The tides are changing for Canadian business leaders and for many companies, it’s go help or go home.
Companies are looking to socially responsible business practices to appeal to customers and recruit talented employees.
A recent study of CEOs shows a new focus on social responsibility. Programs from Canadian IT companies have helped the country lead the charge towards a new strategy in meeting customer demands.
IBM Corp. released its Global CEO study earlier this year, which collected data from 1,130 CEOs and managers across the world, including Canada.
The study revealed a corporate focus in addressing environmental and socio-economic changes. Upper-management is committed to increasing funding for corporate social responsibility (CSR) programs by 25 per cent over the next three years.
This is the first IBM Global CEO study in which the issue of CSR has come up, according to IBM spokesperson Mike Boden. In previous years, he said, it wasn’t such a big issue but environmental and other concerns have pushed it to the top of the corporate totem pole.
Worldwide concerns over the environmental footprint caused by big business, international labour issues and other socio-economic factors have increasingly made customers more wary of which companies they buy from.
This shift in thinking has CEOs focusing more on their company’s global reputation.
“One thing that’s becoming more important is the reputation a company has,” said Richard Jenkins, vice-president and corporate director of public opinion research at TNS Canadian Facts, a Toronto-based market research firm that released a study on CSR earlier this month.
“That reputation is about how an organization deals with environmental issues, proper labour laws and all those other things.”
One Canadian company that has embraced the shift towards CSR is IBM Canada. Last March, CEO Sam Palmisano announced the creation of a corporate service corps. The corps operates under the company’s Global Citizen’s Portfolio.
As part of the program, young and ambitious IBM Canada employees were selected to visit countries such as Ghana, Romania and Vietnam, and offer technical training in a number of areas.
The Ghanaian team – which included two Canadians – worked with a local NGO to create a network allowing local artisans to expand their business outside of the local market.
“With IBM you’ll find tangible results (of CSR programs in action),” Boden said. We’re very proud of our (CSR activities) and working with (emerging) communities.”
Three years prior to IBM’s announcement, Hewlett-Packard (HP) Canada president and CEO Paul Tsaparis stressed the importance of global awareness in a speech to the Canadian Club.
“More than 92 per cent of Canadians surveyed said that the more socially and environmentally responsible a company is, the more likely they are to purchase its products or services,” he said. “In fact, the more socially and environmentally responsible a company is, the more attractive it becomes.”
Funding for CSR-based initiatives can cover many areas. Companies strive to work closely with emerging nations and offer expertise and support. Reducing an organization’s green footprint is also a common method of repairing a company’s reputation. HP’s recycling programs have long been lauded by social business groups.
While IBM’s CEO study showed a marked change in the attitude of most managers, some believe Canadian companies still trail their European competition in the area of social responsibility.
Canadian Business for Social Responsibility (CBSR), an advisory group whose members account for 40 per cent of Canada’s GDP, believes Canadian businesses can do more to improve their global reputations.
“Canada is a bit behind,” said Barb Steele, director of membership for the CBSR. “The United Kingdom is far advanced. Most of our best practices are borrowed from them.”
Steele said CSR has come to prominence over the last five years. She sees the trend as a positive one for Canadian businesses and an opportunity for companies to take a leadership role in North America.
IT companies, said Steele, should have a special interest in improving their CSR initiatives. Canadian branches of companies such as Toshiba and Microsoft have dedicated CSR plans and Canadian branches of IBM and HP could have the most to gain from increasing global awareness.
“IT is a really important sector,” she said. “The companies have a large environmental footprint due to the energy they use. IT is part of the solution. We will look to (these companies) as a way to fix (global problems).”
Boden agrees IT companies can benefit from increasing their presence in emerging nations.
“To be a successful business, you need to be globally integrated,” Boden said. “For an IT company, it’s a must. It’s an opportunity.”
Some companies have been slow to embrace a commitment to CSR initiatives. Expanded programs such as IBM’s require a large budget in their early years of development. However, analysts such as Jenkins say improving a company’s image is directly tied to its bottom line.
TNS’ survey reveals almost half of Canadians are likely not to buy from a company if they hear negative news about it. It shows that 28 per cent of Canadians refuse to buy products based on reputation alone.
“One thing [our report] is reflective of is that CEOs are more aware of the importance of their brand,” Jenkins said. “Everything you do can affect that brand.”
The benefits of CSR strategies are apparent to most large companies. In addition to improving image, companies most dedicated to global initiatives also attract the best candidates in the increasingly-competitive IT job market.
Boden said IBM has benefited from its Corporate Service Corps program in unexpected ways.
“The program is an important aspect for IBM. We give [our] expertise but our employees learn a lot from the practical experience,” Boden said. “It’s a give-give situation.”
IBM’s study dealt exclusively with large, multi-national companies. Steele’s organization also includes many of Canada’s largest companies among its members. Despite this, she believes a change in thinking at the top will also lead to changes from smaller business managers.
“Large companies can be corporate citizens and insist on it from their suppliers, which are smaller companies,” Steele said, adding that these measures would lead to an increase in corporate citizenship.
Jenkins says it’s difficult to officially gauge a company’s actual contribution to CSR. Both he and Boden agree that some organizations have not lived up to their publicized commitments. Despite this, Boden says successful business will be driven by global awareness and those that refuse to comply run the risk of being left behind.
Boden expressed the hope that other companies would follow IBM’s lead in fostering CSR. “You will see [CSR initiatives] from the businesses that are successful. Others will lag behind because they don’t want to spend the money.”
Canadian Business for Social Responsibility has long been pushing for all Canadian companies to adopt more responsible business practices. “Managers need to think of the impact their company is having,” Steele said. “If you’re not thinking years ahead then you’re being short-sighted. The game has changed.”