Cause & Effect |
For one thing, there’s genuine community support for the cause. Despite Calgary’s landlocked location, For the Oceans is Sea Shepherd’s biggest fundraiser anywhere. For another, the sponsors got noticed in a way they wouldn’t, say, adding their name to a fun run for breast cancer research. Most importantly, Smed, as DIRTT’s sole shareholder, is at liberty to follow his convictions, unlike most leaders of companies this size. “They should be ramming them,” he says bluntly of Watson’s ship, the Steve Irwin, which, equipped with steel blades protruding from its hull, can gash other ships.
Smed’s been a maverick when it comes to causes he supports: “I was the chairman of Calgary AIDS for five years in a row because we couldn’t get another corporate member of the city to take that position,” he says.
At a lunch event earlier that day at Big Rock Breweries promoting the fundraiser, Smed said executives of major Alberta-based businesses attended who, while they would never corporately support Sea Shepherd, were giving Smed private pats on the back. DIRRT, founded four years ago as a manufacturer of environmentally friendly products designed to reduce waste in the construction or remodeling of office buildings, has green in its DNA. So it’s not as big a stretch supporting an organization like Sea Shepherd as it might be for other companies. Smed candidly admits he has regrets about environmental mistakes made by his previous company, SMED International, a modular furniture manufacturer he sold to an American-based competitor in 2000.
“If you go back and look at what I’ve done to the environment in my personal life and my business career, it’s totally unforgiveable. And I’d like to think it was only because I was ignorant…. I feel hugely guilty about my past corporate practices the way we finished furniture, the way we destroyed the environment with our drywall construction process and all those things. There is a better way.”
Although the 500-employee DIRRT is privately held, it does have about 800 private and institutional investors who might not agree that Sea Shepherd is their brand of CSR. But, Smed points out, “those investors knew when they invested in our company that this is just part of the deal. They are totally aware of what our company represents, of our commitment to the environment, of our commitment to the community.”
In fact, for charitable organizations tackling queasy problems like homelessness or AIDS or which skirt the edge of mainstream respectability, it often takes a plucky CEO who heads or owns a private company to include them in their CSR policy. So far DIRRT, which had $92 million in revenue last year, hasn’t witnessed a backlash for supporting Sea Shepherd.
Smed and Jones, said one observer at the fundraiser, “have balls” supporting Sea Shepherd. Yet even selecting conventional charities within a CSR strategy is rarely easy. In a recent survey by the National Round Table on the Environment and the Economy, Canadian companies interviewed indicated they could support less than 5% of the requests they got from community organizations. Some got more than 2,000 requests annually. With so many choices, it can be challenging to figure out which causes do valid work, which align with a company’s core values and business objectives and how revenue and profits will be affected by public perceptions.
Philanthropic adviser Gena Rotstein founded Dexterity Consulting two years ago to help small- and medium-sized companies decide where in the community to invest their time and money. In the 1980s and ’90s, that often meant just cutting a cheque to a charity. Now CSR and “corporate citizenship” are the thing.
When a client such as Dan Balaban, CEO of Greengate Power Corporation, which is developing more than 1,550 megawatts of wind-powered electricity in southern Alberta, comes to her, Rotstein helps evaluate the charities the company might choose to align itself with so as to maximize donor impact. She has a list of about 500 charities and non-profit organizations she’s vetted through a model she developed called “Karma & Cents” and by using annual reports, news reports and other public documents from watchdogs like Charity Navigator as well as personal interviews with executive directors and board members.
That’s important, because some non-profits accomplish more than others. Some may be financially unstable, meaning a company’s volunteer or monetary investment might be wasted. And some charities are outright frauds. Last year, Rotstein notes, Canada Revenue Agency cancelled more than 2,000 charitable tax numbers because organizations misfiled paperwork, closed or couldn’t demonstrate benefits to any communities.
Figuring all the risks out – not to mention benefits – is a growing priority for Canadian firms, says Melissa Whellams, a Calgary-based senior CSR adviser with Canadian Business for Social Responsibility (CBSR). The member-led, non-profit organization promotes corporate social responsibility concepts among Canadian industries.
“CSR has become more mainstream in the last three years to four years. That’s being propelled by a lot of factors. We’re on a wave,” says Whellams. The so-called “social licence” to operate in any industry, in any community around the world, she explains, is getting harder to come by. The CSR wave is being propelled by a public disgusted by the Enrons of the world, riled by the huge executive bonuses of greedy and failing corporations like GM and Bear Stearns, and concerned by inescapable warnings about pollution and global warming.
Consumers are exercising their influence like never before. In a PowerPoint presentation she often uses, Theresa Howland, vice-president, western region of green electricity provider Bullfrog Power, spells out some reasons CSR is becoming a fundamental part of operations at a steadily growing number of Canadian companies. Research Bullfrog relies on indicates 79% of consumers prefer to spend money with companies working to reduce their environmental impact. Eighty per cent want more green goods, and 35% would pay more for them.
That’s been good for Bullfrog, as more companies check in Howland to see how the green electricity retailer might fit into their unfolding CSR strategies. “The number of companies with people assigned to the CSR file has definitely grown exponentially,” Howland observes.
Whellams travels widely helping Canadian companies – primarily in extractive industries – obtain that “social licence” to operate in countries such as Mexico, Guatemala and Peru, countries long environmentally and socially scarred by exploitative foreign development. Soon after speaking to Alberta Venture, she was off to Mexico on behalf of an unnamed Canadian company to help lay the CSR groundwork for a new mine.
Her spectrum – typical of most people in CSR – covers human rights (ensuring employees and people living near operations are treated fairly), supply chains (ensuring products or services purchased by her clients come from companies also observing similar ethical and environmental standards) and environmental footprint. Employee engagement and corporate governance and ethics round out the mandate.
Although paid by the companies she advises, Whellams says her role is nevertheless independent and neutral. Her goal: to assess the social, political and environmental risks of a mining or oil operation in a community. “Mostly when we go down to the sites we talk to the communities that are nearby and really try to find out what the communities interests and needs and priorities are so the company can address those adequately, and start to engage with them.”
If public pressure, rather than altruism, forces some companies to adopt CSR strategies, evidence of CSR’s curative properties, so to speak, is luring others.
No wonder a company like Imperial Tobacco Canada, which makes an inherently deadly product, has joined CBSR and, at the same time it pumps out cigarettes, started, in 2007, publishing annual “social reports” proclaiming Imperial’s efforts in tackling such problems as the sale of cigarettes to minors or test marketing “snus” – supposedly safer smokeless tobacco products.
Regardless of whether one buys into Imperial’s efforts, strong CSR efforts have helped some big-name corporations like WalMart evolve rather quickly from pariahs to companies praised for their ethical or more environmentally friendly operations. The transformations can be remarkable.
In 1998, Calgary-based Talisman Energy found itself at the centre of international controversy when it purchased a 25% stake in oil operations in Sudan. Allegations (never proven) claimed Talisman allowed a genocidal Islamic government to use company airstrips to launch helicopter attacks on its own citizens. Talisman royalties paid to the regime were believed to help it buy weapons to continue its civil war. Talisman’s stock took a big hit and, finally in 2003, Talisman sold its interests in Sudan.
Yet six years later, in 2009, Talisman made the list of the Jantzi-Macleans 50 Most Socially Responsible Corporations and was ranked 36th by Corporate Knights magazine’s 50 Best Corporate Citizens. Talisman was commended for installing two of the world’s largest demonstrator wind turbines off the Scottish coast and, among other things, for being one of only two Canadian company signatories of the Extractive Industries Transparency Initiative.
