Oct 20

A World in Trust – Leadership and Corporate Responsibility

Björn Edlund

Bjorn Edlund
Retd EVP Communications, Royal Dutch Shell plc
Principal, Edlund Consulting Ltd.

At 72 pages, the heft of a recently published overview of the state of Corporate Responsibility (CR) by Echo Research and IBLF bears witness to the study’s solidity, insights and range. This report is well worth a read, for CCOs especially.

Looking back over 10 years and more as well as into the future, “A World in Trust” captures from several key angles how CR is becoming mainstream in strategically savvy corporations.

At the outset, CR or CSR seemed like a way to expand from the environmental base of sustainability into a wider societal arena.

At the turn of the millennium, this expansion took the form of frenetic activity in a fertile biotope. Most active were sustainability consultants, academics and not least NGOs, and in the corporate world, some of us joined in the fray.

With business often confused about what constituted a sound course, this activity led to some marginal outcomes, such as a growth of corporate philanthropy coupled with PR puffery and loose, non-binding talk of corporate citizenship.

Good stuff happened, too.

Kofi Annan, the then UN Secretary General, in 2000 launched the UN Global Compact, calling on corporations to act on their societal responsibilities and join governments and civil society to ensure better societal conditions in a fractured, globalized world.

In 2000, many leading thinkers – including Annan – firmly believed that business was better placed than governments and multilateral bodies to withstand the buffeting gales of the global market place that were causing worrying imbalances within and between nations.

In the fertile C(S)R eco system also grew a plethora of initiatives aimed at making clear what role business can and must play beyond creating shareholder value. Now that, as “A World in Trust” shows so well, was truly useful.

Solid initiatives grew into fine institutions, perhaps the most useful being the Global Reporting Initiative. Using GRI indicators, today 1,000 plus corporations measure and report along the triple bottom line of economic, environmental and social performance.

Some proposals were plain silly. At worst even disruptive to the cause of good CR.

I’d award the Awkward CR Prize to the so-called UN Draft Norms on business and human rights. Some seven-eight years ago, they had the business world up in arms. The norms aimed at turning universal human rights conventions – set up to guarantee citizens economic, social, political and cultural rights – into hard law for corporations. Go figure.

The UN’s own human rights commission threw out the norms, and asked John Ruggie, a Harvard professor who as Assistant Secretary General earlier helped Annan set up the UNGC, to create a workable framework. Ruggie is almost done. His framework is a major step forward – and something we will all be working with from mid next year.

Today, as the Echo Research/IBLF report shows, leading companies are integrating CR thinking in a number of key ways.

CR is informing a more mature view of the company’s stakeholder model. CR is crucial in the values finding process, the core of true (re-)branding. CR, done right, will help make better long-term strategic choices.

All this is no small feat over a span of 15-20 years. CR’s development into a mainstream component of how to run a company will probably, as the report says, lead to CR groups in companies becoming redundant.

Yet, think of excellent corporations founded by sound, decent people – take Johnson and Johnson, or Ford Motor Company. From the outset they were there to fulfill a purpose and meet a social need. In my examples, healthcare and mobility. And they always knew their role.

I believe that it was as a result of a too heavy emphasis on shareholder value, coupled with blind servitude to the Milton Friedman doctrine of “the business of business is business” that made the counter trend of CR so badly needed. And made CR catch on so readily.

Add globalization and the inability of societies to truly harness economic forces to deal with the adverse consequences of economic activity, and CR was a trend waiting to unfold.

Today and tomorrow, mainstreaming CR in businesses will be critical – from management incentives over ISO norms to new value parameters for investors.

If we fail to do so, customers, communities and governments will turn their backs to our companies. And trust, that elusive all-important element, will be denied us.

The report shows why that is so, but more importantly it signposts what companies can do to build and expand their trust base.

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