The corporate responsibility movement is hitting against real limits
because of the distance of most initiatives from core business. In the
face of the Millennium Development Goals, CSR is providing precious
little in the way of a substantial business contribution towards
tackling some of the most significant development issues facing human
This is the key message of a new report by Sustainability, produced for the Global Compact, called 'Gearing Up'. The report argues that in order to address the fundamental questions of how to achieve real scale and impact, companies have to shift their focus from individual initiatives and programmes towards a more effective global governance framework.
Although many CSR initiatives are evolving in the right direction, with companies beginning to take action on an increasing number of key issues, the fact is that such action is often disengaged from any long-term strategy. Many leading companies pursue disjointed and conflicting activities. Whilst they employ environmental management systems, their lobbyists seek to lower legal environmental standards, for instance.
The report takes an important step towards highlighting one of the most difficult questions for the CSR movement overall - what is it for? In the UK, it began over 20 years ago when senior business leaders responded to a spate of inner city riots in the conviction that business had to invest in the health of society in order to be able to carry out healthy, long-term business. This has hardly ever led to any kind of far-reaching strategy for economic regeneration or urban renewal. More often it has been expressed in terms of short-term actions focused on easily visible symptoms of the problem. But how far does it go? Should we expect CSR to provide answers for poverty, hunger, and environmental sustainability issues across the world? Is CSR only worthwhile if it triumphs where government, civil society, and communities across the world have so far failed?
For the report's authors, the answer is essentially "yes". The implication of 'Gearing Up' is that CSR is the business contribution to sustainable development. Not only that, it has to be carried out in full knowledge that in many parts of the world governance is failing - and in the absence of governments showing real leadership, companies may be best placed to act as the catalyst that makes the difference.
Can companies play a real part in helping to achieve major global objectives, such as the Millennium Development Goals? Only if they focus on changing some of the rules of the game. "Companies need to foster progressive alliances with other business actors, civil society organisations and - above all - governments. The aim: to help scale up CR by linking into system level change, particularly in governance frameworks."
Why have the commitments of leading companies not yet translated into more significant progress on sustainable development goals? A consultation by Sustainability came back with a number of reasons. Only a fraction of companies world-wide are committed to corporate responsibility. What they do is not necessarily well focused.
Of course, the achievements of some of those that are can be extremely impressive. For instance, on climate change, many companies have committed to - and achieved - significant reduction policies. DuPont, for instance, achieved its target of reducing emissions by 65 percent from 1990 levels.
But absolute emissions have increased nearly 9 percent during the same period overall. Andre Fourie of South Africa's National Business Initiative said of business: "They think more about what goes into their GRI report than how they connect to systemic change. Yet, ultimately, this is not about reducing CO2 emissions by 1% but about helping build a system that reduces society's total emissions by 60%."
This is not easy stuff. On the one hand, it seems to be rather unfair to begin castigating the CSR movement for not having achieved what it never set out to achieve - single-handedly delivering the human race from its own folly. On the other, with business providing the engine of wealth creation that has been such an important part of reducing absolute poverty, it is inconceivable to see solutions that don't harness it. But, as the authors contend, this will only happen if CSR becomes core business.
Rather than finding market failures that can be exploited to make major profits, CSR champions should be finding solutions to market failures that make it more difficult for them to operate sustainably. Then they need to persuade others - particularly governments - to play their part in implementing those solutions.
The implication of the Sustainability report - as well as the messages from many of the campaign groups - is that unless CSR can begin to address this very soon, it will lose its momentum and legitimacy. And yet can this be the case when there is so little sign of the other necessary actors showing the necessary leadership.
According to the report, governments need to play their part in changing the rules of the game to make a meaningful difference on areas such as climate change, world poverty and human rights. Civil society needs to provide consistency in how they target high impact companies, and to be transparent and accountable in turn, whilst focusing on system-level reforms rather than ad-hoc changes. So far, there are few examples of governments or NGOs making the same kind of step change showed by DuPont.
What's needed is a greater consensus on what the end goals really are. If corporate social responsibility is the business contribution to sustainable development - can we agree that the millennium development goals are the priorities for action? How much can be achieved by leadership companies innovating and changing the terms of reference for their marketplace? And how much needs to become a new minimum standard, that can only be put in place by real action to change the market signals which drives business action?
Since we have no definitive agreement over which of these are the right questions, it's hardly surprising if CSR is not delivering the answers. However, if CSR is now about core business - as surely it is - this is where the focus now shifts.
'Gearing Up' is available from Sustainability's website.
An Article from Business Respect, Issue Number 77, dated
22 Aug 2004
By Mallen Baker