As corporate social responsibility becomes the norm across Europe, it’s increasingly clear that companies with more robust CSR programs also tend to have better corporate governance than companies coming late to the game. For compliance officers, involvement with their company’s CSR program can be a key differentiator not just in a company’s public image, but also how well it is run.
At Novo Nordisk, the Danish multinational pharmaceutical company, with production facilities in seven countries and affiliates or offices in 75 countries, compliance (known at Novo Nordisk as business assurance) “facilitates” each of the company’s departments at least every three years to make sure they embody the company’s value system—the so-called Novo Nordisk way—related to financial, social, and environmental responsibility.
Scott Dille, project lead for corporate sustainability at Novo Nordisk, explains that the procedure helps to build a cohesive sense of community at a company whose operations span continents. “CSR challenges and successes are extremely important for us to communicate internally, to build this sense of pride and meaning, and really to put action behind the corporate brand and our values,” Dille says. “We find that the small things are equally important, especially when it comes to environmental responsibility. Even though double-sided printing and remote light sensors and automatic power-off on computers and printers are all small things, when you’re a global organization of 40,000+ people, they all add up.”
Beyond the cost savings generated by doing the right thing, “When everyone is onboard it creates a trusting environment where we all know how we should behave, toward each other and our external stakeholders,” Dille says. “When everybody knows, and has seen demonstrated, that the Novo Nordisk way is legitimate and nobody is above it, even the CEO, it has meaning. From the shop floor to our executive management, everyone definitely lives by that.”
At Volkswagen Group, based in Wolfsburg, Germany, Gerhard Prätorius, head of sustainability and political communication, says one key challenge with CSR is figuring out how the ongoing measurement and evaluation of sustainability performance can be done in an objective manner by transparent and comparable sustainability indicators—especially important as annual CSR reporting is becoming mandatory across Europe.
“We constantly fine-tune our concept, which is aimed at ensuring that we recognize and manage at an early stage the risks and development opportunities in the areas of environment, society, and governance at every step along the value chain, and further improve our reputation,” he says. But there are some hurdles. At a company with 12 distinct brands, 118 production locations and more than 590,000 employees, Prätorius says an additional challenge is keeping up with increasingly complex and expanding stakeholder expectations.
Sustainable development is being recognized as a long-term value driver, so CSR is a challenge that needs addressing. “We learned that our business is not only about horsepower and torque, but about improving the quality of life and about being fit for the future,” he says.
“Regulation in areas like CSR will continue to increase, and companies will be subject to even stricter reporting processes.”
Brigitte Dumont, Director of CSR, Orange
Prätorius adds that companies should make sure to communicate their CSR efforts loudly if they want to stay relevant in an ever-more CSR-aware society. Because CSR is now so important to brand identity, Volkswagen founded a dedicated communications team whose sole responsibility is summed up in its title: “Experience Communications and CSR.”
At Orange, a pan-European mobile telecommunications products and services company headquartered in Hatfield, U.K., the notion of CSR became a major part of the way the company is governed about five years ago. While Orange had undertaken CSR initiatives before that, management’s adoption of CSR as a business objective has changed the face of the company, and the number of people whose roles are dedicated to CSR has doubled, says Brigitte Dumont, director of CSR at Orange.
From a compliance perspective, Dumont says the Grenelle Act—known as Grenelle II—that passed into law in France in 2012 determined that larger companies, such as Orange, must report annually on 42 CSR-based indicators. “However, because Orange had previously established a CSR program that had already fulfilled the relevant criteria, we were ahead of the curve,” she says.
Today, Orange has a clear-cut CSR strategy that addresses its responsibilities toward society, customers, employees, the environment, and its goals from both a responsibility and compliance perspective to create shared value for Orange and its numerous stakeholder groups across its 30-country footprint. “The Orange board understood many years ago that in order to create a sustainable business, Orange had to make CSR integral to the company’s strategy,” Dumont explains.
Below are the Novo Nordisk Essentials, 10 statements describing Novo Nordisk’s business philosophy, known as the Novo Nordisk Way.
We create value by having a patient-centered business approach.
We set ambitious goals and strive for excellence.
We are accountable for our financial, environmental, and social performance.
We provide innovation to the benefit of our stakeholders.
We build and maintain good relations with our key stakeholders.
We treat everyone with respect.
We focus on personal performance and development.
We have a healthy and engaging working environment.
We optimise the way we work and strive for simplicity.
We never compromise on quality and business ethics.
Source: Novo Nordisk.
While Orange’s size means maintaining a companywide CSR program is a challenge, it’s also an opportunity, Dumont says. “Orange has a CSR network with local representatives in each market it operates in,” she says. “These correspondents help to ensure that our initiatives are in line with the challenges and sentiment of those markets.” This means programs of specific interest to certain markets will receive special attention, whereas the same issue won’t be at the forefront of markets where the issue isn’t of local concern.
“Societal thinking at a particular time will also determine where we act,” she says. “Compliance helps us to benchmark ourselves against the minimum required standards, which we aim to exceed,” noting that prior to Grenelle II, Orange was already exceeding its duties in the 42 indicators. “As such, we just had to tweak our program in order to be fully compliant.”
Orange’s CSR program remains a work in progress, especially since it uses numerous suppliers in order to run its business. “We must also engage the needs of sub-suppliers across the chain to ensure that each touch point is acting responsibly and in line with regulations,” Dumont says. To keep the program current, the company is actively engaging stakeholders in its “Essentials2020” program, which addresses how the CSR strategy will look in practice for the next five years. “Consultation is important as it helps us to apply what the business can achieve in order to be responsible,” Dumont says.
In order to ensure a CSR program doesn’t become unmanageable, Dumont advises compliance officers to focus only on the CSR initiatives that make sense to the individual company and its stakeholders. “From a compliance perspective, not all CSR requirements are relevant for everyone,” she says. “We need to be very sector-based if we are to address the different challenges that different industries create. For instance, Orange may not need to allocate a huge amount of resources to explain its water consumption as, relatively speaking, we are not a large or even moderate user. However, other areas are more important for us than they would be in other sectors—energy consumption for example.”
Once the plan is set, companies must be careful to communicate the details of their programs, but again, not to overreach realistic boundaries, which can pose a significant reputational risk. “The most important element here is being totally transparent, rather than trying to market a program in a more favorable way,” Dumont says. “We have seen unfortunate cases where companies have ‘green washed’ the realities of their exploits—they communicated way beyond the reality of what they were achieving.”
Lastly, Dumont advises compliance and CSR offices not to go at it alone—work with industry groups and with peer companies to develop meaningful common standards between different operators. Taking the initiative in this regard can help stave off any potential negative impact from what will likely be a slew of new CSR-related regulations down the road. “Regulation in areas like CSR will continue to increase, and companies will be subject to even stricter reporting processes,” Dumont says, which demonstrates just how much common ground compliance and CSR now share.