VIEW: CSR as the heart of a sustainable business model
Written by John Ludlow, CEO, Airmic
Organisations increasingly recognise that a strong approach to corporate social responsibility is not just a good thing to do – it’s a business imperative. Aligning business objectives and strategy to broader societal issues is at the heart of creating a sustainable business model, and thereby builds long-term shareholder value.
But while few would argue with this, not enough risk professionals recognise they have an important role to play in supporting their businesses in achieving their CSR objectives. In fact, the CSR team and the risk function share much common ground. CSR teams are focused on ensuring that the issues society is most concerned about, particularly as they relate to a company’s activities, do not become a barrier to achieving corporate objectives; and that they might even support them. This makes them part of the risk manager’s alliance: the three lines of defence.
Take reputation. Effective CSR teams will understand corporate reputation and how to build, leverage and protect it from a societal perspective. They are close neighbours with communication and brand teams. Reputation now accounts for a staggering proportion of corporate value and is the most fragile and vulnerable of assets. Risk managers need to help these teams learn how to manage reputation and its risks. Insurance products are there as part of the solution, but like cyber, data and intellectual property, the first step has to be to find the people responsible for an asset, then help them manage and protect it.
The UK presents a mixed picture when it comes to CSR. Some company cultures embrace the needs of their societal stakeholders and turn this into strategic advantage. Others pay lip-service, or use CSR as a smokescreen for less desirable business practices. Meanwhile, others fail to see its relevance, leaving the business vulnerable to a backlash when things go wrong. Failing to take corporate social responsibility seriously is a risk in itself, and my challenge to risk managers is to do more to recognise CSR teams as a valuable ally in the drive to create sustainable resilience.
This viewpoint was published in the January 2019 issue of CIR Magazine.
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