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Executive Interviews: Interview with Michael Hopkins on Corporate Social Responsibility
September 2007
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By Dr. Nagendra V Chowdary
Dr. Michael Hopkins CEO and Chairman of MHC International Ltd. (London & Geneva). He is a part-time Professor of Corporate Responsibilty Business Performance (VRBP) at Middlesex University Business School Visitng Professor at Brunel and Geneva Universities. 
However, excluding the word
"social" from CSR leaves us with the
phrase "Corporate Responsibility"
and is, to use an ugly but apt
expression, simply throwing the
baby out with the bath water. I define
social to include economic and
environment (precedence is set by
the fact that most Universities have
Schools of Social Science that
include sociology, economics,
political science, environmental
sciences, etc.). If the word 'social' is
left out of CSR, then it is not so clear
what is implied.It could imply
attention to corporate governance
and agreeing to obey the law. But
even that latter sentiment, although
praiseworthy, falls down in many
countries; for instance,Uzbekistan has rigorous laws about
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labor
standards but, in practice, ignores
most of them. Thus, corporate
responsibility, without the qualifying
word 'social' adds further confusion
to what is now becoming a right mess
of definitions. -
What is the importance of
Corporate Social Responsibility
initiatives? Why should companies
embrace them? Can CSR be a
competitive advantage for
companies?
This question is worth a book length
response since it covers three of the
key CSR questions. Briefly, CSR is, in
a sense, obvious. Treating
stakeholders responsibly such as
listening to employees, good
consumer relations, avoiding
corruption, transparency in
operations, rewarding suppliers on
time, having a clear mission
statement, avoiding unnecessary
pollution, involving local
communities, etc., do not need a lot
of argument to show that they are
good for business and, therefore, will
improve a company's reputation and
profitability. It is amazing, however,
how many companies do not follow
these simple rules. Just go to
Germany and experience customer
relations! I have never understood
how that is good for business. Other
than anecdotal evidence, there has
been an increasing interest in
empirical research linking the
business case to CSR. In one of my
company's regular "monthly features
see http://www.mhcinter national.
com/monthly_feature.html", Adrian
Henriques cited a study of top US
companies that found a good
correlation between an explicit
commitment to an ethical approach
to business and market value added.
Of the 500 largest US companies,
those with a code and a strong
commitment to ethics had an average
market value added three times that
of those without any
commitment. The same study also
found that those companies where
the ethics executive was a member of
the professional Ethics Officer
Association, had a lower correlation
with good perfor mance. The
conclusion drawn from this is that
the commitment matters far more
than the code. Henriques noted that
perhaps the most promising
correlation was between good social
performance in relation to staff and corporate performance. In the UK,
Investors in People claimed that the
return on capital employed is double
the national average and pre tax
profit margin is 50% higher where
their staff management approach is
followed. The reasons for such a
dramatic relationship revolve largely
around greater staff motivation,
resulting in:
- Reduced costs
- Increased invitations to tender
- Increased sales
- Improved customer/client
retention
- Improved productivity
- Increased customer satisfaction;
and
- Improved quality of service/
product.
Henriques concluded that: - The hard evidence for a robust
correlation between good social
or financial performance is weak;
- The area of social performance
which has been most strongly
linked to good financial
performance is related to
employee's welfare; and
- There is little evidence that good
social or environmental
performance leads to poor
financial performance.
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How do you distinguish between
corporate social responsibility and
corporate philanthropy? When the
individuals belonging to a company
actively engage themselves in a
philanthropic activity, for instance
Bill Gates (through his Bill and
Melinda Gates foundation), etc.,
would it constitute a corporate
philanthropy or individual
philanthropy?
Permit me not answer the second
question since, as you will see, I
distinguish between CSR and
philanthropy. As I wrote in a
previous article (http: www.mhc
international. com/articles/CSR
_and_philanthropy.htm ), CSR is a system-wide concept that touches all
the stakeholders of a corporation.
CSR, as I define it, does not
concentrate on only one stakeholder
but philanthropy, "the practice of
performing charitable or benevolent
actions" does. Most, if not all,
philanthropy is devoted to items that
Governments should be doing
(health grants to developing
countries, help to the handicapped,
drugs for HIV/AIDS for example).
And their failure should not be the
preserve of corporations. However,
since the government is one of the
stakeholders of a corporation, there
is nothing to stop corporations
offering their management and
technical skills to the government to
improve or introduce programs to
help vulnerable groups.
Corporations exist to make profits.
There is nothing wrong with that,
only the way profits are made is the
concern of CSR practitioners.
Philanthropy does little or nothing to
help companies make profits, while
all CSR activities are linked to
improving a company's bottom line.
1.
Corporate Social Responsibility Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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