The Three Curses of CSR: Curse 2 - Peripheral Status

Curse 2: Peripheral CSR

Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. This is ‘code-speak’ for saying that CSR is, at best, a peripheral function in most companies.

There may be a CSR manager, a CSR department even, a CSR report and a public commitment to any number of CSR codes and standards. But these do little to mask the underlying truth that shareholder-driven capitalism is rampant and its obsession with short-term financial measures of progress is contradictory in almost every way to the long-term, stakeholder approach needed for high-impact CSR.

The reason Enron collapsed, and indeed why our current financial crisis was allowed to spiral out of control, was not because of a few rogue executives or creative accounting practices, it was because of a culture of greed embedded in the DNA of the company and the financial markets.

Joel Baken (author of The Corporation) goes so far as to suggest that companies are legally bound to act like psychopaths. Whether you agree or not (and despite the emerging research on ‘responsible competitiveness’), it is hard to find any substantive examples in which the financial markets reward responsible behaviour.

The Three Curses of CSR: Curse 1 - Incrementalism

Why has CSR failed so spectacularly to address the very issues it claims to be most concerned about? This comes down to three factors – the Three Curses of CSR, if you like:

Curse 1: Incremental CSR

One of the great revolutions of the 1970s was total quality management, conceived by American statistician W. Edwards Deming, perfected by the Japanese and exported around the world as ISO 9001. At the very core of Deming’s TQM model and the ISO standard is continual improvement, a principle that has now become ubiquitous in all management system approaches to performance. No surprise, therefore, that the most popular environmental management standard, ISO 14001, is also built on the same principle.

There is nothing wrong with continuous improvement per se. On the contrary, it has brought safety and reliability to the very products and services that we associate with modern quality of life. But when we use it as the primary approach to tackling our social, environmental and ethical challenges, it fails on two critical counts: speed and scale. The incremental approach of CSR, while replete with evidence of micro-scale, gradual improvements, has completely and utterly failed to make any impact on the massive sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSR-led attempts at amelioration.

Curse 2 to follow ...

The Low Carbon Revolution: It’s Closer Than You Think

A few days ago, the UK government announced its Low Carbon Transition Plan, which will revolutionize the British economy. A few weeks ago, the Corporate Leaders Group on Climate Change launched its Copenhagen Communique, calling for a bold global policy deal. Less than a month ago, the US house of representatives voted to bind the world's largest economy to cutting carbon emissions by 17% from 2005 levels in 2020 and 83% in 2050. The revolution is here! Let's look at these harbingers of change in a bit more detail.

The implications of the UK's plan, announced by Ed Miliband on 15 July, are that Britain will cut its greenhouse gas emissions to 34% below 1990 levels by 2020. Among other things, this means that the UK will move from 5.5% renewable energy today to 30% in 2020, with an additional 10% coming from nuclear and clean coal. That's 600% growth in just 11 years, creating 400,000 new green jobs.

The Copenhagen Communique was launched on 29 June by the Prince of Wale's Corporate Leaders Group on Climate Change, which is convened by the University of Cambridge Programme for Sustainability Leadership (www.cpsl.cam.ac.uk) . The Communique, expected to be signed by 500 of the world's largest companies across all G20 countries, calls for "an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency of the crises facing the world today", including "a reduction of 50-85% by 2050" of greenhouse gases.

In addition to establishing a cap and trade system that is the heart of the 1,200-page US climate bill, the measures approved by the house would require power companies to produce 15% of their electricity from wind and solar energy. This starts to turn Obama's campaign rhetoric - to reduce climate-altering carbon dioxide emissions by 80% by 2050, and invest $150 billion in new energy-saving technologies - into action.

All this is happening before the crucial Copenhagen multi-lateral talks in December. The message is clear: progressive business and governments have seen the writing on the wall, and are not waiting for the bureacrats to catch up. Nobody should be holding their breath. The low-carbon revolution is well underway. The only question now is who will be the winners and losers. Smart governments and companies are betting on first-mover advantage.

Pandora's CSR Box: The Case for Banning CSR

I participated in a strategy session on CSR/sustainability this week and was left wondering if we CSR specialists are our own worst enemy. Would more progress be made if we banned CSR? Would we be better off if we never used the C-word again? What if we substituted “CSR” with “risk management” or “new business development”?

Let me explain what I mean. By having a CSR function, or department, or profession or career, we have created a neat little box for mainstream business to put CSR-related activities into - the CSR report, the ethics code, the supply chain audit. That has some advantages - there is a focal point, people to get things done - but at what cost?

The problem with boxes is that people often don’t think (or act) outside them. If environmental quality, or human rights, or health and safety, or stakeholder engagement is something that gets assigned to the CSR-box, there is a very real danger that everyone else feels they have been absolved of responsibility.

Not only that, the CSR-box mentality suggests that social, environmental and ethical challenges can be solved by thinkering at the edges of business, rather than reforming the core. If the current financial crisis teaches us anything, it is that we have to fundamentally change the way we do business. The current model is broken.

But what are the chances that business will change voluntarily? The answer is: extremely good! In fact, it is inevitable. That is because the issues we are dealing with - the breakdown of ecosystem services, the erosion of morality and the disintegration of social justice - are not marginal issues. They are business deal-breakers.

Put another way, the issues CSR is trying to tackle are business risks. If fish stocks collapse, or communities stay poor, or we have catastrophic climate change, or corruption is endemic - these undermine the ability for business to prosper. They undermine the enabling conditions for business - resource availability, political stability, and clear rules and ethics.

So when I say there is a case for banning CSR, I don’t mean stopping CSR-related efforts, or firing CSR professionals. I mean changing the language of CSR and raising the CSR game - to the level of strategic risk and opportunity. This is not about greenwash and moral high ground. This is about competitive survival and future markets.

Business will not (and should not) do CSR only because it is the right thing to do. Business should do CSR because it will go out of business if it doesn’t and it will be more successful if it does. And if it just calls that approach “good business sense” or “risk management” or “strategic investment”, rather than “CSR”, so much the better.

An Agenda for the Future of CSR (Part 2)

An idealistic-realistic approach calls us to engage in making CSR a catalyst for systemic change. Consequently a new agenda for CSR can emerge, with four essential tracks where coalitions need to be built.

Changing the baseline

The first track involves changing the baseline of markets, the driving force behind most business. This will involve coalitions of businesses, financiers, NGOs, governments, and others, aimed at changing the rules that govern the basics of capitalism, such as company law, currency flows, property rights, competition, tax management and executive accountability. Such work will be time-consuming and technical, and may seem too abstract and negative for some. But there are other crucial things to do.

Playing the Solos

The second track involves playing the solos within markets, by pioneering sustainable and just models of enterprise. Social entrepreneurs will help prefigure a new economy through creating businesses and projects that are inherently just and sustainable, including environmental technologies, co-operatives, and even sustainability stock markets. Their own success and their ability to takeover the mainstream economy will, however, depend partly on how well the first track is changing the baseline. Page 4 of 5 © Wayne Visser

To some people these first two tracks may seem too much like pontificating about macro economics, on the one hand, or following a fashion for eco-ethical enterprise on the other. They will focus instead on how people continue to be abused, poisoned, evicted, sacked and even killed, because of corporate interests and activities.

Singing the Chorus

Therefore the third track involves standing alongside and singing the chorus with those negatively affected by current market dynamics. Thus some will continue to work either with or against large companies to help specific groups of people improve their lot or seek redress – an area where much of the current effort on CSR and corporate accountability is located.

Maintaining the Beat

The fourth track involves maintaining the beat within the CSR profession, to keep its focus on a transformative agenda. This will require preventing it from becoming either solely client-directed and only interested in the goals of its paymasters, or protectionist and primarily interested in regulating access to services in this area. Instead, coalitions will form to help evolve a values-oriented profession, to maintain the heartbeat that is essential to a transformative movement.

Choosing Our Future?

The activities one chooses to engage in will depend on one’s particular skills, inclinations and circumstances. But for CSR to be part of the Rise and Shine scenario, a four-track agenda is essential, with the tracks harmonising to create a powerful music greater than the sum of its parts.

This means that people working in each of the four tracks will need to recognise the value of each and ensure their own work synergises with, rather than undermines, the other tracks. Unfortunately this is not always the case at the moment, as some people suggest their path is the only right one. We hope that developing and sharing a vision of how different activities could actually synergise towards creating systemic change will help that vision to become a reality.

Co-authored with Jem Bendell. Extracted from “The Corporate Responsibility Movement” (2009) by Bendell, Visser, et al.

Islamic and Cleantech markets: A CSR 2.0 tipping point?

I was fascinated to read a recent Time Magazine article on the growth of Islamic markets, which are reportedly already worth $1 trillion! The Halal food sector alone makes $632 billion annually, accounting for about 16% of the entire global food industry, acording to Halal Journal. The Islamic finance sector (which forbids the charging of interest) stands at $500 billion and is expected to grow to $4 trillion in five years, according to a 2008 report from Moody's Investors Service.

What is interesting about these and other Islamic markets (cosmetics, real estate, hotels and fashion) is that they have an ethical basis. According to Time, "citing the kosher and organic industries as successful examples of doing well by doing good, some entrepreneurs even see halal products moving into the mainstream and appealing to consumers looking for high-quality, ethical products." Mah Hussain-Gambles, founder of Saaf Pure Skincare which markets halal makeup, calls it "the next purity thing".

The other market area that is booming is the so-called clean-tech or green-tech sector. According to Clean Edge, $148 billion was invested in clean energy companies and projects in 2007, up 60% from 2006. Venture capital and private equity investment in clean energy companies was up 34% in 2007 to $9.8 billion, while finance via public markets was up more than 123%. Annual revenue for four benchmark clean technologies — solar photovoltaics, wind power, biofuels, and fuel cells - increased nearly 40% from $40 billion in 2005 to $55 billion in 2006. These are forecast to become a $226 billion market by 2016.

Add to this the vast sums being promised and poured into the so-called “green collar economy” as part of government financial stimulus packages around the world in 2009. Then add the emerging policies on climate change, such as the UK government's commitment to reduce carbon emissions of 80% by 2050, and we have something starting to feel like a brewing revolution. In fact, according the The State of Responsible Competitiveness 2007 report by AccountAbility, responsible markets in climate change, gender, human rights and anti-corruption will be worth at least US$750 billion by 2050.

Taken together, the green moon of Islamic markets and the green sun of cleantech may be just the tipping point we have been hoping for to turn CSR from a marginal, philanthropic activity into a connected, scaleable, responsive force of business for good. This is the real meaning of CSR 2.0 - the creation of a different way of doing business and an evolution of sustainability and responsibility to the level of markets, as opposed to old-style CSR applied at the individual manager or company level. Who knows, perhaps in the future, when we explain to our children how we narrowly escaped plunging into an overshoot and collapse catastrophe in our global social and ecological systems, we will use a simple tipping point formula:

Green Moon + Green Sun = Transformational Change.

An Agenda for the Future of CSR

I recently received my copy of “The Corporate Responsibility Movement” by Jem Bendell, et al., which includes some pieces I wrote together with him. I was struck by how relevant the chapter on “An Agenda for the Future of CSR”, which we wrote in 2005, still seems to be. So I have decided to repost it here:

We believe that the movement is at a crucial juncture. Companies have climbed the corporate social responsibility (CSR) learning curve and are now playing the game like experts. They have reframed the debate into language which they can understand and use without upsetting most of their shareholders, and they have designed policies and programs which they can implement without having to question their underlying business model.

There seems to be a pervading sense in many CSR circles that there is now business consensus about the most pressing issues in our global society, taking their cues from the Millennium Development Goals (MDGs), the Global Compact and other such frameworks. While many of the issues remain difficult to deal with in practice, companies are credited with putting strategies in place for tackling them. Everything, they argue, is going according to plan; hence, there is no need for anything more dramatic, especially not legislation to enforce improved performance. Or is there?

There is another perspective, which enjoys far less air time. A perspective that says the world is in a deepening crisis of alarming proportions and that the private sector’s response, under the guise of CSR, is as effective as placing a band aid on the foot of someone who is haemorrhaging from a head wound. This alternative perspective, radical as it sounds, nevertheless seems to be confirmed by just about every available statistic on the ecological and social health of our global society.

The question then becomes: is CSR, as it is currently being preached and practiced by multinational corporations around the world, actually a red herring? Is it a distraction from the more fundamental transformation (perhaps revolution even) of the capitalist business model which is needed? And as CSR becomes an established professional practice, will it take as given that its purpose is to benefit those who employ its professionals, rather than a primary goal of transforming the world?

If so, CSR will have contributed towards a global ‘Crash and Burn’ scenario, with growing ecological and social degradation.

Such criticism forces those of us who work on corporate responsibility issues, perhaps even identify ourselves as part of a CSR movement or a CSR profession, to reflect on our roles. Do we have a clear strategy for how we can help solve the big problems of poverty, pollution, abuse and so forth, by working with/in corporates? And if we think we are helping in small ways, do we have a plan for how to scale up our impacts to address problems which require widespread action, like climate change? Without one, might we just be pretending we are helping the planet and its people, while climbing another greasy pole? The risk here is that we all seem remarkably adept at coming up with explanations of our own behaviour and priorities that maintain an appearance of “ethicalness”… at least to ourselves. We have to find the courage to be self-critical, and explore what we are thinking and doing.

It is through this reflexivity that CSR might avoid being complicit in a global ‘Crash and Burn’ and become a crucial part of a ‘Rise and Shine’ scenario, where the world achieves a greater harmony between its peoples and with ecology. This scenario requires systemic change. For CSR to help with this systemic change, we need to embrace both idealism and realism.

Idealism is important as we must reawaken the values which underscore the CSR agenda, rather than hiding them sheepishly behind commercial arguments for action. A revival of zealous passion and moral belief as a driver of corporate change and a new intensity of questioning of the reigning business model is key.

Idealism and realism are often counterpoised, yet we need both if we are to promote systemic change. Idealism should not blind us from awareness of the limits of individual voluntary action. Some realism about markets and the law is essential. The commercial benefits from improved social and environmental performance are patchy, and many companies still make profits through externalising social and environmental costs - a process which is promoted by mainstream financial markets that still focus on short term value creation. Given this situation, the current system of governance, regulation and law enforcement is not often sufficient, as international companies can evade accountability through the use of sub-contracting and subsidiaries, while also being able to influence the processes of public governance itself, with questionable outcomes.

Extracted from “The Corporate Responsibility Movement” (2009) by Bendell, Visser, et al.