By Business & Finance 
Brian O’Neill pictured in Uganda in July 2014 with the charity Lesson for Life
Brian O’Neill shares his thoughts on how corporate social responsibility’s role is assisting in delivering sustainable long-term value.
I highlighted in a previous article on corporate social responsibility (CSR) in Business & Finance that a truly successful business is one that develops and maintains long-term value for all stakeholders. This includes financial value for shareholders and value for customers from the products and services marketed to them, but also includes staff, distributors, regulatory authorities and wider society.
At Friends First, we formulated a new three-year business plan in 2012 and as part of this process reviewed our existing business model and results. We concluded that we needed to deliver increased long-term value to all of our stakeholders and in doing so develop a more sustainable business model.
Our industry involves the provision of life and income protection products plus long-term savings and pensions products to individual customers and companies.
Like most other retail business sectors in Ireland, the protracted recession between 2008 and 2013 led to far less new individual and business customers acquiring our products or investing with us.
We also experienced significantly more customers cancelling or reducing contributions into existing products and schemes, which had a significant adverse impact on our financial results and value.
Value proposition
This process of customers cancelling products was being exacerbated by a practice known as ‘rebroking’, whereby clients are advised by their financial advisers to cancel existing products and take out a new product with another provider.
Much of this activity was in the client’s interest, but some was motivated by the needs of financial advisers to generate commission income from selling a new product.
We concluded that the latter was not in the best interest of customers and was destroying value for them and us as the product provider.
We further concluded that we could not develop a sustainable and socially responsible business if we now altered this business practice and encouraged advisers to move to a recurring income model based on selling added advice to customers and not just products. We therefore decided to alter the level and form of commission paid to financial advisers and to assist them in developing a financial advisory model.
In 2013, we changed the way we paid financial advisers, focusing on spreading the commission payment over the term of the product, rather than paying all of it upfront.
CSR is not just a tangential set of nice activities, it is core to what we want to become as a business and a company in Ireland.”
We also significantly increased our educational support to financial advisers to help them to change their business and transition to a customer-focused financial advisory model.
We decided that we needed to provide better value for money products that were easier to understand for our customers. So, we reduced the cost of cover across our life and income protection products and reduced charges on our savings, investment and pensions product. We also added further low-risk investment choice on these products and simplified the charges to make them more understandable for customers.
Socially responsible
Our owner Achmea, the Netherlands largest insurance group, had consistently highlighted the need for us deliver clear value to a broader range of stakeholders, including the wider community.
They also stressed the need for Friends First to embed social responsibility and sustainability principles across all parts of the business.
As a co-operative group, Achmea has always had a strong societal focus and so CSR principles and activities are fully integrated across their business. For example, it operates its own charitable foundation, and in 2012, signed up to the United Nation Principles for Sustainable Insurance charter.
While Friends First needed to make significant changes to transform our business into a sustainable business, we knew what we needed to do and had some of the building blocks already in place.
We were already active in supporting charities and had a well-developed environmental programme. But we were fully aware that being a truly socially responsible and sustainable business involves far more than increased charitable and societal activity.
CSR integration
To ensure the integration of all CSR-related activities into our business we established a new programme to monitor and co-ordinate all activities acrosss the business. The structure of our programme and activities was influenced by a review of best practice in CSR across major Irish and international companies, and in our owner, Achmea. Our new CSR Committee decided to manage CSR activity in Friends First under four key headings:
- Friends in the Market – our sales and marketing facing activities
- Friends in the Workplace – our staff facing and development activities
- Friends in the Environment – our environmental activities impact
- Friends in the Community – our society community and charitable support.
We developed a fully integrated CSR plan commencing in 2013 with objectives and activities agreed for each of the four streams supported by a reporting and monitoring process. In our Community Programme we appointed charity, schools and community co-ordinators to initiate and manage a significant range of new activities which included:
Supporting four charities selected by the CSR committee with Friends First matching any monies raised by staff.
- Six staff members completed a London to Amsterdam cycle for one of our charities – Lessons for Life.
- I visited Uganda in July to review the work of Lessons for Life in educating children who are aids orphans.
- 35 of our staff members participated in the Women’s Mini Marathon to raise funds for our charities.
- Two of our staff, and four financial advisers, completed four rounds of golf in one day to raise funds for one of our charities.
- We embarked on a new schools’ support programme with St Laurence’s Secondary College in Loughlinstown and we commenced a reading partnership with a St Columcille’s National School in September.
- We are supporting Stonebridge Community Centre in Shankill through a range of initiatives for their younger and older members.
- We operate a programme of community sponsorship and supports for a range of community events and sports.
Trusted partner
The Friends First charitable and community activities are core to our CSR programme, but is only part of a broader transformation of our business which aims to deliver long-term value to all of our stakeholders. We aim to become a sustainable and successful business and one where we can show that we are a trusted insurer.
While we have made significant progress in transforming our business to date, the process is far from complete and in a changing market environment is never fully completed.
We have learned a lot to date and will apply these learnings in our CSR programme and across the business.
CSR is not just a tangential set of nice activities, it is core to what we want to become as a business and a company in Ireland.
