Until recently, the image of pragmatic capitalism is one that laughs at the notion of volunteer work, sustainable practices and community harmony. But consumer, employee and shareholder pressure, climate-change worries and the threat of regulations are changing that. “No company can afford to ignore it,” Larry Stone says of corporate social responsibility (CSR).
British Telecom giant
BT Group, where Stone is president of group public and government affairs, is certainly not ignoring CSR. But it’s also important to make a business case for doing good, says Stone. “Our CFO is delighted when we have a project which can pay out in three or five years, and reduce our energy bill,” he says. “He’s less delighted if we put forward a project like a wind farm, which might take seven or nine years.”
He spoke to CFO Innovation’s Angie Mak about how to balance CSR spending and business concerns, BT Group’s experiences implementing CSR programmes, overcoming unforeseen project setbacks and other issues.
How do you balance CSR spending and prudent financial management?
There are two elements to it. First of all, what’s CSR? It was traditionally seen as being community engaging, charitable giving, education programmes — basically, filling in links with communities and being seen as a good corporate citizen.
The return on investment on that is the same as your ROI in having a good brand and reputation. Every company wants [a trustworthy brand], but it’s very difficult to build a business case around it. It’s a lot like getting a license to doing business. It’s something which is good and helps employee engagement, and very difficult to [assign the value of] pounds notes or a Hong Kong dollar to it.
But CSR has [now] moved more into the business space, increasingly into things like energy efficiency and being green. Inevitably, if organisations don’t enforce energy efficiency and positive environmental practices voluntarily, there are going to be regulations — carbon accounting rules that will be possibly mandated as emission reductions in the future. We’re already seeing a regulatory approach.
Our CFO is delighted when we have a project which can pay out in three or five years, and reduce our energy bill. At the same time, he’s less delighted if we put forward a project like a wind farm proposal, which might take seven or nine years. It’s that sort of debate in organisations now.
There’s also the risk management aspect of it.
Climate change is a risk for all businesses, including the telecom sector. Working with IT partners or telco services around Internet, intelligent energy management systems for buildings, logistics or smart metres — these practices will reduce energy emissions and also help our business growth. There’s growth in the low-carbon economy for us, and we try to put a lot of effort into looking at this market.
[Other] companies, much more than us, are looking at branding their company with eco-imagination . . . We do some advertising [ourselves] which we think is linked in to how we think we’re becoming a green organisation. That builds our brand and reputation, particularly in the UK market.
Everyone wants to do the right thing, sometimes pitching it as a corporate requirement, sometimes as a personal requirement. In BT’s case, the chairman Mike Rake brought over his vision for CSR from his previous company. But is combining a personal vision with a business goal ultimately just an expensive branding exercise? It’s not easily reducible to a business case.
Do you find that CSR helps you recruit and retain talent?
There are studies, some nascent, that suggest that happier people work better. If people are reasonably happy and engaged, and have a diverse life outside work, then they’re more likely to be positive about an employer and to stay with their employer. You may even hire better graduates in a competitive marketplace for people. Volunteering improves productivity. It’s not proven yet, but we think that there will be an empirical case which suggests that.
I don’t think you would get the same employee engagement, personal engagement between the organisation and the customers, through [just] an advertising campaign . . . An increasing trend is facilitating volunteering by your people, especially in northwest Europe and the US. When graduates are looking for companies to join, they were previously thinking, “Is my job interesting and how much am I going to be paid?”
2012, May 22 
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