Recession sorts out commitment from goodwash

A report on last week's Business in the Community Conference suggests it is getting easier to see who is committed to responsible business.

 

If a company's responsible business focus is on "giving back" then it appears those initiatives have been the first to suffer as cash flows tighten. Those were hardly indicative of a truly responsible approach to business in the first place.

 

More disturbing are tales of banks completely stripping out their CSR teams. Either those teams had the wrong kind of skills needed for rebuilding trust in the sector (i.e. they were focused on the goodwash version of CSR rather than on instilling an ethical culture and appropriate corporate governance mechanisms) or financial firms have not realised the extent of the problems their sector faces.

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Dog bites man: Jack Welch trips up over CSR

In a comment article yesterday in Director Magazine, Jack Welch tried to help by clarifying where CSR should be prioritized during a downturn.

 

It makes depressing reading because here we have a business leader emeritus completely failing to understand what corporate social responsibility is.

 

CSR, according to Mr Welch, essentially comes down to "giving back" (what we used to simply call philanthropy) and to products that meet the demand for sustainable alternatives.

 

Such CSR, he continues, has to be toned down when the going gets tough.

 

My problem with his argument is twofold:

 

1/ CSR is first and foremost a management framework for enabling ethical decision making to take place within a short-term profit obsessed corporate culture. Mr Welch does not mention ethics once, nor does he indicate explicitly whether our ethics should take a back seat in tough times.

 

2/ Mr Welch's argument betrays the fundamental problem with the way that the bulk of the CSR industry chooses to present the case for doing the right thing (i.e. behaving ethically): that good companies reap financial rewards.  The flaw in relying on the profit motive as the driver for ensuring that your product range and manufacturing processes limit negative social and environmental impacts is clearly laid out by Mr Welch:

 

"When gas costs $4 per gallon, a hybrid Toyota Prius is an attractive value proposition. When gas is $2 per gallon, that's no longer the case. When most consumers have good jobs and feel secure in them, it makes sense to expect them to pay more for a product that's environmentally friendly. When bank accounts have been drained, that more expensive product is a very tough sell."

 

If corporate social responsibility has been robbed of any useful meaning, perhaps we should start encouraging business leaders like Mr Welch to give an opinion on their prioritization in times of crisis of, say, "ethics management" - a broad enough term to encompass the firm's approach to managing social and environmental impacts.

 

Mixing up CSR with good old philanthropy, public relations or product innovation and ignoring the ethical conduct of business is just shell gaming.

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Ghana: Comms professionals call for CSR framework

Communications professionals in Ghana have called on the government to implement a National Corporate Social Responsibility (CSR) Framework.

 

The call was made at a trade fair organized by the Junior Chamber International (JCI) Ghana and supported by other local business groups.

 

According to the report in the Ghanaian Chronicle, the group called "for a regulatory body to be set up to regulate corporate social responsibility to meet international standards, adding Listed Companies on the Ghana Stock Exchange should be required to report on their CSR."

 

Mr. Kweku Rockson, a senior lecturer at the Ghana Institute of Journalism, "urged the government to create a public policy framework, including legislation for the corporate social responsibility to check the operations of companies in the country."

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Accountants stealing a sustainability march

The International Federation of Accounting (IFAC) - the global professional association for accountants - has produced a sustainability framework.

 

According to Greenbiz, the framework "is a web-based tool that targets professional accountants working in all kinds of different organizations who the IFAC believes can "influence the way organizations integrate sustainability into their objectives, strategies, management and definitions of success."

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IFAC borrows heavily from the decade-old SIGMA Project. This project developed guidelines to help provide clear, practical advice to organizations to help them make move down the path towards sustainability. It was the first effort to link management systems, risk management, business excellence frameworks, the three responsibilities, and continual improvement into a single framework."

 

GreenBiz observes that the tool helps accountants by cutting through the internet "noise" on sustainability and giving them a coherent framework for action, one which, they note, CSR and sustainability officers often lack.

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Corporation tax gaining recognition as a CSR issue

60% of financial directors in the UK now regard tax as an ethical issue, the Guardian reports in its ongoing series on corporate tax avoidance.

It should always have been such, but the last time payment of corporation tax was viewed as an issue of social responsibility rather than as something to be minimised as a simple matter of financial efficiency was during the Second World War.

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Thai SEC to promote criteria for inclusion in SRI index

The Thai market regulator is to reveal "preliminary criteria" for assessing whether a company should be included in a forthcoming SRI index.

Stock indices comprising companies assessed against standards of corporate responsibility - "socially responsible investment" (SRI) indices - are well established elsewhere, including the FTSE4Good indices in the United Kingdom and the Dow Jones Sustainability Indices in the United States.

A Thai SEC committee has been working since late 2006 on the question of how to promote greater corporate social responsibility (CSR) in Thai listed companies.

SRI indices can help to push corporate responsiblity standards incrementally higher by setting a bar just slightly higher than average standards being achieved currently, then reviewing and raising that bar over time.

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