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• Why is responsible business practice important?
• Why is it important Forum

Initiatives

• CRI - Corporate Responsibility Index
• GRI - Global Reporting Initiative
• UNGC - UN Global Compact

Why is responsible business practice important?

While terms like ‘corporate social responsibility’ and ‘responsible investment’ may sound altruistic, they all boil down to sustainable business practices. The kind of business practices Australia needs right now.
Senator the Hon Nick Sherry Minister for Superannuation and Corporate Law

The Business Case

Transparency, trust, confidence and comparability are emerging as key themes in the new economic climate. There is a growing 'body of evidence' which underpins the business case for responsible business practice.

A fundamental premise is that business is not divorced from the rest of society. Companies are an integral part of the societies and communities in which they operate. And business cannot continue to generate wealth if the society around it fails.

A coherent ‘CSR’ strategy, based on integrity, sound values and a long-term approach can offer clear business benefits. These cover a better alignment of corporate goals with those of society; maintaining the company's reputation; securing its continued license to operate; and reducing its exposure to liabilities, risks and associated costs. Björn Stigson, President, World Business Council for Sustainable Development (WBCSD) www.wbcsd.org

The business case relies on genuine intention and a well informed course of action. An approach which sees only business advantage and fails to engage in the underlying ethical purpose will be unlikely to reap the full benefits of responsible business practice … and more likely to fail when challenges emerge, such as the global financial crisis, where risk is pitched against opportunity.

There are eight broad clusters of recognised business benefits for companies that engage in the responsible business practice ‘journey’:

1. Reputation management and competitive advantage: including enhanced reputation with customers, market differentiation, building brand, goodwill and public trust – creating access to new markets
    
2. Enhanced social license to operate - stronger relationships with communities
    
3. Employee satisfaction - improved management performance, productivity and capacity to attract, retain and motivate talented staff. Increased learning, innovation and productivity. Reduced hiring and retention costs
    
4. Risk management - long-term security
    
5. Access to capital - improved relations with the investment community and better access to capital
    
6. Financial performance - stronger financial performance and profitability through operational efficiency gains
    
7. Minimised environmental impacts - cost savings and creation of business efficiencies
    
8. Long-term perspective - benefits from operating with a perspective broader and longer than immediate, short-term profits

The Case for Ethics and the Global Financial Crisis

If ever there was a time when the credible measurement of a company’s practical commitment to responsible business practice (corporate responsibility) was needed … then it is now.  The global financial crisis is not only a failure in the financial markets but also a failure of ethics.  Companies that have the skills and resources to manage and measure their performance in this area demonstrate a superior capacity to manage complexity – that is they can simultaneously deal with the multiple dimensions of running a responsible, resilient and sustainable business. 

 

Those companies that claim that they do not have the resources to measure their performance in this area are signalling that they do not have either the capacity or inclination to equip themselves to manage the variable challenges and opportunities faced by companies today.  

Responsible Business Practice meets Responsible Business Investment

The Responsible Investment Association Australasia (RIAA) is the peak industry body for professionals working in responsible investment in Australia and New Zealand. RIAA defines “responsible investment” as “an umbrella term used to describe an investment process which takes environmental, social, ethical or governance considerations into account. This process stands in addition to (or is incorporated into) the usual fundamental investment selection and management process”.

Senator Nick Sherry, Minister for Superannuation and Corporate Law, announced on 5th February 2009 that RIAA would receive $2.5 million in funding over three years to establish the Responsible Investment Academy - the world's first academic-level centre for responsible investment education, training and innovation.

In response to growing evidence of the importance of environmental, social and governance (ESG) factors, global investors and asset managers are increasingly integrating a broader assessment of risk into decision-making.

The Australian Government is committed to fostering corporate social responsibility in the Australian business and investment communities. Facilitating a greater awareness of responsible business practices in Australia can contribute to the long term profitability of corporate Australia, and deliver benefits to the community. Senator the Hon Nick Sherry Minister for Superannuation and Corporate Law

Read the full RIAA press release regarding the funding announcement here.
For further information we encourage you to visit their website: www.responsibleinvestment.org/

The Case for Reporting Responsible Business Practice

Companies are facing a growing demand from different stakeholders to be more transparent about their economic, environmental and social performance:  what gets measured gets managed. Stakeholders range from institutional investors, social and environmental activists, carbon traders, financial risk managers, insurance companies, buyers, clients, customers, employees, government … and our children.

Government Recognition

On 5 February 2009 at the ACCSR conference in Sydney the Hon Nick Sherry, Minister for Superannuation and Corporate Law emphasised the importance of reporting:

CSR reporting provides a mechanism which helps broader social, environmental governance issues to be priced into investment decisions. This is important — markets cannot function efficiently and sustainably unless these issues are taken into account.  With access to CSR information, investors can better understand how a company creates financial value and deals with issues that can affect its financial performance and value over time. Many investors are also realising that when financial and non- financial is combined it can provide valuable insight into the overall quality of management. Senator the Hon Nick Sherry Minister for Superannuation and Corporate Law

To read the Senator’s speech click here.

Who is Reporting?

The Global Reporting Initiative (GRI) has welcomed the findings of the most recent KPMG International Survey on Corporate Responsibility Reporting (2008) which reveals that disclosure on corporate economic, environmental and social performance has become the norm among larger companies globally. The report reveals that:

• Over 80 per cent of Global Fortune 250 companies (G250) provide ‘sustainability’ or ‘corporate responsibility’ reports.
• 70 percent of the reporting companies worldwide use the universally applicable reporting guidance from the Global Reporting Initiative.
• The number of top Australian companies issuing a sustainability report has doubled to 68 out of 100 since the survey was last conducted in 2005.

Summary

Just as three or two or even one year ago we could not have predicted the effects of significant global events such as climate change or the global economics downturn it is equally likely that the landscape will change just as significantly over the next three years. Companies that operate from responsible and sustainable business practices will be better prepared to adapt and build resilience to overcome these unknown challenges.

Where do I begin?

Large Organisations

Small to Medium Business

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St James Ethics Centre and Beaton Consulting launch national study on business ethics

On 29 April 2009 St James Ethics Centre and Beaton Consulting has released data on what Australian business professionals really think about ethics. The new study finds a link between employer’s approach to ethics, and productivity and loyalty of employees.

Download the media release

Download the full report

Have your say about the results of the study in our online discussion forum!

WHY TAKE RESPONSIBILITY?

Mitigate RISK
Build REPUTATION
Improve RESILIENCE
 

HOW TO TAKE RESPONSIBILITY?

Undertake REFLECTION
Build in RESPONSIVENESS
Start REPORTING