In less enlightened times many corporations considered that the only social responsibility of business was to make as much money for shareholders as possible.

It is acknowledged that profits are the lifeblood of capitalism, the greatest wealth-creating system known to man. Profitable companies, large and small, are vital both for our economic prosperity and for our quality of life. Companies provide jobs, wealth and opportunity, constantly improving the goods and services that make people's lives easier and happier. Business also generates much of the tax revenue that pays for public services.

But in today's increasingly enlightened world responsible societies and businesses accept that not everything can be left to market forces.

It would be wrong to say that responsible businesses are bound to be less competitive. Surveys have shown that responsible businesses are usually the most competitive and the most successful. (Responsible business is the process through which companies seek to maximise their positive impact on society and minimise their negative impact. It covers issues from climate change to employee volunteering).

IODR believes that responsible business practice is good both for corporations in Britain and further that it is essential for commerce.

Today, more UK businesses, large and small, are addressing their environmental and social impacts because they believe it is the right way to run a business and because they understand that, managed well, it is in their business interests to do so. An increasing number of employees, customers, business partners and investors expect this approach, and prefer to deal with companies that are trying to operate responsibly.

CSR AND THE ENVIRONMENT

Many companies have moved beyond mere legal compliance into the management of environmental and other issues. Energy efficiency of buildings, for instance, is not a legal requirement. However, companies have found that management of this issue saves them money, particularly in controlling emissions to air and water and reduction and disposal of waste. IODR's projects always involve a local environmental impact analysis and IODR always aims to demonstrate best practice in respect to environmental concerns.


THE IMPACT ON GLOBAL WARMING IS NOW IS A CONSIDERATION FOR RESPONSIBLE INDIVIDUALS AND BUSINESSES.

Companies are increasingly finding themselves drawn into the global environmental debate. Airlines, for example are criticised for the fast growing environmental impacts of air travel. Retailers are under pressure to reduce the waste associated with excessive packaging. Typical aspects of the global environmental agenda are the following:

. Global warming Industrial companies in particular are affected by the debate on global warming and their emissions of 'greenhouse gases' - IODR through the installation of solar energy systems in the Indian Ocean region can assist corporations in offsetting their carbon emissions caused by their business actions including air and other travel.

. Access to water Much of the world's population does not have access to clean drinking water. IODR has supported water projects and has funded the digging of wells to provide clean drinking water.

. Use of packaging Modern goods use a great deal of packaging. The reduction in use of packaging, and the increased use of recyclable packaging are therefore increasingly important. IODR has pledged to reduce waste and recycle whenever possible. In the particular climate of underprivilege in which IODR works recycling is not just a norm but is a necessity.

. Destruction of habitat Some industrial processes, agriculture, mining and logging for example, have a significant impact on fragile eco-systems. IODR is always sympathetic to the environment.

. Use of renewable resources To reduce carbon and to preserve habitats, companies are encouraged to use renewable resources such as timber from 'sustainably managed forests'. IODR only uses locally sourced products and local labour, although external expertise may be utilised in order to build local capacity. Timber and other building materials are from sustainably managed sources.

THE SENSE OF COMMUNITY IS NOW OF GREATER IMPORTANCE

Donations to 'good causes', staff volunteering and other philanthropic activities have been traditional ways in which companies have engaged with the communities around them. Such activities still carry on and are regarded as being of great value both to the recipient community and the companies themselves. Companies are perceived to benefit both from the goodwill that such activities generates, both amongst local communities and amongst their own staff. IODR is fortunate that to date it has been able to fund its activities from the generosity of socially responsible companies and individuals.

COMMUNITY RELATIONSHIPS

Companies are increasingly seeking to build an understanding of local and other needy communities:

. Awareness and engagement with local issues Companies are increasingly aware of and engaged with key issues important to local people.

. Donations and gifts Companies frequently make donations to local and international charities, schools and other good causes.

. Staff volunteering Many firms allow, or even encourage, their staff to volunteer their time to charities and other similar organisations. While volunteering and community engagement projects are growing in number, the key challenge for both small and large business is to link such work with business strategy. IODR would be delighted to discuss how we can become part of your organisation's CSR strategy.

BUSINESS RESPONSIBILITY HAS BECOME AN INCREASINGLY SIGNIFICANT ISSUE

A short definition of business responsibility is difficult (although we have attempted a definition in the introduction). Its essence lies in the relationship between companies and the societies in which they operate, and in how social phenomena can have an increasingly significant impact on a company's ability to do business. Responsible business is not the same thing as philanthropy.

Companies have developed responsible business programmes mainly for two reasons. First, they believe that acting responsibly is simply the right thing to do. Second, they believe that it benefits their business in a number of ways.

The past few years have seen a huge increase in the number of 'socially-responsible investors'. they see their role as being to engage a wide range of companies on different social and environmental issues. Typical of the SRI investors is Morley Fund Management, part of the Aviva group. They state that: "Sustainable development has become a priority issue for international government and business.[it is] increasingly important for companies to demonstrate that they understand their corporate social responsibilities.Only stocks that clear both the environmental / social and the financial hurdles are selected for inclusion in our portfolios."

IMPROVED FINANCIAL PERFORMANCE

In 2003, the UK's Institute of Business Ethics published a report Does Business Ethics Pay? This surveyed a group of companies from the FTSE350 to ascertain how those companies that had an implemented code of business ethics performed financially in comparison to those without. The financial performance of the companies was traced between 1997 and 2001. The report concluded that "there is strong evidence that large UK companies with codes of business ethics/ conduct produced an above average performance when measured against a similar group without codes." Between 1997 and 2001, companies with a code of ethics: generated significantly more Economic Value Added (EVA) and Market Value Added (MVA) than those without codes;had significantly more stable price-earnings ratios; and had been steadily increasing their return on capital employed, whilst those without codes had seen their return on capital employed decline. A report by the UK based NGO, Business in the Community, entitled The Emerging Link between Financial and Environmental Performance, concluded that there was a direct link between good environmental performance and lower stock volatility, leading to a reduction in the company's cost of capital.

EMPLOYEE MOTIVATION AND RETENTION IS ANOTHER KEY CONSIDERATION

A recent study in the UK by the charity, Common Purpose, found that 80% of 30 year-old professionals felt unfulfilled by their career, and concluded that employers who "provide opportunities for their staff to explore how society works and to get engaged in the wider world will hang on to their talent."

This study builds on an increasing body of evidence that good responsible business can help attract and retain the best staff. Potential recruits are driven, not just by the desire for a good salary and benefits package, but by the desire to work for a 'responsible' organisation. In 2003, KPMG reported that their graduate recruits cited responsible business as one of the 3 most significant issues in choosing to work for the organisation.

CUSTOMER RELATIONSHIPS ARE POSITIVELY INFLUENCED BY RESPONSIBLE BUSINESSES.

Media and consumer attention makes public-facing companies - for example, retailers and food manufacturers - particularly sensitive to the need to behave responsibly. This in turn leads them to make greater demands of the companies that supply them. Drinks company Diageo, for example, makes very clear the high expectations it has of suppliers: "We have established globally specific minimum requirements on ethical business practice, human rights, core labour standards, environment, and compliance monitoring, and reporting".

LEGAL COMPLIANCE OBLIGES BUSINESSES TO BEHAVE RESPONSIBLY

In many jurisdictions, including the UK, there is already a significant body of existing legislation relating to issues of responsible business.

THE PRESERVATION AND/OR ENHANCEMENT OF REPUTATION AND THE AVOIDANCE OF NEGATIVE CAMPAIGNS HAS FURTHER INFLUENCE.

The non-governmental sector has shown a continued appetite in the past 15 years for campaigns and boycotts against companies that exhibit poor social or environmental behaviour.

THE AVOIDANCE OF ADDITIONAL LEGISLATION MAY NOW HAVE A BEARING

Since the early 1990s, the European Commission has taken an active interest in responsible business. To date, the Commission has rejected the introduction of mandatory requirements on corporate social and ethical practices. However, as Richard Howitt, the European Parliament's spokesman on responsible business issues, commented, "The [European] Parliament voted for the adoption of mandatory social and environmental reporting by companies. This result, while not legally binding, is surely a sign of things to come." It must be acknowledged here that the current European Commission generally disagrees.

DEVELOPING LINKS WITH COMMUNITIES

Many larger companies are increasingly seeking to build an understanding of local and needful communities into their planning processes.

BEHAVING RESPONSIBLY IS THE RIGHT THING TO DO

Although the corporate sector often has a poor image - think 'fat cat' pay headlines - virtually no business leaders set out to be irresponsible. Instead, most of them believe that they have a responsibility incumbent on them, derived from the power and influence of their corporate position, to do what they reasonably can to benefit the world around them. Today, companies will often work with communities, or provide other social or environmental goods not because there might or might not be a commercial logic to it, but because they believe it is right. This is particularly true of many small businesses who in many parts of the UK ARE the business community.

FROM POLLUTION TO SOLUTION - WITH IODR

There is an increasingly movement from reducing environmental harm to the environment to positively enhancing the environment.

Emissions trading - the process by which institutions are set CO2 emissions limits, but are able to purchase more from others whose emissions are lower than their allowance- has been an invaluable tool in addressing environmental pollution. Many businesses are looking to offset any negative environmental impacts from their business operations by committing themselves to expenditure which produces a positive environmental impact.

IODR can provide this opportunity and is involved in projects will aim to fulfill the Gold Standard requirements for carbon trading.

MANY RESPONSIBLE BUSINESSES ARE NOW ENGAGING IN CAPACITY BUILDING IN THE NON-PROFIT SECTOR – AND IODR IS AN IDEAL PARTNER

Capacity building and knowledge sharing between business and the non-profit sector can build valuable bridges and be a source of innovation for all groups. Companies wishing to engage in role swapping, mentoring and capacity building programmes are welcomed by IODR.

Such activities which, might include annual awards, generate good publicity particularly for those companies whose employees, from the CEO downwards, take a long term view of volunteering and what it can offer. From ‘one day a year’ schemes to more engaged, thoughtful models bring value back to the company as well as to civil society/communities.

IODR would be delighted to hear from you if you consider we might be able to assist with your CSR plan.

Kind regards,

Tony Matharu
Chairman
IODR
Charity No. 1108329