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Posts Tagged ‘co-responsibility’

This post was originally posted on Vault’s CSR Blog - a great resources and a huge thank you to Aman Singh! It was part of a discussion between Alberto Andreu (Chief Reputation & Sustainability Officer at Telefónica)  and I on CSR and Sustainability. He countered with a great post. Great guy and great thinker. It was an honor to have such a constructive discussion with someone like him.

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I am afraid Alberto and I violently agree with each other on the most important aspects of CSR: Where it comes from and where we are today. Where we might not agree as much is whether this is still CSR.

In my view, CSR is not a revolutionary process but one that continues to go through many changes—an evolutionary process. The graphic below is my first attempt to describe this evolutionary process.

Phase 1: Philanthropy

In its initial phase back in the 1970s, CSR was all about philanthropy and what business should do with some of its profits. Small shifts in thinking pushed this early form of CSR forward. Companies became more strategic with philanthropic initiatives and tended to focus on projects in their local communities. This eventually grew into Corporate Social Investment that brought a business sense to philanthropy – focusing on results and outcomes.

 

Phase 2: Globalization Forces Standards

Slowly, globalization started shaping our world more and the impact of business in this globalized world became an increasing focus for activists. From a narrow focus on philanthropy we moved into an era of citizenship. Companies became business players in a globalized world, or, as it became known, Corporate Citizenship.

They started developing standards to manage their risks. This led to the need for global standards – from extractive companies and human rights to how we report on CSR today.

Phase 3: Citizenship-led Cause Marketing

When the term cause marketing was initially floated, CSR became something business could benefit from for the first time. It was a huge shift in how we perceived CSR,– not just risk management. This benefit-based approach brought operations back on the table leading to the development of CSR as a business strategy.

Now, CSR was suddenly not about cutting costs but about increasing profits.

Phase 4: CSR & Sustainability Tied with Future Business Growth

The latest evolution of CSR, or sustainability, has taken this concept of business benefit even further and started looking into the future of business and society—the heart of CSR. Sustainability today looks at finding mutually-beneficial solutions to the challenges we face as society as well as future challenges.

But CSR, even today, is  still about how business can operate profitably within this role as a responsible citizen toward society.

From Reactionary to Risk Management

We have moved from a reactionary model of philanthropy to a crisis-led model in the early stages of globalization to a risk-based model in citizenship to a mutually-beneficial business model in sustainability.

We might have seen our understanding of CSR deepen throughout this evolution but the definition of CSR hasn’t changed much over time—CSR is the way a company manages and communicates its impact on society and the environment.

Many of the individual parts of this evolution (Philanthropy, standards, etc.) remain with us today but these are not the only parts of CSR anymore. We’ve adapted and moved on – keeping the good stuff, improving on them and adding to it.

The world of CSR is very, very different today. But it is still CSR.

An Argument for Terminology: Corporate Social Responsibility Fits Best

While this might be somewhat semantic in nature, it is still an important part of the debate: We should look at the description of CSR itself. Why do we use these very specific three words to describe what we do?

I would argue that the concept is actually a very good description of what we do today. Here’s why:

Corporate implies that this is about business.

  • It not only describes that we are busy with a discipline involving business but goes deeper.
  • It is about profits – how we make them and how we can make more of them today and tomorrow.
  • It is not about charity.
  • It is about building a sustainable business model that will continue to deliver business results for stakeholders – especially shareholders.

Social tells us this is about society.

It is about the impact business has on society and how we can manage this impact to ensure both business and societal benefit.

Even the environmental part of CSR is about society – how we can minimize environmental impact to benefit society in the end of the day.

The new developments in CSR – sustainability – further continue to prove that CSR is about a mutually beneficial relationship between product and service development, and societal value chains.

Responsibility reveals that business does carry a responsibility in this world – to do business in a way that benefits both business and society. Further, this responsibility gives business the opportunity to create new solutions to the needs of society. I would even argue that it is their responsibility to develop these new solutions and benefit by capturing new avenues of sustainable profit.

All three concepts—Corporate, Social and Responsibility—tell us exactly what we do today. CSR is also the perfect reminder of the relationship between business and society, and the responsibility they have towards each other. None of the other concepts proposed today actually tell us what we are doing and what we should be doing.

I say, long live CSR, and may it continue to evolve and change our business world for the better.

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Can you remember the first time the two of you got together. The stolen looks, the uncomfortable moments of silence, the tripping over your sentences, the sweaty palms, the he-likes-me-he-likes-me-not thoughts, the private meetings when no one was looking, the uncomfortable first meal together. Yes, I am talking about stakeholder engagement. Just as with any relationship in the early wooing and courting stage, stakeholder engagement is never easy at the start.

Most companies just don’t know how to talk to activists and campaigners. Hey, make no mistake, activist hardly knows how to talk to companies either. But they don’t need companies to like them as much as what companies need them to like them. Or at least leave them alone and not target them.

Don’t feel bad when they target you. It happens to the best of companies. Sometimes it makes sense and sometimes not. I remember seeing an anarchist kicking a Nike sign at the battle of Seattle in ’99 – while wearing his Nike shoes and top…

But there are a few tips you should follow if you decide to engage and start courting. This is not an exhaustive list. Just a few tips to get you through those first uncomfortable early stages of stakeholder dating.

Firstly, do your homework and find out a bit more about the NGO and what it regards as its ‘bottom line’ – it is unlikely to be financial! I was invited to speak to the global affairs team of a very large pharmaceutical while I was at Oxfam (I headed up the Access to Medicine Campaign for a while). I was shocked to hear that the majority of people at the company thought that Oxfam only worked on health issues. And this happened when Oxfam was in the middle of their Coffee Campaign! Dig around a bit first and find out what the NGO does and what is their mandate. Most of them are registered with a constitution that states what they should focus on and how they should work. This will help you understand whether there is any potential for a longer term constructive relationship – or just a one night stand. Also a good tip when you start dating – know who you are dating. Except if you like blind dates.

Secondly, respect the differences between NGOs by not lumping them all together in the same room for a consultation exercise – NGOs are proud and competitive too. You wouldn’t want them to call a whole bunch of companies together and still expect special treatment just aimed at you. You should respect their differences and treat each one differently. Rather meet each one separately in an environment that works best to put them at ease. Meet them where they feel most comfortable – maybe at their place. Especially if you want to build the foundation for a long-term relationship. And even this should work best for real dates – don’t bring all your prospective dates together in the same room. They might just start sizing each other and you will be left with no date at all.

Thirdly, don’t make the mistake of thinking that you are the only company that is the target of the NGOs campaigning efforts, or that the NGO hasn’t other programs and projects that may have nothing to do with business. Just as with the large pharmaceutical company I mentioned, most NGOs have numerous focus areas and different programs and projects to try and achieve their overall goals. And most large campaigning NGOs have various campaigns going at the same time. They might have one single broad focus, but it plays out in different campaigns and programs. For instance, Greenpeace might be about the environment, but they focus on climate change, oceans, forests, genetic engineering and nuclear issues. So your company might only be a small part of their focus and interest. Same with real life dating. A friendly smile does not mean they want to date. It might just be a friendly smile.

Fourthly, start by talking, learning about each other and building trust rather than starting by expecting ground-breaking strategic partnerships. There might be a few obstacles to overcome – perceptions of what ‘big business’ is all about and a feeling that you want to ‘clean’ yourself by associating with them. Take it easy and just talk. Let them get to know you. Don’t create expectations. Just listen and learn and see where this might take you. Again a good tip for real life dating as well. Don’t ask them to marry you or expect ‘the commitment’ on the first date – it might just scare them off.

Lastly, remember that cash does not necessarily have the same currency as it does when buying products or services from other companies. First and foremost NGOs want to affect change. But they don’t always see money as the way to achieve change. Yes, some of them have huge budgets and operate like multinationals. But they generally have strict guidelines on receiving money from companies. For instance, Oxfam will not accept money from companies that fall within an industry they target in their campaigning. They might not even accept money for travel – never mind for a program. They would rather see you ‘do the right thing’ than pay them to do something. Okay, this one is less relevant for real life dating. Money generally impress prospective dates!

Okay, one more tip. Don’t expect them to agree with you on everything. And don’t make this a prerequisite for your potential relationship. I love my wife to bits. But we only agree 80% of the time. But we don’t let the 20% of the time we disagree define our relationship. No. Focus the relationship on what you have in common and don’t get stuck on the differences. It’s part of being human – we are all different. And the same for companies and NGOs – we are all different. And I learned that I am wrong 20% of the time in any case. Just ask my wife.

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I’ve always been sceptical about CSR rankings and ratings. Partly because there are just so many of them. It sometimes feels as if we have a ranking and rating system for every company. Just find the one that fits your needs and away you go! But this also underlines a deeper problem with rankings and ratings - is it even possible to have a ranking or rating system capture all the differences and diversity amongst businesses?

Citizen IBM had a good piece on how CSR Rankings Can Be Improved. They capture some of the key problems I have – from the needs to acknowledge the differences in industries to the need for continuous improvements to full transparency in the criteria used. But I don’t think they went deep enough – and I would like the scratch the surface a little bit more.

Firstly, as Citizen IBM mentions, the differences between industries should be acknowledged. But it goes deeper than purely the differences between those who manufacture and those who offer services. And it’s these differences that makes it even more difficult to take rating systems seriously. Let’s remove the obvious difference for a moment – let’s exclude for the sake of argument services companies and only focus on companies who manufacture.

Even within manufacturing the differences are just too steep to make a single standard rating workable. Most rating systems looks at the impact of the manufacturing process – environmental impact, workplace practices, financial performance,  governance etc. Most companies within manufacturing can be judged according to these, right? Well, just hang on for a minute there…

What most of these rating systems focus on, measure and rate are the impact of the process and not the impact of the actual product delivered by the manufacturing process. Let me give you an example, it is possible for a tobacco company to have excellent CSR practices in their manufacturing process and therefore rank better than say a pharmaceutical company. But the actual product delivered by the pharmaceutical company is vastly different than those from a tobacco company – the one contributes to the health of society and the other do the opposite.

Now it will be easy to exclude tobacco companies – and many do. However, the basic principle remains. The extremes are easy to differentiate – and we can exclude tobacco and arms manufacturers. But what about comparing the products of an oil company to a pharmaceutical company? How do we judge the end product and the impact of that end product? Especially when we start bringing in the idea of sustainability – leaving the future world in a better or no worse place. How do you rate a product that positions us better for the future against a company who serves an immediate need but at a high environmental and sustainability cost? How do you rate a software company who connects sustainable solutions to a company whose software is used for warfare? The differences in what the products deliver becomes complicated and makes comparisons complicated and almost impossible.

Even within a single industry it is complicated and problematic – how do you differentiate between an energy company that produces only oil to one that only produces solar or another “green” energy? And what about a traditional oil company spending more and more on alternative energy? How do you judge the future impact and value of the product or service?

The approach to ratings also undermines a key development in CSR over the last few years – finding the opportunity of mutual responsibility or shared value between the company and its stakeholders (or society at large). Companies are increasingly seeing CSR as a way to create new opportunities that will be beneficial to both the business bottom line and the needs of society. But the approach of rating systems doesn’t allow for this to be reflected because they focus on the impact of operations and not the business model and approach to CSR. You can (and will) therefore have companies who practice CSR the old way (ticking boxes, compliance etc) have a higher rating than companies who seek new ways to create product and service solutions that will benefit both society and the business itself. Too many ratings take a “tick the box” approach instead of looking at innovation, opportunity, mutual responsibility, societal benefit etc.

And it goes even deeper than that…

The drive towards a common standard has another unwanted impact – individual criteria might mean a company have excellent rankings on some but fail on others. Especially those areas where their major impacts are. Let’s say a company rates highly on governance, philanthropy, financial performance and the environment but their major impact is actually on human rights. And let’s say this company then operates in countries where child labor or forced labor are fine. The fact that they have great rating in all but one will most likely give them a good rating overall. But they fail in the area that matters most to their specific company as it intersects with society. Again, the standardization of ratings therefore fail to acknowledge the area of major responsibility and impact of the company.

That’s my biggest problem with ratings and rankings. They focus too much on the process and too little on the impact and value of the actual products and/or service delivered and those areas of major impact and responsibility. A single standard rating and ranking to compare all companies cannot capture these differences adequately. Rankings and ratings go for the lowest common denominator and fail to truly rate those who benefit society today and tomorrow and fail to acknowledge the differences in impact between different industries – or even different companies within an industry.

Frankly, I don’t rate ratings and rankings that much…

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