The dawn of enlightened self-interest

WHEN a famous American energy company collapsed suddenly in 2001 exposing a web of fraud and deceit the world paid attention.

After all it had to. Enron’s failure cost the markets (and other stakeholders) billions as a result of its rotten governance.

Ethical business was thrown onto the centre stage and corporate responsibility – then an embryonic concept – became a solution to be taken seriously. Almost overnight the focus shifted from philanthropy to the creation of initiatives designed to maintain and grow the overall wellbeing of an organisation from the workplace to the community.

Infancy saw the development of non-financial reporting models, benchmarking indices, the creation (and subsequent demise) of the operating financial review (OFR), a new era of openness and disclosure, better governance and compliance, and the birth of a new industry designed to produce complicated and happy smiling faces filled corporate responsibility reports.

By 2007 however teenage angst had set in. Popularity was taking its toll as firms fought to gain the higher moral ground with “hip” terminology, record cash donations, and headline grabbing target reductions. Meanwhile a number of key adopters found themselves embroiled in scandal around poor ethical conduct. Corporate responsibility was in danger of being written off as green wash, hog wash, no wash. But after a little sulking and some deep reflection, corporate responsibility emerged with a new purpose – sustainability. Plainly put protect the wider stakeholder and profit through “enlightened” self-interest.

The sudden and tsunami-esque collapse of the banking sector should have strengthened corporate resolve to embrace a long-term approach to share value and creation. But as we enter recession commitment will be tested and there will be those who will choose to cut CR budgets to save in the short-term. Just what that means for the hundreds of charities, communities and non-governmental organisations (NGOs) that rely on corporate support and donation will be interesting. Charities have already been very vocal in their concerns over a sudden drop in corporate sponsorship and fund-raising and while the banks have their detractors, few can criticise the level of NGO support they have offered over the years.

Adopting such a strategy would be wrong according to Dirk Mischendahl of Leeds-based creative agency Logistik.

The company is one of the sponsors of the Northern Arts Prize and Mischendahl firmly believes its support, which is part of the firm’s wider CR programme, will be even more critical to promoting the firm’s sustainable approach to business as times get tough.

“Our sponsorship gives us the opportunity to give something back,” he says.

“But it also promotes our responsibility in the community, the workplace and so on. Normally, during times of economic pressure the temptation to stop sponsorship of such events is easy.

“That would be a mistake especially for smaller firms as it helps raise and maintain your profile.”

For Logistik, the importance of shattering the perception that all creativity is in the South is important, not only for attracting and retaining talent but showcasing all that the region has to offer.

“It was a commercial decision. We wanted to create something that generates some sort of reason for people to stay in the North,” adds Mischendahl.

Property developer ISIS is another strong advocate of the commercial benefits of art related corporate responsibility. The firm, which is behind a number of key regeneration projects including Granary Wharf in Leeds and Islington Wharf in Manchester, is actively involved in a number of art-based community initiatives at each of its developments with a particular focus on preserving social history.

“Our work tends to be in challenged communities, which have been written off for one reason or another,” explains ISIS director Mike Finkill.

“By using art to engage these communities we hope to win their support, portray them more positively, and show that we are a responsible company.”

According to Finkill, ISIS’ “rescue geography” projects have included films, books and sound recordings as well as visual creations. He says that its responsible approach to regeneration helps both retain and attract talent and that the firm will be growing its programme rather than cutting back.

“Construction has slowed down, which means we have the time to take part in more initiatives,” he says.

“It’s all about building futures.”

Such approaches to community involvement could be accused of being traditional philanthropy, but there’s one important difference – the motives are undeniably commercial and the impacts measurable.

Being able to see the wider picture not only enables firms to gain competitive edge – it can help maintain local economic health. Such is the belief of Arup. The global engineering and design consultancy has on the ground CR initiatives wherever it operates. Another Northern Arts prize sponsor, the Yorkshire office is also heavily involved in local community initiatives including Leeds Ahead.

Nigel Foster, Arup director and head of its transport consultancy division, strongly believes that art can be seen as some kind of social “glue” provoking reactions that bond people together whatever their reaction to it.

“With art people either like it or they don’t,” he muses.

“It stimulates conversation either way, which is why it’s an easy decision to fund art.”

For Foster, sponsorship contributes positively both locally and commercially.

“Positive PR means positive brand recognition,” he adds.

And while Foster admits that budgets are always under review, the consultancy’s belief in enlightened self-interest is immovable. As the economy is further knocked by recent events firms may be reluctant to find the time or the money to support community-based initiatives. But the benefits outweigh the effort. CR programmes can attract new business, enable firms to compete for public sector tenders, improve efficiencies and cut costs, secure skills and talent, generate positive PR and brand recognition, and above all promote sustainability. Done right, CR is a everything it promises to be. Enlightened self interest may just deliver us all.