Why CSR fails: It’s not an auditing tool or a PR activity –
it should be your fundamental business ethos!
I have just finished a book
chapter dedicated to my views on this point and the question that keeps arising
in my head after reading pages and pages of audited CSR reports /Sustainability/
Environment and ethics reports using UN Global Compact Principles, ISO Guidance
Standard on Social Responsibility, ISO 26000 or Global Reporting Initiative
(GRI) Guidelines is: How is all of this relevant
to the business operation, the business organizational culture and the local
communities the business impacts both upstream and down stream? Is it working? How well? The fact that it is
still the prerogative of “big companies” who get access to networks is an issue
for this new business belief.
You pay an annual “financial
commitment to join the UN Compact”
though it is a small amount. The Global Reporting Initiative is a
non-profit organization with less than 5000 companies sharing their reports. Many of the companies who are “global
sponsors” of GRI are well known Auditing firms “Goldman Sachs, Deloitte, Ernst
& Young, KPMG and PwC” who will also make a lot of money auditing for this
new trend as GRI recommends that sustainability reports are externally assured.
Right now these are volunteered disclosures but they are lobbying governments
to make it mandatory. Do Accounting firms “volunteer” their expertise to audit
as a benefit to CSR? There is big monies
involved in some major initiatives[1]
like:
• United Nations Principles for Responsible
Investment: 800+ signatories, $22 trillion in investment capital
• Investor Network on Climate Risk (INCR): 90+
members, $9 trillion
• Carbon Disclosure Project: 50 purchasing
organizations and 551 institutional investors, holding US$71 trillion in assets
under management
• Institutional Investors Group on Climate Change
(IIGCC): 70+ members, $6 trillion
• Interfaith Center on Corporate Responsibility
(ICCR): 300 members, $100 billion
We tend to look at this topic as
a communication platform [2]
or a method to create value (albeit
long-term for the firm)[3].
Most Boardrooms are thinking this concept will get them brownie points in the
marketplace through corporate legitimacy[4].
A Global CSR Survey by APCO show that 60 percent of those surveyed say that
based on negative news about the CSR of a firm, they have decided to boycott
the firm’s products or services.[5]
This also shows customers are more reactive about CSR than being proactive.
Education may have role to play!
I think we need to approach this
business in a much more focused manner – not just from at a systematic
strategic level not a need/opportunity/cause reactionary mode. I believe
employees should be also empowered at the local level to get involved because
they are the closer stakeholder in proximity than customers.
1. What is this CSR ethos and why
are you choosing this philosophy? It’s
OK to be personally motivated – as long as the organization is there for the
journey. Hence by all means support cancer research, HIV studies, local schools
but try and embed the philosophy in the organizational culture. Remember the
easiest thing to give is money, the hardest is time (volunteering hours) and
skills and network access (to media to promote the cause and not the company
and transfer skills to people using your staff competencies). True in 2010, BP
could have been more “caring” following its oil spill in the Gulf of Mexico –
but so could any of the other owners of oil rigs (there are 1200 owners of
active leases)[6], including the US Government whose coast and
people were affected (remember it took Obama 12 days to visit). Too much time
was spent bickering and pointing fingers.
2. Who are you impacting? CSR
should not just impact the company but everyone in the value chain! Based on proximity – TMT needs to be first
involved, and then employees, investors, suppliers, distributors and the last
is the customer. In today’s world we are in a hurry to tell the customer first!
What would happen if the customer turned it around and said “Hey P&G –
great that you salute all those Moms – your Olympics commercial has brought
tears to many eyes – but how many Moms do you have in your organization and
what have you done for them?”. Or ask UniLever – “You believe that young people
are beautiful – love the “real beauty” campaign – how many teenage girls of
your employees have you worked with to let them know this?” Or let us ask Apple/Nokia/Samsung/Sony “You
say you use environmentally friendly manufacturing…what are you doing about
reverse distribution? When you ask customers to upgrade – how are you making
sure that used up Apple products are not polluting landfills?”.
3. Be focused: You can’t run a
business that solves everything so you make choices. This does not mean you
cannot “moonlight” – it means like any business decision you debate and open up
the discussion. Why are you partnering with whom? How transparent have they
been with your resources? A few years
ago we were given a talk but someone who worked for a prominent NGO. They were
told a certain company wanted to donate millions close to the year end to open
a school in Central Africa using the latest IT technology. The money was
available now or they would lose it because of the accounting year if the NGO
would not take it. The NGO took it knowing (1) they did not have the contacts
in the conflict zone to open the school with less than 30 days (2) knowing that
they would have to “trust” a partner with political contacts to hope that the
project would get implemented (3) there was at that time no infrastructure to create
an IT enabled school where there absolutely no basic necessities. Such projects often take years to implement.
The speaker was very articulate when she said – the irony was that the company never
asked them after that year – did the school come up and was it working well.
They had got their PR high and were content with that.
There is so much to do in this
area, so little time and so few who have got involved. We need new firm
start-ups to consider these issues when they begin their organizations and
older one to retrain as it calls for change and maybe courage too. We need
education institutes from school onwards to embed this concept of what is CSR? So
the kids will become enlightened consumers and not slaves to “Consumerism”.
They but with purpose, with ethics and with certainty. The products represent
the organization and the organizational values and that of the person who buys
the product.
[1] GR!
(2012), A new phase: the growth of sustainability reporting, Available: https://www.globalreporting.org/resourcelibrary/GRI-Year-In-Review-2010-2011.pdf
[2]D.S.
Simon Productions (2012), The Growing Importance of Corporate Social
Responsibility for Reputation Management: The Occupy Wall Street Survey, Available: http://www.client.dssimon.com/demo/OWSsurvey13.pdf
[3] McKinsey
& Company (2009), McKinsey Global Survey Results: Valuing corporate social
responsibility, Available: http://commdev.org/files/2393_file_McKQ_Valuing_Corporate_Social_Responsibility.pdf
[4] Carl-Johan
Hedberg and Fredrik von Malmborg (2004), THE GLOBAL REPORTING INITIATIVE AND
CORPORATE
SUSTAINABILITY REPORTING IN SWEDISH COMPANIES, Corporate
Social Responsibility and Environmental Management, 10, 153–164
[5]
APCO Worldwide (2004), Communicating CSR: Talking to People Who Listen, Available:
http://www.apcoworldwide.com/content/pdfs/Global_CSR_Study_Sept2004.pdf
[6]Deep
Sea News (2010), Oil Platforms in the Gulf: How Many and Who Owns Them?,
Available: http://deepseanews.com/2010/06/oil-platforms-in-the-gulf-how-many-and-who-owns-them/
