Redefining CSR as a process that starts at the heart of the company
An Article from Business Respect, Issue Number 60, dated 27 Jul 2003
By Mallen Baker
Mark Goyder has laid down a challenge to the movement for corporate social responsibility in "Redefining CSR", produced by the UK's Centre for Tomorrow's Company. Widely reported on publication as an attack on the "box-ticking" approach of some advocates, it is in fact a much more valuable review of the difference between companies who take the message into the heart of the company and those who simply comply with today's expectations whilst leaving the core untouched.
Goyder sees a key distinction between what he describes as 'compliance CSR' or a more fundamental process that he calls 'conviction or values-led CSR'. Compliance CSR sees a company undertaking the community programmes, the ethics statements, the environmental management systems purely to keep up with external demands. One might think that such a company was a long way forward. But the case of Enron - a company that had a good profile for its compliance programmes - illustrates the point of how action without the guiding light of real values and substance can unravel in the harsh spotlight of public accountability.
For Goyder, the correct interpretation of CSR is the expression of a company's purpose and values in all its relationships. Examples of such a values-led approach appear, however, to be the exception rather than the norm.
But there is a problem here. The flaw at the heart of this argument is that the values-led approach depends on top quality leadership to be effective. Goyder himself makes the point: "A well-led organisation will always seek to create the optimal value in all its relationships. In a way, that is simply good leadership. The most impressive corporate leaders have always been those whose vision of a successful business stretches beyond the product and the profits to their positive impact on the world around them."
The promotion of the features of good leadership will always, of course, be a worthwhile activity. However, a model of sustainable development that depends on enterprises being universally well-led is doomed to failure, since the majority simply do not meet this criterion. Should any expression of corporate social responsibility be held to be invalid if it is not fully incorporated into the corporate DNA, even if it helps the company to meet targets on environmental and social impact? It is a difficult question.
Of course, in some cases it is about being able to tell the truth about a company by what it does rather than what it says. Goyder gives the example of a company in his experience that trumpets its employee volunteering and yet within which it is well known that such activity is not something to be engaged by the ambitious manager intending to progress. There must be a difference between companies that undertaken CSR without having a strong values-led approach and those that undertake it purely cynically and for show.
Goyder has some extremely valuable points to make about confusions that exist about such concepts as the 'triple bottom line'. For instance, some companies claim in their reports that the economic part of the triple bottom line is where they show the creation of shareholder value, but this does not really stand up within the concept of sustainable development. He says: "Wise companies will restrict their use of the phrase 'triple bottom line' to a description of the economic, social and environmental impact of the company on the world around it: they will not use it as an umbrella term to describe the totality of everything that they measure and report."
How companies report is an important part of the mix, and the move towards the Global Reporting Initiative (GRI) across the world is not helping. "It is clear from this that GRI is not attempting to cover the whole crucial issue of intangibles reporting. Its focus is not, and cannot primarily be, on helping shareholder value analysts better understand where the future wealth of the company will be created. So companies will still need to develop other measurement and reporting mechanisms beyond the scope of GRI's thinking once shareholders wake up to the importance of relationships and leadership to the future success of their investment.
"That is not the only problem. If you look at the social and environmental indicators of GRI, many of them are based on the external, societal codes that business is expected to comply with. For example, under the heading 'Labour relations' the indicators include: 'participation in tripartite bodies, percentage of organisations represented by independent trade union organisations, and policies for formal worker representation.' These, and many more examples, are areas where views around the world will differ about what represents progress in social responsibility. If the number of worker representation mechanisms increases, is that a good thing or a bad thing? Does it imply a reduction in entrepreneurship or an increase in involvement?"
Goyder gives the example of ABB as one company that had tried to produce a GRI report only to find its mix of indicators did not provide the tools to give a meaningful account of the company's unique character and progress.
The trouble is that legislators are now moving onto this territory and the GRI provides a crude tool to apparently meet compliance objectives - a point that has just been confirmed by the actions to do just this by the JSE in South Africa. Goyder worries that the result will be an increase in the 'push' of compliance, but no accompanying 'pull' by businesses internalising the values society seeks to promote.
The text is not perfect. There are certain statements made which seem rather rhetorical and unproven. Overall however, Mark Goyder provides a useful, thoughtful narrative in 'Redefining CSR'. If successful, it should prompt many the CSR movement to tighten their understanding of what makes a best practice company, and what are the limits of expectations of 'one-size-fits-all' compliance frameworks.
"Redefining CSR", Mark Goyder, Centre for Tomorrow's Company 2003.