Blog for Centre for Responsible Business, Birmingham University, February 2021
The Way Forward
In my previous two blogs for this site I’ve spelled out what’s wrong with so much that passes for ‘corporate social responsibility’ (CSR): it’s too often short term, voluntary, transient, input-led and not related to the company’s mission. It can be summarised as ‘[Some of us] raised [some pounds] for [some charity] during [some hours] of volunteering’. The touchstone question is: What difference did it make?
Raising money does not in itself make a difference – the difference happens when someone else, down the line, perhaps working for a charity, changes someone’s life for the better. Litter picking does not make a difference – come back next month and see if I’m wrong. And setting up a corporate team building exercise posing as community engagement doesn’t change the world outside the company much, either.
But let’s be positive: the company that tries, succeeds. ‘TRIES’ stands for ‘Transparent, Responsible, Inclusive, Ethical, Sustainable’.
Light is a great disinfectant and a company that acts in a transparent fashion is inviting its stakeholders to trust it. ‘We have nothing to hide’ is a great claim, especially if it’s true. More transparency is required by law than used to be the case – the gender composition of boards and the relative pay of male and female employees of bigger companies is now a matter of public record. Companies are required to declare that there’s no ‘modern slavery’ in their supply chain. The public has a right to know what ingredients are in products. While commercial secrets remain sacrosanct, companies that lean towards too transparent rather than not transparent enough are more resilient and better at risk management.
An economist might term ‘responsible’ as the ‘internalisation of externalities’, or taking responsibility for your company’s full impact on the world and not just the nice bits that suit you. Almost invariably something negative needs to be taken into account. You need to look at the ‘whole life’ impact of your product and not just at its net environmental impact up to the moment it leaves your business.
Every governance expert will tell you that diverse boards and diverse workforces work better than monolithic ones. When you exclude people who are different from you from influencing your company you reduce the pool of experience which ultimately guides it, you make it less resilient, less agile. When you price potential customers out of your market you exclude them and miss out on sales. There’s a good case for companies to help make poor people (including employees) better off because that extends the market place for products and services. Addressing these issues reaps the benefits of inclusion.
No one wants to be unethical but there are too many examples of weak ethics, such as cronyism (aka corruption), tax avoidance or deliberately delaying the payment of bills (small businesses’ greatest and most justified gripe). Treat your employees like partners; invest in them, get them on board with your company purpose. Walk the talk on ethics.
‘Sustainable’ simply means thinking and acting long term; you don’t want to be here today and gone tomorrow. Collectively we’ve not acted in a sustainable manner: our climate is damaged almost beyond repair, our oceans are filling up with micro-plastics, the supplies of key minerals for mobile phones are running out and vital natural habitats and species are being lost. In each case, it’s the unsustainable behaviour of industrial practices over decades that has caused and is causing the damage. Don’t just wring your hands; ring your sustainability consultant.
None of these issues are difficult, none of the required actions unreasonable. Doing them right – from paying a living wage to using less damaging cleaning materials – is not just good for the planet and the economy. Such actions can form a common cause between company leaders, employees and customers.
In the longer term there’s good evidence that this sort of behaviour is good for your business, too. That’s what I call ‘win-win’!