Profit, planet and people
Navigating corporate social responsibility
The idea of corporate social responsibility (CSR) isn’t new – but in the age of informed and empowered consumers and shareholders, it’s no longer just a smart public relations move, but a fundamental business consideration.
We expect more of companies and organisations: we want honesty, authenticity. We want corporates to take responsibility for their actions, and we punish them when they don’t.
In today’s world, companies need a ‘social licence to operate’. It’s not a matter of simply producing a supply to meet a demand: it’s doing so in a socially and environmentally conscious way, and which meets the public’s expectations of what is right and acceptable.
At our most recent ChangeMakers event, we heard from three UQ graduates leading in CSR to ask some of the big questions in this space.
Kathryn Fagg AO
Chair of CSIRO and Non-Executive Director NAB
Bachelor of Engineering ’82, Doctor of Chemical Engineering honoris causa ‘16
Kathryn Fagg AO, Chair CSIRO and Non-Executive Director NAB
Since I graduated from UQ in chemical engineering in 1982, I’ve worked in a diverse range of industries, including resources, industrials, professional services, banking and the non-profit sector. All have something in common: an organisation must deliver value to its customers, its people, its shareholders and investors, along with the community – over the long term – if it is to be successful.
There is tension between striving for profitability for shareholders and looking after the interests of other stakeholders, but this resolves over the long term. That doesn’t mean balancing long-term outcomes and short-term pressures is easy: it requires a great deal of attention from an organisation’s management and board. In the end, it is by being purposeful and having great people that an appropriate balance is realised.
Over the last few decades, it became clear that there was too much emphasis on short-term action to deliver shareholder returns with sometimes negative consequences. The Global Financial Crisis was an egregious example. Not surprisingly, there has been a shift to a more balanced perspective to better meet the needs of all stakeholders.
Board directors have a responsibility to act with care and diligence and in good faith, and in the best interests of the company for a proper purpose. Board rooms pay a great deal of attention to all elements of CSR, but in the last couple of years, there has been a dramatic shift in focus on sustainability and the need to reduce carbon emissions.
In the end, most corporations are quite rational. There are compelling reasons to pursue a reduced carbon footprint – customers are asking for it, our people expect it, the largest investors are demanding it, regulators are paying more attention to it, and increasingly, the community is looking for it.
I am excited by the innovation and technological developments to come as we decarbonise the economy, but I also recognise the criticality and importance of managing the social transitions involved. The coming years will require us to bring our best problem-solving skills along with our hard-earned wisdom, and respect for all, to the challenges and opportunities ahead of us.
Kathryn Fagg AO, Chair CSIRO and Non-Executive Director NAB
Kathryn Fagg AO, Chair CSIRO and Non-Executive Director NAB
Susan Mizrahi
Chief Sustainability Officer, Australia Post and Australian Retailers Association Sustainability Advisory Council Member
Master of International Relations ‘03
Susan Mizrahi, Chief Sustainability Officer at Australia Post
Susan Mizrahi, Chief Sustainability Officer at Australia Post
The concept of the “triple bottom line” –people, planet and profit – is not new, but roughly 30 years old. During that time, the notion of being a responsible corporate citizen has evolved, driven by growing societal and environmental challenges. Changing consumer and employee expectations, the acceleration of ethical investing, ongoing globalisation and increased access to information and education are additional factors contributing to the changing expectations on – and within – businesses.
The 2019 bushfires and the ongoing pandemic have acted like rocket fuel, propelling the prioritisation and discipline of corporate sustainability. Communities are directly experiencing the consequences of biodiversity loss and emerging diseases, as well as the links between a changing climate and bushfires. In turn, they are expecting more of businesses – many of whom have profited with indifference for the environment for far too long.
At the start of 2020, many sustainability leaders feared the pandemic would result in job losses in our evolving industry. The reverse has been the case. Demand for sustainability professionals is at a record high in Australia as businesses increasingly recognise sustainability as core to their business strategy, products and social licence.
Environmental, social and governance (ESG) is growing in importance, relevance and resources as companies recognise that they cannot operate in isolation of a changing environment, nor with disregard of their workforce, customers and stakeholders’ needs, health and wellbeing.
The polarisation of the business and government sectors is not helpful to advancing the sustainability agenda. Business, government and civil society – and the individuals within each of these entities – all have a responsibility to leave their communities and the planet in a better place than they found it.
Businesses are sometimes seen as being more responsive to social and environmental concerns than governments, but it’s not necessarily that black and white. If you define sustainability broadly to cover social and environmental aspects, it could be argued that governments have been focused on sustainability for longer than businesses. From the outset, governments have established programs, rules and regulations that support education, health, transportation, planning and the environment. To generalise, it is companies that have historically operated with a focus solely on profit and a disregard for these matters. We’re now seeing businesses make amends.
Malcolm Broomhead AO
Chair of Orica, Non-Executive Director of BHP Group Limited and BHP Group Plc
Bachelor of Engineering ’75, Master of Business Administration ‘84
Traditionally, the role of business in society has been to create wealth, which through taxation underpins all expenditure by government (who essentially redistribute that wealth based on social needs). They also provide a large percentage of a country’s employment.
Wealth creation funds improved standards of living for all individuals and enables improved health, welfare and progress in society. In countries where wealth generation is low, health and environmental outcomes are much lower than in richer nations.
This vital role of corporations remains as important as ever. It is however a somewhat indirect means of delivering social good and is not obvious to all members of society. Given the massive size of major corporations, together with social pressures exerted through social media and the internet, societies now demand a more direct involvement by corporations in delivering social good.
The emphasis on various social good changes with societal expectations. For example, whilst operating with care for the land, water and air in the area of a corporations' activities has been important for some time, the more recent societal concerns about climate change have necessitated corporations changing their activities to meet the rapidly emerging global targets (for example, zero net emissions by 2050). As well as the obvious moral reasons for doing so, corporations which ignore these demands increasingly find that equity and debt funding for their activities has become extremely difficult to source.
Another example is the growing emphasis on community needs. For example, both caring for important ancient material such as Indigenous rock art or archaeological matter, as well as fully consulting with traditional and existing landowners in the regions surrounding a business, are demanded by both society and governments.
CSR is both a rapidly changing and growing part of companies continuing to deliver their vital role of wealth generation in societies throughout the modern world.
Did you watch our most recent ChangeMakers event? Catch up on the discussion on our event page.
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