Sirpa Juutinen: Ensure at least these five corporate responsibility issues
What are the five issues against which to assess the state of responsibility in a company? What things make us conclude that this area is under control and results can be expected?
1. Active interaction with many kinds of stakeholders
The basis of everything is to understand the expectations and business pressures that come through different stakeholder groups. I will probably always remember the lecture given by a US professor in the early 2000s in which he said:”You have to listen to your stakeholders, even aliens”. Stakeholders are both a mirror of today and also reflect weak signals.
2. Material parts have been picked out from the large whole
Corporate responsibility is a vague and unclear term, which needs to be concretised. This is achieved by assessing what is material. My rule of thumb has been that the number of material aspects should rather be closer to ten than over twenty. The purpose is to put them under strong and target oriented management, which cannot be done with a very large number of issues are the same time.
3. The significance and impact mechanisms of responsibility as a creator of business value has become clearer
This thought exercise should be done when defining materiality so as to clarify the significance of responsibility in the company’s value creation. Some of the issues have a direct impact on it, while some impact through some other, and they are by no means the only factors that affect the value. But they are involved, anyway, and the impact mechanisms should be known.
4. Corporate responsibility issues are actively managed and included in the management system
Results are achieved in responsibility issues in the same way as in other issues: they have to be managed actively, which means clear objective setting, measurement and monitoring as well as giving rewards when there is reason to. Objectives are not only set for the head of corporate responsibility but for everyone whose area of responsibility the achievement of the objective concerns.
5. Results are reported and communicated on a regular basis
Openness and transparency that are an important part of corporate responsibility are promoted by regular reporting of results achieved. However, this alone is not sufficient for communicating about corporate responsibility. Various stakeholders expect different information and they are reached through different channels. Neither should we forget investor communications in the world where responsibility has increasingly become a part of investment policy in the form of ESG criteria.
The company that has these five issues in order has made good progress in corporate responsibility. So you should keep an eye on them.
Sirpa Juutinen, Partner, Corporate Responsibility Services, PwC