A weighty proposition

CSR:The merits of corporate social responsibility have been debated for decades but the concept is becoming popular in corporate Ireland.

JUST OVER TWO YEARS AGO, THE board of Irish Life & Permanent (IL&P), the country's biggest mortgage and pensions provider, decided the time had come to beef up its corporate social responsbility (CSR) policy. As an initial step, it appointed Gerry Loughrey as its first full-time corporate responsibility manager. Loughrey was sent off to develop a policy that "would permeate the entire organisation".

"The board took the view that we needed to bring a bit more focus to the area," Loughrey explains. "CSR is about being part of the community rather than being set apart from the community."

IL&P is now spending about €2.5 million a year on CSR initiatives. On the community side, the group has committed €4 million over the next 10 years to support an in-depth study on ageing being conducted by Trinity College Dublin.

The project started last year and promises to be the most comprehensive study of all aspects of the ageing process every carried out in Ireland.

It has also linked up with Age Action to trial a "care and repair" programme for the elderly. This involves carers visiting pensioners who are living alone and employing a handyman to do little jobs around the house. Pilot projects are running in Dublin's docklands and in Galway.

"We're the biggest provider of pensions after the government, so this is a logical association for Irish Life to have," Loughrey explains.

IL&P is also looking out for the environment. At its Middle Abbey street headquarters, its 1,000 staff have been briefed about energy-saving measures.

"We're looking at reducing our energy output by 5 per cent," he says.

Recent international research illustrates clearly why IL&P has decided to beef up its CSR profile.

A CSR survey by investment bank Goldman Sachs found that listed companies on an ethical list outperformed the MSCI World Index by an average of 25 per cent.

Separately, McKinsey found recently that business leaders increasingly regard socially-responsible conduct as creating competitive advantage and boosting performance, rather than as a costly burden.

CSR was the theme of a chief executive retreat to Haiti organised as part of the Ernst & Young Entrepreneur of the Year award scheme.

About 50 Irish entrepreneurs, bankers and accountants made the trip to the Caribbean with the aim of supporting local projects on the impoverished island.

"The trip was an eye opener," says Stephen Grant, managing director of Grant Engineering, an Offaly-based company that makes energy-efficient boilers. "People there [in Haiti] are living in abject poverty."

Grant was involved in two projects. One to improve the output of local cashew nut producers, who were being held back by outdated equipment.

The other was aimed at benefiting local fishermen, who have seen their stocks pushed farther out to sea as a result of soil erosion caused by deforestation.

By the end of the trip the entrepreneurs had agreed to provide improved roasting ovens for the cashew nut makers and to help purchase modern boats for the fishermen.

"Hopefully, as a result of this, they can become entrepreneurs in their own right," Grant says.

Billionaire telecoms entrepreneur Denis O'Brien is also actively involved in CSR work in Haiti.

O'Brien's Digicel mobile phone operation launched in Haiti just over a year ago and has secured 1.5 million subscribers, making it the best start-up of all the 22 Caribbean markets in which the telco operates. Conscious of the need to give something back to a country where nearly half the adult population is illiterate and a large majority of people are unemployed, O'Brien has established a foundation to build 20 primary schools in Haiti within 12 months.

"Education is the road to prosperity," O'Brien said, when interviewed in Haiti. "We're very committed to this project."

At home, UPC, the international owner of the NTL and Chorus cable TV networks, has also chosen an education route for its first CSR initiative here.

UPC has provided digital TV equipment to the 315 pupils at St Finnachta's National School in Sixmilebridge, Co Clare.

"We believe that the overall project will provide the schoolchildren with the type of technology that they're used to having access to at home," says Robert Dunn, chief executive of UPC Ireland.

"It's the type of community project that we believe will be a valuable association in the long term for the company," he says.

The debate on the merit of CSR has raged for decades. As far back as 1962, Milton Friedman, a prominent American economist and intellectual, published a withering analysis of CSR.

"Few trends so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible."

It's a view shared by many, including Clontarf-based entrepreneur John Teeling, who runs the Cooley Distillery independent whiskey maker and is chairman of a raft of mining and exploration groups.

His companies operate in Botswana, Iraq, Iran, Sierra Leone and parts of South America.

"Economics work, it's as simple as that," Teeling says. "CSR is nothing more than PR. I have no right to pay more for workers in developing countries than my competitors. What right do I have to spend my shareholders money that way?

"Remember, a dollar is an orphan. It has no loyalties and it has no responsibilities. It will go where it's wanted and will go anywhere. You have to keep that in mind," he says.

The debate, however, could be moved on by legislators. CSR could yet become compulsory for companies operating in Europe if members of the European Parliament have their way.

Earlier this year, MEPs backed a report calling for CSR practices to be included in EU policies. It wants a mandatory "environmental audit" that would require businesses to report on the environmental impact of their operations.

In Indonesia, the government is considering a bill that would require all limited companies to set aside some of their after-tax profits for CSR activities.

Many global corporations are already a step ahead of the posse. Global financial giant JP Morgan Chase last month established an Office of Corporate Social Responsibility to co-ordinate its efforts in government affairs, public policy, charitable work and environmental and community efforts.

Earlier this month, energy giant Shell said it had spent $273 million (€201 million) worldwide on CSR in 2006.

Susan Shannon, who heads Shell's social investment initiatives in Ireland, says independent research it has commissioned recently suggests that trust is gradually being rebuilt after recent low points in public relations over its plans to build a natural gasline in Co Mayo.

"Others would argue that that isn't the case but we feel strongly that it is the case and we have independent studies to back it up."

Shell recently announced a university scholarship programme with four secondary schools in Mayo that will benefit 10 students. The cost is about €500,000 to the company. It also employs a number of community liaison officers.

Shannon admits, however, that it is difficult for companies to quantify the benefit to their business from CSR. "You can't measure it . . . but this is not really an option for businesses anymore. It's a must-have in today's world," Shannon says.

Tina Roche, chief executive of Business in the Community (BITC), is in no doubt about the benefits of CSR. "It's thriving in Ireland," Roche said. "It's about balanced decision making that will benefit all stakeholders in a company."

Set up in 2001, BITC has 47 members, with Citibank recently adding its name to the list. These are big-ticket members but Roche says about 600 businesses around Ireland are involved in projects. BITC's board includes corporate heavyweights like Anglo Irish Bank chairman Sean Fitzpatrick and C&C chief executive Maurice Pratt.

"Environment is going to the biggest issue going forward," Roche says. "The price of oil is rising and we've got a huge debate on climate change. It's a society issue now and one that all companies are going to have to deal with."

Two years into the job, Loughrey says IL&P has made good progress implementing its CSR policy, but he acknowledges that corporate Ireland still has a distance to travel. "A lot of people [in Ireland] don't yet fully understand CSR," he says.

"You have to break it down to individual elements, be it community, environment or disability. Once companies do that, they begin to understand it better. We're still some way behind the UK but awareness is building . . . we're getting there."