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Sunday, 6 November 2011

Can We Break the Spell of CSR Curses?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.5

Looking back, we can see that the 1990s were the decade of CSR codes and standards – from EMAS and ISO 14001 to SA 8000 and the Global Reporting Initiative. But these were just a warm up act compared to the last 10 years, when we have seen codes proliferate in virtually every area of sustainability and responsibility and all major industry sectors. So much so that in the A to Z of Corporate Social Responsibility, we included over 100 such codes, guidelines and standards – and that was just a selection of what it out there.

This spawning of CSR codes and standards is typical of Strategic CSR, emerging from the Age of Management. At its heart, this is the drive to relate CSR activities to the company’s core business (like Coca-Cola's focus on water management) by turning these into formal management systems, with cycles of CSR policy development, goal and target setting, programme implementation, auditing and reporting.  All good and well, but where does this leave us?

My belief is that Strategic CSR – like its predecessors Defensive, Charitable and Promotional CSR - has brought us to a point of crisis. Specifically, all these approaches are failing to turn around our most serious global problems – the very issues CSR purports to be concerned with – and may even be distracting us from the real issue, which is business’s role causal role in the social and environmental crises we face. This failure is due to what I have called the three Curses of CSR 1.0, namely that it is incremental, peripheral and uneconomic. Let’s look at these briefly in turn.

Curse 1: Incremental CSR

One of the great revolutions of the 1970s was total quality management, conceived by American statistician W. Edwards Deming and perfected by the Japanese before being exported around the world as ISO 9001. At the very core of Deming’s TQM model and the ISO standard is continual improvement, a principle that has now become ubiquitous in all management system approaches to performance. It is no surprise, therefore, that the most popular environmental management standard, ISO 14001, is built on the same principle.

There is nothing wrong with continuous improvement per se. On the contrary, it has brought safety and reliability to the very products and services that we associate with modern quality of life. But when we use it as the primary approach to tackling our social, environmental and ethical challenges, it fails on two critical counts: speed and scale. The incremental approach to CSR, while replete with evidence of micro-scale, gradual improvements, has completely and utterly failed to make any impact on the massive sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSR-led attempts at amelioration.

Curse 2: Peripheral CSR

Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. Translated, this means that CSR is, at best, a peripheral function in most companies. There may be a CSR manager, a CSR department even, a CSR report and a public commitment to any number of CSR codes and standards. But these do little to mask the underlying truth that shareholder-driven capitalism is rampant and its obsession with short-term financial measures of progress is contradictory in almost every way to the long-term, stakeholder approach needed for high-impact CSR.

So what we are left with is an approach to CSR which allows each company to set their own voluntary objectives and targets, which appear responsible, but lack the scale and urgency needed to reverse our social and environmental crises. CSR remains peripheral in another sense as well, because it is only a handful of big-branded companies that find themselves in the CSR spotlight. What about the millions of small and medium sized enterprises. By and large, CSR passes them by, despite their collectively bigger impacts.

Curse 3: Uneconomic CSR

Which brings us to Curse 3. If there was ever a monotonously repetitive, stuck record in CSR debates, it is the one about the so-called ‘business case’ for CSR. That is because CSR managers and consultants, and even the occasional saintly CEO, are desperate to find compelling evidence that ‘doing good is good for business’, i.e. CSR pays. The lack of corroborative research seems to be no impediment for these desperados endlessly incanting the motto of the business case, as if it were an entirely self-evident fact.

The rather more ‘inconvenient truth’ is that CSR sometimes pays, in specific circumstances, but more often does not. Of course there are low-hanging fruit – like eco-efficiencies around waste and energy – but these only go so far. Most of the hard-core CSR changes that are needed to reverse the misery of poverty and the sixth mass extinction of species currently underway require strategic change and massive investment. They may very well be lucrative in the long term, economically rational over a generation or two, but we have already established that the financial markets don’t work like that; at least, not yet.

The way I see it, that leaves us with three options for taking CSR forward, which I like to think of as the Parrot, Ostrich and Phoenix scenarios.

The Way of Parrot is to tell it like it is: recognise the limitations of CSR and admit to its primary role as a business tactic for reputation management. The Way of the Ostrich is the status quo: pretend that CSR is working and that more of the same will be enough. The Way of the Phoenix is the transformative agenda: reconceptualise CSR as a radical or revolutionary concept that challenges the intransigent business and economic model and offers genuine solutions to our global challenges. The Way of the Phoenix is what I call Systemic CSR, or Transformative CSR, or CSR 2.0, and is what we are just starting to see rising from the ashes of the previous ages, as we enter a new Age of Responsibility. This rather more positive agenda is what I will explore for the remainder of this blog series.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.


Saturday, 5 November 2011

Exposing the CSR Pretenders


By Dr. Wayne Visser

Quest for CSR 2.0 Series No.4
Industrialism created a limitless appetite for resource exploitation, and modem science provided the ethical and cognitive license to make such exploitation possible, acceptable, and desirable. – Vandana Shiva
Can Big Tobacco ever be responsible? British American Tobacco (BAT) have engaged in extensive stakeholder consultation exercises and, since 2001, their businesses in more than 40 markets have produced Social Reports, many of which have won awards from organisations as diverse as the United Nations Environment Programme, PriceWaterhouseCoopers and the Association of Certified Chartered Accountants. BAT has also been ranked in the Dow Jones Sustainability Index, the FTSE Ethical Bonus Index and Business in the Community (BITC) Corporate Responsibility Index, and they funded Nottingham University’s International Centre for CSR.

Yet this is the industry where, in 1994, the CEOs of 7 of America’s largest tobacco companies[1] testified before the House Subcommittee on Health and the Environment of Congress, all denying that cigarettes are addictive. They lied under oath. And this is the business that, according to the World Health Organization, kills more than AIDS, legal drugs, illegal drugs, road accidents, murder and suicide combined.’ Of everyone alive today, 500 million will eventually be killed by smoking, and while 0.1 billion people died from tobacco use in the 20th century, ten times as many will die in the 21st century. Isn’t responsible tobacco an oxymoron?

Of course, it’s not just Big Tobacco. What about Big Oil? This is the industry that set up and funded the Global Climate Coalition (GCC) to lobby against the emerging consensus of climate science and policy development until it was embarrassed into disbanding in 2002. A 2007 report by the Union of Concerned Scientists, entitled Smoke, Mirrors & Hot Air, documented how ExxonMobil adopted the tobacco industry’s disinformation tactics, as well as some of the same organisations and personnel, to cloud the scientific understanding of climate change and delay action on the issue. According to the report, ExxonMobil funnelled nearly $16 million between 1998 and 2005 to a network of 43 advocacy organisations that seek to confuse the public on global warming science.

Or what about BP? In 2000, the company reportedly spent $7 million in researching the new ‘Beyond Petroleum’ Helios brand and $25 million on a campaign to support the brand change. Greenpeace concluded at the time that ‘this is a triumph of style over substance. BP spent more on their logo this year than they did on renewable energy last year’. Antonia Juhasz, author of The Tyranny of Oil (2008), is similarly sceptical, claiming that at its peak, BP was spending 4% of its total capital and exploratory budget on renewable energy and that this has since declined. That’s even before we factor in the Texas City refinery explosion in 2005, or the catastrophic Gulf spill in 2010, or BP’s ongoing investments in the Alberta tar sands. Isn’t sustainable oil a contradiction?

While many of these examples – and I could cite countless more, from automotive, agricultural, chemicals and other industries – are a little more than the familiar toxic mix of old-fashioned dirty lobby tactics, many companies today in engage in far more subtle and seemingly plausible campaigns of misdirection – investing in environmental management systems, producing sustainability reports, and performing supply chain audits. Each of these actions is, on its own merits, laudable and to be encouraged; applauded even. But all too often, they are used as a smokescreen to mask the more damaging impacts and irresponsible practices of business.

Behind these actions lies a pervasive driver. According to the UN Global Compact and Accenture’s 2010 CEO survey, three corporate attributes – brand, trust and reputation – were consistently cited by CEOs as their primary reason for acting on sustainability. Simply put, CSR or sustainability are seen as a means of promotion in an Age of Marketing. As we saw in the BP case, ‘greenwash’ has become one of the popular labels applied to this kind of PR-driven misdirection by companies on environmental issues.

The word was coined by environmentalist David Bellamy in the 1980s and plays off of the concept of ‘whitewashing’ – literally painting over the cracks to cover up inherent faults. In 1999, the Oxford English Dictionary added the term, defining it as: ‘Disinformation disseminated by an organisation, so as to present an environmentally responsible public image; a public image of environmental responsibility promulgated by or for an organisation, but perceived as being unfounded or intentionally misleading.’

Jose Lopez, EVP of Operations of Nestle admits that ‘there is probably out there an environment for pretenders, for the greenwashers. It’s going to get harder and harder to tell apart the greenwasher from the real guy. The reason is, we have a lot of information on what constitutes good sustainability practice,’ i.e. it’s easier to copy apparently credible behaviour.

One classic example was an advert run by Shell which has a picture of a factory with flowers coming out of the smoke-stacks and claiming: ‘We use our waste CO2 to grow flowers’. There was a grain of truth in the claim, as in the Netherlands the company did capture CO2 and use it in floral hothouses. However, since Shell only used 0.325% of its CO2 output in this way, the Advertising Standards Authority banned the advert, following complaints.

As a result of this kind of greenwash, the UK’s  Committee of Advertising Practice (CAP) Code, enforced by the Advertising Standards Authority, created a clause for environmental claims in 1995. Since 1998, it has also published a non-binding ‘Green Claims Code’, advising advertisers on how best to make good claims. Despite this, greenwashing complaints, the majority of which are upheld, continue to rise year-on-year. One rather fun, yet informative, publication is ‘The Greenwash Guide’ by Futerra.

Of course, this kind of PR-spin does not only apply to environmental issues. After the launch of the UN Global Compact, companies started to be accused of ‘bluewash’ – a reference to the blue of the UN logo and business using association with the United Nations to appear more responsible than they really are.  Likewise, although I haven’t heard the term, I can imagine the ‘redwash’ brush being applied to companies claiming social, community or labour responsibility that masks their real negative impacts on society.
Let’s be clear, I’m not into corporate witch hunts or evil empire theories, but isn’t it time we stop giving credit to industries and practices that tick superficial CSR and sustainability boxes, while doing little or nothing to change the underlying irresponsibility and unsustainability of their industries? Many companies are stuck in an Age of Marketing, with promotional CSR as their modus operandi, and it’s time that we exposed them, so that we can separate the CSR pretenders from the ‘real mccoys’.

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.


[1] Philip Morris U.S.A., RJ Reynolds Tobacco Company, U.S. Tobacco, American Tobacco Company,  Lorillard Tobacco Company, Liggett Group, Brown and Williamson Tobacco Company

Friday, 4 November 2011

Is Philanthropy a Smokescreen?


By Dr. Wayne Visser

Quest for CSR 2.0 Series No.3
“I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man, according to the dictates of my conscience.” —John D. Rockefeller Sr.

The Rockefeller story is a good one to introduce the Age of Philanthropy, not only because of John D.’s iconic status as a tycoon and philanthropist, but also because his life and views on charity embody much of the philanthropic attitudes that still prevail today in business. At the heart of the Age – and its chief agent, Charitable CSR – is the notion of giving back to society. Rather interestingly, this presupposes that you have taken something away in the first place. Charitable CSR embodies the principle of sharing the fruits of success, irrespective of the path taken to achieve that success. It is the idea of post-wealth generosity, of making lots of money first and then dedicating oneself to the task of how best to distribute those riches, by way of leaving a legacy.

In 1970, the respected US economist Milton Friedman published an article in the New York Times Magazine (13 September) entitled ‘The Social Responsibility of Business is to Increase Profits’. In it, he called the ‘doctrine of social responsibility’ a ‘fundamentally subversive doctrine in a free society’ and argued that ‘there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud’. As such, he came to define one end of the spectrum of opinion on CSR: the purist, stockholder (or shareholder) view, a view which was once again given an airing in the Wall Street Journals’ ‘The Case Against Corporate Social Responsibility’ article on 23 August 2010. Despite his hard-line view, Friedman does allow some concessions, saying:
“It may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects. Or it may be that, given the laws about the deductibility of corporate charitable contributions, the stockholders can contribute more to charities they favour by having the corporation make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate taxes.”
Although Friedman calls this ‘hypocritical window-dressing’ when done under ‘the cloak of social responsibility’, he concedes that these practices may be justified if they contribute to shareholders’ interests. Hence, he is setting out an early version of what today is more popularly called ‘strategic philanthropy’ – the practice of social responsibility only when it is aligned with corporate profitability. Three decades later, academics Michael Porter and Michael Kramer have given this concept more structure and credibility – and with considerably less malice directed towards CSR. In their 2002 Harvard Business Review article, ‘The Competitive Advantage of Corporate Philanthropy’, Porter and Kramer argue that:
“Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company’s image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context – the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company’s long-term business prospects. Addressing context enables a company not only to give money but also leverage its capabilities and relationships in support of charitable causes.”
Without a doubt, strategic philanthropy represents an evolution of more ad-hoc approaches to charity, and there will always be a place for philanthropy in responding to the most urgent and desperate unmet needs of society. Even so, we have to question the appropriateness and effectiveness of philanthropy in addressing the root causes of our biggest global challenges, which have more to do with the Achilles heel of Western capitalism itself, namely the environmentally unsustainable and socially inequitable growth and lifestyles that it spawns. How, for example, does so-called ‘philanthrocapitalism’ address the Western consumption, production and trade practices that are wreaking havoc with the world’s ecosystems and many of the world’s poorest communities? By and large, it doesn’t.

I believe ‘giving back’ after the fact is just a smokescreen, notwithstanding the generosity that it shows and the benefits that result. Would you agree?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.


Thursday, 3 November 2011

Is Greed Still Good?

By Dr. Wayne Visser

Quest for CSR 2.0 Series No.2

If CSR isn’t working, could it be because it pales into insignificance in the face of a much more pervasive force at work in business and society, namely greed? After all, “greed is good!” So declared the fictional character Gordon Gekko in Oliver Stone’s 1987 film, Wallstreet. “Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms – greed for life, for money, for love, knowledge – has marked the upward surge of mankind.” I wonder if today, nearly 25 years and a $7 trillion global financial meltdown later, we are finally ready to lay this powerful myth to rest?

We have lived through an Age of Greed and come out the other side bruised and battered, disillusioned and angry. But are we any wiser? Ever since the first financial derivatives were traded on the Chicago Mercantile Exchange in 1972 and the casino economy really got going, it seems like ‘greed is good’ and ‘bigger is better’ became the dual mottos underpinning (at least one popular version of) the American Dream. The ‘invisible hand’ of the market went largely unquestioned, despite its self-pleasuring habit. Incentives – like Wall Street profits, traders’ bonuses and CEO pay – became perverse, leading not only to unbelievable wealth in the hands of a few, but ultimately to global financial catastrophe.

With the world still reeling from the ensuing global recession, and threatening to slip into the ‘double-dip’ doldrums, I find myself compelled to ask many difficult questions: Was this, as Lehman Brothers trader Larry McDonald suggests in his book of the same name, just ‘a colossal failure of common sense’? Was it the greed of ‘bad apples’ like Lehman’s CEO Dick Fuld, or the banks and their insatiable bonus-driven traders? Or was it the pervasive culture of greed in Wall Street as a whole? What about the greed of politicians and governments who were happy to benefit from growth-on-steroids? And what about Main Street? Wasn’t the public – we, the people – more than happy to greedily lap up those subprime loans?

All this begs the larger question: Is capitalism itself fundamentally flawed? Are we really talking about endemic greed, built into the free-market system – a system which not only allowed, but encouraged the fantasy of double-digit profit growth and an endless bull market? Will capitalism, with its short-term, cost-externalization, shareholder-value focus always tend towards greed, at the expense of people and the planet? Will the scenario of ‘overshoot and collapse’ that was computer modelled in the 1972 ‘Limits to Growth’ report (and reaffirmed in revisions 20 and 30 years later) still come to pass? Has Karl Marx been vindicated in his critique (albeit not in his solution) that, by design, capitalism causes wealth and power to accumulate in fewer and fewer hands?

Perhaps the trillion-dollar question for me is not whether capitalism per se acts like a cancer gene of greed in society, but whether there are different types of capitalism, some of which are more benign than others. To date, the world has by and large been following the Western, Anglo-Saxon model of shareholder-driven capitalism, and perhaps this is the version that is morally bankrupt and systemically flawed.
Interestingly, a 2010 Pew poll of the American ‘millennial generation’ (currently aged between 18 and 30) showed that just 43% still describe capitalism as positive, while the same percentage now describe socialism as positive. Management guru Charles Handy seems to agree. Speaking to me, he confessed:
I’ve always had my doubts about shareholder capitalism, because we keep talking about the shareholders as being owners of the business, but most of them haven’t a clue what business they’re in. They are basically punters with no particular interest in the horse that they’re backing, as long as it wins.
If we can learn one thing from the Age of Greed, it is that we have immense power to make change happen on a monumental scale, and with lightning speed. Greed has proved to be a high octane fuel in the rocket engine of globalization. But ultimately, it was an economic missile without a moral guidance system. I am under no illusions that the Age of Responsibility will vanquish greed. No doubt, the selfish gene will continue to spark our evolution. And yet, if we are successful, the Age of Responsibility will provide capitalism with that much-needed moral compass and Transformative CSR (more about that later in this series) will provide business with a mission-critical social purpose. 

So what do you think, can we collectively give up our greed addiction?

Source

Welcome to this international dialogue, Quest for CSR 2.0, with Dr Wayne Visser, pioneering author, academic and social entrepreneur. The dialogue, hosted by CSRwire Talkback, is based on his groundbreaking book, The Age of Responsibility: CSR 2.0 and the New DNA of Business. For the next several weeks, Dr Visser will summarize the main points and key lessons of each chapter of his book, exploring why CSR 1.0 has failed, the 5 Ages and Stages of CSR, the 5 Principles of CSR 2.0 and how to make change happen. Readers will be invited to share their views on each posting. This exciting new series is co-published by CSRwire and CSR International.