Corporate Social Responsibility: the big picture

The IYPE presents particular challenges for global business because, in any discussion about the management of the Earth’s finite resources, corporate activity is often identified as a part of the problem rather than part of the solution. Businesses pursuing profits to the exclusion of other considerations are often portrayed as the ‘bad guys’ in debates about the environment and the impact of human activity.

However, business has responded to criticism over the past 20 years and the movement to improve the way companies, large and small, work with the communities and the natural world around them is developing momentum all the time. That movement is commonly described as corporate social responsibility, although some suggest the word social is redundant. Corporate responsibility is not just a social issue, it is about interaction between a business and all the people it deals with, be they customers, employees, local residents and other businesses. The shareholder is no longer the only person the CEO has to worry about.

A trendsetter

One man who has embraced the concept wholeheartedly – and has cogent arguments about the way business should approach the IYPE utilizing the principles of corporate responsibility – is Sir Mark Moody-Stuart, the chairman of the world’s third-largest mining group, Anglo American, and a former managing director of Royal Dutch/Shell. Both companies have in the past been accused of not acting in the best interests of anybody other than their investors. Sir Mark was at the helm of Royal Dutch/Shell in the 1990s as it was coming to terms with the fallout of the sinking of the Brent Spar oil platform and the execution of Nigerian writer and ecology campaigner Ken Saro-Wiwa, where responsibility was laid partly at Shell’s door. These damaging affairs helped shape Sir Mark’s thinking about a company’s responsibilities and, in the years since, he has developed a reputation as one of the world’s foremost thinkers on the issue.

Sir Mark says the key to the successful application of corporate responsibility is the culture of a company. “The most important thing is to get people thinking about every aspect of a business. You have to say to people, think about how we go about every aspect of our work.” He cited an example from his days at Shell when the issue of the abuse of child labor was first becoming a global concern. Shell was confident that it did not employ or exploit any children but then began to ask deeper questions about the products it used, such as the overalls the company’s filling station staff were wearing. Had they been made by child labor? “We can’t solve everything,” Sir Mark adds. “But when people approach a company with a problem you don’t say: ‘That’s not our problem’ because if it’s a problem for society it is our problem. The question is – what is our capacity to contribute to a problem and to solve it.”

At Chevron, Sir Mark said workers had thought about literacy in Africa and wanted to supply young people with books. They realized they could put a container of donated books on every tanker heading for Africa at virtually no cost to Chevron but to the great benefit of illiterate Africans.

“It involved the people in the company and that’s quite motivational. People like to think that they are playing a part in something that’s very important.” Yet Sir Mark went further when he said that it is also essential to analyze a company’s activities in a systematic way. At Anglo American they use a socio-economic appraisal toolkit which is applied to all its operations. “It makes you ask the questions about what is the social impact, what is the economic impact of this particular mine. Then what can you do about it. Can you increase the positive aspects of the activity and decrease the negative? If you get people thinking like that it makes life much more interesting.”

Enterprise development

Using this approach brought home to Sir Mark how, in Anglo American’s operations, the main issue was poverty of the areas in which it worked – and Anglo American could make a difference. “At Anglo we are putting a lot of effort into enterprise development. Communities and people are poor, not because of economic activity but because there’s no economic activity – and there is no economic activity because enterprises are not being developed. We want to see if we can help stimulate the local economy through our supply chain but also growing beyond our supply chain into other things. If you can develop businesses then that is the way you can deal with poverty. Aid is necessary for infrastructure, health and education but it is not the lasting solution.”

Measuring achievements

Sir Mark acknowledges that a challenge for global business in the future is agreeing a common standard of reporting on corporate responsibility and what naturally follows – sustainability. He is a board member of the Global Reporting Initiative, which is dedicated to the development of the world’s most widely used sustainability reporting framework. This framework sets out the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance.

The Prince of Wales has also recently launched a U.K. initiative with the Association of Chartered Certified Accountants. The Accounting for Sustainability project focuses on how to “embed” sustainability considerations into general corporate thinking, but also on how to report these efforts. This initiative recognizes that more companies are producing ‘stand alone’ corporate responsibility reports. Yet, although companies are getting better at explaining how they impact on the environment, it is difficult to find the numerical targets against which they can be tested. Carbon emissions can be measured in many ways and there is no single agreement on what should be included in these measurements.

Roger Adams, head of technical services at the Association of Chartered Certified Accountants, said: “We need a common language of valuation so the financial implications come through clearly to the global markets.” Whatever benchmarking system is agreed, the work is an extra burden on companies but advocates, including Sir Mark Moody-Stuart, suggest that, given growing public pressure, there is little realistic choice and, it should be remembered, there are some commercial benefits.

Some industries are more advanced than others in their sustainability reporting. The most enthusiastic tend to be extractive industries such as oil producers and miners, whose activities have clearly identifiable impact on the environment. As the practice spreads through other sectors, however, the need for a common system of evaluating corporate commitment and success in the field is bound to grow. As we embark on the IYPE, this may be the most significant challenge facing business. How does a company measure its contribution to the sustainability of the planet – and how can the rest of the world judge how effective it is?

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