Chapter 10 Corporate social responsibility 113 Much research has been conducted into the relationship between CSR and firm performance. For example, Russo and Fouts (1997) found that there was a positive relationship between environ- mental performance and financial performance. Hillman and Keim (2001) established that if the socially responsible activity were directly related to primary stakeholders, then investments may benefit not only stakeholders but also result in increased shareholder wealth. However, participation in social issues beyond the direct stakeholders may adversely affect a firm's ability to create such wealth. 6 Harnessing diversity ­ respecting that people are different, which is reflected in fair and transparent business practices. Developing and implementing a CSR strategy To develop and implement a CSR strategy based on these principles it is necessary to: understand the business and social environment in which the firm operates; understand the business and HR strategies and how the CSR strategy should be aligned to them; know who the stakeholders are (including top management) and find out their views on and expectations of CSR; produce and deliver persuasive arguments in favour of CSR: if all else fails suggest that there is room for enlightened self-interest that involves doing well by doing good; identify the areas in which CSR activities might take place by reference to their relevance in the business context of the organization and an evaluation of their significance to stakeholders; prioritize as necessary on the basis of an assessment of the relevance and significance of CSR to the organization and its stakeholders and the practicalities of introducing the activity or practice; draw up the strategy and make the business case for it to top management and the stakeholders; obtain approval for the CSR strategy from top management and key stakeholders; communicate information on the whys and wherefores of the strategy, comprehensively and regularly; provide training to employees on the skills they need in implementing the CSR strategy; measure and evaluate the effectiveness of CSR. the basis for developing a Csr strategy The basis for developing a CSR strategy is provided by the following competency framework of the CSR Academy (2006), which is made up of six characteristics: 1 Understanding society ­ understanding how business operates in the broader context and knowing the social and environmental impact that the business has on society. 2 Building capacity ­ building the capacity of others to help manage the business effectively. For example, suppliers understand the business's approach to the environment and employees can apply social and environmental concerns in their day-to-day roles. 3 Questioning business as usual ­ individuals continually questioning the business in relation to a more sustainable future and being open to improving the quality of life and the environment. 4 Stakeholder relations ­ understanding who the key stakeholders are and the risks and opportunities they present. Working with them through consultation and taking their views into account. 5 Strategic view ­ ensuring that social and environmental views are included in the business strategy so that they are integral to the way the business operates.