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Corporate social responsibility at the executive level

Corporate social responsibility at the executive level

CIOs can use their decision-making power to influence CSR direction

Message Stick co-founder, Michael McLeod, was intrinsic to the development of the Australian Indigenous Minority Supplier Council, AIMSC.

Message Stick co-founder, Michael McLeod, was intrinsic to the development of the Australian Indigenous Minority Supplier Council, AIMSC.

There have always been organisations and professions which have supplemented their primary business activities with the ancillary role of ‘good citizen’ — whether through pro bono work such as that undertaken by lawyers and doctors or simply companies taking a ‘green’ stance, raising money for charities or doing work with local communities.

But it has only been relatively recently that the concept of corporate social responsibility (CSR) has arisen as a significant and regular part of a company’s bottom line. So much so, in fact, that such accounting is often referred to as triple bottom line also known as ‘people, planet, profit’ or ‘the three pillars’. The catchphrase captures a range of values and criteria beyond the normal performance measures of an organisation, covering organisational and societal success in ethics, social justice and environmental concerns. Sustainability is a key issue here, as shareholders often demand more than just short-term profits and, altruistically, dividends.

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These shareholders prefer to know that their money is invested in firms that intend to be around for a while, based not only on their core business, but also on their attractiveness to current and future employees, customers and no-doubt other shareholders. The responsibility to ensure CSR performance is often reserved for those company personnel with outward-facing positions, which is where CIOs can come into the picture.

All C-level executives are exhorted to ‘align with the business’ and work toward increasing shareholder value. And, while in reality much of a CIO’s time is spent on inward-looking administration (proportions of up to 80 per cent are sometimes quoted), there are many who pine for the open fjords of business rather than the limitations of technically-oriented activity — a true CIO versus a CTO.

“There’s a lot that CIOs can do about CSR and sustainability,” says Garry Whatley, CIO of business supplier, Corporate Express. “A big proportion of my time is spent on organisational strategy. I spend a lot of time out with customers. But you can only be as involved in CSR as much as the organisation is.” And that often means a CSR mentality is driven from the top.

Andrew Mitchell, CIO for commercial law firm Gilbert + Tobin, says CSR is “part of the company’s DNA”, citing managing partner, Danny Gilbert, as a key element in the firm’s ‘good citizen’ approach. For its part, the firm happily cites its pro bono work, which it says is “a vital part of what we do and who we are. It has been a feature of our practice since the firm’s beginning in 1988. In 1996, we became the first law firm in Australia to appoint a full time in-house pro bono lawyer and in 2008 the firm appointed its first partner responsible for pro bono.” This means employees may work in such diverse areas as refugee advocacy and Aboriginal stolen wages claims or attending in the firm’s outreach clinics.

Corporate social responsibility is part of the company’s DNA

Much of G+T’s ‘good works’ revolve around helping indigenous communities through a reconciliation action plan that incorporates an indigenous employment strategy, including an Islander cadetship program for operations staff, and an Islander youth program targeted at Aboriginal and Torres Strait high school students.

Indigenous businesses

Overall, there is much support given to indigenous people to help set up their own businesses. Indigenous Business Australia, for one, says its business development and assistance program “assists eligible indigenous Australians to establish, acquire and grow small to medium businesses by providing business support services and business loans”.

This admirable aim is therefore designed to assist start-ups get their business off the ground. But while a ‘push’ approach assists in funding and advising an organisation — something most SMEs, indigenous or not, could do with — there is also the market ‘pull’ to consider, because as much as it is important to get a company started with the right support, there is also that vital element of any commercial operation to consider: Customers.

Enter an organisation called the Australian Indigenous Minority Supplier Council (shortened to AIMSC and pronounced “am-see”).

Less than a year old, AIMSC is decidedly not a charity, according to chief executive Natalie Walker. Rather, it is a commercially-oriented “business dating agency” that brings indigenous suppliers together with AIMSC members or customers, many of whom are among the largest firms in Australia — Commonwealth Bank, Australia Post, Citi, IBM, Foxtel, Wesfarmers, NAB, Telstra, the entire operations of the Victorian government and, of course, Corporate Express and Gilbert + Tobin, to mention just a few.

AIMSC’s portfolio of suppliers, too, run the gamut of diverse offerings, from foods products and corporate gifts to IT facilities. Each supplier must be certified by AIMSC to ensure customers that “the indigenous suppliers they seek to contract with are majority indigenous Australian owned as well as managed and controlled by indigenous Australians”.

The commercial emphasis of the arrangement comes in the way suppliers trade with customers. There is no preferential pricing; all suppliers compete for business on an equal footing with non-indigenous companies. The advantage lies in their being on the potential supplier list in the first place. “This is the only way we believe the program is a sustainable business venture,” Walker says. “It has never been done here before on a formal basis.”

Walker says overseas experience has provided the business case for supplier diversity. In 2006, the Fortune 500 companies showed a 133 per cent return on their cost of procurement by using indigenous suppliers, often because the latter have a keen and hungry approach to doing business. She cites one US company, which called in tenders to undertake shutdowns of oil and gas facilities in Alaska. An indigenous supplier proved nimble and quick, and therefore provided the most cost-effective solution, adding to shareholder value in both financial and branding terms for the customer. That indigenous supplier is now a $US1 billion operation.

“Indigenous suppliers need to prove themselves more,” Walker says. There’s a certain shyness about many indigenous operators, she adds, largely because of perceived barriers that mean they’re not even in the ballpark of doing business with large corporations. She’s quick to add that those barriers are often not an issue; in fact, the goodwill offered by customers is extremely positive.

Funded to the tune of $3 million from the Federal Department of Education, Employment and Workplace Relations as well as Industry and Investment NSW, AIMSC is a not-for-profit organisation working under a three-year pilot program. At the end of those three years it should be self-sufficient. It has a target of helping to establish $2.5 million in supplier-member transactions in its first year, building up to $20 million in its third. And it looks likely to reach its total three-year figure of $31 million.

AIMSC will be holding its inaugural AIMSC Connect 2010 conference in November, designed to bring all players together to network and discuss the council’s operations and future, as well as that of the indigenous business market as a whole.Intrinsic to the development of AIMSC is Michael McLeod, co-founder of technology, communications and media business, Message Stick. Hardly an overnight success, Message Stick was founded in 2003, largely as a supplier of audio and Web conferencing facilities, as well as SMS, voice broadcast, email and fax distribution. Without any government handouts, as McLeod proudly says, the company now turns over several million dollars a year and is looking at dramatically increasing that figure.

McLeod readily describes his personal background of hard knocks, homelessness and addiction — “the stereotype of an urban Aborigine”. He spent six years on the “rehab shuffle”, but eventually pulled himself out of what he calls “the welfare comfort zone” and established the first indigenous ISP, which “failed successfully”. He didn’t understand the entrepreneurial approach, he says. But with Dug Russell, former CEO of the Compass Group, he set up Message Stick, and it is now one of the top four indigenous companies in the country, and easily the number one in the IT market (not that there are many in that field).

We can sense their frustration — they want to add to CSR

McLeod saw that the US had a facility — the US National Minority Supplier Development Council — to bring indigenous suppliers together with prospective customers. He unashamedly copied and pasted the system onto the Australian environment, and then lobbied for the establishment of AIMSC. “AIMSC is all about demand. It is commercially-oriented, and AIMSC is like a dating agency, but a dating agency on steroids. It has achieved more in its first year than expected.

“We’ve also been surprised at the goodwill shown by the corporates, although we shouldn’t be. We can sense their frustration — they want to add to CSR.”

Cultural issues

Do the barriers to the success of indigenous businesses — real or not — extend beyond their size and lack of a track record?

McLeod says that sometimes he feels he is the first Aborigine in a suit that many corporate executives have ever met. The novelty of the approach by indigenous businesses means that “at times there is a corporate culture of protection [toward indigenous business and business people] and being overly cautious about sensitivities. That can seem to be a bit paternalistic.”

That unsureness about the business and personal relationship works both ways. McLeod says that it is incumbent on Aborigines to push their causes. “We haven’t been brought up with the mindset [necessary for doing business]; there’s still a handout mentality. But we and the suppliers are not looking at short term relationships. We want to create a corporate Australia that is indigenous friendly in business terms.” He admits that there may be some hesitation among the indigenous community about the role and activities — and possibly even the existence — of indigenous businesses, but Walker says it’s not an issue to “walk in both worlds”.

And Message Stick is not shy in promoting its indigenous background. Its very name is indicative of that heritage, as is the livery on its website and even news items on Aboriginal issues (and not necessarily business ones). Its vision is that “the first three decades of the 21st century are seen as the period in which economic participation and economic independence for the Australian indigenous community was substantially achieved [and] that the achievements of economic participation and independence was the result of a planned and coordinated effort on behalf of the indigenous communities themselves, the indigenous business community and our state and federal governments”.

He says he wants his company to be a role model and offer support to other indigenous individuals considering making the move. But again, that success will rely as much, if not more, on the existence of customers as it does on support and mentoring.

Which brings us back to the role of CIOs.

CIO influence

Gilbert+Tobin’s Mitchell says his firm’s involvement in indigenous businesses started well before the establishment of AIMSC, providing pro bono legal services to Message Stick and McLeod’s team to assist with the business start-up. “Danny Gilbert and G+T have supported the concept of AIMSC from the beginning. Danny continues to participate, being one of the board members.” G+T uses Message Stick’s audio and web conferencing services “and we’re very happy with the service we receive”. Whatley says Corporate Express is a relative newcomer to the indigenous business field. It has been using Message Stick’s offerings for a few months, and is looking at another supplier for office products.

“Indigenous business is one part of our CSR program. We have green KPIs, which is a more mature part of our program. And we have a very proactive CSR/sustainability officer.”

He points to the benefits that can be achieved by being sustainability oriented: Retaining and attracting good people, especially young employees; adding value to employment; and being able to respond to Gen-Y queries regarding a company’s social bona fides — “good questions to ask”, he says.

Both CIOs’ companies have indigenous employees (although none in IT) and both organisations are members of the CIO Executive Council, though they admit that the topic of CSR and indigenous supply has not featured highly on the agenda. But they want to reach out to other CIOs because they know that many of them have the decision-making power to influence CSR activities. “They purchase many products and services and thus they have the ability to utilise the various services from indigenous suppliers that they are probably not even aware of,” Mitchell says.

Which means that it’s probably about time that CIOs got out from behind the technology, looked outward to the need for sustainable and responsible involvement, and used their purchasing power for the benefit of all.

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Tags managementCSRsustainabilityCorporate Expresscorporate social responsibilityMessage StickDug RussellMichael McLeodGilbert TobinNatalie WalkerGarry WhatleyAIMSC Connect 2010Andrew MitchellAIMSC

More about ABAndrew Corporation (Australia)Australia PostCommonwealth Bank of AustraliaCorporate ExpressCSRetworkFoxtelIBM AustraliaIBM AustraliaNABTelstra Corporation

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