The standard approach to finance is often the sad antithesis of corporate social responsibility. Most Finance managers have a perception of CSR as simply a cost center and not a revenue generator.Cohen provides an explanation of how there is a basis for the financial function to be a contributor to, and not just a calculator of a company’s CSR program.

by Elaine Cohen is the Joint CEO of BeyondBusiness Ltd

Embedding CSR in …. wait for it … the FINANCE function. Oops! Did I hear that right ? Do CFO’s have a CSR mindset ? Isn’t CSR just a cost center and not a revenue generator? Isn’t that how most CFO’s think? So what’s the deal with embedding CSR in the financial division of the corporation? This post on embedding CSR in the business, is prompted by  Ethical Corporation’s latest research publication on How to Embed Corporate Responsibility Across Different Parts of Your Company , a 100 page report published at end September 2009. It provides an analysis and case studies covering five organizational functions: human resources, finance and accounting, communications, procurement and logistics and operations. I have already blogged about embedding CSR in the procurement function and in the human resources function. Here comes Mr Money’s turn.

I will pause to tell you a story. I was once attending an executive leadership meeting of a company, where an unavoidable 60 redundancies were to be made as part of a cost-reduction exercise. The CFO, on hearing this number of people who would be dismissed, shouted out with glee and said ” Great!! That will almost solve our cost problem.” or words to that effect. The sight of a respected manager of a large business almost jumping with joy at the fact that 60 people were about to lose their livelihoods still makes me feel rather sick. It’s not that I have anything against finance, managers (apart from the fact that they always seem to control what money is not available, rather than what is), but this “people equal costs” approach is the sad antithesis of corporate social responsibility. Story over.

Finance Managers are also employees and share responsibility to be ambassadors of the corporate CSR approach. They  create their share of direct impact through their resources consumption, travel  and waste generation , and participate in corporate volunteering activities (unless it’s month or year end) . The are the authority on managing the company’s money are the first in line to field investor questions and analyst queries. They are the first to understand the financial implications of most corporate risks. So, it seems there is a basis for the financial function to be a contributor to, and not just a calculator of a company’s CSR program.

The Ethical Corporation research report refers to CIMA (Chartered Institute of Management Accountants) and IBE (Institute of Business Ethics) who issued a report in 2008 that emphasized the role that ethics will increasingly play in Finance Managers’ jobs, based on a survey they conducted. The report covers issues such as advice for finance professionals on ethics, how accounting and finance functions can improve a Company’s CSR strategy, the opportunities of carbon trading, ethical checks and balances, and the expectations of ethical investors. Richard Ellis of Boots is quoted in the report as saying “Financial departments need to have an interest in measuring non-financial information,” and I agree with him.  (I am sure he will be pleased about THAT.  Though we all know that accounting for long term indirect impacts are a little more complicated than the standard accounting exams most CFOs have passed with flying colors.

The research report touches on integrated reporting which only a handful of CSR reporting companies have adopted. Integrated reporting is an indication of total systems thinking by an organization and serves to elevate the CSR content to the same level of transparency and rigor as the financial content. As the owners of the financial report, the CFO’s cannot ignore this new style content invading their traditional territory.

I thought about the CSR reports i read and review, and recall little about the way the finance function is involved in CSR. The Australian Real Estate Mirvac Group reported in its 2008 Sustainability Report that it had  “established the Climate Change Response Group. This group, which is chaired by Mirvac’s CFO,and includes representatives from corporate risk, sustainability, and all business unit areas is developing Mirvac’s business wide climate change response.” I also recall that CSR at the Spanish group Telefonica is managed by the CFO, though i cannot find this mentioned in their CSR Report for 2008.

Like it or not, finance managers need to embrace CSR as a reality of the business. Like it or not, we will probably find that when they do, we will suddenly have a lot more numbers in our CSR reports. Like it or not, i am now gonna devour my daily tub of  Chunky Monkey before its cost feasibility outweighs its contribution to making the world a better place.

© 2009, Elaine_Cohen. All rights reserved. Do not republish.

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Author: Elaine_Cohen (19 Articles)

Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, a leading CSR consulting and reporting firm, offering a wide range of consulting services for the strategic development of social and environmental responsibility of businesses, reporting and assurance using the GRI and Accountability frameworks, and reporting on application of Global Compact principles. Elaine writes a blog on CSR reporting, expert CSR report reviews for CorporateRegister.com ,tweets on CSR topics at @elainecohen and has specialist knowledge of governance, ethics, diversity, advancement of women, responsible workplace and use of social media for csr communications.