Tim Smart

We've reached a turning point in the theory and practice of corporate social responsibility (CSR). In recent years, heightened awareness of environmental, economic and societal issues has put sustainable development high on organisations' agendas, while scientific consensus on the reality of global warming has focused everyone's minds on the urgency of combining economic growth with more sustainable practices. The net result is that CSR has become central to the business in a way it never used to be.

Across the developed world, and increasingly in emerging markets as well, customers are demanding action from their suppliers – including government bodies. A recent UK survey by MPG/Havas found almost 75 per cent of families were prepared to boycott organisations that did not take credible steps to minimise their environmental impact.

At the same time, people are rightly sceptical of "greenwash". When spotted, attempts to increase sales by applying a veneer of environmental or social responsibility where little, if any, change has been made can quickly tarnish an organisation's reputation. CSR can no longer be treated as a superficial PR exercise – it demands real action and real change.

At the very least, CSR now demands a defensive investment in processes and practices. There's no point courting an adverse reaction by continuing to work in ways your customers might no longer find acceptable.

But CSR is no longer only about just reducing risks. As those companies that have taken a lead have found, having a track record of doing good for society and the environment can give you a competitive edge. In the past financial year, for example, customers asked for evidence of BT’s CSR credentials to be included in contract bids worth some £1.8bn. As such, the company is finding that a focus on sustainability is helping accelerate growth.

The field is becoming more crowded, of course. The early lead in CSR enjoyed by Europe-based multinationals is now being challenged both by US businesses and by enterprises in China and India.

Sustainable and ethical practices are fast becoming basic requirements for doing business, nationally and globally. This reality means the question is no longer about whether a business case can be made for CSR – it's about how to maximise the return on the investment you're going to have to make anyway.

There are many ways to look at returns from CSR but, in BT's experience, the most significant result from the power of CSR is an improvement in corporate performance.

Action to cut waste and consumption may reduce carbon emissions, but in the process can also deliver significant cost savings. These savings can be immediate – for instance, in the form of reduced energy costs – or they can result from subtler, longer-term improvements in human resource management.

And savings soon mount up. In the year to 31 March 2007, BT made savings worth £229.3m, mostly through the effective use of audio and video conferencing services to avoid the time and travel costs associated with face-to-face meetings – an approach that also reduced our CO2 emissions by more than 97,000 tonnes.

Similarly, agile working is an increasingly essential tool in modern business, but many just see it as a way of enabling people to work from wherever they happen to be – in an office, at home, on the move, or on a customer’s premises. There are benefits in this, of course, for both the business and its employees, but much more significant is the impact it can have on performance. By removing location from the equation, teams can be brought together much more quickly and better use can be made of the resources you have in different parts of the world.

BT clearly has a vested interest in promoting the communication technology that underpins it, but any organisation that seeks to achieve agile working through technology alone will fail. Agile working changes the relationship between employer and employee, and that demands clear vision and sustained effort at every level of the organisation.

Done properly, agile working delivers plenty of benefits for the business and its CSR agenda. For instance, the CO2 reductions that result from reduced travel are tangible and real, and so too is the time released for more productive work and improved work/life balance. Overall, research suggests that the 13,000 BT staff who work mainly from home are 20 per cent more productive than their office-based colleagues.

Other savings result from the more efficient use of office space. Estimates suggest the average central London desk is only occupied for about 60 per cent of the time. Agile working allows much higher levels of shared occupancy that ultimately lead through to reductions in the need for office space and all the bills that go with it. With 64,000 flexible workers and more than 13,000 staff working from home, the reduced need for office accommodation saves BT around £60m a year.

Agile working has also helped BT create a more inclusive workplace, since it removes the hurdles to work for people with limited mobility, or caring responsibilities. Consequently, our absenteeism rates are also markedly lower than the sector average and, most striking of all, 99 per cent of our UK-based new mothers return to work after maternity leave, compared with a national average of 47 per cent. No matter how you look at it, the value of this retained experience and expertise is immense.

But even if BT is generating quantifiable benefits from flexible working, the company still has a lot to learn.

Recently, for example, we have begun to use the concept of materiality to sharpen our approach to CSR and our long-term strategic planning. Materiality is a reporting discipline that demands you assess any initiative or issue against its potential impact on the business in the medium or long term, and establish performance measures to monitor your progress. Not only does this thinking help you weigh priorities for the different CSR initiatives, it also urges management to look for activities that will create sustainable value in the business rather than simply defending it against risks.

Looking to the future, our materiality-based approach encourages everyone in the business to constantly think about issues like diversity and sustainability. As a result, CSR is both colouring our new product development and enabling us to explore new opportunities – for example, where our customers are looking for products or services that enable inclusion, or perhaps help them to reduce their own carbon footprints.

Beyond these immediate opportunities, CSR perspectives have also helped BT reshape its business around the complex realities of the global marketplace. Mirroring the shift to agile working is the need for agile supply chain management – sourcing skills, product manufacturing and support services from optimal locations, wherever they happen to be. Few businesses can afford to ignore the pressure to work this way, and yet it brings serious potential risks to reputation. BT's board-level commitment to ethical trading has helped us to develop a policy called Sourcing with Human Dignity that ensures our £6.8bn procurement budget is spent with suppliers with an appropriate attitude to human rights.

This is an apt reminder that the risk management element of CSR has not gone away. But it is only part of the picture now. CSR has evolved from a force that's good for society and the environment to be one that's good for business as well.

Tim Smart is the CEO of BT Global Services UK