The CSR 2.0 Principle of Creativity - Stagnation through Standardisation

In contrast to the social entrepreneurial story of Anurag Gupta and A Little World of India, one of the great dangers of the Age of Management – especially its focus on standardisation – is that it does not foster the kind of creativity that is needed to solve the complex social, environmental and ethical problems that we face. The reasons are fairly obvious. First, an incremental approach, in which companies voluntarily set their own CSR-related objectives, does not tend to create the kind of stretch targets that incubate innovation. Second, standardisation is by its very nature a compliance-based approach, with systems, procedures, measures and audits. As a result, those running on the standards treadmill develop a tick-box mentality, rather than thinking outside the box.

Here’s an example of how it happens in practice. A colleague of mine works in CSR at one of the production plants of a multinational pharmaceutical company. When I interviewed him in 2008, he was deeply disappointed by the conservative, compliance-driven approach of their international head of environment, health and safety (EHS): ‘There was quite a level of frustration for me when we had the top EHS guy come out [from America] and visit the site. We were actually training The Natural Step to shop floor guys, and we were quite excited that he would take this thing on, and he had the power to change the whole way the corporation thinks. … [Well], he obviously had a very different take on it [and] the approach that has been taken in the company has very much on the surface been the legal type ISO approach.’

Sometimes the standards themselves are (perhaps unwittingly) to blame. For instance, when the Global Reporting Initiative (GRI) launched its G3 Sustainability Reporting Guidelines, they included Application Levels which are intended to ‘communicate to the readers of your report to what extent the G3 Guidelines have been utilized in your sustainability report. They are intended to provide GRI reporters with a pathway in which they can continuously improve their reporting. There are 3 Application Levels: A, B and C. These levels can be self-declared, third-party-checked and/or GRI-checked and each with the option of recognizing external assurance (“+”).’ So far, so good. The problem is that, because the levels are directly related to the number of indicators reported (more indicators equal a higher rating), many companies have slavishly reported on many irrelevant or marginal issues, despite GRI’s request that they use the levels ‘with due regard to the Materiality Principle’.

In such compliance-driven environments, incentivised by CSR standardisation, two things typically happen. Most managers will go strictly by the book – whatever the letter of the standard dictates – without experimentation, without pushing the envelope and hence with less likelihood of making mistakes. After all, measurement, auditing and reporting are widely perceived, if we are honest, as a kind of punishment for mistakes. The other thing that happens is that managers become creative about how to trick the system. If the standard calls for continuous improvement on pollution reduction and pollution has gone up, then why not report it in terms of unit of production so that it appears to have gone down? If a multinational supply chain auditor requires SA 8000 compliance, why not run two factories: one ‘model site’ for the international auditors to check, and one without labour controls to supply the mass market? What the Age of Management does, therefore, is at best stifle creativity and at worst foster perverse creativity.

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This is an extract from Chapter 7 of The Age of Responsibility: CSR 2.0 and the New DNA of Business. For more information and ongoing updates, follow the The Age of Responsibility Blog

Copyright 2011 Wayne Visser