CSR is a term that many people associate with PR. It is something that people claim to have in order to attract customers, employees and investors, so many of the claims are often exaggerated and do not tackle many of the issues that companies need to address in order to fully have a functioning CSR and corporate responsibility programme.
The CFO has a key role to play in this process.
One of the keys to a good CSR programme is about having an effective budget that can be flexible enough to give charitable donations and fund effective employee schemes/training. The ability to budget effectively for these aspects is going to be the responsibility of the CFO. Having a flexibility in the budget that can allow for these kinds of actions is not something that is easy to achieve, especially in the current economic climate, so a CFO must have a strong resolve and communication skills to make sure his vision is fulfilled.
Another aspect is transparency within a business.
This is arguably the most important aspect of any corporate responsibility programme as transparency allows a company to work effectively whilst maintaining an open nature that allows others to see how your company is working. This transparency comes in terms of allowing your books to be looked at, deals that are done to be fully researchable and the ways that your employees operate.
As the finance department is ultimately the benchmark against which a company’s performance is assessed, it is arguably the most important area in terms of transparency as it gives an accurate portrayal of how a company is operating. A prime example of how this can fail is with the recent Tesco financial problems, where their poor business practices were highlighted by their financial results.
Therefore this corporate responsibility falls heavily on the shoulder of the CFO, as they need to not only make sure that their end of year reports are accurate, but that the processes by which they are created throughout the rest of the year are robust enough to create a good report at the end of the year.
However, as we are increasingly seeing with CFOs today, many are taking their responsibilities away from accounts and reporting and moving into a more strategic role that can have a wider overall impact of the company.
This means that cost saving initiatives which also have an impact on financial performance will often be overseen or at least signed off, by the CFO.
Cost savings frequently have an environmental impact as a positive unexpected side effect. This could be from small things, like using energy saving lightbulbs, which reduces a company’s overall energy consumption whilst also saving money on energy used, to larger initiatives such as changing consumable products to becoming harder wearing and therefore need less replacements.
These kinds of initiative are focussed on saving money in the long term whilst also helping the environment. What they also require is a, sometimes significant, financial outlay initially. This needs to be agreed with the CFO as well as fully justified by a CFO to the board.
The CFO has a significant role in improving the CSR of a company, often equal or greater than a CSO. This is simply because in order to make any initiative work, it needs to have working capital behind it, they need to be able to control the outflows and inflows to make sure that it is more than just a PR exercise.