Whitepaper: Corporate social responsibility and the construction industry
Corporate social responsibility (CSR) is changing the way that businesses interact with consumers. A new age of accountability now means that those organisations that are keen to connect with customers and stimulate market growth need to have a well defined and transparent CSR commitment. This is as true for the construction sector as for any other. In this whitepaper we will examine the nature of CSR and the challenges it presents for businesses. We will also be looking at the role that CSR has to play in the construction sector, as well as the benefits for those businesses that make it a key focus.
The meaning of CSR
At the heart of the meaning of CSR is the idea of “doing the right thing.” There is a great deal of rhetoric that tends to arise surrounding this topic and the meaning of CSR has become quite fluid. However, at the core of the CSR movement is the idea that business can, and should, be ethical. Those ethics could cover a very broad range of different ideas and consequences, from environmental impact through to the economic effect on a local community. There is also the idea that CSR should be a process through which positive change is achieved and the financial aspects of running a business are balanced by the ethical. Some different takes on what constitutes CSR include:
“Corporate social responsibility is a type of international private business self-regulation.” Wikipedia
“Corporate social responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it… because it is good for our business.” Niall Fitzerald, Former CEO, Unilever
“Business has a responsibility beyond its basic responsibility to its shareholders; a responsibility to a broader constituency that includes its key stakeholders: customers, employee, NGOs, government – the people of the communities in which it operates.” Courtney Pratt, Former CEO Toronto Hydro.
“Corporate social responsibility is not just about managing, reducing and avoiding risk, it is about creating opportunities, generating improved performance, making money and leaving the risks far behind.” Sunil Misser, Head of Global Sustainability Practice, PwC
The origins of CSR
“CSR” is a commonly accepted term and one that is widely understood today. However, it has not always been this way. Some believe that the concept of CSR can be traced back thousands of years and there are occasional stories of prominent historic figures who prioritised it. For example, King Hammurabi, ruler of Ancient Mesopotamia around 1700BC, was thought to be responsible for a code that encouraged builders, innkeepers and farmers to consider the impact of their business on society by holding to account those who were negligent in their work and as a result caused damage to others. Although this could also be viewed as a historic version of negligence laws, it does demonstrate that the ideas behind CSR – of taking responsibility for the way business is done – have roots in the earliest civilisations.
Today, CSR is an important strategic issue for businesses and this point of prominence has been largely achieved over the past half a century. In the 1960s the key social changes taking place began to shift consumer ideas of what constituted a “brand to get behind” and by the 1980s, companies were getting much closer to the interests of stakeholders and taking these into account. In the 1990s, CSR became a prominent issue although still largely attached only to companies that pitched themselves as ethical or innovative. Since the dawn of the 2000s, CSR has quickly risen up the corporate agenda and become mainstream, in part because consumers now have much more say over what makes a “good” brand than in the decades gone by. As a result, today, there are many benefits to a CSR commitment for businesses in the construction industry, and beyond.
CSR for every business
Even the smallest enterprises can benefit from integrating CSR into corporate strategy – for some it is a key growth trigger and business differentiator. We are operating in an era where transparency in terms of brand values is highly prized by consumers, many of whom increasingly want to align themselves with businesses that are focused on the same positive goals for wider society. So, even a small firm operating on a purely local level has a lot to gain from implementing CSR. For any business this will involve looking at the way what it does impacts on other stakeholders, as well as the community at large. From here, it’s possible to identify any choices that could be better made, as well as the positive impact that the organisation could have if certain priorities shifted.
What does successful CSR look like?
The Reputation Institute is a reputation-management consulting firm in Boston, US and recently carried out a survey into CSR. The survey identified Lego, Microsoft and Google as the three top ranking CSR businesses. Lego, in particular had an especially strong reputation for CSR with its transparent business practices and projects such as a partnership with the World Wildlife Fund and Build the Change and Sustainable Materials Center initiatives. The survey also found that CSR is among the top three drivers of corporate reputation.
Reasons to invest in CSR
In addition to corporate reputation, there are some very good reasons for businesses in the construction industry to invest in CSR. These include:
- Helping to attract new clients
- Forging partnerships with others businesses with similar values
- Enhancing brand perception in the sector, and with clients and customers
- Boosting sales and increasing exposure to new projects
- Creating a more positive working environment for staff
- Attracting the top talent who are looking to work for a socially responsible business
- Creating a way to add another dimension to your business, outside of pure profit focus
- A genuine way to give something back to the stakeholders and communities that have supported you
Plus, a lack of CSR is proving increasingly problematic for many businesses, as this can cause clients – and potential clients – to question why such a policy hasn’t been put into place.
CSR – starting the process
CSR will look different for every business but there are some common themes. For example, CSR responsibilities are often expressed in terms of four general categories:
The reality is that this could take a number of different forms. In the construction sector, there has long been a push towards improving factors such as health and safety, as well as issues of diversity. Construction sector CSR could be policies such as:
- Providing support to local community groups
- Looking at innovative ways to minimise waste, both in buildings being constructed and also during the construction process
- Opting for responsible purchasing when committing to supplies
- Creating buildings that are designed to further better quality of life and wellbeing
- Introducing flexible working options for employees and investing more in diversity programmes
- Researching and implementing energy efficient initiatives
- Committing to paying the living wage
- Providing support to local educational programmes and apprenticeships
Why is CSR important in the construction sector?
Construction is one industry that has the potential to have a huge influence over the mental and physical wellbeing of communities. Whether this is via the buildings that are being designed and built, or the way that the business itself interacts with stakeholders and communities, this is an industry where there are obvious repercussions and effects. Innovation and forward thinking design in construction could genuinely contribute to real positive change and a rise in living standards, something that former Chief Executive of Constructing Excellence Rodger Evan agrees with. As far back as the 2005 Constructing Excellence conference he was quoted as saying, “The construction industry makes an enormous impact not just for its clients, providing homes and businesses, but on the community within which the buildings are located. CSR is all about recognising the positive impact that construction can have in these communities and optimising the benefits for all stakeholders.”
Is CSR mandatory?
In theory, no. It is a voluntary commitment that businesses are not legally required to make. It may be that this changes in the near future but, for now at least, investing in CSR is not obligatory. Having said that, the lack of a CSR commitment is often noted by industry partners and by clients and customers. So, although there is no official requirement to invest in CSR it could soon be the case that it’s difficult to really grow a client base without it.
The construction industry’s commitment to CSR
Of all the sectors of the UK economy, the construction industry has been proactive when it comes to encouraging its members to commit to CSR at an early stage. The Considerate Constructors Scheme (CCS) was established by the construction industry in the UK and is designed to help improve CSR commitment within the sector, as well as the image of the industry as being a socially responsible partner. The CCS’s Best Practice Hub is a resource that is available to any business within the sector that is looking to engage more with CSR. It includes a Code of Considerate Practice, which is essentially a framework of minimum CSR expectations that provides useful guidance for those unsure where to start.
CSR and the individual construction sector business
The starting point for any CSR commitment is the idea of “doing things better.” This requires any organisation to look beyond the immediate needs of the enterprise itself and to take into account the kind of impact that the business has. This could be an impact on the environment, on local people, or on workers who are based further afield and producing supplies, for example. There are social, environmental, human rights and ethics considerations at the heart of CSR but it will be different in practice for every business. The first step is to look at the processes, systems and structures that make up the infrastructure of the business and to review whether these are being conducted in a way that means the organisation is taking responsibility for the impact that it has on society and the world around.
6 benefits of incorporating CSR into your business
True CSR is integrated right through the business – it’s not simply a policy to which lip service is paid. Consumers today are much more proactive when it comes to testing the CSR claims that corporates make, so a robust CSR policy that stands up to scrutiny in practice is essential. It’s also worth noting that widespread adoption of CSR in the construction sector has a lot to contribute to the positive development of the industry as a whole. Plus, there are multiple benefits for individual businesses that choose to switch to a CSR mindset.
1. The impact on business reputation
Taking a proactive approach to CSR provides the foundation for building a positive reputation. Business reputation is a crucial factor in success, whether you are a huge multinational or a small mom ‘n’ pop business. The kind of reputation that you’re able to craft for your business will, to a certain extent, dictate how successful it is and also influence factors such as client loyalty and the options that exist when it comes to industry partnerships and supply chain management. CSR contributes to creating a reputation for forward thinking practices and values that recognise exactly what is important to consumers and societies today.
2. The financial benefits of being a CSR pioneer
Although CSR is becoming a key strategic consideration we are still only in the early wave of those organisations who have made it a central brand value. This presents a great opportunity for those businesses who are keen to commit to CSR. In the construction sector, in particular, being a CSR pioneer provides an opportunity to distinguish the business where there might be great similarities with competitors with respect to other factors, such as service and cost. Standing out from the crowd in a highly competitive industry can deliver tangible financial benefits in terms of winning work and growing client base.
3. The opportunity to streamline
CSR provides an organisation with a fantastic opportunity to start reducing operational costs and introducing a wealth of efficiencies that could streamline business processes. The motivation of reducing the physical impact that the business has on the environment could encourage a move to a paperless office, for example. This could minimise the costs associated with communication and also reduce the spend that is required to deal safely and confidentially with document destruction. Reducing energy consumption and ensuring that premises and processes use less fuel could also be part of a CSR initiative. The obvious benefit of switching to more energy efficient options is that powering the business costs less, with the result that business costs go down. There are many ways in which incorporating CSR into an organisation can help to contribute to a reduction in operational costs – these are just a few of the more obvious examples.
4. Becoming a talent magnet
The construction industry is struggling to attract Millennial talent – this is something that we have highlighted before. Millennials are a generation that tends to prioritise social responsibility when it comes to choosing an employer so a prominent commitment to CSR has a role to play in attracting the next generation of talent. Many of the most forward thinking and pioneering minds in engineering and construction see CSR as the path to the most innovative and rewarding careers and so, for those businesses looking to attract top talent, CSR is going to have an essential part to play.
5. Creating a more positive working environment
CSR policies tap in to something that many workplaces find it difficult to channel today: collaboration, positive social change and doing the right thing. Where these principles are what underpins the working infrastructure there is the potential for a much more positive working environment. This can open up the potential for working practices that make a positive difference and projects that factor in human and ethical elements, as opposed to purely design and financial considerations. Prominent CSR also ensures that all those within the business are on the same page and there is consensus on the organisation’s values, often resulting in faster growth and much more exciting innovation.
6. Opening the door to business growth
From becoming an employer of preference for talented Millennials keen to make a difference, to attracting a new generation of innovative finance partners, adopting CSR gives construction businesses many more opportunities for growth. Whether you’re looking to rebrand with a more socially responsible outlook or you’re keen to be part of the movement towards creating infrastructure and design that is both ethically sound and forward thinking, you’ll find that there are many others that are keen to take the CSR journey alongside you. The opportunities for growth that result from a shift towards a CSR perspective could be immense.
At RG Group we believe that CSR is fundamental to the construction industry, now and in the years to come. Contact us to find out more about CSR in the sector and the RG Group’s current projects.