text,” Pilot says. “If your budget gets cut, don’t print any, but create a fantastic, simple, content-rich online report. The real CR gurus never look at the pictures and fancy language anyway, so create a document that focuses on genuine results and updating goals and metrics.”
7. Get a New Analysis of Your Risky Business
Hollender of Seventh Generation offers that companies shouldn’t reduce corporate responsibility budgets--unless they plan to go out of business.
But, now would be an opportune moment to reassess risks, Hollender says.
“Given the increasing media scrutiny of corporate responsibility by NGOs (nongovernmental organizations) and the media, now is the time to update your risk analysis and determine if accelerating investments in dealing with anything related to reputational risk is appropriate,” Hollender says.
This is especially important in a challenging economic environment, says Tesler of Enablon, because “there is less room for mistakes.”
Tesler adds: “The risks are so high for companies which do not manage these issues and they cannot afford to take these kinds of risks in a downward environment.”
8. Get Trendy, or Trend-Conscious, At Least
You’ll have a better feel for which direction to take your corporate responsibility efforts once you gather a little intelligence.
“Take a look at what your competition is doing,” says Park of Deloitte. “Then take a look at where the legislature is leaning, not just at the federal level, but also at the state and municipality levels in all of the locations where you do business. Assess market trends here and abroad. Once you have this information, you’ll know what to do.”
9. Check Your Reality and Shift Around Your Budget, if Necessary
“Customers, shareholders and regulators are far more sophisticated than they were even a year ago,” Park says. “They’re demanding real, positive change in the way you run your business. And, it’s hard to change your image without first changing your reality.”
Park adds: “So, if the bulk of your corporate responsibility budget has been dedicated to corporate communications or public relations, it may be time to re-apportion it so that operations and governance get a greater share.”
Of course, if you have your act in gear and already can walk the walk, then it may be time to increase the public relations budget and let the world know about your efforts and brand.
10. Keep the Faith
The economy is like an elevator: what goes up must go down. And, the converse is true, too.
Housing prices will go back up one day. The credit markets will loosen. Even the dollar might show some life in some hard-to-fathom future.
And, if you have done your corporate responsibility homework and kept integrating sustainability as a way of doing business, your efforts should put your company on solid ground.