About Corporate Social Responsibility

Let’s start with considering what an irresponsible (socially) company looks like. Clearly one which destroys the environment, exploits workers and customers and generally behaves in a cavalier and arrogant manner. Sounds like an awfull lot of the large (and not so large) service providers who, despite having spent trillions on CRM (customer relationship) software still treat the customer as an idiot.

My per hate are the mobile telephony operators who use call centers to phone at the most unfortunate moment and try to sell a service which a half way to competent employee would KNOW I do not need. Or gas and electricity suppliers who try to get me to sign a three year contract offering cheaper (supposedly) tariffs for the first year and then maximum rates allowed by the regulator then after.

You can tell these organisations a mile off as they ALL espouse CSR as if spending a fraction of profits on socially desirable projects will make consumers ignore their rapacious desire to extract the last cent from the gullible.

So where does a truly responsible company stand? Well in Poland at least the institutions promoting CSR have a very socialist belief that the company should not derive any benefit from its CSR activity. So whatever you do will be questioned as to motive. Does motive really matter if something is done for the community?

The 19th Century development of CSR actually occured in Britain. Responsible employers learned soon enough that with development of more complex products you actually need an educated and healthy work force. Hence the support by business for municipal schools, hospitals, street lighting, sewerage etc.

And so it is today on a local level. But please don’t question motivation. What is important though is that government recognises, via tax legislation, that CSR is a legimate business expense so long as the benefit to society is higher than the cost in lost tax revenue.

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Professional ethics and the cultural divide

It’s that time of year again and continuing professional education rears its head. Whilst the Institute of Chartered Accountants in England and Wales (ICAEW) is satisfied with my confirmation of compliance simply by answering one question on line the Polish Chamber of Auditors requires me to sit through 40 hours of lectures per annum and sign countless forms.

This year one of the available topics was the IFAC (International Federation of Accountants) code of ethics. The lecturer started off by saying that a professional code of ethics was the result of US accounting and audit scandals of the late 90’s. And there I was thinking that the first code of ethics was published by the ICAEW way back in the 19th Century. The reality was that all of the ICAEW training and exams which I suffered in the early 1980’s had as a point of reference ethics and doing the best for the client and society as a whole. Ethics was seen as a state of mind rather than a set of prescriptions.

Of course the UK has the benefit of a legal system which is based on what a passenger on the no. 11 bus would consider to be appropriate and inappropriate. Hence a few principles and examples suffice rather than the US and Continental approach of a three inch thick rule book which at the end of the day fails to guard against fraud.

The questions raised by my co trainees last week suggested that ethics is not something which has been inculcated with “mothers milk” with most of the questions and comments being about how to circumvent regulations. But then I reflected that the users, be they corporations, banks or government do not view Polish auditors as being a true profession, rather a necessary evil. I recall 23 years ago trying to convince a sceptical President of the Polish Association of Accountants that making the Polish qualification a general business qualification based around high standards and ethics would lead to attracting high quality graduates which could only enhance professional standing. The opposite has happened. Clearly evident in the marketing efforts of the Big4 which not surprisingly position themselves in Poland as business consultants and not as auditors.

I will end by stating that practically all FTSE 100 companies have Chartered Accountants on their main board. I would suggest that few Polish quoted companies have board members bound by a professional code of ethics, which although it does not stop fraud at least makes its perpetration more difficult to hide. I wonder who the “whistle blower” at Tesco was?