Isn't it a bit idealistic?

A new video popped up on my Twitter feed last week. It’s quite a cute film made by the University of St Gallen, which sets out what Corporate Social Responsibility (CSR) is all about. If you’re new to the concept of CSR, then it’s definitely worth a watch as it sets out the key points in a way that’s easy to digest.

When people ask me about what I do - after I've fielded the usual question ‘so you work for a charity?’ - I often get the following comment: ‘that’s great, but isn't it a bit idealistic?’ And the answer, to a certain extent, is yes. What unites people in this field is that they are aspirational and passionate about changing the world for the better; they dare to dream. However, this is coupled with strong sense of realism. The ecomaginations and Plan As of this world are still far and few between and those of us close to the action know better than anyone how much work there is still to do. It’s a positive thing - as the video shows, we know where we want to go; we're just figuring out the best way to get there.

Just in case you don’t have time to watch the film, here is a summary of the key points. The language is a bit clunky but you’ll get the general idea:

• CSR is based on the question of good business for a good society, today and tomorrow
• CSR is not charity. It is about the way a company earns its profits, not how it spends them
• It takes employees of integrity plus appropriate organizational structures to realize CSR. It is a matter of individual and institutional ethics
• Politics continue to play an important role but in a globalized world the effects of regulation can be limited, thus…
• Companies play an increasingly important role
• Soft laws are new governance mechanisms based on a company’s self commitments
• CSR has arrived in business practice and it’s necessary to support these developments professionally but also to provide critical perspectives with respect to them

Happy Watching!

Ruggie's Rules - The End of the Beginning

Ask the CEO of a multinational corporation “does your company respect and protect human rights?” and the answer is unlikely to be negative. But go on to ask another question “how do you know?” and you’ll probably get a much less confident response. The truth is that, until very recently, they didn't have to know. What’s more, if a problem or an accusation was filed against them, there was no international legal framework against which they could be brought to justice - existing national frameworks were inadequate or simply not relevant.

This was the challenge given to John Ruggie, Berthold Beitz Professor of International Affairs at the Kennedy School of Government and an Affiliated Professor in International Legal Studies at Harvard Law School, by the United Nations Human Rights Council – to bridge the gap between national public governance frameworks and the governance of global businesses.

Last night, I went to a talk by John Ruggie at the Harvard Bookstore, to mark the launch of his book Just Business. He talked about his approach to the challenge and his experiences of working with governments and corporations all over the world to agree a set of guiding principles, perhaps better known as Ruggie’s Rules. It became clear to him very early on that there was no silver bullet - it wasn't about creating a legal instrument and expecting everyone to adhere to it because, as we saw with the Kyoto Protocol, this would be far too easy to ignore. What was required was a ‘building block approach’, establishing a common platform (i.e. the guiding principles) and then gradually bringing organisations on-board. For example, having agreed the guiding principles, John Ruggie and his team approached national export agencies and persuaded them that, when promoting companies overseas, there should be some due diligence built into the process to ensure that they are not promoting companies who do not respect or protect human rights. This has proved to be a clever and successful means of pushing the guiding principles out into the global corporate network and a start towards changing the status quo.

As you’d expect, the guidelines have received mixed reactions. Activist organisations don’t think they go far enough with the organization Human Rights Watch saying that the UN Human Rights Council “squandered an opportunity to take meaningful action to curtail business-related human rights abuses.” Other commentators, such as John Braithwaite, Corporate Criminologist at the Australian National University, are more encouraged by the steps taken: “I’m a strong supporter of progressive UN framework agreements that seem pretty wishy-washy at first…“ in the long run they can make a huge contribution from limited beginnings.”

Whilst, I don’t believe that extensive regulation is the answer to making companies more sustainable, it is helpful to have some frameworks in place to ensure a minimum standard of practice. As John Ruggie put it last night “it’s the end of the beginning”; in other words, Ruggie’s Rules are not going to eliminate abuses of human rights by global companies over-night but they create a baseline to support companies to start answering the question “how do you know?” with confidence.

Embrace change - it leads to success

Nike has made huge leaps forward in addressing the social and environmental impacts of its business. Not so long ago, the company was mired in controversy over allegations of human rights abuses in the factories making its shoes and clothing around the world – there were large protests, boycotts and widespread criticism from the media. Today, it's considered a sustainability leader.

The company’s vision is to deliver innovation and inspiration to every athlete and sustainability is central to how they do that. Hannah Jones, VP of Sustainable Business and Innovation at Nike Inc., summed up the approach in a recent tweet:

The key word is ‘innovation’ and ‘opportunity’. In order to become more sustainable, businesses need to see it as an opportunity and it means change, not a few tweaks here and there, but real change. The good news, to steal Hannah Jones’s tweet style, is that change = profit.

A recent report by MIT Sloane Management Review and the Boston Consulting Group, The Innovation Bottom Line, demonstrates the link between business model change and profiting from sustainability. 50% of survey respondents (executives and managers from commercial enterprises) who had changed 3 or 4 elements of their business strategy said that they had profited from sustainability activities:

And more change = more likely profit because, as you can see, only 37% of the respondents who had changed one element of the business model said that sustainability adds profits.

The change doesn't end with the business model, as report outlines, to “hit the sustainability bull’s-eye”, there needs to be:

• Support from the top and full integration across the business
• Clear goals and effective measurement - get the numbers that people can’t ignore
• Understand what your customers think and want in terms of sustainability
• Collaborate with individuals, customers, businesses and groups outside the business

Check out the report for more details - there are some interesting statistics. 

In the words of Charles Darwin “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”