The Scottish Budget and the Corporate Social Responsibility (CSR)

October 2002

There is currently a growing interest in the notion of "ethical consumers" and Corporate Social Responsibility, although perhaps limited understanding of what Corporate Social Responsibility (CSR) is – or what being an ethical consumer entails.

CSR is in general terms when a company, organisation or body acts in a "responsible" way, where it minimises the negative external impact it has, and maximises the positive. CSR in its most complete sense would permeate all core and non-core activities, creating an intrinsic link between ethics and the actions of the company/organisation/body.

Scottish Executive & CSR

The Scottish Executive earlier this year set out its position on CSR. First Minister Jack McConnell observed rising public expectations and a desire for companies and organisations to behave responsibly towards customer, the community, employees and the environment, in terms of production, resources, consumption and waste. UNISON welcomes this view, but believes the Executive could give greater encouragement to business and organisations, and do more itself to act in accordance with CSR values, in policy making, procurement, employment and its internal operations.

UK Government & CSR

The Department of Trade and Industry has said that business needs rather than altruism should be the driving force behind CSR, and that companies are more likely to practice CSR if they can see organisational benefits. UNISON is concerned at this perspective. Whilst there is a need to demonstrate the business case, if the only reasons companies adopt CSR is for personal gain, this surely contradicts the whole ethos.

The UK Government's CSR strategy is to:

• Promote activities with economic, social and environmental benefits.
• Work in partnership with private sector, public sector, community groups, trade unions, consumers and stakeholders.
• Encourage innovation and best practice.
• Define decent minimum levels of performance.
• Encourage public awareness – through trust and dialogue.

UNISON feels the Government could be doing much more to define the "minimum levels" and to encourage public awareness.

Earlier this year the UK Government expressed fears that the European Commission would introduce a Directive making it mandatory for employers to introduce CSR policies. Whilst the Directive has not materialised, it is clear that at Scottish, UK and European government levels there is interest in the concept of Corporate Social Responsibility.

UNISON's views on CSR & Ethical Consumerism

Our definition of CSR very much embraces the notion of ethical consumerism, and it is on these terms that we would wish to see elements of CSR incorporated into the operations of local government and the public sector in general.

UNISON is supportive of the concept of CSR. We strongly believe that business, organisations and the public sector should act in a socially responsible manner, aware of the external and internal impact of their actions, policies and products, and be prepared to change their actions, policies or products if they have a detrimental impact.

UNISON believes the idea of CSR should be considered in broad terms to take account of the wide range of effects organisations can have. This should include a wide range of impacts:

• Social
• Economic
• Political
• Environmental
• International

CSR should also include the impact actions or products have on:

• Equality
• Work life balance
• Health
• Fair employment
• The developing world.

UNISON particularly supports the focus on valuing people. Our concept of CSR focuses on the value of every human life; valuing people's time, their family and caring responsibilities, their personal ambitions and aspirations. This means giving employees opportunities, operating decent working hours, fair conditions and pay levels which do not discriminate against people because of their race, gender, sexuality, disability, age, or belief.

Devising a CSR and Ethical Policy

Trade unions can provide invaluable information to organisations, businesses and the public sector in relation to CSR. However, it has to be noted that this is a new and incredibly broad area of bargaining for trade unions.

As noted above CSR can cover every aspect of a company or organisation's operations. It may be better to focus on one or two key areas which are important to your organisation / company:

• Employment
• Procurement
• Investment
• Production / services
• Influencing / leadership role.

The CSR policy should then consider what impact it wants to achieve – eg:

• Supporting the environment/ opposing pollution

• Promoting equal opportunities
• Anti tobacco
• Supporting fair trade.

You should then look at how the company/organisation can work to the CSR policy goal in the given area: eg:

• Addressing procurement and fair trade: identify all procurement needs and look at options for purchasing from fair trade companies/ organisations developing policy along these lines.

• Addressing production / services and the environment: review all services provided or products made, and audit them for environmental impact, and look out how the company/ organisation can minimise the negative impact its products/services have on the environment.

Ethical Investment

One area where there has been substantial research and advice is on the subject of ethical investment. The Ethical Investment Research Service (EIRIS) offers advice to companies, charities and the public sector on investing along ethical or socially responsible criteria. Socially responsible/ ethical investment may be applied to any areas of the financial sector where the ethical/ environmental/ social concerns of the investor influence which organisation or venture they choose to place their money with.

EIRIS suggests three broad strategic approaches for ethical investment:

Screening involves creating a list of acceptable companies in which to invest through a combination of positive or negative tests. Eg: a list of companies who have positive involvement in areas you support such as good employment practices, or a negative test that the companies are not involved in "unacceptable" areas such as tobacco production.

Preference involves rating companies according to ethical investment policies, creating an ethical investment index on which to base investment decision making.

Engagement provides investors with the opportunity to influence corporate behaviour. It involves identifying companies that could improve their ethical/socially responsible investment policies, and actively encouraging them to do so, by writing letters, involvement at AGMs, or maintaining detailed and direct dialogue with the company.

Further Information:

Ethical Investment Research Services: www.eiris.org

IPPR www.ippr.org.uk

Ethical Consumer www.ethicalconsumer.org

Department of Trade and Industry www.dti.gov.uk

Government's Annual Business & Society CSR Report: http://www.societyandbusiness.gov.uk/
2002/report/agenda/message.htm

Contacts list:

Dave Watson - d.watson@unison.co.uk

@ The P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0845 355 0845
Fax 0141-307 2572