Coming Soon – Page in Progress

“A nation, as a society, forms a moral person, and every member of it is personally responsible for the society.” – Thomas Jefferson

This page will contain commentary and questions on corporate responsibility (CR) – where it stands, where its going, what it should/could be doing, best/good practices / examples of what has worked and what has not, why more corporations should get involved, etc… Right now, it is just a compilation of my notes and thoughts on it, in draft form.

Overview: Corporate Responsibility (CR) means that businesses across the globe use thei power responsibly–to protect rather than destroy the ecosystems on which they depend for physical capital, and to support rather than neglect the communities and livelihoods on which they depend for human capital.

I believe that corporations want to help, not harm, people and ecosystems, and that working with business will produce better results than working against them. And, in many cases, saving money and doing the right thing are not conflicting goals, but when they are, businesses should weigh other considerations (in addition to profit) into their decision-making models.

Continuum:

Do No Harm >——————————————————> Do Good

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CR issues can also be talked about in the same terms as public policy issues:

• Moral hazard problem: For example, oil companies don’t have strong enough incentives to clean up places they don’t live in…
• Public Goods problem: For example, clean water is a public good, and poor water quality in China leads to major health problems…
• Externalities: Pollution, for example… these are things that we talk about governments legislating, but could just as easily be resolved by corporate responsibility (or exist because the lack of it, consistently)…
• Market Failures: …

CR issues can also be talked about in business terms:

SWOT:

• Strengths: For example, a company may have lower operational costs through energy savings by installing more efficient light bulbs or motion sensors in bathrooms or through redesigning its packaging in a way that results both in less waste and lower packaging costs.
• Weaknesses: Not acting as a responsible business may, for example, result in a high employee turnover rate, which results in increased operational costs for a company.
• Opportunities: For example, attracting the best talent/employees.
• Threats: Not acting as a responsible business may, instead, result in new government legislation (”power is taken away from those who abuse it”), in lawsuits, or in boycotts and other forms of social activism or negative campaigns (which can hurt sales and the company’s brand/image).

Competitive Advantage:

It Goes by Many Names: CSR (Corporate Social Responsibility), CR (Corporate Responsibility), Corporate Citizenship, Sustainability, etc…

No matter what you call it, the interesting thing is… the role of business in society…

Business Case:

Responsibility vs. Capacity? Let’s say that the truly responsible party, like a developing country with a corrupt government, lacks the capacity to solve the problem at hand. Then, does the responsibility to take action change hands? Do those capable of taking action have more responsibility to act than those who, under other circumstances, may actually have more responsibility?

Is Corporate Philanthropy CR? In my opinion, it is a nice thing that companies give money to good causes but that it is not CR, because (1) it takes away from the feeling that charity/philanthropy is a voluntary act of kindness, and (2) it allows many businesses to hide under the cover of doing something nice while they fail to fulfill their core responsibilities. I would even question whether having a corporate foundation before you’ve addressed all your CR issues is actually irresponsible.

The Big Picture vs. Individual Issues: Some organizations may, for example, create campaigns to seek the elimination of child labor in various industries and countries. Of course, this sounds like something good to support, but without addressing the larger issues of the prices paid for various commodities or of extreme poverty, the result could potentially be just as bad. For example, let’s say that a cocoa farmer is told not to engage in forced child labor, but remains under the same price constraints. They will be forced to find another way to cut costs, merely transforming the problem into worse working conditions and health care for its remaining adult workers, for instance, instead of eliminating the, problem altogether.

About the Global Reporting Initiative (GRI): The Global Reporting Initiative is a non-governmental organization that has created a framework that businesses can follow when reporting on their economic, environmental and social performance in addition to their current financial reporting through their annual report. The goal is for consumers to be able to compare efforts in corporate responsibility/sustainability across companies and over time. In addition to the general reporting framework for all companies (G3 Guidelines), GRI has begun to create supplements tailored to particular countries and sectors (i.e. for mining, electric utilities and telecommunications).

> Learn more at www.globalreporting.org/home

About the UN Global Compact: environment, human rights, labor, anti-corruption

Other Principles and Standards: CERES principles, ISO 2600, ILO standards on human rights, OECD guidelines for MNEs, California Global Accountability Project, Caux Roundtable principles, Global Sullivan Principles, International Chamber of Commerce principles

Certification Organizations and Labels: Rainforest Alliance, UTZ Certified, TransFair, Institute for Marketecology, Whole Trade Guarantee

History of CR:

Notes:

• 17th century, East India Company
• Ancient Chinese, Egyptian & Sumerian writing detail rule of commerce/trade
• first large-scale consumer boycott – England, 1790s, over slave-harvested sugar (succeeded in forcing importer to switch to free-labor sources)
  

Stakeholder Theory: CR is about more than just your shareholders and customers. Its about all of your stakeholders–your suppliers, your employees, the environment, your subsidiaries, the people impacted by your operations in any given country, federal and state/local governments, civil society organizations, the media, etc…

Information/Technology & CR Today: Access to more information leads to more informed choices or information overload?

CR in Europe vs. the US:

• Terms used – Sustainability vs. CSR
• started earlier in Europe – with environmental considerations
• different level of government involvement vs. other sectors – nonprofit, business
• less lobbying by companies in opposition to climate change policies & regulations
• the US is a much more litigious society
• European welfare states and centralized/federal government vs. US more power in private sector and local governments

The US Chamber of Commerce & CSR

> describe unpopular/bad decision on climate change legislation

> what are they doing; what more could/should they be doing in CR?

Some Quotes:

“Imagine an industrial system that has no provision for landfills, outfalls, or smokestacks. If a company knew that nothing that came into its factory could be thrown away, and that everything it produced would eventually return, how would it design its components and products? The question is more than a theoretical construct, because the earth works under precisely these strictures.” — Natural Capitalism

“In manufacturing, about one-fourth of the labor force is engaged in the fabrication of basic raw materials such as steel, glass, cement, silicon and resins, while three-quarters are in the production phase. The reverse is true for energy inputs: Three times as much energy is used to extract virgin or primary materials as is used to manufacture products from those materials. Substituting reused or more durable manufactured goods for primary materials therefore uses less energy but provides more jobs.”

Questions:

1. Currently most companies engaged in CR activities have created separate annual CR/Sustainability reports, in addition to their existing financial annual reports. Was this the right move, or should these two reports be combined into a single company annual report?

2. How should corporate behavior vary by country? CSR priorities are going to be different in developing countries (i.e. low-cost food and transportation are more important than decreasing emissions IF a choice has to be made between these). Also, child labor may be a necessity (of course, it should be done in an ethical manner).

3. Can the private sector transform/eliminate market failures? For example, the establishment of property rights took the action of both the private and public sector, together.