CSR Quickly Becoming a Business Requirement

Corporate Social Responsibility (CSR) is quickly becoming a business sustainability requirement.  Leading businesses are being more strategic about community affairs by aligning their core processes with business sustainably activities.  This is most evident in European companies now including CSR as a primary procurement consideration.

The Sustainable Procurement Benchmark Report, released by education body HEC Paris and sustainable procurement experts EcoVadis, questioned procurement executives at 95 of Europe’s largest companies about their corporate social responsibility (CSR) and business sustainability practices.  The study found that:

•    Sustainable Procurement is considered an “important” or “critical” objective by 90% of procurement directors at comparable levels to 2007.

•    Brand protection and cost management are still the driving factors behind Sustainable Procurement initiatives, but compliance with environmental regulations has taken on increased importance.

•    The vast majority of respondents have moved toward operational implementation of sustainability programs, with over 80% citing that they had initiated a program in 2008.

•    35% of companies surveyed intend to increase their investments in Sustainable Procurement despite budget cuts prompted by the recession.

•    37% of companies have put in place a Sustainable Procurement department and half have raised buyer awareness through training on Sustainable Procurement concerns and practices.

•    Usage of tools specific to Sustainable Procurement has significantly evolved, with a special focus on solutions for supplier evaluation and risk analysis across procurement categories.

•    75% of companies interviewed are now integrating CSR into their sourcing process, with 30% allocating significant weight to these criteria in the grading and selection system.

•    75% of companies use Sustainable Procurement criteria to measure the performance of their suppliers on an ongoing basis.

However, one of the great challenges facing sustainability, especially business sustainability, is the ability to measure success.  This challenge is has only intensified by growing eco awareness and resulting expectations to show progress.  Leading sustainability minded organizations still struggle to justify resources and define benefits of implementing sustainability concepts.  Without a universally accepted set of criteria, business sustainability is especially hard for many companies to define and measure.

To complicate the mater, there are approximately 70 business excellence frameworks used around the world, including the Baldrige Performance Excellence Framework here in the United States and the EFQM Excellence Framework in Europe.  These tend to focus on business practices that do not necessarily include sustainability concepts, let alone, business sustainability measurement.

Some promoters of sustainability measurement simply want the business world to evaluate the social and environmental bottom lines equally as seriously as the financial bottom line.  However, critics of popular frameworks, like the Triple Bottom Line (TBL) , comment that the concept itself promises or implies something that is very difficult to deliver.  While the theory is simple, the challenge is developing a methodology for calculating social and environmental progress with financial rigor.

The search for this common link may have slowed TBL aggregate measurement, but it has not limited progress.  The Global Reporting Initiative (GRI)  offers a set of 79 universal indicators and guidelines for sustainability reporting.  The G3 guidelines offer:

•    Principles to define report content

•    Principles to define report quality

•    Guidance on how to set report boundaries

•    Guidance on how to plot a path for continual improvement

Business Sustainability Reporting represents an important step in sustainable development.  It reflects executive commitment to transparency and accountability.  By disclosing information on its sustainability plan, companies increase credibility and confidence with stakeholders.