In the U.K., a More Formal Approach to Social Responsibility
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In the U.K., a More Formal Approach to Social Responsibility

BP, meanwhile, has made a major commitment to social responsibility. It has become the leading corporate voice calling for action on global warming (at a time when many CEOs are still in denial) and has invested more than any other energy company in solar

Paul Holmes

 

At first glance (and perhaps at second and third glance too) oil industry giant BP and do-gooder cosmetics retailer The Body Shop may not appear to have much in common. But both have learned the same hard lesson: that when you dare to be different, you make yourself a target not only from those who are quite content with the status quo, but also from advocates of change for whom nothing short of perfection will ever be good enough.

The Body Shop, of course, was famous for refusing to sell products tested on animals and for investing in developing communities where it found its natural ingredients. Its founder Anita Roddick was mocked mercilessly by the mainstream press for putting liberal politics and social activism ahead of profits, and then excoriated by Business Ethics magazine because some of her programs apparently didn’t go as far as the company claimed, or as the magazine would have liked.

BP, meanwhile, has made a major commitment to social responsibility. It has become the leading corporate voice calling for action on global warming (at a time when many CEOs are still in denial) and has invested more than any other energy company in solar power. It has committed to the highest levels of environmental and social responsibility. And so naturally it is under fire over its activities in Tibet—where it is an investor in a state-run Chinese oil firm that is building a gas line on Tibetan ancestral lands—and for seeking to prevent shareholder resolutions on environmental and human rights issues at its annual meeting this month.

Interestingly, one man has worked for both BP and The Body Shop: Burson-Marsteller’s Gavin Grant, who was director of global corporate and public affairs at The Body Shop before joining B-M as European chairman of public affairs and an expert in constituency relations—in which capacity he serves as a counselor to BP.

“It’s totally different,” says Grant. “The fact that BP is in a dirty business by definition creates a different challenge. A company like The Body Shop has lots of choices about where it does business, but an energy company has to go where the natural resources are, and often those resources are in areas that are relatively unspoiled.”

Another difference is that BP is a large, publicly owned company, while The Body Shop—despite being traded on the London Stock Exchange—has 50 percent of its stock concentrated in the hands of a trio of investors, two of them being Anita and Gordon Roddick. “I don’t think BP wants to be, or could be, another Body Shop,” says Grant. “That doesn’t mean they are not genuinely committed to doing things the right way.”

That commitment is likely to weather whatever storms are created by critics who would like to see the company go even further.

“I think sophisticated companies understand that they have to engage their stakeholders, that they have to listen,” says Grant. “BP and others see this as an area in which corporations that act now can get a real competitive advantage. It’s quite possible that they won’t always like what they hear, but it’s important that they listen.”

Burson’s own research, conducted in partnership with the Prince of Wales Business Leaders Forum, indicates that 64 percent of opinion leaders—including the media, institutional investors, British MPs and MEPs, and the heads of NGOs—say that a company’s reputation for social responsibility will affect their personal decisions, and 42 percent agree strongly that CSR will affect share prices—with only 14 percent seeing no impact on share price.

Grant identifies several factors driving social responsibility higher on the corporate agenda, particularly in Europe: “First, we have seen a breakdown in the classically delineated roles of the state, corporations, and not-for-profit organizations. The lines between those roles have been blurred. People are questioning the responsibilities of the major institutions in solving some of society’s problems, and they expect all of them to play a role.

“Second, the information revolution has transformed the way business operates. Companies can’t hide any more. There’s so much information on the Internet. That’s led to heightened expectations, which is the third thing, and it has also led to greater interest in a wide range of corporate activities on the part of the media.”

There are also issues unique to the U.K., including the fact that for the past year Kim Howells, the trade and industry secretary, has also enjoyed responsibility for corporate social responsibility. He has participated in briefing sessions with industry leaders, and worked to promote greater understanding of and commitment to CSR.

“There’s a strong feeling that the Labour government will be more active in its second term,” says Grant. “I think it sees corporate social responsibility as a major item on its second term agenda.”

It seems inconceivable that the U.S. administration—particularly the Bush administration—would create a cabinet level position devoted to corporate ethics. But that’s just one difference between the approach to corporate social responsibility here and the approach in the U.K.

“There are differences between the way corporate social responsibility is addressed in the U.S. and the U.K.,” says Grant. “In the U.S., there’s a greater focus on human resources issues, like diversity, or equal opportunity for women, and there’s more direct corporate philanthropy. In the U.K. and Europe, it’s more formalized, and there’s more rigor applied to reporting social performance.”

BP, for example, produces reports on both its environmental, health and safety and social performance, with the social performance report including information on the company’s code of ethics, its employee relations practices, and its relationships with a host of key stakeholders, including customers, suppliers, governments, communities, and non-governmental organizations.

It uses an approach it calls “relationship mapping,” which the company describes as “the term we apply to evolving practice in our management of political and societal (as distinct from strictly business) relationships. It helps us to bring more structure and quality assurance to an area of business life that has traditionally depended on informal personal networks. 

“Key political/societal relationships in countries where we have significant operations are identified in a systematic way and individuals are assigned as ‘owners’ of these relationships. The development of the relationship can thus be monitored and the ‘owner’ can share relevant information with other parts of the group as needed. Regular assessments of the number and quality of relationships enable management to compare strengths across different parts of the business and make improvements where necessary.”

While companies such as BP have embraced the need to invest in social responsibility, others still resist the idea that they have any responsibility except to the bottom line. They worry that any commitment to social responsibility will lead to heightened expectations, that people will look to companies to take on a role that should properly be reserved for government.

“I think the public is more sophisticated that many of our clients give it credit for,” Grant says. “I think people understand that the real business of business is business. But at the same time, they want to have a serious conversation about how that business is conducted. The most important thing for companies is to get connected with their customers. Shell got it wrong because they were disconnected.”

That last observation is a reference to the oil company’s difficulties of the late 90s, when it found itself vilified for plans to sink the Brent Spar oil platform in the North Sea, and for its refusal to intervene on behalf of Ogoni activist Ken Saro-Wiwa, who was hanged by the Nigerian government. While at The Body Shop, Grant ran a campaign on behalf of Saro-Wiwa, creating a groundswell of public revulsion that took Shell completely by surprise and caused it to reevaluate the way it interacted with the societies in which it did business.

“I think Shell took the view that internal politics in Nigeria had nothing to do with them,” Grant says. “I don’t think it was a cynical view. I think it was a very genuinely held view that they should stay out of issues that did not directly impact their business.”

Shell conducted a thorough review of stakeholder expectations following the controversy spurred by the Saro-Wiwa incident and the Brent Spar controversy, and came to the conclusion that it had to do more to meet heightened expectations. Like every other company on the planet—including rival BP—it is still trying to assess which of those expectations are reasonable and which are unreasonable, and finding there are no easy answers. But also like BP, it believes the process has made it a stronger, more sustainable company.

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