From Necessary Evil to Business Advantage
By Steve Wallage, Fri Jun 06 08:15:00 GMT 2003

The importance of Corporate Social Responsibility efforts will grow in coming years, but there is some upside for mobile vendors.

If you asked someone in the mobile industry five years ago what CSR stood for, they would have assumed it was a new acronym and guessed that the 'C' stood for 'cellular'.

Now, corporate social responsibility is not just a vague slogan but also a key business requirement increasingly enforced by law. CSR pressure is happening across industries. Mobile companies are being particularly affected for three main reasons.

First, the sizes of some of the companies ensure they are scrutinized in greater depth. Mobile heavyweights such as Nokia and Vodafone are two of the largest European corporations.

Second, the mobile industry is, of course, geared towards the youth market -- and guess which market segment is most swayed and informed by CSR.

Third is that the mobile industry has got a lot of specific CSR issues of its own. These range from health issues to recycling issues to crime issues to 'digital divide' issues.

Particularly the third issue emphasizes the importance of developing CSR policy for mobile companies. Mobile companies need to confront and respond to the specific CSR issues. They can do this reluctantly, on the defensive and in a reactive way, or they can do it in a much more effective way by acting proactively and developing global CSR policies that can actually provide them with a business advantage. CSR should not be just a 'cost' line buried in the accounts, but a competitive differentiator.

Increasing Regulatory Pressure

If mobile companies have been slow to develop CSR policy, then so have governments.

The European Commission issued its first detailed communication on CSR in July 2002. It proposed a multi-stakeholder forum to debate issues such as reporting, assurance and labels, and to develop commonly agreed guidelines for these issues by mid-2004.

The EU Multi-Stakeholder Forum on CSR gathers together the business community, trade unions, civil society organizations and other stakeholders to promote innovation, transparency and convergence of CSR practices and instruments.

In December 2002, the Council adopted a resolution on the Commission's follow-up communication to the Green Paper on CSR. It called on future Council Presidencies to stimulate the debate on CSR and to maintain the involvement of the Council in the CSR Forum.

National governments have shown differing concern over CSR issues. Frustratingly for mobile companies, they continue to take different approaches. Take mobile radiation issues - national European bodies that mobile companies need to deal with include the Health Council of the Netherlands, NRPB (UK National Radiological Protection Board), Spanish Expert Group (Campos electromagneticos y salud publica) and SSK (German Commission for Radiation Protection).

Global bodies such as the United Nations are also becoming more involved in CSR issues. It was the United Nations Environment Programme that organized the Basel Convention that included proposals to recycle mobile phones in an environmentally sound way.

There are also a growing number of independent initiatives, both at a national and global level. An example of a national body is the UK Accountability Group that measures the CSR activities of companies across a wide range of criteria. On a global basis, there is the Global Reporting Initiative (GRI). The Global Reporting organization has produced guidelines that have now been followed by 220 companies in 25 countries who have produced reports using the GRI Guidelines. It is producing a special telecoms supplement to be completed by the third quarter of 2003.

Further pressure is likely to come in the future from investors and stock markets. This will come for a variety of reasons including the desire for investors to assess company adoption of CSR regulations, preparedness to deal with CSR issues, comparison across mobile vendors, and fulfillment of criteria to fit ethical investment standards (a growing investment group).

Looking at the regulatory initiatives it becomes increasingly clear that the scope of CSR is broadening. The GRI talks about the "organisations' contribution to natural, human and social capital." A common buzzword is 'sustainability'. The Accountability Group defines this as "the economic, environmental and social impacts of organizations."

CSR Stick - and Carrot

It is clear that the 'stick' on CSR is getting longer and sharper, and that mobile companies will be forced into greater action over CSR. However, there are some 'carrots' out there - that is, benefits from this investment.

The GRI believes that "relationships with external parties (ranging from consumers to investors or community groups) are increasingly important for companies. The reporting process based on transparency and open dialogue contributes to strengthening the stakeholders relations and build trust."

Orange has been one of the leading mobile groups in developing a global CSR strategy, a process it started two years ago. Its research, across 14 countries, found that people felt mobile phone companies should offer greater access to communications technology, tackle social exclusion and improve their environmental performance. Overall, they found 'overwhelming support' for an increase in Orange's CSR activity. Orange believes it provides great advantage to its brand development and global positioning to have developed such a strategy.

As CSR issues increasingly come to the forefront of potential mobile customers, then the CSR credentials of mobile companies can become far more important. The more negative way to look at this is to examine other consumer markets where corporations who have become associated with a lack of CSR have seen a drop in revenue, particularly in important youth markets.

Interestingly, a coherent CSR strategy can also save money. Organizations such as GRI point out that companies which are having to respond to a multiplicity of CSR information requests would be far better off with a clear, global set of criteria. The GRI also believes that the "process of CSR reporting can highlight weaknesses or opportunities and help to anticipate potentially damaging developments." More subtle savings can come from greater efficiencies through recycling and working in more effective ways.

Proaction Not Reaction

The key message is that CSR is not going to go away, and it will become far more important and far broader in scope. Unfortunately, national bodies will continue to act unilaterally and global mobile companies will need to report on CSR in many different ways to many different groups on many different issues.

However, it will always be far more beneficial to respond proactively and to develop a clear and global CSR strategy. This should be as broad in scope as possible, and include employee input and national considerations.

CSR should not just be seen as cost or another regulatory burden, but an opportunity to differentiate from competitors and gain long-term competitive advantage.

It's Corporate Social Responsibility (CSR) Week on TheFeature! Check back daily for reports, analysis and in-depth articles on the future of mobility.

Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.