The world is changing at an unprecedented rate and, in the wake of the financial crisis of 2008, businesses must redefine how they operate to meet the demands of shareholders and society. It is no longer acceptable for companies simply to select a few charities to support and to sign up to a select number of codes which enable them to tick the right boxes. This approach is now widely recognised as a ‘bolt on’ and therefore not strategically aligned to the organisation’s core business strategy.
CSR, CR or, in an even earlier incarnation, Community Affairs, cannot function as a discrete department that effectively provides window dressing for the commercial operations. Nor should it be the “conscience of the organisation.” Instead, the function should help to shape the values of an individual company and help to embed those values and awareness of society’s reasonable expectations across the entire business. In a sense, CSR is evolving into a discipline more akin to the risk function which has similarly evolved in the wake of the last economic crisis.
Lloyds Banking Group’s decision to move away from using the term “CSR” five years ago in favour of “Responsible Business” had less to do with semantics and much more to do with emphasising this changed relationship with business operations and the new discipline of building a societal strategy that blends into the core business strategy.
The introduction of our Codes of Responsibility in 2012 was one of the first key steps we took to communicate a consistent approach to building responsible thinking into our core products, services, relationships and behaviours. Encouraging people to take personal responsibility for the decisions they make on a day to day basis is an important part of building a responsible culture.
Responsible Business does not end with the internal management of a business. Businesses are increasingly – and rightly – judged on how they prove, and then communicate, their broader value to society. Initiatives from a number of other companies and our own Helping Britain Prosper Plan exemplify this approach. What I particularly admire about our Plan is its clearly defined purpose and its measurability – there is nothing nebulous and cuddly about it. Its relevance to the UK’s economic and societal need is clear and our progress towards meeting our goals can be easily determined, including where we fall short of our ambitions.
I recognise that organisations are at different stages of development and therefore traditional CSR approaches may still be appropriate for some, particularly those just starting on their journey. It has taken Lloyds around five years, with the “stimulus” of the banking crisis to recognise the need to embed a clearly defined and articulate responsible business culture and to build the necessary links to its core values and commercial strategy, all of which is underpinned by a robust governance framework. We are not complacent about this and we fully recognise there is more to do. Finally, this challenge should be welcomed by businesses as a commercial strategy cannot, sustainably, be separate from the clear value those businesses bring to the societies in which they operate.
Damian Leeson is Responsible Business Director at Lloyds Banking Group