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Corporate social responsibility - Ethical to the core

04 Jun 2008

HR teams are in the best position to embed CSR into their organisation's culture and ensure decisions are made with wider ethical issues in mind, says minister for energy Malcolm Wicks.

The best and most successful companies have always been socially responsible.Why? For the simple reason that it makes good business sense. Businesses perform better and are more sustainable in the long term when they regard wider ethical issues while pursuing success.

As HR professionals, you will know the crucial role corporate social responsibility (CSR) plays in recruiting and retaining the best people. It is good for personal development and it is good for generating new business ideas. The most talented recruits are no longer satisfied with simply contributing in their spare time or as a hobby - they want their work to matter too. And if one employer won't provide that opportunity, they will find another that will.

CSR is pivotal to tackling many of the big challenges we face today: poverty in the developing world; sustainable development and climate change; and unemployment and disadvantage in Britain. By showing the world they are working responsibly - economically, socially and environmentally - businesses earn the trust of their customers, their stakeholders, employees and the wider community.

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CSR isn't restricted to outside activities. HR teams are perfectly positioned to embed it into their organisation's core culture. Building corporate responsibility into important activities like appraisals, rewards and training helps to boost an employer's wider credibility.

Transparency - opening up companies to public scrutiny - is the answer here. The growing prominence of reporting and disclosure initiatives is increasing the amount of available information and the awareness of consumers and investors. The Companies Act 2006 legally recognises that companies are more likely to achieve long-term sustainable success if directors work towards wider ethical goals such as protecting the environment and valuing their employees. The new reporting requirements and statement of directors' duties for all companies will help to spread best practice (see p44).

I'm encouraged by the growing interest in responsible investment. At the end of September last year, the Investment Management Association reported that net new investments in ethical funds rose by nearly 600% compared with the same quarter the previous year. I hope these trends continue and we start to see the City of London leading responsible investment into the mainstream. But there is still a lot more to do.

The City Leaders Initiative illustrates the Government's vision for the future - taking advantage of the deal-making, solutions-oriented approach of City professionals and their ability to take on economic challenges. Teams from City organisations and across government are working on financial issues concerning children in care, immunisation and drug addiction. Progress will save public money in the medium term. And the teams are devising financial market mechanisms to release resources now on the basis of those future savings. It is an example of harnessing and stretching the best brains in those organisations - recognising that they want to contribute and develop ideas - in contrast to the approach we sometimes see of CSR being for junior people and peripheral to a company's main business.

CSR is not just for big business and the City - it should be at the heart of every company. We're working to support social entrepreneurs in the third sector and small business nationally.

At first glance, it might be difficult to see how being energy minister sits with leading the CSR agenda. But energy - how we generate it, how we use it and how we can be energy-efficient - is a vital factor in this. For example, the Department of Business, Enterprise and Regulatory Reform's Carbon Disclosure Project encourages corporations to measure, manage and reduce emissions.

And the urgent need to build a global, low-carbon economy will be a powerful driver in the months to come. The Government wants a global price for carbon, rewarding the most efficient and innovative actions to tackle climate change. HR professionals are important in helping us move forward. Their influence means they can work to bring CSR to the heart of every company and every business decision - which is where it belongs.

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