CSR; The Facts Retailers Should Know - April 2014

Corporate Social Responsibility (CSR) – The Facts Retailers Should Know

April 2014

Introduction

What is CSR?

Risk of Weak CSR

Hard Facts:

Public Perception

Consumers

Investors

Employees

Graduate Perceptions

Retailers Committing

Where's the Value?

Conclusion

MAXIMISING VALUE MINIMISING RISK

Contents

Companies with a public commitment to CSR on average perform better on 3 out of 4 financial measures than those without. These companies also have over 18% higher profits on average


Introduction

Upwards of 85% of FTSE100 companies now

report on their CSR activities.

But how critical is a strong CSR strategy for retail industry?

This slide show highlights some of the most recent facts and figures in answer to this question.

Corporate Social Responsibility (CSR) has evolved dramatically over the last decades. From being on the periphery of business strategy in the 80’s and 90’s to now becoming an essential value generating strategy for all forward looking businesses.


What is CSR?

An effective CSR strategy helps a business to manage the social and environmental impacts of its operations and related stakeholder expectations in a way that adds value to the business whilst simultaneously delivering positive social and environmental benefits for society.


What is CSR - CSR in Retail

Increasingly companies within the retail sector are recognising the value (both financial and reputational) that can be generated through an effective & tailored CSR strategy. The benefits include: Differentiating their business from those of their competitors

Attracting new customers and increase customer loyalty

Creating operational cost savings

Increasing employee engagement and retention

Increasing long-term investment value

Minimising risks associated with weak supply chain, employment and

environmental practices


Risks of Weak CSR Practices

Demonstration of strong CSR activities can generate significantly positive reputational impacts for business. Similarly poor / weak CSR practices can be extremely damaging to reputation.


Business Leaders Views on CSR


Public Perception of CSR Practices

The public and media are increasingly focusing on the social and environmental performance of companies. This focus can have a direct impact on reputation, share price and ultimately sales. 83% of people will trust a company more if it is seen as being socially and

environmentally responsible;

68% of people agree that large companies should be actively involved in solving social/environmental problems;

70% of people in UK believe companies and brands should play a role in improving our quality of life and well-being.

D.Woods (2011)

Retail companies not proactively focusing on their social and environmental impacts are risking reputation and as a result value


Consumer Interest

81% of CEOs believe that the CSR/Sustainability reputation of their company is important in consumers' purchasing decisions;

64% of companies see the consumer as a key stakeholder in influencing their approach to CSR/Sustainability;

53% of consumers would pay a 10% price premium for products from a sustainable company;

Only 28% report that to date they have secured a price premium with consumers through their reputation on CSR/Sustainability.

P.Lacy and R.Hayward (2013)

Though to date though consumers may not always be willing to pay a price

premium, the importance that consumers are starting to place on the CSR reputation of companies indicates that it is likely only a matter of time

before this becomes a key differentiator between products of similar price, quality and availability.


Investors: Growing Engagement

Only 12% of CEOs currently regard investor pressure as among their chief motivators on CSR/Sustainability;

23% see investors as an important stakeholder in guiding their approach;

31% believe that their company's share price currently includes value directly attributable to CSR/Sustainability initiatives;

69% believe that investor interest will become an increasingly important factor in developing their CSR credentials.


Though currently investors may not be heavily influential in terms of a companies CSR practices, CEO’s are expecting this to increase in the coming years, in

particular as investors become more aware of the value that CSR can generate for their investment, as well as risk mitigation.


Employees Opinions

Companies with more engaged employees perform better financially, with productivity increasing on average by 18% and operating margins up by 27%;

57% of employees want their company to do more in relation to CSR;

63% of employees believe that having time off during working hours to commit to charitable causes would significantly increase employee engagement;

49% of employees are more likely to stay with an employer that encourages charitable giving;

GALLUP (2013) & D.Woods (2011)

Employee engagement is crucial to long-term business success and productivity. An effective CSR strategy

incorporates this as a core focus of its activities


Graduate Perceptions of CSR

80% of young professionals are interested in securing a job that has a positive impact on the environment and society;

90% of young professionals would prefer to work for an environmentally friendly employer;

50% of young professionals would turn away from an employer that lacked good CSR policies.

D.Woods (2011)

Businesses that attract the best graduates have a competitive advantage over their rivals. Ensuring your business is seen as being an attractive place

to work is an essential part of attracting the brightest graduates.


Accelerating Progress

93% of CEOs see CSR/Sustainability as important to the future success of their business;

78% see CSR/Sustainability as an opportunity for growth and innovation;

80% see these issues as a route to competitive advantage in their industry;

83% of CEOs believe that governments should step up their efforts to provide an enabling environment for business efforts on CSR/Sustainability.


Implemented strategically CSR can deliver real sustainable value for a business. Ultimately those company's not engaging will be left behind.


Major Retailers Committing

The retail industry has set itself new targets for 2020, under the British Retail Consortiums “A Better Retail Climate initiative”.

This group of retailers including Next, Waitrose, Sainsbury’s and the Co-operative have pledged to;

Reduce carbon emissions from retail operations by 25% by 2020;

Cut energy related emissions from buildings by 50% by 2020;

Reduce energy-related carbon emissions from store deliveries by 45% by 2020;

Measure water usage at sites in-order to account for 100% of water usage by 2020.

Major retailers in the UK are investing significant time and effort into reducing their environmental impact. These strong commitments are not only helping retailers improve their environmental performance but also their bottom line. It is also setting an increasingly strong benchmark and

expectation for all others in the industry


Where’s the Value?

Companies with a public commitment to CSR on average perform better on 3 out of 4 financial measures than those without. These companies also have over 18% higher profits on average

Institute of Business Ethics


Where’s the Value?

• Unilever - reduced its overall environmental footprint: $395 million cost savings since 2008.

• Marks & Spencer - Plan A: $296 million in combined economic benefits since its inception in 2007.

• Walmart - Packaging reduction: $200 million in initial costs savings in 2009.

• Adnams new and more efficient distribution centres have improved energy efficiency, saving the company £50,000 per annum.

• In a recent study by Unilever, employee well-being programs

covering managing stress and improving nutrition and exercise delivered a return of $6.59 on every $1.64 invested.


Conclusion

Although retailers have recently been operating in a challenging economic environment things are starting to look up. Consumers once driven purely by considerations such as price, quality and convenience are now increasingly taking a company’s social and environmental performance into account.

Retailers actively engaging in CSR (developing strategies relevant to the size and nature of their business) are seeing benefits including:

Differentiating their business from those of their competitors

Attracting new customers and increase customer loyalty

Creating operational cost savings

Increasing employee engagement and retention

Increasing long-term investment value

Minimising risks associated with weak supply chain, employment and environmental practices


Capstone Consultancy – What We Do

Capstone Consultancy is a Corporate Social Responsibility (CSR) and Sustainability consultancy.

We work alongside companies to help them develop, enhance and implement CSR and Sustainability strategies that deliver real value to their business, whilst also minimising any potential risks.

If you would like to learn more about how CSR/ Sustainability can help your business, please feel free to contact us by either emailing [email protected] or calling +44 (0)20 7183 9501.

mailto:[email protected]


References

• C.Krosinsky and D.Lubin (2013) theguardian.com, http://links.sharedby.co/share/PZ4mdj, 04/10/13.

• C.Carson (2013) GreenBiz.com, Why firms fall short on touting their sustainability work, 04/10/13.

• P.Lacy and R.Hayward (2013) The UN Global Compact – Accenture CEO Study on Sustainability 2013, 04/10/13.

• D.Woods (2011) CSR could be the key to boosting engagement and productivity, 04/10/13.

• GALLUP - http://www.gallup.com/strategicconsulting/en-us/employeeengagement.aspx

http://www.theguardian.com/

http://links.sharedby.co/share/PZ4mdj

http://www.gallup.com/strategicconsulting/en-us/employeeengagement.aspx



Leadership & Management

CSR; The Facts Retailers Should Know - April 2014