Financial performance VS CSR commitments

Is financial performance compatible with CSR commitment ?

Corporate social responsibility (CSR) and the concept of “non-financial performance” are now at the heart of corporate strategy debates. CSR represents an opportunity to develop new business models that create both financial and non-financial performance.

During a webinar on CSR, kShuttle invited Alain Jounot, Head of the CSR department at AFNOR and co-author of the book “Entreprises performantes et responsables c’est possible!” (Afnor Editions), to speak about the opportunity for companies to improve their overall non-financial performance through a relevant and credible CSR approach. Alain Jounot shared AFNOR’s experience in monitoring nearly 1000 French companies in implementing their CSR approach and their “Engagé RSE” label (a label developed by AFNOR and aligned with the recommendations of ISO 26000).

Lors de son Webinaire du 24 septembre 2020, kShuttle a invité à Alain Jounot, Responsable du département RSE de l’AFNOR, et coauteur du livre Entreprises performantes et responsables c’est possible ! (Afnor Editions), à intervenir sur l’opportunité offerte aux entreprises d’améliorer leur performance extra-financière et globale au travers d’une démarche RSE pertinente et crédible. Alain Jounot a partagé l’expérience de l’AFNOR dans le suivi qu’elle a réalisé de près de 1000 entreprises françaises dans la mise en œuvre de leur démarche RSE et leur labellisation « Engagé RSE » (un label développé par l’AFNOR et aligné sur les recommandations de la norme ISO 26000).

kShuttle: According to ISO 26000 and AFNOR, how to structure an effective CSR approach ?

A.J. : ISO 26000 provides an international framework and defines CSR as the contribution of companies and organizations to sustainable development issues. The purpose of ISO 26000 is to conduct a reflection to establish a credible and robust CSR approach. When a company structures a CSR approach, and for this approach to be effective, the company must conduct its reflection on two levels:

  • Internal reflection on its level of contribution to sustainable development issues as well as its impacts on its environment and society;
  • External reflection by identifying its stakeholders as well as their needs and expectations regarding sustainable development.

kShuttle: What is the link between business performance and extra-financial performance ?

A.J. : Corporate performance is not solely defined from a financial standpoint. To the extent that it also depends on the company’s intangible capital, its definition must include the non-financial dimension. To generate wealth, a company relies on human capital, stakeholders, partners and customers, organizational capital, an information system, knowledge, expertise, and a brand. In this sense, the concept of performance highlights the multidimensional nature of the company: the performance of a company is analyzed both qualitatively and quantitatively, and covers its managerial practices, organizational systems, and products or services.

kShuttle: AFNOR has established the “Engaged CSR” label. What evaluation criteria and approach does this label rely on ?

A.J. : This label relies on the guidelines of the ISO 26000 standard and other international references such as GRI and the UN Sustainable Development Goals (SDGs). They assess the company’s maturity, its ability to manage its organization, and to raise awareness, measure, and improve its practices around relevant key indicators. The “Engaged CSR” label uses the PDCA approach, transposed into a scoring method to structure and standardize the evaluation. This approach identifies best practices and possible areas for improvement for companies. The analysis focuses on the robustness of the company’s CSR approach.

The PDCA approach typically involves 4 stages:

  • Plan: Does a process/indicator exist ?
  • Do: How is this process/indicator deployed ?
  • Check: How are the progress and effectiveness of the process tracked? Are the indicator results analyzed and explained ?
  • Act: Is the company seeking to improve its approach/results and compare itself to other actors ?

 

Concretely, this PDCA approach is broken down into a list of questions on strategic, managerial, and operational practices, as well as on the environmental, social, and economic outcomes of the company. This questionnaire, subject to evaluation, allows for the establishment of a rating for each block of the PDCA analysis. At the end of the evaluation, an explanatory report is provided to the company with a score out of 1000 points so that it can determine the maturity level of its CSR approach and improve with concrete suggestions.

Being “CSR Committed” is an approach that unfolds over time and leads companies in a quest for improvement and strengthening of their extra-financial performance. We have observed more than 1000 companies labeled “Engaged CSR” in the deployment of their CSR initiatives. What are the main lessons you have drawn from this experience?

The first and foremost finding from this monitoring was that the key success factor of such an initiative is involvement. This involvement is necessary at all levels of the company: from the leadership of the CEO to the commitment of managers and the motivation of employees. In addition, the CSR approach must be integrated into the company’s strategy, encompass all stakeholders, and be supported by rigorous methods.

This study has also taught us that:

  • The culture of management systems is crucial: 90% of the companies in the sample relied on existing practices to deploy their approach.
  • There is no one-size-fits-all manual: The methods used to launch and structure CSR initiatives vary. This result can be explained by the structure of the ISO 26000 standard, which provides a framework for reflection with guidelines but does not offer a specific procedure for implementing a CSR approach.
  • Lack of time can be one of the main challenges in deployment.

The study focused on companies that were more mature in their CSR approach (referred to as “exemplary” companies) and compared them with companies with “average” practices. The finding was clear: these mature companies demonstrated significantly better economic performance. By excelling in their CSR initiatives, they also excelled overall, financially and economically.

kShuttle: You have followed more than 1000 companies labeled ‘CSR Committed’ in the deployment of their CSR approaches: what are the main lessons you have learned from this?

A.J. : The first and main observation from this monitoring was the following: the key success factor of such an approach is involvement. At all levels of the company: leadership of the executive, commitment of managers, motivation of employees. In addition, the CSR approach must be part of the company’s strategy, involve all stakeholders, and finally be accompanied by rigor in the methods employed.

kShuttle: Outside of the “Engagé RSE” (CSR Committed) label, do we find similar results among other companies that have implemented an CSR approach ?

A.J. : A second study was conducted by Afnor in partnership with the BVA polling institute to compare the results obtained from companies awarded the “Engagé RSE” label and other French companies that have implemented a CSR approach. Over 400 interviews have been conducted with business experts from companies with more or less mature CSR approaches: all have reached similar conclusions..

This survey also examined the link between advanced CSR practices and the company’s outperformance, and the importance of promoting this CSR approach to enhance the associated benefits. 90% of the companies interviewed confirm the interest of this valorization, which helps to clarify the vision and actions taken vis-à-vis stakeholders, give them meaning, and mobilize employees in a more in-depth manner. An effective CSR approach is a guarantee of financial and extra-financial performance, especially when it is widely shared and valued.

kShuttle: In conclusion, and to encourage companies to engage, what are, in your opinion, the main benefits of an CSR approach and the “Engagé RSE” labeling ?

A.J. : The benefits of implementing an CSR strategy are numerous, as evidenced by the interviewed organizations. At the top of the list of enumerated advantages are the strengthening of employee engagement, the development of the organization’s attractiveness, innovation, and differentiation from competitors. These benefits are particularly felt when the CSR approach is mature.

The “Engagé RSE” labeling, meeting the expectations of 97% of those labeled, complements this initial approach: it reinforces the credibility of the company’s CSR approach, creates a new positive internal dynamic, and offers ways to improve for sustainable progress..

It is important to emphasize that it is not the label itself that brings non-financial performance to the company, but rather the methodology and robustness of the evaluation method. Companies will reach the “exemplary” level of maturity because they will follow the recommendations and improvement paths. They will be able to make sustainable progress and improve both their non-financial performance and overall performance.

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