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Greenpractice: Building sustainability into your business pays

Every Issue

Cite as: March 2011 85(3) LIJ, p.79

Rather than being an unnecessary add-on, good corporate citizenship makes good business sense.

Corporate social responsibility (CSR) has fast become mainstream business practice. Firms embedding social and environmental management into their practices are increasingly viewed as companies of choice by investors, employees, customers and regulators.

Reputation, brand and marketing

Reputation is critical to business success. Studies have shown that a good corporate reputation increases the length of time that a firm earns above-average financial returns.

Brand differentiation is important, especially in the tight Australian legal market. Marketing your firm based on your environmental savvy provides the opportunity to distinguish your firm and show leadership among competitors.

A CSR program can also be an aid to recruitment and retention, particularly within the competitive graduate market.

Potential recruits often ask about a firm’s CSR policy during an interview. When a major oil company suffered reputational damage on environmental and social grounds, the CEO said repeatedly that the most negative impact, and the one that made him fear for the future of the company, was the difficulties he would now face in recruiting bright young graduates.

Employee and client loyalty

Aligning your firm’s values with those of your clients and employees is an important way to build relationships and trust. It is therefore imperative to understand what your clients and employees want, and make sure your firm delivers environmental initiatives that complement their values and goals.

Consumers are more aware of the environmental and social implications of their day-to-day purchasing decisions and are making choices accordingly. In response, businesses are seeking to maintain a positive public image, and want to work with partners and suppliers who enjoy similarly good reputations.

Virtually all of the top 100 Australian companies have a CSR program. These businesses are your clients and they want their work with you to strengthen their CSR goals. Smart CSR practices provide links with the activities of your clients and cement relationships.

Embedding environmental considerations into business practices can increase employee loyalty, improve recruitment possibilities and foster a more productive workforce. CSR can also help improve the perception of a firm among its staff, particularly when staff can become involved through workplace donations, fundraising activities or community volunteering.

Risk mitigation and financial savings

Risk management is a central component of corporate governance. Reputations that take decades to build can be rapidly undone by poor business practices.

Studies demonstrate that companies which take a strategic approach to corporate citizenship are likely to be well-managed overall. Thorough and proven CSR practices can protect against reputational damage and reduce costs associated with labour disputes, security issues and stakeholder damage control. Building a genuine culture of compliance and “doing the right thing” can offset such risks.

Through better efficiencies – energy savings, paper, transport, reduced consumption of resources – corporate citizenship can lead to direct improvements on the bottom line.

For example, Catalyst Paper Corporation, a Canadian pulp and paper company, uses its own by-products (biomass) to power its operations. It also regains heat from effluence to warm process water and thereby further reduce its carbon emissions.

Longer term financial profitability

Improving environmental compliance and developing environmentally friendly products can enhance earnings per share, profitability and the likelihood of winning contracts.

Both the state and federal governments consider social and environmental standards when selecting a tender for work. Demonstrating embedded and effective environmental standards will make your firm a more attractive tenderer.

A survey of 300 large publicly listed companies in the US found that investment in environmental management led to a substantial reduction in the perceived risk and a 5 per cent increase in stock price. Another study concluded that companies with stringent environmental practices were more likely to be profitable than those with lower standards.

The starting point for engaging with the community and environment is your firm’s core strengths and capabilities. Design your activities around a clear business model to create a sustainable future for your firm.

The ultimate goal when incorporating CSR into your core business is, however, innovation. CSR activities can be a creative stimulus and an aid to developing new business, strengthening strategic relationships and building diversity.



JULIE FRASER is the immediate past president of the LIV Young Lawyers’ Section and a fellow with the Centre for Sustainability Leadership. MARTIN BORTZ is a law graduate who has recently completed a masters thesis on corporate social responsibility.

Sustainability offers firms:

  • improved relationships with key constituents;
  • more loyal clients;
  • lower operating costs;
  • higher revenues; and
  • an overall improvement of the firm’s standing in the legal profession and business community.

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