Corporate Responsibility Forum

What is the full mission for responsible corporations?

2006-03-24T08:01:00.000+01:00

Is the only mission of the corporate world to make money for shareholders?

Corporations are human endeavors, and all human endeavors should benefit our society and reflect our morals. They should provide more than just investor return.

There are many ways that corporations do benefit society:

They provide jobs
They produce goods and services that people want
They provide a return to investors

But corporations must in addition meet a higher moral standard:

To minimize activities that harm life or the environment
To be truthful
To bring joy to life and reduce suffering, even if in very small and mundane ways
To stop encouraging people's craving or addiction

The World Moral Movement has a collaborative effort to define corporate responsibility based on morals shared by all religions and secular philosophies. The above views are based on the World Moral Movement Corporate Responsibility Wiki page, which is open for further discussion and debate.

Corporate Responsibility and Competitiveness

2005-05-27T15:17:00.000+02:00

The business case for Corporate Social Responsibility has been debated for many years. In a survey of the subject, Roger Cowe from Royal Dutch/Shell Group finds that while links to national and regional competitiveness are less clear, governments and think tanks are enthusiastic about the idea.

It looks like a no-brainer: if there is a business case for corporate social responsibility and enough companies take it up, that will make whole economies more competitive – so governments should be encouraging corporate social responsibility in pursuit of national economic strategies. But brains are needed.

Quite apart from the “ifs” in this argument, there are plenty of uncertainties:

Does the case for corporate social responsibility apply to all kinds of company?
Can benefits aggregate across an economy or is it a zero-sum game?
Does it introduce inefficiencies when scaled up to the level of the economy as a whole, as classical economics would argue?

It is increasingly common to talk about the triple bottom line at the level of the economy rather than the firm. Read on...

Study reveals CR importance growing in decision-making

2005-03-16T14:30:00.000+01:00

After the accounting scandals, governments have introduced new legislation, new codes of conduct have been developed and corporate boards have been 're-balanced' to include more independent members.

The over-riding goal in every case has been to restore investor confidence. However, these changes have also brought with them the realisation that good governance is a key topic not only for shareholders but also for a much broader set of stakeholders, including customers, employees, suppliers and the wider community.

That in turn has made the term corporate responsibility (CR) much more familiar than ever before in boardrooms across the globe. The line is far from solid, but CR can be seen as the extension of governance beyond simple compliance to embrace broader social values.

A recent survey from the Economist Intelligence Unit, produced in cooperation with Oracle Corporation, reveals that more business executives and corporate investors are factoring corporate responsibility into their decision-making. Read on.

Prahalad and Corporate Responsibility

2005-02-17T15:51:00.000+01:00

In his important new book: The Bottom of the Pyramid, management guru C.K. Prahalad recommends a private sector and market-based approach for fighting world poverty.
I wonder do we agree as Corporate Responsibility Forum that:

The poorest people should become an integral part of the work and of the core business of the Private Sector?
The Bottom of Pyramid markets cannot merely be regulated to the realm of CSR initiatives?

Bestselling Corporate Responsibility Books

2004-12-29T14:44:00.000+01:00

Award for Excellence for Cause Related Marketing

2004-12-29T10:05:00.000+01:00

"Businesses across the UK are being invited to enter the Business in the Community's Awards for Excellence 2005, in association with the Financial Times, sponsored by the Department of Trade and Industry, supported by Marks & Spencer, Company of the Year 2004. The categories include the Dollond & Aitchison Cause Related Marketing Award which recognizes, rewards and celebrates programmes when businesses have used the power of the brand in partnership with charities or causes to address key social issues.

Last year's Award was won by BT for its partnership with ChildLine. Blockbuster Entertainment was Highly Commended for its partnership with Starlight Children's Foundation.

Cause Related Marketing is defined by Business in the Community as a commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product or service for mutual benefits. It is an additional tool for addressing the social issues of the day through providing resources and funding whilst at the same time addressing business marketing objectives.

The Business in the Community Awards for Excellence are the most prestigious UK awards recognizing companies for integrating responsible business practice into their mainstream operations resulting in a positive impact in the workplace, the marketplace, the environment or the community. Now in their eighth year, they are the primary means by which Business in the Community identifies, celebrates and communicates good practice in corporate responsibility.

Further information about Business in the Community and the Award can be found at the website www.bitc.org.uk.

Five maturity stages of CR

2004-12-10T13:47:00.000+01:00

Simon Zadek provides a useful best practice five-stage maturity model of how organizations deal with CR (HBR Dec04 - 'The Path to CR')

Defensive: deny practices, outcomes or responsibilites ("It's not our job to fix that")
Compliance: adopt a policy-based compliance approach as a cost of doing business ("We'll do just as much as we have to")
Managerial: embed the societal issue into core management processes ("It's the business, stupid")
Strategic: integrate the societal issue into core business processes ("It gives us a competetive edge")
Civil: promote broad industry participation in CR ("We need to make sure everybody does it")

Oil Companies ranked on CSR

2004-09-14T09:06:00.000+02:00

Independent investment research firm Innovest Strategic Value Advisors (www.innovestgroup.com) has released the latest of its sector-based assessments of how companies perform on CSR. The report ranks 33 companies in the oil and gas industry.

Companies that received the highest ranking include Norsk Hydro, BP, Suncor, and Royal Dutch/Shell.

Companies that received the lowest rankings include Yukos, PetroChina, Marathon, and Surgutneftegas.

The report discussed escalating climate change risk, access to resources, C. governance scandals and the shift towards new, lower impact products.

Innovest used its proprietary EcoValue 21 environmental rating methodology to assess the relative environmental performance, or "eco-efficiency," of the 13 companies. The rating is based on more than 60 different aspects of environmental risk, opportunity, and management, including positions on climate change, renewable energy, fuel cells, natural gas, emissions, and social management in international operations.

Dow Jones Sustainability Index

2004-09-02T10:31:00.000+02:00

Today the new composition of the Dow Jones Sustainability Index has been announced.

SAM today announced the results of the annual review for the Dow Jones Sustainability Indexes (DJSI). Effective with the opening of equity markets on September 20, 2004 the Dow Jones Sustainability World Index will again include over 300 companies from 24 countries that lead their industries in terms of corporate sustainability. The pan-European sustainability benchmark – the Dow Jones STOXX Sustainability Index – will include 167 companies from 13 countries. Both indexes will continue to closely mirror the sector distribution of the corresponding mainstream equity benchmarks.

The annual review of the DJSI family is based on a thorough assessment of companies’ economic, environmental and social performance and accounts for more than 50 general as well as industry specific criteria in each sector. Its results will influence the investment decisions of asset managers in 14 countries who have licensed the DJSI family as objective benchmarks and underlying for a variety of sustainability-driven portfolios. In total, these licensees currently manage close to 3 billion EUR in DJSI-based funds, structured products, segregated accounts as well as an exchange traded fund that is listed on Euronext.

Launched in 1999, the Dow Jones Sustainability Indexes track the financial performance of the leading sustainability-driven companies worldwide. Based on the cooperation of Dow Jones Indexes, STOXX Limited and SAM Group the indexes provide asset managers with reliable and objective benchmarks to manage sustainability portfolios. The Dow Jones Sustainability World Indexes DJSI World) cover the top 10% of the biggest 2,500 companies in the Dow Jones World Index in terms of economic, environmental and social criteria. As a benchmark for European sustainability investments, the Dow Jones STOXX Sustainability Indexes (DJSI STOXX) cover the leading 20% in terms of sustainability of the companies in the Dow Jones STOXXSM 600 Index. The Dow Jones EURO STOXX Sustainability Index (DJSI EURO STOXX) is the Eurozone subset of the DJSI STOXX and, thus, tracks the financial performance of sustainability leaders in this particular region. The selection of index components follows a rules-based process defined in the DJSI Guidebooks. It is based on a thorough assessment of general and industryspecific sustainability criteria. The analysis is verified by an external auditor. Full details about the design philosophy, review methodology and index components are freely available at www.sustainability-indexes.com.

IR and CR

2004-08-26T09:35:00.000+02:00

In an interesting though far from simple article, Will Barret (Research Fellow with the Centre for Applied Philosophy and Public Ethics at the University of Melbourne) explains that the notion of CR dominates business ethics, in education and in practice. The relationship between the moral R. of corporations and that of their individual and collective members is an ongoing philosophical issue, ultimately riding on theories of moral agency. Whether corporations possess moral agency or not, C. activity undeniably has morally significant effects. In the article Barret discusses moral R. and how it gives rise to accountability. He then outlines the connection between R. and moral agency, and associated theoretical difficulties. Barret finally gives 5 reasons why corporations can be accountable without necessarily being able to make rational decisions:

First, and perhaps a little facetiously, Barret recommends you look at some C. mission statements. They invariably mention the corporation's aims, commitments, and activities. They talk as if the corporation has the properties required for rational decision-making.
Second, we describe systems and processes as rational in cases where no individual or collective could have produced the outcome.
Third, allowing that only the members of corporations have the required capacity, C. accountability might emerge from individual capacity, without being reducible to it. The idea that corporations are accountable doesn't require a theory of C. agency, but rather a causal history.
Fourth, corporations satisfy whatever is required to meet the demands of legal accountability, so we already have a sense of C. accountability.
Fifth, and finally, a corporation can be morally accountable for some state of affairs without having the capacity for rational-decision making, as long as people who possess that capacity can meet the demands of accountability on behalf of the corporation. Those people may themselves not be morally responsible for the relevant state of affairs.

Read Barret's full argumentation

London Stock Exchange announces "CR Exchange"

2004-08-20T09:55:00.000+02:00

The London Stock Exchange (LSE) has developed an online disclosure tool to make it easier for firms to comply with CR demands. The tool will prompt firms to provide details concerning a wide range of policy areas. This will create a unified resource to which institutional investors can refer requests for information and so avoid duplicated effort. Topics covered include health and safety issues and supplier relationships.

This so called "CR Exchange" (CRE) allows companies to save time by disclosing only once to an audience of many – and provides analysts, fund managers and research agencies with a better tool for researching companies’ policies and practices in areas of CR.

The system is said to be compatible with:
- GRI (Global Reporting Initiative)
- EiRIS (includes FTSE4 Good)
- SAM Dow Jones (Sustainable Asset Management)
- BITC (Business in the Community)
- NAPF (National Assoc of Pension Funds)
- ABI (Assoc of British Insurers)
- The 2003 Combined Code

There is a cool online demo also.

2004 best MBA paper in C. Citizenship

2004-08-19T11:20:00.000+02:00

A paper entitled "Thinking Strategically About CR: The Merits and Limitations of the Value Creation Approach" by Bradley Cameron Smith (Rotman School of Management, The University of Toronto) has won an "Honorable Mention for the 2004 best MBA paper in C. Citizenship".
In this indeed interesting paper, Smith presents a number of innovative concepts that can be integrated into an assessment of a corporation’s CR strategy. Two of these models – Laszlo’s approach to value creation and the real options valuation technique merit further study, according to Smith.
Smith concludes that his analysis demonstrates that corporations are capable of framing the perceived threats of CR as potential opportunities to capture and create value. The downside is that this new approach faces some concerns.

Complex alternative valuation techniques, such as real options, must be used to better assess the total value of CR investments.
Creating organizational alignment is difficult and old cultures are unlikely to adapt until local managers believe the link between CR and business strategy.
Furthermore, it must be ensured that expectations of CR initiatives do not exceed capability to deliver on those initiatives, both internally and externally. Failure to do so may diminish credibility to stakeholders, hinder changes in the organizational culture, and damage the brand.

Read the paper

12 Critical Success Factors for CSR

2004-07-03T10:18:00.000+02:00

The EU's Multi Stakeholder Forum on CSR completed its 20-month mandate on 29 June 2004 after delivering its final Draft summary report and recommendations. This final report brings together the conclusions submitted by the individual round tables.
The four Round Tables identified 12 critical success factors for credible and effective CSR:
1. Commitment from key people – directors, owners, senior managers;
2. Ensuring that the values and vision of the CSR approach are integrated into the business and its culture;
3. Integrating the CSR approach and any associated practices and tools, with the C. strategy, core business, mainstream management processes and policies, and
everyday operational practice. This might mean adapting existing systems, or adopting or developing new ones;
4. Setting appropriate goals or targets, related to the core business, developing a staged plan for achieving them (including some quick wins), evaluating progress towards them, and communicating this appropriately;
5. Communicating about the approach, strategy, aims or activities in a transparent and meaningful way. Such communication is also a way of helping to magnify the benefits associated with drivers of CSR practice, for example through aiding learning and innovation, as well as building credibility and helping to improve relationships with stakeholders.
6. Openness to learning, improvement and innovation;
7. Engagement with external stakeholders - including local stakeholders in non-EU countries – understanding their views and expectations, being open to learning from them, communicating well with them about issues, goals and progress, being open about areas of agreement and disagreement and thus building a trusting relationship, where the company and its stakeholders are willing to co-operate in good faith in efforts to achieve its CSR goals, including to the extent of working in partnership together;
8. Involving employees and their representatives in developing and implementing CSR, programmes, activities and initiatives;
9. Sharing experience, learning from and with peers, in sectoral and multi-stakeholder initiatives or through networks, good practice examples, initiatives and benchmarking, and being willing to solve problems, innovate and improve as a result of this learning;
10. The availability of easily accessible and specific advice, and appropriate, effective and credible tools and initiatives which the company can learn from when developing its own approach, use, or join in with, which are suitable to its circumstances or are flexible enough to be enable the company to learn over time, innovate and respond to circumstances.
11. Particularly for developing countries, the existence of an appropriate legal environment which reinforces compliance with fundamental standards, and the presence of strong civil society organisations such as trade unions and NGOs as stakeholders and potential partners;
12. A high level of awareness among consumers and investors, of the issues and companies’ options in responding to them. Full Final EU CSR Forum Report
If there are no less then 12 CSF's for achieving credible and effective CSR, it's probably going to take a while :))

Combining CR with SCM and Brand Management

2004-06-21T21:47:00.000+02:00

In the Harvard BR of June 2004, there is an interesting article by Elliot Schrage about coffeemaker Starbucks. Not only did Starbucks react to antiglobalization activists singling out Starbucks for having exploited third-world farmers: to protect its brand the company also began to actively cultivate and reward environmentally and socially responsible suppliers ("sustainable sourcing"). This is a preferred supplier program to attract and reward farmers committed to socially and environmentally responsible farming.