It may feel good to do the right thing, but in the realm of international trade, corporate social responsibility has emerged as a vital modus operandi on which failure and success often hinge.
It wasn’t always that way. EDC chief CSR advisor Signi Schneider says as recently as a decade ago the prevailing Canadian approach to international trade was founded largely on a belief that “Western business practices and technical expertise would ‘seal the deal’; now those companies face foreign competitors with similar skill sets and capabilities.”
She says this – among other factors – has emphasized CSR’s importance in trade.
For Ms. Schneider, this shift was highlighted recently when a foreign delegation of state-owned enterprises visited EDC with a specific interest in learning more about Canadian ethics and anti-corruption practices.
“They had clearly been thinking ahead on this. They have very high expectations regarding ethics and governance, and they posed tough questions about how state-owned entities deal with these issues.”
Rob Moore, a former senior vice president responsible for investor relations, corporate marketing and public affairs with companies including HBC and Loblaws, says the importance of CSR is evolving at an exponential pace in part because of technologies that enable the monitoring and reporting of corporate practices abroad.
“If you think you are operating out-of-site/out-of-mind when you are in another country, that’s just not the case. There is an active international NGO community using social networks dedicated to reporting on corporate operations. They use technologies like Google Earth to monitor mines and other job sites.”
Mr. Moore, now serving as acting president of Canadian Business for Social Responsibility, a non-profit, member-led organization, says, as a result, it’s incumbent on businesses to do more than just meet regulatory requirements.
“Six or seven years ago, you would find most organizations following rules of the law only. You would be hard pressed to find large, successful organizations practising that way today, with a 100 per cent reliance on being law abiding as the sole guide to their operations. Operating ethically and transparently is essential to earning a social licence to trade, extract, procure or sell.”
That may be true, but Ms. Schneider notes that emerging markets are complex places to do business and having “a CSR policy is not a guarantee that issues won’t arise. But a CSR policy provides your company with principles and measures to mitigate risk and respond to challenges.”
She points to the rising emphasis of CSR in the extractive industries, for example, and applauds the leadership shown by Canadian companies including Inmet Mining, Talisman Energy and Iamgold.
“These companies take a holistic approach to risk and opportunities. They make CSR part of their business strategies,” she says. “In the mining sector, companies that are acquiring mineral assets don’t want projects that have put the community offside, where there is a high risk that the project may face roadblocks. They also know their financiers require them to get it right early on.”
Mr. Moore adds, “If you want to dig something out of the ground and you don’t engage the community on issues such as water, employment, social dynamics and more, you risk creating a barrier to your operation’s ultimate success.”
He says the key is a process that involves broad stakeholder engagement to clearly identify expectations on all sides, sets out commitments and reports on them transparently.
So why aren’t all Canadian companies pursuing CSR? Ms. Schneider says sometimes a shortsighted CFO may overlook the value in CSR. In other instances, all that is lacking is a formal structure around existing practices.
“What I often say to clients just starting out is ‘You know the principles; write them down,’” she says. “An absence of a CSR policy doesn’t mean an absence of good work. But when you write it down, those values are translated into official practices and everyone in the organizations gets it. That’s how you get everyone engaged, and that’s how you get better at it.”