Social responsibility gives Canadian firms an edge (Guest Commentary)

I am a firm believer in corporate social responsibility and I am also a business leader who understands that we cannot succeed without delivering solid financial performance. I do believe that CSR can deliver competitive advantage, and is a critical and often overlooked contributor in the pursuit of global competitiveness.

How we do business is as important to our success as what we do. This concept has never been more important to our collective economic success in Canada.

Canada has always been recognized as a leader in social responsibility. We have a proud legacy on many fronts — we were one of a handful of countries responsible for the creation of the United Nations and one of the first in the world to adopt a publicly funded health-care program. From embracing the international rule of law, to peacekeeping, to diversity in its broadest terms, Canada has led the way — and we continue in our pursuit of common good and fairness.

However, Canada is not immune to the challenges that have plagued other nations. We have had our share of corporate and government scandals that have been both visible and concerning. Still, CSR remains a concept that is openly embraced by a strong majority of Canadians. This puts us in the forefront of countries around the world.

HP recently commissioned a study on attitudes towards CSR with the research firm GlobeScan. The results show a compelling connection between values and economic success. For example, last year alone 40 per cent of Canadians surveyed reported punishing corporations by not purchasing their products or speaking critically about them because they felt those companies were not acting in a socially responsible manner.

More than 92 per cent of Canadians surveyed said that the more socially and environmentally responsible a company is, the more likely they are to purchase its products or services. Additionally, 91 per cent of Canadians surveyed prefer to work for a company that is socially and environmentally responsible. The more socially and environmentally responsible a company is, the more attractive it becomes as an employer.

Companies and countries that attract the best talent, win in the global market. This convergence of business values and the strong social values that Canada is known for means that not only must we embrace CSR to succeed, but that we can turn our industry-leading attitudes and approaches into a global competitive advantage.

In her book, Value Shift, Harvard professor Lynn Sharp Paine maintains that superior performance consists of excellence along both moral and financial dimensions, not just financial performance. She asserts that by definition, a company cannot be an outstanding performer it if fails to conform its activities to generally accepted ethical principals, even if its financial performance is outstanding when viewed in isolation. I could not agree more. More importantly, shareholders also agree. The GlobeScan research I mentioned previously also found that more than one-third of Canadian shareholders surveyed have bought or sold shares because of a company’s CSR performance, and half actually view socially responsible companies as more profitable than irresponsible ones.

CEOs share these sentiments — 79 per cent of global chief executives agree that social responsibility is vital to the profitability of any company. In fact, good will is believed to account for 71 per cent of total market capital, driving the move towards socially responsible investment and the establishment of ethical indices such as the Dow Jones Sustainability Group Index.

But aside from the fact that it’s the right thing to do and that we may be punished by shareholders, customers, partners and employees for not doing it can we really tie CSR to better financial performance and competitiveness? While the response seems to me to be a resounding “yes”, this “ethics pays” argument requires that we take a broader view than simply the next quarter or financial report.

This view was recently echoed by Harvard Business Professor Michael Porter, a leading authority on competitive strategy. He and I were both part of a conference held recently at the University of Toronto’s Rotman School of Business. He made it clear that companies are no longer self-contained entities. Their successes are intertwined with other firms, local institutions and communities. He called on business leaders to “closely examine this intersection and find the countless ‘win-win’ opportunities waiting to be discovered.” This shift in thinking from strategic and competitive heavyweights like Porter is good news for organizations, industries and indeed countries that are in a position to take advantage of this opportunity.

Given the new level of convergence of personal, business and societal values, there is clearly a new imperative to act. In 1947, HP’s co-founder Dave Packard said: “the real reason HP exists is to make a contribution… to improve the welfare of humanity… to advance the frontiers of science… profit is not the proper end of management, it is what makes all of the other aims possible.” While he was certainly ahead of his time, these principles have never been more important, not only to our families and community, but indeed to our ability to differentiate ourselves and succeed.

The goal is to facilitate dialogue and action. For some, as it was for Dave, the impetus to act will be based on a true passion and vision. For others, it may be enlightened self-interest that will spur action. But either way, driving a balance between personal, business and societal values is no longer an option.

Good corporate citizenship at home and abroad, including respect for human rights, environmental stewardship and community investment, plays an essential role in enhancing public trust, attracting and retaining talented employees and reducing investor perceptions of risk. Canada could not be in a better position to lead the way.

Paul Tsaparis is President and CEO of Hewlett-Packard (Canada) Co.

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