There’s been a lot of discussion on our site recently about social and environmental responsibility versus cost. (See: After Supply Chain Transparency Comes What? Social Responsibility, Apparently.) In many cases, making sure a business simply complies with the various environmental laws around the globe -- not to mention being a good world citizen -- requires investment in time, people, operations and equipment upgrades.
I recently interviewed Charlie Denham, Manager for Corporate Social Responsibility (CSR) for global catalogue distributor Premier Farnell. As a UK-based company, Premier Farnell had a front-row view of the EU’s Restriction on Hazardous Substances (RoHS) and launched a massive compliance effort throughout its distribution operations. Premier Farnell and its US-based subsidiary, Newark, have compiled an extensive database on environmental regulations and green design practices and are a leading resource for engineers, suppliers, and customers in the electronics industry.
The distributor also practices green initiatives within its own business operations. In April 2010, Premier Farnell was awarded Platinum status for the Community Corporate Responsibility Index, one of the leading benchmarks for CSR programs. Denham discussed how Premier Farnell and Newark balance their commitment to social responsibility with the investment it takes to commit to environmental friendliness.
“Making a business operation as sustainable as possible delivers a return for shareholders,” Denham says. “There is a value attached to social responsibility and environmental considerations for both employees and shareholders of our company.”
As a publicly traded company, Premier Farnell has an obligation to be profitable for its shareholders. But the financial community, with a focus on quarterly earnings, doesn’t always reward companies that invest for the long term. Among his other responsibilities, Denham conveys the value of corporate social responsibility to Premier Farnell’s shareholders.
“The most effective way we communicate to our shareholders is that our energy bill has gone down,” he says. “And it will stay low. The issue of carbon-footprint reduction is emotive, but there are scientific reasons why investing in this effort makes sense. If you look at shareholder interests, obviously they want a profitable business. But how you communicate [the value of environmental initiatives] is you talk in terms of efficiency, savings, and how it relates to hours of electricity. We can fulfill our fiduciary as well as environmental responsibilities.”
Good environmental practices, he says, are not only about compliance -- they are a competitive advantage. “If you merely focus on compliance, you are being reactive. But if you look at the future of business, we are doing work now that in 40 years will be standard business practices. The commercial landscape is changing, and companies will look at sustainable development and determine how [the electronics industry] can be the most sustainable. That means a secure future and generating ongoing value for our shareholders and investors.”
Financially, the company is achieving its goals. For its fiscal quarter ended July 2010, the Premier Farnell group’s second-quarter sales and operating profits were the highest for 10 years, according to Group Chief Executive Harriet Green. “This reflects the continued progress in our strategy and market share growth as well as the broader-based increased activity levels in the global electronics supply chain,” she said.
It appears that companies don’t have to sacrifice profitability for good global citizenship. In future blogs, we’ll talk about Premier Farnell’s other CSR programs, including human rights.