How to take responsibility for your actions
Richard looks at the corporate social responsibility report (CSR) and examines how it pertains to the flooring industry.
ALONG with the growth of environmental issues customers are beginning to focus their interest on the ethical and moral standards companies adopt: who do they buy materials from, who are their investors and business partners? Are they part of a supply chain that includes corrupt governments, forced labour, human rights abuses, environmental damage and the like?
For members of the flooring industry this is a two-way process. In one direction you have the information that you pass on to your customers about the products and services you’re providing, and in the other, the way you assess your own suppliers.
In recent years there have been several national news stories concerning the ethical standards of some of our larger global organisations - not just companies, but charities too and some of the allegations have been very damaging.
The news starts with the larger companies of course, because these stories have the greatest impact, but inevitably there’s a ‘trickle down’ effect with questions asked of smaller companies too. Increasing levels of public awareness means today almost any company or organisation can be asked to account for its standards of citizenship and ethics, UK flooring industry manufacturers and contractors included.
Higher levels of public scrutiny are persuading many companies to look at their suppliers’ and subcontractors’ credentials as well as their own. Environmental issues will usually be considered at the same time and with equal importance.
Where is this information to be found?
A company will usually communicate its standards and policies through a corporate social responsibility report (CSR). Customers will usually be given free access to this, and most companies that participate will publish theirs on their website.
A CSR is a formal report issued by the company, often reviewed annually. It’s a voluntary, self-regulating set of standards and policies that the company adopts to show that it is a ‘good citizen’ and an ethical member of its business and local community. There’s a direct correlation between CSR and sustainability and environmental issues through among other things, reducing pollution, use of sustainable materials, low carbon and reduced energy use.
So, an ethical company with a good CSR will have many positive messages to pass on and to ‘sell’ the company itself alongside the products and services it offers. It can strongly enhance the customer's experience of dealing with the company.
CSRs tend to be adopted by medium and larger sized companies and are probably not something that a small company would consider producing themselves. However, if you represent a small company or are a sole trader you will probably be offering your customers products that are manufactured by larger companies and ‘big brands’ for whom a CSR is more relevant.
If you use any form of supplier assessment process, ensuring your larger suppliers have a CSR should be a key part of the process. It’s possible of course that some of your customers will not care who you buy from provided the price is right. But indications are that an increasing number do care, and pressure on UK companies is increasing because they know that any loss of reputation may take many years to overcome.
We have a generation of students that is generally well educated and has high levels of environmental and political awareness and a strong sense of justice. They will soon be the next generation of clients and construction professionals and whilst we know that all the world’s ills are unlikely to be solved soon, the pressure on companies to operate ethically will only increase.
There is an international standard that relates to CSR; ISO 26000: 2010. However, it is important to understand exactly how this standard operates. Firstly ISO 26000: 2010 is not a management system, certification scheme or set of regulatory standards, so you cannot be ‘ISO 26000 certified’.
ISO 26000 helps companies to put together their own CSRs by defining a CSR and its scope and describes the main concepts. It defines how these concepts need to be integrated into the organisations’ practices. It also sets out how the organisation should integrate with its stakeholders, customers, suppliers and any other bodies they engage with. It advises on how the companies’ policies should be communicated through the organisation and beyond, and how these should be implemented, monitored and reviewed.
The standard encourages organisations to go beyond legal standards wherever possible; compliance with the law is after all a fundamental responsibility.
Much of what is contained in a CSR will be taken on trust, but the information presented must be verifiable. Whilst ISO 26000 is not a certification scheme a CSR should contain references to any other relevant certification that the organisation holds as this will strengthen the credentials of its CSR. Many of these will be independently audited to recognised standards.
So you can see there’s no single route to a CSR and the measures adopted will vary from one organisation to another depending upon their sphere of activity, materials and production methods, their location and who in the world they interact with.
What can a CSR do for me?
An ethical company will adopt certain policies and procedures, but of course you can do this whether or not you choose to issue a CSR. A CSR though, is an excellent way of communicating your values and activities to your stakeholders.
Customer relations and PR
Engenders trust between company and customer. The message conveyed by a CSR appeals to the customers’ sense of justice and makes them feel good about themselves - that they are not contributing to the world’s problems! The company’s approach will reflect a growing number of customers’ ideals and preferences for ethical trading. Satisfied customers often recommend the supplier to others and the company’s market strength may well improve.
It can provide material for case studies, social media activity, publicity and advertising. This can work on a global or national level depending upon the nature of the topic, e.g. strong local impact for reduction of pollution at the factory site, or wider impact of helping to provide better working conditions or training schemes abroad. A CSR helps to avoid adverse publicity, speculation and rumour about ways that the company operates.
Having a CSR contributes in a positive way to the way the company is perceived by customers, stakeholders and the community. A company with a high ethical profile is likely to be trusted as a representative of its industry and so may be more influential in shaping its industry, providing input for new product standards, advising government and expert bodies and the like. This should also engender support and trust from the local community.
It provides employees with a common aim and principles they can buy into. Having a reputation for a satisfied workforce will give the employer a better choice of candidates when recruiting.
During the tender process a CSR can be a useful way to assess bidders. If products and prices being offered are similar the successful bidder may be the one who is the best corporate citizen. CSR holders may also be less prone to price pressure. All things being equal a company that holds a CSR is likely to be perceived as more trustworthy and with a better level of customer care than one that does not.
Apart from the moral issue of using labour that is underpaid and confined to poor living conditions and little if any welfare, can a company who exploits its labour force offer its customers good service and business continuity?
Attracting funding and Investors
Ethical investment has been with us for some time and we have seen the proliferation of ethical investment funds including pensions that are tailor made for both consumer and corporate investors. On the consumer side green energy companies are here to stay and we have clothing and food retail chains whose ethos is ‘fair trade’.
What might a CSR contain?
There’s not enough space here to talk about everything a CSR report might contain but there are some fundamentals that will occur frequently. Perhaps the best way to illustrate this is to use my own company, Junckers, as an example - and of course being the one that I know best! For anyone not familiar with the company, Junckers is a Danish manufacturer of solid hardwood floors.
Bear in mind this is just one approach adopted by a single company. Other organisations will be working in different environments so their CSRs will need to relate to the world that they operate in. Junckers’ CSR focuses strongly upon forestry and timber supplies, on site energy generation, and in the past, local pollution, noise etc. (all resolved I am pleased to say).
In order to provide a framework for its CSR in 2011 Junckers signed up to the United Nations Global Compact to support the four main areas of activity; Human Rights, Labour Standards, Environment and Anti-Corruption. The company has set goals in each of these areas and has devised a strategy to meet them. The CSR reports periodically on what progress has been made. What follows is a brief summary of what the company is doing in each of these areas.
The company has several locations around the world and in each of these countries human rights legislation is enforced, therefore the risk of violating human rights is low. However, there is still a focus on ensuring that violations are not occurring indirectly through dealings with third parties. For different companies the balance of risk between direct and indirect/third party human rights violations will be different according to whom they trade with.
Health and safety at work policies are a key element of labour welfare.
High priority is given to identifying opportunities to increase employee job satisfaction and to invest in appropriate technology whenever possible. As part of its general approach the company aims to reduce activities that are repetitive. This can reduce stress and the likelihood of accidents and injuries such as RSI.
The company is certified under OHSAS 18001, which provides an independently audited system for management of occupational health and safety.
Junckers has several independently audited accreditations that are related to environmental issues.
ISO 14001 Defines the scope and operation of environmental management systems.
ISO 50001 Sets out standards and practices for energy management.
PEFC and FSC Timber sustainability schemes, to ensure that timber is from legal and sustainable sources.
Danish Indoor Climate Labelling Scheme Assesses products in relation to their effect on the air inside buildings. The scheme examines emission levels of organic solvents, carcinogens and particulates over a defined period of time.
Operational practices include 100% use of the raw logs that are purchased. The waste wood is used in an on-site power station that generates all the electricity for the factory site and provides the surplus to the local grid. As a result, the company is carbon neutral and its products have very low embodied carbon.
On a local level the company is obliged to be a ‘good neighbour’, and to this end measures have been put in place to reduce pollution from noise and dust, and contaminants in wastewater from the plant have been reduced.
The company checks to ensure that none of its activities support oppressive regimes, human slavery and exploitation, poor pay and working conditions. In practice this means not only looking at its own activities, but those of its suppliers and subcontractors.
To reiterate, this is a broad profile of the CSR of one company, but I suggest that many of the topics shown here will also relate to many organisations.
I think it’s likely that CSRs will become increasingly important to clients and specifiers, and companies will be asked to justify their place in the ethical community.
We’ve already seen significant changes in attitudes towards the environment, and the way it’s impacted the working methods of architects, engineers and product designers.
Does it not make sense that our concern for the impact on the natural world will be followed by concern for the people that inhabit it?