Jane Wood: Positive business in wake of VW scandal

The Volkswagen emissions scandal dented consumer trust in business. Picture: AP

The concept of corporate social responsibility (CSR) has taken a bruising recently. The Volkswagen scandal has damaged not just the German multinational and the general trust between business and consumer but also the very idea of CSR. In a recent Daily Telegraph article the scandal was described as evidence of the “dangerous racket” of CSR with the writer saying that it has shown us that CSR allows companies to “parade their virtue, and look good, while internal standards are allowed to slip”.

The idea that CSR is a smokescreen is something I would certainly take umbrage with, having witnessed great initiatives over the years amongst our member companies. I can see the good work being done by CSR professionals across Scotland and the positive impact it makes to local communities. To a certain extent, however, I agree that we need to move forward. Old school CSR as a box-ticking exercise, part PR spin, is long past its sell-by date. It is time to recognise that responsible business – deep-rooted and integrated into the fabric of companies – is key.

When there is a crisis like the Volkswagen case it is often because there has been a breakdown in the chain. Whoever was responsible had a contract, a job description, targets to reach and someone appraising them to make sure these things were done correctly. Sadly, there is still a huge amount of pressure within companies for employees to maximise profits at any cost.

A modern, fit-for-purpose CSR philosophy is not about form-filling or writing a large cheque for charity. It is not simply about window dressing to improve the appearance of a business. It is about how companies integrate a responsible business philosophy into everything that they do and stand for. It’s not about how companies spend their money, but how they make their money. Genuinely responsible businesses go beyond CSR to recognise that business is key to creating a fairer society and a more sustainable future moving from its employees to suppliers and beyond and thus affecting real change.

A company creates value by investing in its employees, by being a leader in environmental practice, and by contributing to the local community in which it operates. This goes beyond financial return. Progressive CEOs who genuinely understand this know that their entire business can create value far beyond just profit. From securing the best employees, to unlocking innovation – this translates to the bottom line.

Ethical standards on workers’ rights, on the environment, on diversity, on the needs and concerns of local communities – these should be an intrinsic part of any modern business strategy. These are not supplementary concerns, or add-ons in the old school sense. These are core concerns rooted in dynamic, forward-thinking businesses. Companies must be authentic. The public care about how companies behave, not just how their products are priced. Social media and the online world has shone a light on companies, exposing truths about practice. The public is savvier. There is nowhere for businesses to hide.

One cannot differentiate between business doing good for the community and businesses doing good for themselves. Businesses need to be measured on being good. Responsible business means encouraging businesses to play a role in improving communities, including customers, suppliers and employees.

We need to get back to the boardroom and engage. We need to create a new concordat between business, government and society – the creation of a national plan, even. At SBC we’ll soon be facilitating a discussion between business leaders and senior representatives around responsible business in Scotland. We believe that this can result in the development of a responsible business movement. However, this movement must be business-led. It needs to be articulated simply and the balance between regulation and voluntary action needs to be considered in full. The plethora of initiatives and “pledges” needs to be rationalised and government’s many asks of businesses need to be co-ordinated. Businesses, representatives of government and NGOs must all strive together to make Scotland a world leader in responsible business. Responsible business can, and will be the norm.

• Jane Wood is chief executive of Scottish Business in the Community, www.sbcscot.com