Heading for Greener Grass: The challenges for CSR implementation

In the third of a series of focuses on how students view CSR, Seamus Dufurrena, PhD student at ESSEC Business School, shares his path to awareness, responsible business and a wider purpose.

The challenges in implementing CSR

Short of enacting laws to force companies to comply with CSR guidelines, Seamus Dufurrena believes CSR implementation needs to come from the top. Though bottom-up CSR – in which employees take initiative to implement new and responsible practices in the work place – is possible and does happen, for Dufurrena top management is in the ideal position to enable the forces of CSR to take hold in a company. ‘They have the power to cultivate a corporate personality that is conducive to treating people with dignity and to innovating on processes and products to make them more sustainable,’ says Dufurrena. ‘In my home country, the U.S., one of the principle obstacles to progress in CSR has been the focus on short-term, quarterly profits and maximizing shareholder value, often at the expense of other stakeholders. The incentives have been improperly placed on short-term targets that often, even undercut the future performance of the company.  The nature of CSR is an emphasis on the long-term, especially with respect to conducting business. If management could be better incentivized to make decisions on the basis of sustaining the company long-term, that should necessarily mean conducting the business more responsibly.’

A classic example of this is Unilever under the management of Paul Polman who decided to scrap quarterly reports and short-termism after the financial crisis and began to reshape the company to be more transparent and socially responsible. The result was an initial steep decline in Unilever’s stock price as investors were wary of such an approach, but it didn’t take long for the stock value to recover and its upward trend over time reflects an enhanced credibility that draws both investors and consumers alike. According to Dufurrena, this approach by Unilever also sets the bar higher for its industry peers. If consumers have a choice among products where, all other features equal, one is produced more sustainably than the other, they’ll likely choose the more sustainable one. ‘This is a solid example of how CSR really can pay off.’

‘On the other hand,’ continues Dufurrena, ‘take the example of Volkswagen who, in 2015, was caught lying about its products’ emission levels. This not only resulted in pervasive negative publicity that caused significant damage to the brand, but it cost the company billions of dollars in fines and put it at risk of bankruptcy, not to mention the dive its stock price took and is still suffering from. ‘This illustrates an example in which conducting business responsibly can serve as an insurance policy, if nothing else,’ states Dufurrena. ‘Sure enough, there are costs involved in developing cars that meet stricter environmental standards, but investing in better products at the outset is significantly less expensive than the fines Volkswagen had to pay to stay in business, let alone its loss of credibility.

Is CSR reserved for the big fish? CSR has many facets and all it really takes is the right attitude  

Is CSR only something that large companies and groups can afford? ‘The question of whether CSR is something only large companies can afford is an interesting one,’ states Dufurrena.  ‘The World Wildlife Fund states that some 500 companies control about 70% of commodities worldwide – that’s an extraordinary amount of power in a relatively small number of companies. The impact of those companies engaging in CSR, for instance, is undoubtedly going to be more substantial than that of individual SMEs when it comes to the environment.  However,’ continues Dufurrena, ‘that’s not to say that SMEs can’t afford to engage.  Rather, they should see CSR as a means to differentiate themselves from industry peers. CSR has many facets and all it really takes is the right attitude. If SME managers would simply enable their employees to make proposals on how to make their company more responsible, not only would they be engaging in CSR to some degree merely by empowering their employees, but their companies would likely benefit from the free ideas – not to mention that it’s fairly easy and cost-free to begin reporting to the UNGC.  The UNGC can be seen as a good starting point to begin CSR reporting as their standards are less stringent than, say, the GRI standards. The financial costs of these practices should be negligible. It’s more a question of putting forth the effort.’

When asked if he had a wish regarding CSR, Seamus Dufurrena answers with clarity spiced with hope. ‘Simply, to get everyone educated. In an ideal world, everyone would have a decent level of education with which they could make informed decisions about what they demand from their governments, about how they conduct commerce, and about how they consume goods. Informed decisions lead to better outcomes.’

Read Part 1 of Seamus Duferrena’s journey

Read Part 2

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