Published on March 7, 2014
(Applied) Corporate Responsibility Module Birkbeck, University of London Revision Lecture 6 March 2014 MSc. Class 2014 Lecturer: Tobias Webb (tobiaswebb.blogspot.com)
Core themes of the course 1. What drives sustainability, poliLcs, or stakeholders, or both? 2. The balance between risk and opportunity 3. The role of regulaLon vs. voluntarism 4. What does sustainable business strategy look like? 5. How companies make CR ‘sLck’ inside their business 6. Future challenges: what are these and how can companies contribute to a ‘beTer world’ eﬀecLvely What we are trying to avoid today
What drives sustainability, poliLcs, or stakeholders, or both? • Complex drivers: Linked with economic development, more obvious links between big business and ESG impacts, technology, civil society concerns, ESG investors • Power of big biz concerns not new but gained pace post WWII in Europe/USA • Links with economic dev. mean less tradiLonal focus in Asia, Africa, Lat Am
What drives sustainability, poliLcs, or stakeholders, or both? • Been said to be a ‘le] wing’ agenda but o]en conservaLves have done more for environment whilst le]ist poliLcs focuses on social gains • Today the picture is very mixed and ﬂuid: China is suddenly concerned about both green energy and polluLon and social unrest. • Culture plays the strongest role everywhere (US, India, S Africa) • NGO campaigners & media have played key role
The balance between risk and opportunity • CR is presented mostly as opportunity • But more o]en it is sLll ‘opportunity to minimise risk’ • The balance IS changing as leading companies build it into strategy and middle of the road companies evolve risk parameters to becoming pro acLve (S. engagement, prevenLon, policies which encourage intrapreneurialism) • Social opportunity is sLll a major challenge to turn into mainstream strategy, but companies of course provide social beneﬁts every day anyhow
• • • • • The balance between risk and opportunity ntrepreneurialism took hold a BoTom of the Pyramid / Social E decade ago. Results are so far sLll mixed However: Many companies invesLng in “pro-‐poor” products as future bets. Some are working well today: Mpesa in Kenya, Unilever’s Lifebuoy soap in India, SAB Miller, SC Johnson in Africa, GrupoNueva, Suez, Endesa in LaLn America. Others include: P&G, Danone, Nestle, Douwe Egberts, Lal Teer Seeds (Bangladeshi ﬁrm), Tetra-‐Laval and many others The Circular Economy from product design to re-‐use increasingly seen as signiﬁcant business opportunity So is adaptaLon to climate change and its impacts in energy, industrial companies, ﬂood defences etc Investor inﬂuence far more focused on risk management than opportunity
The role of regulaLon vs voluntarism • TradiLonal le] wing criLque of CR was that it undermined regulaLon • That has been tempered by awareness of the real challenge: enforcement and capacity for change in insLtuLons, governments, companies, systems (energy, agriculture) • RegulaLon IS playing an increased role (reporLng, disclosure, environmental enforcement in China) but voluntarism sLll rules given lack of agreed global rules and how enforcement of them would work
The role of regulaLon vs voluntarism • Voluntarism has evolved into ‘so] law’ whereby NGOs such as Greenpeace campaign and push groups of companies to create standards around which they can innovate and which become de facto rules of the game for other companies and parLcularly suppliers • ‘CollaboraLve Governance’ via mechanisms such as EITI or SAC gaining tracLon a]er 10-‐15 years of pressure and improving performance • Do they mean less regulaLon? Not really: Emerging markets are volaLle and poliLcs can mean things change quickly • Also recogniLon growing that environmental standards o]en need to be mandatory and enforced to have real tracLon (climate change, chemicals use)
What does sustainable business strategy look like? • ‘Strategy’, like ‘Purpose’ is both misunderstood & misused. Lots of tacLcs get sold as strategy • It’s clearly used with regard to CR when you can see a company build CR/Sustainability into both how they work every day (few accidents or polluLon incidents) and into their mainstream products and services • It’s very hard to do: The old paradigm sLll dominates in most cases. The new paradigm of stakeholder engagement/listening, tailored products and services, the circular economy, ‘good’ lobbying and contribuLons to capacity building is a complex management challenge
What does sustainable business strategy look like? • Commonly companies promote community work, philanthropy and basic partnerships as ‘strategy’ but usually these are not parLcularly strategic • Companies closer than most include M&S, Nike, Siemens, GE, Patagonia, Interface, VF Corp (Timberland), Vodafone, SAB Miller, Unilever, Nestle and others (see DJSI for a longer list) • Unilever’s “Sustainable Living Plan”, Nestle’s “Shared Value”, BMW’s new i3 car, Siemen’s investments in urbanisaLon and green tech are good examples. Other’s include Interface’s enLre business focus, and even Wal-‐Mart’s supply chain work
How companies make CR ‘sLck’ inside their business and retenLon are key • Employee moLvaLon, aTracLon • • • • drivers of corporate responsibility in companies Yet HR departments are less prominent in the pracLce than they should be. This is a major challenge – how and when to integrate targets and KPIs into performance reviews and incenLves Companies someLmes use green teams, CSR champions networks and internal volunteers to drive interest and awareness Comms technology use and training beyond Lck boxes also drives awareness of the dilemmas Two way engagement and ‘outside in’ viewpoints are seen as essenLal in understanding awareness. Further reading.
Future challenges: what are these and how can companies contribute to a ‘beTer world’ eﬀecLvely • Clearly sustainability ‘numbers’ / predicLons are heading in the wrong direcLon globally • Water shortages, climate change, ﬂood risk, deforestaLon, working condiLons and pay, tax, social conﬂict etc are all major worries for CEOs as well as civil society • But in some cases big ‘problems’ are created because we now know so much more than before • Conﬂicts and wars are down, some serious diseases are being tackled. Some numbers ARE genng beTer. Some reading here • Companies are part of the soluLon. As their power has grown, some negaLve numbers have declined. BUT: • Companies have signiﬁcant negaLve impacts “NegaLve externaliLes” which have o]en not been managed well or understood
• • • • Future challenges: what are these and how can companies contribute to a ‘beTer world’ eﬀecLvely These are now understood more and more, as is the power of company / money inﬂuence of companies on poliLcians (US, UK) One result is a signiﬁcant trust deﬁcit for companies (see Edelman 2014) Another is companies understanding the limitaLons of tradiLonal philanthropy/community and aTempLng to rebadge CR as ‘Shared Value’ A more interesLng development is an understanding that Governments are o]en weak, lack capacity and can get stuck in poliLcal deadlock for decades (Bangladesh)
Future challenges: what are these and how can companies contribute to a ‘beTer world’ eﬀecLvely • This means that companies must move beyond their own direct operaLons and even that of their suppliers to think about having in impact within their ‘sphere of inﬂuence’ ie where they can make a diﬀerence as a group to systemic pracLces (Kimberly Process, Fair Labor AssociaLon, RSPO, previous examples) • Finally, some are starLng to grasp that insLtuLonal weakness needs addressing via company funding and support, usually via NGOs and with transparency. One recent example being the Bangladesh Accord 2013 • Long term trends and their impact on Governance are now increasingly front of mind for CEOs of large companies • Reports such as the FutureState2030 are raising awareness, alongside the UN Global Compact and WBCSD
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