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The Business Case for Corporate Responsibility:
Building Prosperity Together

Charlie Coffey
Executive Vice President
Government & Community Affairs
RBC Financial Group
Good Corporate Citizenship: Myth or Reality? Forum
University of Ottawa
Ottawa, Ontario


Thursday, October 30, 2003

Penny, special thanks for the warm introduction…and the invitation to share some perspectives about good corporate citizenship in the company of Denis, Ursula, Nathalie and everyone who has joined us here today.

Next week, hundreds will be gathered in Amsterdam for the fifth annual Triple Bottom Line Investing Conference (TBLI) - the largest international sustainable investment, learning forum. The program includes recent developments on screening, auditing, reporting, socially responsible investments (SRI), corporate citizenship, indexes and research. As some of you may know, TBLI is a concept revolving around the economic profit of a corporation, as well as its social and environmental accountability. You'll see this theme plays well in our discussion this afternoon.

Let's begin by focusing on what is corporate citizenship? One definition that gets to the heart of the matter goes like this: "understanding and managing a company's wider influences on society for the benefit of the company and society as a whole" (Perspectives on Corporate Citizenship - Jorg Andriof and Malcolm McIntosh, 2001).

Many people use the terms corporate citizenship and corporate social responsibility interchangeably. RBC usually refers to corporate responsibility (without the word "social"), as this strategically important issue is much more than the word "social" implies. It's also much more than what the word philanthropy implies.

Corporate responsibility and good corporate citizenship is about the marketplace: are we conducting business responsibly; it's about community: are we assuming a leadership position with investments and issues pertinent to our business and customers; it's about the workplace; are we treating employees well and encouraging/supporting their participation; and it's about the environment: are we taking care of our surroundings - the air we breathe - the energy we use? It's all about TBLI accountability and building prosperity together.

Is there a solid business case for corporate responsibility? We believe so. However, it's important to note that corporate responsibility is only on a corporation's agenda, if the company's vision, mission, objectives, and goals -- developed collaboratively by its major stakeholders, put it there. For example, corporate responsibility is on RBC Financial Group's agenda. It's reflected in our vision - "Always Earning the Right to be our Clients' First Choice." We put it there.

What are the key drivers of corporate responsibility? Anthony Lupi, co-founder of Positive Outcomes in Australia, addresses this question (March 23, 2003 - University of Sydney):

  • "Internal pressures: Capacity to attract and retain staff; being an 'employer of choice'; staff morale/pride; managing diversity - getting best value from your staff;
  • Business pressures: Improved stakeholder relations; community acceptance; brand image/company reputation; enlightened self-interest; attracting socially responsible investment funds (SRI); competitive advantage of good environmental practices;
  • External pressures: Increased demand for higher standards of ethics, governance and accountability; globalization - increased demands for transparency ('living in a CNN world'); increased importance of public/private partnerships; increased stakeholder expectations - consumers/customers/interest groups - the rapidly growing strength and assertiveness of NGOs; and seeking to avoid (government) regulation."

These internal, business and external pressures are supported by research, which shows that:

  • Corporate image and reputation is the number one driver of customer loyalty;
  • There's a clear link between the company's reputation as a good corporate citizen and consumers' willingness to do business with the company; and
  • Corporate image is also a key driver of employee engagement.

In addition, the 1999 Millennium Poll (involving 25,000 citizens in 23 countries) suggests that 2 out of 3 citizens wanted companies to contribute to broader societal goals. This poll also asserts that, "people around the world focus on corporate citizenship ahead of either brand reputation or financial factors when forming impressions of companies."

Corporate responsibility makes a difference to brand success, employer of choice leadership, investor preference and a competitive advantage. It also makes a fundamental contribution to the health, well-being and prosperity of our country and communities. There are no limits to health, well-being and prosperity…only unlimited possibilities. Talk about healthy returns…

Who disagrees with the business case? Milton Friedman says, "Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible." Friedman maintains that, "The business of business is business." David Henderson (author of Misguided Virtue) believes that corporate responsibility is "woolly at best and damaging at worst - that it will bring higher costs with questionable social benefits and that business leaders are too willing to appease NGOs. He opposes government intervention and "global corporate citizenship."

There will always be varying views on this subject, especially since shareholder value is involved. However, when one sifts through the research and observes the positive trends, it's clear that corporate citizenship is hardly a myth and very much good for enhancing shareholder value. Like anything else of strategic importance, leadership and ownership starts at the top. Gord Nixon, our President and CEO, says that corporate responsibility is "an essential part of relationships with our customers/stakeholders and a strategic investment in the future prosperity of a civic society."

RBC will continue to maintain a leadership role in corporate responsibility, track appropriate internal/external parameters and participate in credible third party surveys - benchmarks for success. We believe "what gets measured, gets managed." For 7 consecutive years, RBC has been named one of Canada's top corporations for social responsibility (The Globe and Mail). This reflects the sum of our actions and view of good corporate citizenship.

We believe our investment in corporate responsibility, helps children, strengthens families, enriches our communities and builds the human capital we need to ensure the future health and prosperity of our country - the human capital right here in this room. You can find out much more about RBC's priorities and best practices in our Corporate Responsibility Report. There are copies available before you leave this session.

In closing, it's not a matter of whether a company can be both profitable and responsible, because in the long term, you can't have one without the other. The bottom line is that corporate responsibility is about relationships with all stakeholders - our ability and commitment to act and respond in the cities/towns where we live and work.

RBC Financial Group takes its role as a corporate responsibility leader seriously, particularly in terms of raising the levels of integrity, dialogue and action, as we're doing today. We've been committed to corporate responsibility for years. When you consider the difference between "involvement" and "commitment", just think about an eggs-and-ham breakfast: the chicken was "involved" and the pig was "committed" (Anonymous).

I look forward to hearing your comments and questions. Thank you.

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2002-2003 Corporate Responsibility Report
Public Accountability Statement

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