Saturday, December 12, 2009

Climate change & COP 15 - Part 3: Leadership response

What we need, therefore, is to strengthen the societal context – though increased public awareness and customer activism – and the market context – through stronger public policy and price incentives. This is what leadership author Manfred De Vries calls the architectural role of leaders – and that is what we see the world’s leaders here in Copenhagen striving to do: to redesign the ‘rules of the game’.

Beyond the societal and market context, however, we also need to enable individual leaders to emerge – both as strategic navigators at the helm of their organisations, and as embedded catalysts at all levels of organisation and society.

We may ask: what types of leaders are we looking for to take us through the climate crisis? There are many theories on leadership styles and traits, but it seems to me that we will need all kinds of leadership to emerge. Times of crisis do call for heroic, charismatic leaders, but quiet, servant leaders are equally needed.

Many leadership traits will come into their own in the years ahead, as climate change intensifies and we transition to a low-carbon economy. We will look to leaders with an ability to craft a compelling alternative vision in the midst of business-as-usual, to think systemically about solutions in the midst of reactionary politics, to call for action in the midst of inertia and to foster hope in the midst of despair.

The good news is we do not have to wait for these leaders to be born. We at CPSL firmly believe – and we are supported by modern leadership research in this – that leaders are made, not born. For 20 years, we have been nurturing leaders to take on the sustainability challenge. Now their time has come, and we start to see them stepping forward, through initiatives like the Corporate Leaders Group on Climate Change and the 1,000 CEOs that have committed themselves and their companies to the Copenhagen Communiqué.

It is true that it will not be easy; nor will all who tackle the challenge, succeed. But that is the challenge of leadership.

I started by saying that we need extraordinary leadership for extraordinary times, and I quoted Unilever CEO, Paul Polman. Now, I would like to end with something else he said, because I believe it captures some of the essence of what it means to be a leader for sustainability. He says, “I hope that the word integrity comes into that. I hope the word long-term comes into that. I hope the word caring comes into that, but demanding at the same time.”

Friday, December 11, 2009

Climate change & COP 15 - Part 2: Leadership crisis

This crisis in trust is closely linked to a crisis in leadership.

A McKinsey survey of global executives found that while three quarters (74%) say the CEO/chair should take the lead on socio-political issues (such as climate change), only half (56%) say the CEO/chair is taking such a lead. What’s more, less than 1 in 10 (8%) think that companies are championing environmental and social causes out of genuine concern.

In the US, almost a third (27%) of executives claim not to be playing any leadership role on public issues like climate change, and only 14% claim to be playing a direct, active role. And yet, almost half (44%) of US executives feel their peers should be taking a leadership role public issues, with only one-seventh believe they are actually doing so.

So much for the numbers; what are the implications for leadership? The same McKinsey survey may give us a clue: Of those who claim not to be playing any role in leadership on public issues, 71% cite ‘business reasons’, while of those who say they are playing a role, 64% cite ‘personal reasons’. This suggests that – in order to have transformational leadership on climate change – we need to look at both the business ‘rules of the game’ and the role of individual leaders.

Interestingly, this conclusion dovetails nicely with the leadership research coming out of academia, which emphasises importance of both the context for leadership and the individual traits of leaders.

Part 3 - The leadership response

... follows tomorrow

Thursday, December 10, 2009

Climate change & COP 15 - Part 1: Extraordinary times

In the midst of the UN Climate Negotiations in Copenhagen, I want to talk about leadership, because I believe this climate agenda – and the wider sustainability agenda – will succeed or fail depending on the quality of leadership that emerges - not only this week, but over the coming decade.

Extraordinary times

Let me begin with something that Unilever CEO, Paul Polman, said in a recent interview. He said that “part of leadership is to look reality in the eye”.

Well, at an event such as COP 15, I hardly need remind anyone that the reality we face on climate change is extremely serious. Not only is the problem potentially catastrophic, but the solution requires nothing short of a second industrial revolution.

This is not a problem we can incrementally manage our way out of. It is a crisis that requires extraordinary leadership – the kind of leadership that creates transformational change on a scale and with an urgency that the world has seldom ever seen before in peace time.

Not only do we face this extraordinary challenge, but our trust in the ability of society’s institutions to deliver the solutions is at an all time low. The latest Edelman Trust Barometer (2009) shows that nearly two-thirds of the public (62%) trust corporations less than they did a year ago. In the US, only 38% said they trust business to do what is right—a 20% plunge since last year—and only 17% said they trust information from a company’s CEO.

Part 2: Crisis in leadership

... follows tomorrow

Wednesday, December 9, 2009

Reflections on "The Top 50 Sustainability Books"

On 8 December 2009, I spoke at the launch event for my new book - The Top 50 Sustainability Books - at Heffers bookshop in Cambridge. At the end of this 3 year project, it is both a relief and a triumph to see the book in print - and it looks great, even if I say so myself! :)

One of the comments by our bookshop host was that they were surprised (and delighted!) that the 50 books were so diverse. That is certainly true, and there were some surprises even for us - books like A Sand County Almanac and The Dream of Earth were not even on our radar screen before we conducted the poll among the Cambridge alumni (on which the list is based).

In addition to this, I had three main reflections that I touched on in my brief talk, largely based on the

interviews I did with around 30 of the authors:

  1. Worldviews - It was very clear that the books said much more about the authors' worldview - the lens through which they see reality - than the actual 'facts' of sustainability. Someone like Paul Ehrlich (The Population Bomb) was very pessimistic, while Jeffrey Sachs (The End of Poverty) was very optimistic.
  2. Stories - I soon realised that the books mostly represent stories - possible futures that the authors' have imagined, based on their own culture, knowledge, experience, etc. Whether we buy into 'The Limits to Growth' or 'When Corporations Rule the World' story depends on where we are at in our own journey, as much as the authors'.
  3. Hope - Finally, I deliberately asked them all where they derive their hope from, and almost without exception, it was the inspiration from people who are working tirelessly and selflessly to solve social and environmental problems.

top50cover2Two anecdotes about the late Donella Meadows stick with me (as told by her ex-husband Dennis). On her door, she had a quote that said: If I die tomorrow, I would still plant a tree today. And when people used to ask her if we have enough time to solve our global problems, she would always say: Yes, precisely enough time, if we start today!

To me, these capture the spirit the lies at the heart of sustainability. It is an optimism built on making a difference; an attitude of action for hope.

For more information on the book, see here.

Sunday, November 29, 2009

CSR Gives Companies a Competitive Edge

This is a translation of an interview for Capital newspaper in Armenia, conducted when I was recently there delivering training (hosted by the UNDP/Global Compact, British Council and Eurasia Partnership Foundation) on CSR and Marketing. The interviewer was Habeth Madoyan.

Question: Mr. Visser, it is no secret that labour is cheaper in developing countries than in the developed world. Developing countries have weaker legislation on environmental issues, which gives them a kind of competitive edge in attracting foreign investment. Wouldn’t the promotion of CSR in a developing country deprive it of this edge?

Developing countries do have advantages as far as labour is concerned. To some extent, business and capital will go to those places where costs are less or standards are lower. That is why we need a system of CSR standards.

An interesting piece of research on Responsible Competitiveness, which covers 108 countries, has been published. This research shows that those countries where CSR is embedded in business and the government, and is also reflected in civil society, have a greater competitive advantage. In these cases, the link between responsibility and competitive advantages is always obvious.

So if developing countries have advantages based on lower costs, but do not have responsibility, then over time they will inevitably lose their competitiveness.

I think that, over the short term, it is possible to have economic growth without taking standards into consideration. But today, the CSR sector is seeing the integration into business of standards on quality, environmental issues and work conditions. So it is possible to sell a bad quality product at a cheap price and get to economic growth that way. But that is not a long term solution, because it leads to only short term economic growth.

After all, developed countries need more products of good quality. Their demand for responsible and ethical goods is constantly increasing.

Question: How should CSR standards and principles be introduced to developing countries?

The first path is through multi-national companies. In developing countries, they often use the same CSR principles and standards which are part of their operations at headquarters. This leads to the introduction of responsibility from developed countries to the developing world.

I think there is some pressure from the governments of developing countries too. China, for example, is saying that if the world wants it to become more responsible, then the world has to transfer the knowledge and technology necessary for this, preferably for free.

Today there is an interesting tension between the developed and developing world especially around the issue of climate change. The West has no moral right to tell developing countries that they cannot develop and grow or produce more and copy that which they have done. The West has no moral right to do this because it has already been on that path.

If the West is asking developing countries to adopt a new model of development and to produce cleaner, socially responsible and ethical products, then it should be ready to help them financially, through training and providing technology. Only through this kind of support does the West gain the right to demand a new model of development.

Question: How can one find the middle path between CSR and profit maximisation?

It is quite difficult to find the point of perfect balance between these two. Developing countries often find themselves faced with this problem. But it is necessary to seek and find the opportunities which allow cost reduction through steps aiming at environmental management. These are new business solutions that everyone is looking for today.

But in order to find these business solutions, it is important to have a strong system of governance, a well established civil society as well as pressure from the international community. In these cases, avoiding environmental issues could end up being more costly for companies.

One has to ask a simple question – what costs will I be facing ten years from now, if I avoid solving environmental issues today?

Economists have calculated that the money spent on climate change issues today could account for only about 1% of the world’s GDP. But if we leave avoid those issues now, then the costs could come to 20% of global GDP. This is the logic that we need to explain to our business community – by avoiding these expenses now you face much larger costs over a long term.

A few developing countries are bringing forward the concept of “environmental justice”, i.e. they are linking social issues to those of the environment. Their governments are coming up with legislation which encourages companies not only to spend on social issues. They demand that companies implement environmental programmes as well.

After all, it is the poorest layers of society that bear most of the ill effects of a polluted environment and it would be only fair for companies to deal with environmental issues as well.

Question: In our country, there are cases when companies are very active in philanthropy. Many people think that this is a “cheap” marketing ploy. How can one differentiate between them and draw the line between Marketing/PR and charity?

One first needs to understand the concept of strategic philanthropy. This is the theory of American academic Michael Porter. He says that companies should be involved with the philanthropy that deals with their area of business directly.

When a company works in agriculture, its philanthropy could be linked to food security issues. When that company is Coca-Cola, then its philanthropic work should involve water issues. In those cases, it is less likely that philanthropy will be used as a PR or marketing tool, because in reality it helps the business itself.

Corporate Social Responsibility is a much broader concept.

CSR is not about how a company spends the money it makes, but rather about how it makes that money. The weaker the link between CSR and the company’s main business, the higher the probability that it is being used for PR or marketing purposes.

There are a number of initiatives in the CSR industry that help us avoid these issues. One of these is the Global Reporting Initiative and its Sustainability Reporting Guidelines. These are very similar in nature to accounting standards. Accounting methods and standards are similar for all companies.

Through these, companies present their social activities, such that society also gets a chance to see and evaluate them. This would make it difficult for companies to use CSR as a PR or marketing tool.

Question: In your opinion, how will the global economic crisis affect CSR? Should we expect companies to lower their standards?

I think this question is linked to the last one. Those companies which are dealing only in philanthropy will suffer during the economic crisis. In these cases, philanthropic activity will lessen. Those companies which have strategic CSR will be less likely to reduce costs.

Coca-Cola will not be inclined to reduce its expenditure on water issues. They know that if the water situation worsens, the company would have serious problems.

Some time ago, that company had faced a conflict situation in India. They were accused of wasting water reserves there. It was not true, but that was the impression that people had there.

Coca-Cola is a huge consumer of water and, according to the people, they were responsible for water issues. That led to the problems for their brand reputation. But I don’t think that the crisis will affect the standards of those companies which have strategic CSR and ethical operations in any way; that is their way of working.

On the other hand, I think that a lot depends on the stage at which CSR is in a specific company. We may begin to see a tendency where companies that have well developed CSR gain additional competitive advantages in times of crisis.

That is natural – they have implemented a number of social programmes and so have a greater share of the public’s trust, which means better conditions of business for them.

Saturday, October 24, 2009

The CSR Media Boom: We Got What We Deserve

Having just spent a morning reading the latest issue of Time magazine (one of my favourite mags, when I get a chance to read it), it really got me thinking about how far the world has moved since I started out in my CSR/sustainability career nearly 20 years ago.

20 years ago, finding credible media coverage on environmental or social responsibility was like hunting for a needle in a haystack. Now CSR/sustainability issues are the haystack. For example, in this week's Time, there are stories on:
  • The President of the Maldives and his Cabinet holding an underwater meeting to urge UN leaders to pass climate change legislation in Copenhagen in December
  • California's "new gold rush", namely its scramble to be the world's clean-tech leaders, making the state "America's future"
  • Research showing how the least healthy cereals do the most marketing, i.e. questioning the ethics of advertising & greenwash
  • How jellyfish are taking over in overfished, fertilizer polluted areas of the sea and "shifting from a fish to a jellyfish ocean"
  • How China is fast becoming the world's largest alternative energy markets - including hydro, solar and wind power.
  • Booming barter schemes - including the Barter Card - that allow cashless exchange during the recession (a movement long advocated by so-called "new economics" types)
  • And how "our obsession with gross domestic product is unhealthy - and misleading" (another pillar of the new economics and sustainability movements)
I remember Stuart Hart, Chair in Sustainable Global Enterprise at Cornell and author of "Capitalism at the Crossroads", joking with me last year that "we got what we deserved", meaning that we were crying for change all those years, and now we have so much that it's hard to keep pace.

That's true. My inbox is awash with daily CSR & sustainability stories - no longer tucked away in specialist publications, but making headlines on the front pages of the world's conservative business and news press. Quite simply, the social and environmental challenges - and solutions - have become so dramatic that "green is the new black", so to speak.

Now the challenge for those of us working in the R&S (responsibility and sustainability) space is to separate the wheat from the chaff. Which issues being reported are noise and which are genuine breakthroughs? Which solutions are peripheral chatter and which are scalable game-changers?

Whichever way you look at it, this is an exciting time to be in the thick of the R&S revolution. It's a privilege to be part of making a real difference in the world - at a time when nothing less will do. And yes, Stu, it's what we deserve, in more ways than one.

Saturday, October 10, 2009

CSR for SMEs: Lessons from Mexico

In a country where more than 95% of businesses are micro-enterprises, how do you make CSR relevant? Well, you start by replacing the corporate C with an enterprising E. In Mexico, as in all of Latin America, CSR translates as RSE - Responsabilidad Social Empresarial, or Social Responsibility for Enterprises.

You also figure out how to turn social, environmental and ethical responsibilities into a business model, rather than a peripheral add-on. This is what the IDEARSE Centre for Enterprise Sustainability & Responsibility at Anauhuac University has done, as part of the government's SME Accelerator programme (Aceleradora de Negocios IDEA-Anáhuac).

I had the chance to learn more about this pioneering programme at the 7th International CSR Conference in Mexico City on 9 October 2009, hosted by COMPITE in partnership with IDEARSE, among others, where I was delivering the keynote address on "The Future of CSR".

The IDEARSE Acceleration Business Model - which strives to support businesses growth through a CSR business administration model that develops competitive advantage - is based on 6 principles: Self regulation (governance), human rights, stakeholder engagement, labour responsibility, environment (eco-efficiency) and social & community impact.

Working with this framework, IDEARSE takes SMEs through an 18 month process of establishing baseline performance, completing a CSR diagnostic, doing a gap analysis, coming up with an action plan, executing it, establishing a new baseline, evaluating impacts and writing up the case study. To date, 76 SMEs have been taken through the process.

What is the result? SMEs that scored an average of 23% on IDEARSE's comprehensive CSR diagnostic before the intervention almost doubled their CSR performance to 43%. Some of the biggest improvements were on self regulation/governance (17% to 48%), process improvement (26% to 47%) and stakeholder engagement (32% to 52%).

Importantly, improvements also show up on the bottom line. The SMEs in the Acceleration programme showed a 30% annual sales growth, and 19% growth in employment, creating 675 new jobs (pre-financial crisis). This is an iterative model, so once the first round of actions have been implemented, the cycle is repeated, leading to continuous improvement.

In developed countries, we have become arrogant about being leaders in CSR. But I believe that many of the most interesting and important innovations - like the IDEARSE Business Acceleration Model - are happening in developing countries. To give another example, Mexico is one of the only countries I know that has a national certifiable CSR standard.

It is time to recognise that CSR is no longer a standardised, Western concept. It has globalised, and as it has done so, it has diversified to meet the needs of the countries, cultures and communities where it finds itself. This is good news. We must hang onto universal CSR principles, but learn to let go of any pre-conceived ideas of what CSR must look like in practice. For to really change the world, CSR first has to become a grassroots movement.


For more information about the IDEARSE Business Acceleration Model, contact Jorge Reyes-Iturbide on

Wednesday, September 30, 2009

Worth more alive than dead: Our biodiversity challenge - Part 2

In essence, what we need is the equivalent of "The Stern Review on the Economics of Climate Change", for biodiversity. And happily, that is exactly what we are getting. TEEB - The Economics of Ecosystems and Biodiversity - is working to put a cost on the loss of ecosystem services and biodiversity loss, and to recommend policy actions.

What TEEB needs to prove - much like the Stern Review - is that the cost of inaction is not only real, but also enormous. Fortunately, this argument is getting a boost from the crescendo on climate change. And more specifically, the links between deforestation and climate change. Tropic deforestation accounts for about 20% of annual greenhouse gas emissions.

So the challenge becomes, how do we make forests worth more alive than dead? The answer, championed by Brazilian Congressman Marcio Santilli, is "compensated reduction". In other words, paying developing countries not to chop down their forests. Thankfully, this idea is starting to gain political traction. It is a win-win on climate and biodiversity.

And it is people like Sino-Australian Dorjee Sun that are showing us how to turn a good idea into a practical reality. 32-year old Sun - a millionaire by age 30 - now runs Carbon Conservation, which brokers rain-forest-carbon-credit deals. In 2008, he brokered the world's first commercial deforestation-avoidance project, with Merill Lynch paying to protect 1.9 million acres of Indonesian jungle, for credits that it will trade on the international carbon markets.

We all know that we can't - nor would we want to - put a price on everything. But the sad fact is that unless we put a price on biodiversity and ecosystem services - our very life support system - we are in danger of self-destruction. There is an African saying, "the revolution will eat its children". Let's make sure the "market revolution" does not devour our natural inheritance.

Sunday, September 27, 2009

Worth more alive than dead: Our biodiversity challenge - Part 1

One of my enduring critiques of the CSR movement is that it has failed to have a dramatic impact on some of the biggest global challenges we face. Despite all the CSR reports and ISO management systems, many things are getting worse, not better. This is indisputable when it comes to biodiversity loss. It is not exaggerating to say that we are causing the sixth mass extinction in the history of planet earth.

I always have to pinch myself when I present figures on this - WWF's Living Planet Index, which tracks populations of 1,313 vertebrate species, has gone down 30% since 1970. Just think about that. We have lost a third of the world's vertebrates in just one generation! According to the Millennium Ecosystem Assessment, 60% of our ecosystems are degraded.

The reason is that nature - as it is currently measured and valued - is worth more dead than alive. Which of course makes no sense at all. It's what Herman Daly and John Cobb Jr, in their book "For the Common Good", call "when to kill the goose that lays the golden egg". We have known for a long time that nature has an economic value, but it hasn't been factored into markets.

In 1997, a team led by environmental economist Robert Costanza estimated the economic value of 12 ecosystem services to be $33 trillion, nearly double world GNP at the time. And yet these same services (and many others) are given a value of zero, by default, in most of our economic and investment decisions. It is true they are free, but only while they continue to function.

When the bee colonies started collapsing in the United States in 2007, the 'free service' of pollination suddenly started to look frightfully expensive - approximately $14.6 billion a year more expensive, according to some estimates. What we need, therefore, is a game-changer. Something to radically alter the debate, to change the way we think about biodiversity.

Wednesday, September 2, 2009

The Three Curses of CSR: Curse 3 - Uneconomic Role

Curse 3: Uneconomic CSR

If there was ever a monotonously repetitive, stuck record in CSR debates, it is the one about the so-called ‘business case’ for CSR.

That is because CSR managers and consultants, and even the occasional saintly CEO, are desperate to find compelling evidence that ‘doing good is good for business’, i.e. CSR pays! And indeed, the lack of sympathetic research seems to be no impediment for these desperados endlessly incanting the motto of the business case, as if it were an entirely self-evident fact.

The rather more ‘inconvenient truth’ is that CSR sometimes pays, in specific circumstances, but more often does not. Of course there are low-hanging fruit – like eco-efficiencies around waste and energy – but these only go so far.

Most of the hard-core CSR changes that are needed to reverse the misery of poverty and the sixth mass extinction of species currently underway require strategic change and massive investment. They may very well be lucrative in the long term, economically rational over a generation or two, but we have already established that the financial markets don’t work like that; at least, not yet.

Sunday, August 23, 2009

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.

Tuesday, August 18, 2009

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 ...

Sunday, July 19, 2009

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 ( . 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.

Saturday, June 20, 2009

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.

Tuesday, June 2, 2009

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.

Monday, May 11, 2009

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.

Sunday, April 5, 2009

Earth Hour: A Tipping Point?

Did you participate in Earth Hour - switching off your lights from 8.30-9.30 pm on 28 March? If you did, you were one of "hundreds of millions" who joined WWF's campaign to "Vote Earth". But did it make a difference, or was it just a feel-good piece of "green spin"?

What is Earth Hour?

Earth Hour began in Sydney in 2007, when 2.2 million homes and businesses switched off their lights for one hour. In 2008 the message had grown into a global sustainability movement, with 50 million people switching off their lights. Global landmarks such as the Golden Gate Bridge in San Francisco, Rome's Colosseum, the Sydney Opera House and the Coca Cola billboard in Times Square all stood in darkness.

In 2009, hundreds of millions of people – from over 4,080 cities and towns across 88 countries - joined in, according to WWF. In the UK, famous landmarks like Big Ben, Buckingham Palace, Tower Bridge, the Millennium Stadium, Stormont and Edinburgh Castle all switched off to support the event. Around the world, iconic landmarks, like the Great Pyramid of Giza, the Eiffel Tower and even Las Vegas all joined in "the big switch-off".

What was the Impact?

I expect an official WWF analysis will emerge, but according to news reports, the Philippines saved 611 MWh of power during Earth Hour, involving 15 million Filipinos in 650 major cities. This placed them ahead of the rest of the world, with Greece placed second with 484 cities and towns participating, followed by Australia with 309. In South Africa, 100,000 people switched off 4.7 million 60 watt lightbulbs, saving 400 MWh. The best-performing city was, apparently, Christchurch in New Zealand, which reported a 13% decline in energy consumption.

Impressive statistics and quite fun to play with. For example, Pulse Energy reports that "if the actions taken for one hour of energy savings tonight [in Vancouver] were repeated for an entire year, enough energy would be saved to make six round trips on the SkyTrain between Vancouver and Paris. On the other hand, in Calgary in Canada, electricity use went up 3.6% during Earth Hour (they blame the weather). I also saw comments like, "Surely candle-power is much less energy efficient than fossil fuels?" (it is). But getting too caught up in the thermodynamics or the numbers, I think, entirely misses the point.

My 10 Reasons Why

Sceptics are well justified in shouting 'green spin!' After all, everyone went straight back to their normal fossil-fuel guzzling ways after the hour was up. And yet, I remain a total fan of Earth Hour. Here are my "10 Reasons Why":

  1. Politics - The mass public demonstration of support for action on climate change gives the world's politicians space to maneuver in making the difficult transition to a low-carbon economy.
  2. Focus - Earth Hour is not focused on 28 March, but on building pressure on the world's governments when they meet in Copenhagen in December 2009 to work out a Post-Kyoto deal.
  3. Governance - In the face of significant corporate lobbying, civil society's ability to mobilise "hundreds of millions"  acts as a vital counter-balance in national and international governance.
  4. Awareness - The widespread media coverage of the event means that it is not just "preaching to the converted", but raising broad public awareness of the seriousness of climate change.
  5. Downshifting - Going "back to basics", even for just an hour, is a great reminder of what is important in life, without the distractions of all of modernity's electricity-gizmos (TVs, computers, etc.).
  6. Empathy - It also gave people pause to think about the billions in the world who have no electricity. Hence, finding a sustainable energy solution needs to be linked to poverty reduction.
  7. Community - All around the world, communities and families were drawn together behind a common cause, as so often happens voluntary events.
  8. Action - The fact that Earth Hour required action - i.e. switching off lights and other appliances - sends an important psychological message that we need to go beyond talking.
  9. Hope - Showing that we can make a difference, and that tackling our energy crisis is possible provides a critical antidote to feelings of hopelessness and disempowerment in the face of climate change.
  10. Tipping Point - Earth Hour plays a crucial role in edging us towards a tipping point of public concern and political action on climate change, after which we will see the rapid transformation we need.


My feeling is that Earth Hour is not a once off, but rather the start of a tidal change. In much the same way that Earth Day, which Greenpeace started on 22 April 1970, played an important part in building momentum for the environmental movement, I believe Earth Hour will play a crucial role in fueling the post-carbon movement.

P.S. Switch!

For those with poetic leanings, you may wish to read the poem I wrote by candlelight during Earth Hour (which one Facebook friend called "an incorrigibly romantic way to spend Earth Hour"). It is called Switch!

Acknowledgement: Painting by Kimberly H.

Saturday, March 28, 2009

Googlization: For Better or Worse?

I have been intrigued by the twittering and gnashing of teeth over the past week or so over Google's launch of its Street View maps for 25 cities in the UK. This case illustrates the CSR-related dilemmas faced by many companies today. In this blog, I look at the basic facts, the pros and cons and the implied questions for CSR.

What is Street View?

Street View is a 360 degree photographic panoramic view of the streets, which can be accessed through Google Maps in the cities in which it is available. The photos are about a year old and faces and number plates are blurred out. Google believes this is simply an evolution of mapping, giving people more useful and accurate information about their travel routes and destinations. Although new to the UK, it has, I believe, been available in the US for some years already.

What are the Objections?

A number of thematic concerns have emerged in the post-launch hulabaloo:

  1. Privacy - The most common objection is that this represents an invasion of privacy and a commericalisation of public space. Somehow, people feel vulunerable, even violated, by having photos of their homes, cars and in some cases themselves or their children, made public.
  2. Security - There are concerns that Street View creates a tool for criminals (burglars and perhaps peidophiles) to search for, target and study their victims homes - do they have a burglar alarms, where are the windows and doors, are there children playing in the garden?
  3. Consultation - Individual members of the public were not consulted, or asked for permission, before Google took photos of their home. They did this using a modified car, with a special mounted camera that drove down each street taking 360 degree photos.
  4. Googlization - There is a deep mistrust among some portions of the public who believe Google is somehow taking over the world, invading our lives, like some sinister, evil meglomaniac - the latest in a long line of corporate colonisers and cultural imperialists, like Coca-Cola and McDonald's.

What is Google's Response?

Google is anything but apologetic. It doesn't believe it is doing anything wrong. Here are their reasons why:

  1. Privacy - Since the photos are not live, they are taken in a public space, faces and number plates are blurred out and house owners have the right to request that their house image is removed from Street View, Google believes it is not infringing on people's privacy.
  2. Security - Besides the pictures being more than a year old, any criminal could walk down a street and view the same house details without breaking any laws. Criminals use mobile phones and cars to help them commit their crimes, so should we ban mobiles and cars? Why should maps be different?
  3. Consultation - There is nothing in law that requires anyone to get permission to take photos in a public space. Also, Google consulted with all the relevant UK authorities (including security and police departments) and got given the green light.
  4. Googlization - Google believes it is popular because it offers useful products and services for millions of people. Google's motto is to "do no evil" and its vision is to make all knowledge freely available to everyone on the planet. It also has ambitious plans to make renewables cheaper than fossil fuels. Is this the picture of a monster?

What are the CSR Implications?

This all raises fascinating questions for CSR, for example:

  • Legal Compliance - Google is not doing anything illegal, but CSR is about going beyond the law. What does "beyond compliance" mean in this instance? Does giving house-owners the choice to remove their images go far enough?
  • Transparency - The launch of Street View came as a surprise (a shock even!) to most people in Britain. Where was the public information, let alone consultation, in the lead-up to the launch? Would there have been less reaction if the public was made more aware?
  • Governance - Do companies need to consult stakeholders individually on every issue (surely this is impossible)? If the government is meant to represent the public, is it enough for companies to consult government agencies? Would it have worked better if other stakeholder groups were consulted?
  •  Power - At what point does corporate power and influence become dangerous? Google is providing vast free-to-the-public knowledge resources, but at the same time we are placing increasing reliance on one corporation to look after our personal details and private documentation. Isn't this risky?
  • Demand - Isn't it hypocritical to demand that Google change, when consumers are clearly demanding and enjoying their services? Surely a public harm would need to be clearly demonstrated (the equivalent of poor labour conditions for low-cost retailers, or health risks for fast-food chains)? Even then, government intervention is difficult in the face of widespread public support.

Google seems content to ride out the public mini-storm, confident that Street View will survive and thrive on its own merits, as it has done in America and elsewhere. But there seem to be some clear CSR lessons they could learn about consultation, transparency and increasingly worrying perceptions of their "Big Brother" mantle.

Wednesday, March 18, 2009

I have now joined the future

This is a green post. It is recycled from my reporting blog. It's a sort of lighter version of Wayne's excellent analysis of the REAL future of Codes and Standards, though it was actually written before i know that the future would feature in both posts it is:

Guess what ! I have now officially become a member of the future.

I participated yesterday in what was for me a very futuristic experience - yes - you guessed .. a WEBINAR!! I like to think i am a computer-literate techie sort of person, but to date, I have resisted all these millions of webinars and things, mainly because of the hassle factor (getting hooked up), the earphones factor (flat ears) , the poor connection factor (crackles, buzzes and beeps) and the half-sentence factor ( hello, welcome to.................. today............will discuss .................important to note that ....................very significant as you can see on slide 3 that....................) . But the temptation of hearing code-guru Deborah Leipziger was too great to resist. So, albeit a little late (10 yr old daughter needed mom to buy her hundreds of $$$$$ of clothes for her birthday party at the weekend), I accepted the CSR International invitation to join the first in the impressive line-up of webinar events scheduled until the end of 2009 (this is great forward planning - unlike my local culture where planning more than 3 hours ahead causes chronic migraine)

Deborah Leipziger is the first lady of corporate, industry and cause-related codes of conduct and ethical standards. Her Code Book created order and understanding of the relevance and importance of framing conduct expectations and existing best practices. A sort of Code Bible. Amen.

How is this connected to Reporting ? No CSR report today is complete without reference to a Code of Conduct and in many cases, declaration of a string of external codes that the corporation adopts. My guess is that on average, companies have about 5 or more different codes they try to observe in their businesses.

A quick look at some CSR reports proves me mainly right:

  • ExxonMobil 2007: corporate code(s) of conduct , global responsible care charter, global compact, voluntary Principles on Security and human Rights, millenium development goals, ILO convention on Indigenous peoples
  • Westpac Banking Corp 2008 : UNPRI, principles for doing business, Equator Principles, ASX principles on Good Corporate Governance, sustainable supply chain managment code of conduct, GRI, UNEP Finance Initiative, CEO Water Mandate
  • Sony 2008: Sony Group code of conduct, EICC code of conduct (only 2 ? did i miss a few?)
  • Diageo 2008: Global compact, Dublin Principles, Business charter for sustainable development, CEO Water Mandate, internal codes of ethics, GRI

The harmonization of codes was one point raised in the discussion - though a key part of the value of the Code is the process by which it was created. So maybe we need lots of processes but less codes ?

Anyway, back to the view from the top - few insights from the guru:

  • ISO 26000 is not cutting-edge but it is broad and covers most of the range of CSR issues . It is right to go the guideline route and not the certification route, though certification at a national level in local language could be an opportunity. Some national certification bodies are already starting to consider its use - Portugal and Denmark for instance.
  • Sectorialization is becoming more popular and useful as a tool for different industries such as the electronics industry, automotives, forestry, financial sector tools such as the Equator Principles.
  • Training is essential to ensure application and assimilation of codes - this is often underestimated
  • Impact analysis including gathering of base line data is often overlooked but is an important tool in understanding both the effectiveness of the code and the unintended consequences of implementation.
In response to my question, What about a code of conduct for CSR professionals or are we exempt? there was a knowing smile and an admission that the cobbler forgot to make himself a pair of shoes, or whatever the saying is. There was the question of how do you define a CSR professional . Right now, as long as its polite, I dont mind. :-)
Anyway, i have to end this blog post now as i have to go off and write another code....
Thanks to Deborah and to Wayne Visser, CSRI founder and webinar maestro

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at: !

The Future of CSR Codes and Standards

Reposted from the primary CSR International Blog:

csr_codebookYesterday, we had an excellent webinar with Deborah Leipziger, author of "The Corporate Responsibility Code Book" and "SA 8000". It got me thinking about the future of CSR codes and standards, and if indeed they have a future. In this piece, I look at the lessons we have learned so far (both positive and negative) and what part CSR codes and standards play in an emerging New Governance model.

Positive Lessons

Let me start with what I think we've learned about CSR codes and standards over the past 30 years or so.

  1. Codes can be a useful activist tool - One of the first CSR codes was the Sullivan Principles, launched by Reverend Leon Sullivan in 1977 to give companies operating in apartheid South Africa a code of ethics. Another example is the CERES Principles, launched in 1989 as the Valdez Principles after the Exxon Valdez oil spill. Both these CSR codes can claim their fair share of success in shifting awareness and behaviour.
  2. Codes can help to generate consensus - The benefit of CSR codes and standards like the ICC Business Charter for Sustainable Development (1992), the UN Global Compact (2000) and arguably the forthcoming ISO 26000 (2010) is that they create a common language and set of principles that broad constituents of companies feel comfortable with and can commit to voluntarily. Their effectiveness at changing behaviour is questionable.
  3. Codes can embed incremental improvement - What CSR codes and standards like EMAS (1993), ISO 14001 (1996) and OHSAS 18001 (1999) have shown is that process-standards are extremely effective in bringing about continuous improvement in organisations and bringing CSR issues like environment, health and safety closer to the operational management of companies. Often change is slow and patchy however.
  4. Codes can change industry sectors - Some of the most effective CSR codes and standards have been industry- or sector-based, such as the Forest Stewardship Council (1993), the Kimberly Process (2003) and the Equator Principles (2003). Their strength lies in changing the rules of the game for an entire sector, which eliminates first-mover disadvantage. They also enjoy a common language and high relevance.

Negative Lessons

There are also downsides to CSR codes and standards, which we have come to realise.

  1. Codes create auditing and reporting fatigue - Speak to anyone in business and they will complain about how much time and expense CSR audits and reports are costing them. They have a point, since the proliferation of CSR codes and standards (there are over 100 in "The A to Z of CSR" book that I co-edited) usually each have their own certification and disclosure requirements, despite considerable overlap.
  2. Codes create confusion in the market - The excess number of CSR codes and standards creates noise in the mind of the customer and the financial analyst. If a company has ISO 14001 but is not a signatory to the CERES principles, is that good or bad? What is the difference between FSC and Rainforest Alliance certification? Confusion in turn creates distrust, which is ironically what CSR codes and standards are trying to build.
  3. Codes can be a mask for irresponsibility - When we look at the collapse of Enron and Worldcom, the current banking crisis, or the reluctance of oil companies to go renewable, it is absolutely clear that CSR codes and standards (which all these companies had or have) can often mask a deeper unsustainable business model or irresponsible corporate culture. Despite genuine efforts by CSR departments, their activity remains marginal.
  4. Codes are no substitute for regulation - The voluntary nature of CSR codes and standards means that they will inevitably only apply to the progressive few, and even those may choose to dilute their commitments during financial hard times, or hide behind the "lack of teeth" (i.e. sanction) in most CSR codes. Voluntary action is hardly ever effective in properly internalising externality impacts or creating widespread change.

Future Prospects

With the usual caveats that the future is unpredictable, it does seem to me that there are several trends in CSR codes and standards that indicate the direction of their evolution.

  • Principle-based codes will consolidate - The great victory of the past 20 years has been the increasing consensus on what CSR principles should underscore business activities. We can expect a few of the principle-based CSR codes (like the UN Global Compact and the Global Reporting Initiative) to win through and the rest to wither away, or become marginal actors for big business.
  • Process-based codes will struggle - The markets for process-based standards like ISO 14001 will continue to grow in developing countries, but quickly reach saturation point, as they have done in the developed world. The reason is that incremental improvement can only get you so far and then you need systemic change, which requires changes in the market structure or the policy framework.
  • Performance-based codes will strengthen - Companies will come under increasing pressure to demonstrate their CSR performance in absolute, measurable terms (since process-based codes have essentially failed to solve our global problems). Hence, CSR codes like SA 8000 and emerging standards around carbon emissions will be in higher demand and more trusted.
  • Sector-, product-, issue- and geography-based codes will expand - We can expect to continue to build on the progress and relative success of specific CSR codes and standards (as opposed to generic principles), whether they be for a specific sector (e.g. pharmaceuticals), product (e.g. palm oil), issue (e.g. water) or geography (e.g. China). They will be an elaboration of the generic codes, applied to a specific, actionable context.

A New Governance

My fundamental belief is that CSR codes and standards will not disappear, because they form part of an emerging new form of governance, based on a multi-stakeholder approach. They will not be a substitute for legislation (as many from business hoped over the past 20 years), but rather a complimentary mechanism for delivering change. Nor will they be the panacea for the world's problems, but rather an important piece in the jigsaw of solutions.

Behind this question of governance is the crisis in institutional confidence, i.e. the lack of trust by the public in the major institutions of society, including both government and business. Even NGOs are under increasing scrutiny and will see great pressure to demonstrate accountability. CSR codes and standards, if designed and implemented well, can help to bridge the trust-gap. If done poorly, they will only widen and deepen the chasm.

The secret, I believe, is not in the "what" but the "how" of CSR codes and standards, i.e. less about the content (what the code says) and more about the participative process through which they are created; less about the signatories and more about the ways the codes are implemented among the workforces and communities in which companies operate. In a nutshell, CSR codes and standards of the future will be less about words and more about actions.