Corporate Social Responsibility:
Rewarding in more ways than one
by Kelsey Mullen
The term "corporate social responsibility" is being used more today than ever before, but what does it mean? Do socially responsible companies outperform those that don't meet the same standards? How do investors find out about a company's CSR?
The World Business Council for Sustainable Development describes CSR as the business contribution to sustainable economic development. CSR consists of the actions taken by a company that go beyond those required by law to further a social cause. A company's corporate social responsibility, also referred to as corporate responsibility, corporate citizenship, sustainable responsible business or corporate stewardship, is often described in dedicated publications such as reports, newsletters or brochures. Recently, companies are opting for supplementary online reports, such as Agrium Inc.'s interactive 2007 Sustainability Report, designed right here at BMIR.
Some investors claim CSR has no impact on a company's profit-making function. What's more important than social and environmental concerns, they say, is a company's bottom line. Others, however, maintain that not only does engaging in CSR increase a company's visibility, it contributes to its profitability in the long run. Although limited research has been conducted on the connection between CSR and financial performance, a study by Marc Orlitzky, Frank L. Schmidt and Sara L. Rynes in 2003 titled "Corporate Social and Financial Performance: A Meta-analysis" found that CSR is positively correlated with financial performance, and that a company's reputation is an important mediator of the relationship.
Serving as stewards of the land can pay dividends for years as property owners remain open to continued access. This is especially true in the oil and gas industry in Western Canada, where getting oil out of the ground temporarily changes the landscape. David Schnell, a Saskatchewan farmer, was only 12 years old when the first oil well was drilled on his family's farm in 1957. Today, NAL Resources operates about 20 wells on his 3,400 acre farm. "It's very important to me that oil companies have a good relationship with landowners," says Schnell, who is quoted in NAL's 2008 Stewardship Report. "After all, oil companies aren't just borrowing the land from us now - they're borrowing the land from future generations." NAL, one of the companies for whom BMIR produces a stewardship report, has achieved Platinum-level status in stewardship reporting since 2003. "We are proud of our stewardship track record and we have set a standard for companies of our size in terms of our attitude, our commitment to the framework, our disclosure of our performance and our dedication to continuous improvement," says Andrew Wiswell, NAL's President and CEO.
Progressive thinking about CSR can also open up new opportunities and marketable pursuits, including alternative energy sources such as clean burning coal or wind power.
So does all this mean that engaging in CSR and producing a printed or online CSR report will improve a company's reputation and ability to survive and thrive? Absolutely. But it can also improve the world around us, proving that CSR can be rewarding to a company - and its investors - in more ways than one.
